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Advisor has resigned. It comes one day after President Trump fired mark esper. Not give a reason for his resignation. A vatican investigation to x Cardinal Theodore mccarrick has found bishops, cardinals, and popes downplayed or dismissed reports that he sexually abused children and adults. The vatican took the extraordinary steps today of publishing its twoyour internal probe into mccarrick. The report places most of the blame on the late Pope John Paul as 1999, newarly that the behavior was problematic. 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. Vonnie it is 1 00 p. M. In new york, 5 00 p. M. In london, and 2 00 a. M. In hong kong. Im vonnie quinn. Welcome to bloomberg markets. Here are the top stories we are following on the bloomberg and from around the world. Will there be any thawing of relations between china and the u. S. Under a biden presidency . Chairman henryi fernandez. Also, what congressional businessmay mean for here and abroad. And what the Competitive Landscape looks like for big banks. We have a flat s p 500, a choppy day. The nasdaq and the dow are mirroring each other. The dow up. 7 . Of course, this after yesterdays big day following last weeks major sessions. The vix back up to 25. The 10year yield at 94 basis points and change. Below 93. Index just we are trading at 660. 16 on the offshore yuan. No secret that relations with china deteriorated under trump. Lets go to somebody now who knows what investors are focused , a potential joe Biden Victory and what it may mean for u. S. China relations. Lets get to the msci chairman henry fernandez. You are all over the world. What is the chinese reaction to the selection this election . Henry initially, the chinese were fearful of a potted administration for what they saw as as a buildup of other countries around the world to put pressure on them, but there are positive changes coming from a Biden Administration in both style and substance. The rhetoric and the pressure less will be in public, bombastic, hyperbolic. Something that china has hated significantly because of the pressure it puts on its domestic population and leaders in which the conservative and nationalistic elements of society begin to surface even more so. I think this is a better probability of effective change. Of course there will be a lot of substance. The coalition i mentioned before on china. The emphasis would be more on political and human rights issues and less on financial and Capital Market issues, and therefore, hopefully we can avert a capital war with china, which would have been devastating. Expect aow can we President Biden to continue on trade, for example, given recent history, and how china seems to be exerting more control over places like hong kong, over its Capital Markets . Question china understands their increasing position in the world economy, world politics, global Capital Markets, and therefore is trying to squeeze its way into the leadership of the world, and the u. S. Is trying to resist that. But the chinese are also very pragmatic people. They understand they can no longer claim they are and emergingmarket and that they need protections and access to markets around the World Without opening up their own markets and their own currency, equity, bond markets. Are seeing major steps taken in that direction. Some people may say it was because of the trump pressure. It could be. But i think china itself recognizes, in order to have leadership in the world, economically, politically, financially, they need to embrace this. I think that will continue and could potentially be accelerated because of the Pressure Campaign , coalition of markets around the world on china. Less bombastic and public pressure in which issues can be solved diplomatically, not through the media. Vonnie did you understand the crackdown on jack ma by china . Do you think a move like that will discourage International Investors . Henry it could. Regulators chinese , with alld realized of the regulatory requirements, estate owned banks were complaining about that. When it came down to the ipo, there were a lot of discussions about that. Capital fromt in the banks, with their lending practices, and therefore, all of that came to a head, where they eventually postponed the ipo. I think there will be a resolution of that at some point , and they will return to the markets. For sure, that was a disappointment for all of us, and probably not the way to conduct regulatory affairs. Vonnie its been a difficult time for all of Corporate America, no less so for nfci. Anything that you can tell us about additions or deletions, do we have to wait . Henry we have to wait. We tried to be as scrupulous as possible, dedicated as possible to provide the information all at once to the market. Been a difficult week, sessions have been choppy. How much is that impacting the rebalancing this time around . Henry not at all. We maintain our indices in stable markets, and in highly volatile markets. If you go back to our rebalancing in the spring, we focused on being observers to the Investment Community, rebalancing the indices in a