Transcripts For BLOOMBERG Bloomberg Surveillance 20240711

The formal application caps a period of speculation that this would be occurring. We are seeing pfizer in premarket rise nearly 2 , biontech down. 3 . Interesting to see how this is confirming what a lot of people have expected, but adding to the risk on feel that we are seeing in markets today. The sense we are going to move past this period that has been incredibly painful economically, as well as socially. Francine lets get the details from fan from sam fazeli from bloomberg intelligence. The news is out. How quickly can some of these clearances be given . Sam good morning, francine. Fdahe u. S. We have the meeting coming up on december 10. It is possible they move on that pretty quickly the next day or the day after. And then in europe, this is the combination of a process that started off sometime in early october where the companies have been filing their manufacturing , and there is no new data in the press release. So it is possible that we should get a European Response by before the end of the year as well. Biggere is it a challenge to get regulatory approval, or a bigger challenge to get out there and have a Distribution System where people get vaccinated in a timely fashion . Sam the regulatory side of things, a really good question. The regulatory side of things is a nonprocess. In that is a wellknown process. It has been known all along across the atlantic, across the globe. For anyould be room major surprise, with companies that have built up so much hope around the vaccines. I think distribution, and the usual problem of getting people through the door to take a jab is going to be the bigger challenge. Lisa to add a little bit of color to the news that is breaking, pfizer and biotech are going to seek conditional european clearance for their covid19 vaccine. They also have sought conditional clearance, regulatory submissions from other countries around the world including canada, australia, and japan, trying to roll out the vaccine and get it into distribution, to get those jabs into the arm by the end of the year. When we talk about the rollout of this program, when do we start to see the Critical Mass . When do we see these shots being disturbed beyond the older care homes as well as the First Health Care responders . That i would expect to see some of that happening, getting close to the end of the First Quarter. It all depends on when the doses start flowing. If you take the u. K. As an example, you have something in the region of enough doses for about 23. 5 Million People from pfizer and moderna. I suspect that will cover the health care workers, the frontline workers, and some of the more susceptible folks in the age bracket above 65. But to get beyond that, we need to, in my view, go into q1 and q2. Lisa so looking right now, we are seeing these shares of biontech and pfizer both climb more in premarket trading after the release of this information, but he really is a momentous move. Im wondering at this point, what has been baked into the market valuation . What could be an upside surprise shock to get people a sense that we are going to get a vaccine sooner and more widely distributed . Surprise would be if another vaccine comes back efficacy. 90 plus the Downside Risk is that as the data gathers for safety, something odd or rare happens in the safety trials. But every day that passes and we dont hear anything is a great day. So those are the two corrections those are the two directions that this can go. Francine is there a danger that the u. K. Approves it before the e. U. , that france improves it before the e. U. , and that is a deciding factor as to whether people get the vaccine or not . Sam not really. At the end of the day, it is approved based on the day that the data is reviewed. Roomu have 500 people in a looking through the data, it goes faster than if you have 100 people. The regulators are professionals, and they know their job, and they will be with a at this data serious eye to safety, and then of course understanding the efficacy. I dont think there is any issue as to what is there. Francine where are we with the other ones, sam . Moderna is also seeking approval, pfizer is seeking approval, but astrazeneca has to go back to trial. Sam astra still has an opportunity here. They have two trials, show us the data for the two trials. I expect that to come in the next few days, with provocation possibly in the that is what im hearing. That could still come back. Im seeing that it worked really well in the younger population, or the details are the key here. And then of course youve got the mobile vaccine in the First Quarter of 2021, and i am optimistic on that one as well. Francine thank you so much, sam fazeli with bloomberg intelligence, watching this very, very closely for us. Thats get to first word news in new york city with ritika gupta. Ritika hi, francine. Fed chairman Jerome Powell will warn lawmakers that the u. S. Economy is still in a damaged and uncertain state. He testifies today before the Senate Banking committee. In prepared remarks, he said the recent news about vaccines is very positive for the medium. Still, powell said a resurgence of the coronavirus is concerning. Vice president pence is signaling that regulators will quickly approve an emergency authorization for the first coronavirus vaccine. He told governors that vaccines could