responsible way. We continue with that effort. That is a big service to the Investment Community worldwide. Joe biden has obvious clan plans around Climate Change and so on. Does that grow the pool in Sustainable Investing . Henry i think so. I think the Biden Administration will put a huge spotlight on Sustainable Finance and investment in a variety of ways. We all know their approach to the Health Crisis is going to be a lot more aggressive, a lot more directive, a lot more topdown, as opposed to bottom up, statebystate, municipality by municipality. That will put a big focus on employees, Citizens Health and wellbeing. On the environment and Climate Change, it is clear the blighted administration will rejoin the Paris Agreement Biden Administration will rejoin the Paris Agreement. There will be a lot more leadership from the federal government, and therefore private entities in the u. S. Combating Climate Change. On the social issues, that could potentially be the largest focus that we did not expect. The Biden Administration, having been elected by a lot of minorities, women around the country, there will be a big focus and be heard in the speech that biden gave he thanked the black community in South Carolina for the turnaround of his campaign, and he would not let them get behind. There will be a big emphasis on racial issues, social justice issues, and that will put pressure on companies and investors to align themselves with the policies of federal government, continuing to have inclusive capitalistic growth. Vonnie large Asset Managers also developing their own. How much of a risk is this to msci . Msci is the leading provider of Climate Change investing tools for investors, managers, banks around the world. Our business is on fire. The rate of growth of revenues in this space is over 40 yearoveryear, and increasing. We go from screenings of companies not very high and esg ratings, both equity and bonds, risk models particularly in Climate Change. We are busier than ever, making significant investments in these areas, and it is great. It is great for the world, great for capitalism, internalizing a lot of these costs to society. All of your role is,utting all of your hats on what is the thing that should be done to strengthen the Global Economy, which is being ravaged right now . Clearly, the control of the pandemic is one. Secondly, we have to figure out how to strengthen significantly the world health organization. When you look at the response to this global pandemic, which was basically world war iii against an invisible enemy, the response by the nations of the world was pathetic. There was no coordination, not a lot of information sharing, not a lot of best practices used. Every country was for themselves. Even inside some countries, everyone was for themselves. We cannot have a response like this again in a Health Crisis. More importantly in a Climate Change crisis, a lot of the people focused on that impact on society, are pretty afraid that if the response to global Climate Change is similar to the pandemic, we are going to be in Serious Problems in the world. Vonnie henry, thank you for the time today. Reconnectingrd to soon and rebalancing after the close today. That is henry fernandez, chairman of msci. The fate of the Affordable Care act. We have a live report, next. This is bloomberg. Vonnie this is bloomberg markets. Im vonnie quinn. Two key u. S. Supreme Court Justices indicated they are inclined to uphold the Affordable Care act. To take us through the legal arguments, we welcome greg stohr. An interesting day, 80 minutes of arguments on the Affordable Care act, the individual mandate, whether to exempt it or not. This is not the first time this has come before the court. What did we learn today . Justices, john roberts and Brett Kavanaugh, seem not inclined to strike down the entire law. A lawsuit focuses on this provision that requires people to buy insurance. That used to be backed up by a tax penalty. It no longer has that tax penalty. Opponents of the law say that provision is unconstitutional, and because it is, the entire law has to be thrown out. Two key justices dont seem like they will go there. Vonnie that is the only part of the law that is up for discussion. There is no such thing as talking about whether the individual mandate went away, whether the whole thing would collapse or not. Greg they argue the individual mandate has to fall, and then therefore other provisions have to fall, like protection for preexisting conditions, and because of that, the entire thing including the expansion of medicaid, the marketplace is set up, that is the argument to strike down the entire law. But it seemed pretty clear today that there are not the votes to do that. Vonnie chief Justice Roberts has voted twice to uphold parts of the law. Do we know how Amy Coney Barrett would rule . Seemed skeptical that the individual mandate by itself is now constitutional. She talked about how in 2012 when the court upheld it, they did it in an opinion by roberts as a tax, saying it was part of congresses taxing power. Now that there is no tax penalty attached, she seemed to think the individual mandate would fall. Less clear about whether she would invalidate the entire law. She will probably at least partially side with the Trump Administration on this one. Vonnie it makes no difference that we are changing administrations potentially. The decision will not come out until june, but the fact that ,here will be a transition different executive presumably, will not make any difference to who writes the decision, how they come to this decision. The bidene is Nothing Administration can do about this case. What they can do, especially if there is a Democratic Congress and we dont know who will control the senate. If the court were to overturn all or part of obamacare, you could have a legislative fix. This is Something Congress could address, perhaps even in a onesentence statute. If the court rules against obamacare, we could see that, but that does not seem likely to happen. Vonnie always great to hear from greg stohr. Thank you. Biden iselect scheduled to make remarks on the Affordable Care act this afternoon in wilmington, delaware. You can watch that on the bloomberg, scheduled for about 40 minutes. How does Corporate America stack up . The justpeak to Capital Foundation ceo martin whittaker. This is bloomberg. Vonnie this is bloomberg markets. Im vonnie quinn. Year, just capital measures and ranks the countrys largest publicly traded companies on the issues Americans Care most about. This years results arrived amid an unprecedented pandemic. The economic fallout of which is really hurting the Global Economy and a reckoning on racial issues as well. Potentially an opportunity for Corporate America. To discuss the results is martin whittaker, just rankings ceo. Talk about the difference this year in criteria and who made the list. Martin this year, the issues were dominated by covid, how companies responded to the pandemic early on at the beginning of the year, how they managed the reopening, how they are dealing with things like job losses, changes in pay, compensation. Core issues. Ofm may onward, we had a Lot Companies responding to the killing of george floyd, how they were responding to Racial Equity within the country. We were tracking all of that. Having said that, the number one hase was the same as it been for many years, Companies Providing fair pay and a livable wage. You may think that is not surprising in this economy, but workerrelated issues dominated this year. Although the worker category has always been number one, this year, the weighting of that was greater. Retailersf companies, were much more prominent. Insaw target, for example, the top 20. They did a fantastic job responding very quickly to covid19 for its workforce, customers. Other notable benches would be at t. Jp morgan was the number one bank. The Number One Company overall was microsoft. Vonnie they always manage to make it in the top spots. Corporate leadership, i know that you have been writing about this. How have Corporate Leaders managed performed in this environment . We had this environment and then we had the election which divided america and potentially their customers right down the middle. Martin we have seen Company Leaders not just over the last six months, the pandemic, but over the last few years, companies that do right by their stakeholders are performed that those who dont. Year, we have seen a doubledigit percentage cap gap between leaders in some sectors and laggards. Companies looking after their workers, communities where they operate, they tend to do better, and those things that are accentuated in a period like we have been through, where looking after those stakeholders are more important than ever. Vonnie is capitalism at a turning point at this stage with a new president likely to take office . Martin i think it was at a turning point before the election and definitely is now. Stakeholder capitalism is what the American People want. The Biden Administration has the perfect opportunity to grab that vonnie. Vonnie thanks for joining us today, martin whittaker. An interesting grouping of companies. Speaking, we will be about what investors expect from a Biden Administration. This as the market continues to turn. The s p is down half a percent. The nasdaq down 1. 4 . Dollar index this is bloomberg. Mark im Mark Crumpton with bloomberg first word news. Senate republicans released a series of bills to fund the government through next september. Its the first move toward negotiations with House Democrats that will be vital to avoiding a federal shutdown next month. Mitch mcconnell says funding the government with complete full your spending bills is a top priority in the postelection lameduck session that began this week and runs through mid december. Also today, lederman tidal was elected to had republicans in the next session that starts in january. Chuck schumer will return in his role at the top democrat but the question of who will be the majority leader remains open. Republicans currently hold a majority in the chamber. After last weeks elections, they will likely be left with 50 seats and 48 four democrats pending race because in North Carolina and alaska. Two justices today indicated they are not ready to strike down the entire Affordable Care act. Chief Justice John Roberts and Brett Kavanaugh so that they were inclined to leave the rest intact, even if challenger succeeded in invalidating the individual mandate. The Trump Administration argued that the law known as obamacare is unconstitutional. The European Union will institute tariffs on 4 billion of u. S. Goods, and escalation of the fight over illegal 82 boeing and airbus. The eu says it would drop the tariffs if the u. S. Removes duties imposed on eu products last year. 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. Amanda live from toronto, im amanda lang. Vonnie from new york, im vonnie quinn. We are joined by our bloomberg and Bnn Bloomberg audiences. Here are the top stories we are following from around the world. We speak with Daniel Arbess about the state of the economy and if the markets have priced into much vaccine optimism. Apple starts its intel breakup. Starting to unveil processors made by apple for the first time, unwinding the 15year relationship with intel or their chips. And more on amandas conversation with james gorman, and why he thinks there is almost a 100 chance of a new president in january. Amanda lets start with a look at markets today, moderating some of the advances from yesterday as the reality of a path to a vaccine sets in and the number of covid19 cases continued to surge around the world, certainly across north america. Negative action in the s p 500. Tech leading the nasdaq lower. Of course, the handful of stocks that got us there, negative today. Apple is a standout as it releases some info in their developers conference. And there are businesses that are feeling confident. Selling about 1. 5 billion in stock. Verizon says it will also issue 12 billion of bonds in five different tranches. Feeling confident about the ability to raise capital here as it bridges over this period of uncertainty. Among the things keeping markets and investors uncertain is still the outcome of elections. Still challenges out there, run off races. I spoke earlier to james gorman, the chair of Morgan Stanley, and this is what he had to say about that. James we dont know if republicans will hold the senate be we assume they will, with the georgia reelection in january. We dont know if President Trumps legal claims will prevail. We assume that they do not. Amanda we are joined now by Daniel Arbess and our own sonali basak. I will turn it over to you. I will offer the first question to you. Thank. The senate run off races are still creating a great amount of uncertainty. With a more divided government, even with that being embraced by markets, everything says that from tech regulation to wall street regulation, there can be some bitter place to be had. How are you factoring all of that in . About what thinking is in our National Best interest over time and how we are going to get past the pandemic, we normalize the economy without doing very severe longterm fiscal damage, which has already been done. Nobody has had a choice in the money printing, the stimulus checks. But we need to be thinking carefully about the medium and long term here. Short term really concern me. The market picks up information end tolifies it from one the other daily. Yesterday, everyone was excited about the election outcome which is perceived to be a return of character, spirit of compromise and unity, which is a plus for the culture and for the narrative and dialogue of the country as a whole, and then of course, the pfizer vaccine. It is great that they have a 90 effectiveness rate on a relatively small sample size. That number probably goes down and there are a lot of hurdles to be overcome in the implementation, but people are realizing it, and that is what markets do. All positive strategically about the opportunities facing the new incoming administration. Whoie when you say we, are you talking about, where are you putting your money . Is in the money equity markets. I dont see much money in the credit markets because of the fracturing of the price mechanism through monetary policy. Failure ofe 10year congress to implement rational fiscal policy. We have been relying on the central bank really 12 years now, since the financial crisis. Got to come together and start to implement effective policies, once this election is decided. That youts a positive will not have one Party Controlling both branches of government, in all likelihood. Still depends on those runoff elections in georgia. S, i have always thought a positive outcome here would be a change in executive ut continuity in congressional leadership, particularly in the senate by the republican party. Will put soontobe President Biden in a better position to navigate his own and not fallincts pressure to the left wing of the democratic party. Amanda when we think about the volatility of these markets, it can be quite serious, doubledigit moves in some stocks. Aboutare you thinking sitting this out, putting your money to work . Daniel i really believe in businesses that have strong areth potential, that trading at reasonable multiples relative to their eps growth opportunity. The idea that yesterday we had a good day in the markets, the 10 year treasury yield went up a little bit, so everyone is worried about higher interest rates, which is terrible for Tech Companies was wrong. Tech companies today have superb balance sheets, almost no leverage, excess cash. They are not borrowers, they are just growing with businesses that have models that are , whichly highmargin command reasonably high multiples, particularly when their eps is growing rapidly. I am focused on the growth segment. I pick individual investments. I have the luxury of being able to look from the bottom up and not having investors call me nextmonday to the desk one day to the next, having investors asked me about it. Also driven by pressures that are imposed, particularly by the hedge fund structure, where investors can redeem and withdraw money quarterly. Sonali i want to shift over from this market conversation. There was an opinion piece that you had written in the hill earlier this year about u. S. Economic stability being threatened with the conflict with china. I know its a conversation that we have at bloomberg all the time. How do you believe the next administration will handle the u. S. Relationship with china, and how will that impact big business . Daniel really glad that you asked that. Their relationship with china has fallen into the background during the pandemic and election process, but there is no economic topic, in my view, that is more important to the future Economic Opportunities for the United States of america. You have the republicans and the president , for the past several years, criticizing the democrats for being too permissive of china, for trying to bring them into the global trade infrastructure, overlooking their violations. The Trump Administration, when we look back in history, the largest single failing of the administration by the way, there have been some accomplishments in deregulation, foreign policy, particularly realigning the middle east but the largest single failure has been the mismanagement of the relationship with china. The democrats in recent months, certainly this year, have been making a mistake, by going too far in the other direction in response to the criticism. Have beenion, and i following and investing in china for decades. Is neitheron, china an enemy nor a friend of the United States. China is an opportunity. Since the beginning of reform in china, people have been dreaming for the day where there will be a chinese middleclass consumer that americans can sell to. Now, manufacturing has made economics equalized. In other words, we can reshore our economics and manufacture, and we are certainly providing services and culture to china and the rest of the world. If we continue to battle with china, we will be locked out of the consumer economy in response. I think it is imperative as part of the blighted administrations restabilizing of relationships with our allies that we begin with our allies a process for revising the wto, ensure protection of intellectual properties, and to ensure their compliance with the terms of free trade. And we restore open trading with china and the rest of the world. Vonnie thank you so much for your time. That is Daniel Arbess, xerion investments ceo, and our own sonali basak. One moret apples thing event, and its ability to breathe new life into the mac. This is bloomberg. Vonnie this is bloomberg markets. Im vonnie quinn. Thes time for our stock of hour. Apple is holding its one more thing event today, basically focusing on the mac, as the Company Moves to its own chip, the m1. Is there anything about this event that will be novel to us . The new claims are slightly wonky, but important for a company like intel. Apple is claiming with these new chips they can produce a lot more Computing Power while not using so much energy. That is pretty important when it comes to a laptop that you are taking around. For instance, the new macbook air that they announced with this new m1 chip will have almost doubled the battery life of the previous model, and probably a lot more battery life in laptops out there. Amanda we have to ask which of the chip company this is a threat to, and in what way. Amd, amd seemsl, to be moving on news of its own this week. I was watching before the event went on. It went down and now is unchanged. Intel has broader issues other than apple, but the switch away from intel chips, which were the main chips used in macs for years, that is basically the greatest example of the trouble they are in. Basically, it is unable to produce chips that are up to the same standards as others. Basically, apple has decided it not go on with apple for intel for its chips. It was part of their strategy anyway, but it does show a lack of confidence in intel. Vonnie we also got a 13 inch macbook pro and mini, so plenty of new things out there, but will it prompt a round of upgrades, or is this just apple transitioning to the new chips . Alistair Mac Computers have been criticized in recent years, especially from professional users, like people that have to do creative graphics things. They have been complaining that apple has not been focusing on the macs. These computers will certainly customers,sfy those so you could get some upgrades. One note of caution, this is a really big technical switch to go from a processor designed by intel to apple. Marks about how well apps and other things will work on this trip. If that all goes smoothly, it could be a big upgrade cycle. Amanda alistair, great to have you with us. Coming up, we hear from the ceo of Morgan Stanley about the importance of the recent acquisitions of eaton vance and e trade. This is bloomberg. Amanda Morgan Stanley has been in acquisition mode. Last month, the 7 billion plan vance not far away from their acquisition of e trade. I spoke to james gorman about what this brings to their table. James we have been trying for decades to rebalance Morgan Stanley. We have been trying to keep our worldclass Investment Bank and at the same time providing balance. That is provided in our wealth and Asset Management businesses. In month management, you have financial advisors, of which we have 15,000, but a lot of people are doing purely digitally. It to our Wealth Management business is something that will accelerate our technology transformation. At the same time, its introducing us to millions of new clients that we would not have reached but through our traditional platforms. It made the more stable, provided more balance, performed technical capabilities, and gave us access to things that we didnt have access to. Andas a very strategic frankly very attractive transaction from our perspective. We closed and are integrating, and i could not be happier with the e trade team. Amanda as you do that, eaton vance comes along. How does that fit into the overall picture . James i told our regulators we are not going to be doing a deal every week. Sometimes you dont control the timing. Thingsquisitions, four really matter. What is the strategy for. We need to bulk up in Asset Management. They have an unbelievable presence in that space. They have a fixed Income Management business that gives us scale. We are a huge distributor of their products, so we knew them well. Strategy has to work. Number two, culture has to be a good fit. We like the partnership culture. Number three, the price has to be reasonable. Vance e trade and eaton coming together. One question is whether you see an inevitable margin compression in both of those businesses, one of which has already happened, but on the Asset Management side, we see that in the future. Even in Investment Banking, we could see things get compressed over time. How do you manage that in your future . James i dont know that it is inevitable. Our organization charges on average 75 basis points. Im not sure that you will see a lot of compression in the Wealth Management space. People who want to do zero cost trading are already doing that. But it is our capability. It is how you value advice and whether you are prepared to pay for it. In Asset Management, there has been compression over the years. That is why getting scale and make yourself costeffective as you fight whatever fee compression will come in the years ahead. But we are building out other businesses to compensate that. We offer a lot of loans to our clients. It is all a matter of having a strategic view that sets you up with the right scale, with the right business mix for the future. Amanda scale obviously matters. Do you feel as if Morgan Stanley itself as a whole has achieved the right scale . When you look at your peers, is there additional size that you would like in order to compete longterm . James as of last night, we were the Third Largest bank in the u. S. , the most attractive Financial Market in the world. We are the number one equities player in the world, one of the top three Investment Banks in every field in the world, number one equities underwriter. We are managing 4. 5 trillion in about wealth assets. There are other things that we are doing, i will not disclose them here, and i would love to do things outside of the u. S. In time, but the firm is in great shape. Amanda that was james gorman. Not something every week, but not nothing in the future, and in europe, it sounds like. Vonnie sounds like his appetite has been whetted by those acquisitions. Amanda from toronto and new york, this is bloomberg. Mark i am Mark Crumpton with bloombergs word news. The Coronavirus Vaccine will be available to all americans by april according to the health and Human Services secretary. Secretary azar outlined what he said would be the distribution schedule for companies experimental vaccines. None have been approved, but pfizer said the vaccine is over 90 effective. Secretary azar said the pharmaceutical giant is ramping up to deliver 20 million doses monthly by the end of november. President elect joe biden is moving more forcefully to make the transition to the white house. He plans to speak at this hour on the Affordable Care act, the same day the Supreme Court has been hearing the case about the obama Administrations Health Care law. He is also likely to name a chief of staff this week. Tropical storm eta poses a threat to oil and gas production

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