start to be distributed the third week of december. One governor says it is not clear who should get the first doses. Opec and its allies need more time to reach a deal on Oil Production policy. Anyeting broke down without agreement. Energy ministers will try thursday instead of today, allowing more time to stick around, whether to delay a planned increase in output starting in january. Supporters say the market is too fragile to observe more oil. Global news 24 hours a day, on air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more im ritikauntries, gupta. This is bloomberg. Francine . Francine thank you so much. This is what the markets are looking at. After a pretty impressive month isnovember that we had, it december 1. Not sure how that happened. Back. Are bouncing u. S. Futures also bouncing back. If you look at the gauge of dollar, it is fallen to the lowest since 2018. Gold edges up after the decline, and overall there is a lot of company news when it comes to, for example, some of the banks. Oil falling for a third day, reaching a deal on production after for the moment they dont have one. Goes i love that tom keene on vacation, and i think we should go walltowall bitcoin as it reaches a record high. Markets,head of u. S. S p futures are higher, near session highs after that Pfizer Biontech news. Basis points, 36. 50 7 3657. 75. Thirst suck kit juckes of Societe Generale put out a note this morning saying the dollar is on the back foot, but who is on the front foot . Meanwhile, we see 10 year yields climb. Newr futures hitting a alltime high after gains. Incredible to see manufacturing giving a boost to that metal. The Global Growth forecast of 4. 2 percent, 5 previously. It is also interesting go through the notes of goldman achs, with the vaccine being game changer. They see a broadened, deeper recovery as soon as it is widely available. Different views on the impact it could have not only on Global Growth on inflation forecasts. Oecd chieffrom the economist at 7 30 am in new york, 12 30 p. M. In london, and this is bloomberg. Francine this is bloomberg surveillance. Lisa abramowicz is in new york. Joining us to talk about the market and European Assets is david riley, bluebay chief Asset Management strata li strategist. I know you have always been europeanwith these fixed income. The periphery bonds is something you are looking at. Is it still the case . Even the portuguese 10 year yield is nearing zero. Prettyi have seen a impressive rally for peripheral credit, and actually for the u. K. Credit more generally. That is large part being driven by the search for as well as what has been a pretty broadbased and impressive response. Valuations right now, i do like italian ptps, but clearly valuations are not as attractive as they were. I still think that it is good with the ecb likely to increase asset purchases at its meeting in december, then actually sort of net supply next year into the market by european governments is basically going to be largely absorbed by the ecb. Think there are opportunities elsewhere, which offer greater upside in my opinion. Francine what are you liking at the moment, david . European bank capital instruments in particular, bonds,additional tier1 yielding 4 . Theuro terms, and some of national champions, up to 5 on those months, getting it banks are a cyclical asset, so in a sustained economic recovery, turning around asset quality, declined earnings outlook start to improve. I think we have come through this crisis pretty well. It has been a pretty severe stress test, and i think it is highlighted just how much stronger the credit fundamentals of banks actually are. I think that is a good place for investors to play both for rotation from growth to value, from defensive to cyclical assets, where i think there is some meaningful mispricing. Lisa so lets take a step back from the capital bonds because see these are some of the riskier of riskiest bonds because they are the first to be wiped out should banks go below certain capital requirements. This would happen, say, if loan losses rose above a certain level. We are looking at the oecd coming out with a projection cutting their 2021 Global Growth 5 . Cast to 4. 2 from how is it that we are not pressing or how should i put this that we are not going to see the loan losses that people were expecting previously that people saw previously, even with projected growth decline . David that is absolute correct. Given the severity of the recession that we have seen across europe and more generally, one would have expected greater loan losses, and one would have expected higher levels of default. What i think that underscores the extent to which policy support and particularly Government Support has meaningfully reduce the volume, so the european high default rate is running at less than 2 . Bankruptcies are lower this year than they were in 2019, in france you had governments provided guarantees on bank loans to the corporate sector. Furloughhave had the of workers, which has reduced operating costs as well. It has been a very unique or different recession and downturn then we have seen previously. Clearly it has been a hit on banks. Banks have provisioned. But we are starting to see banks release some of that loanloss provisioning, and we think that will continue through next year as well. Lisa and a lot of commentators come on and they say the Central Banks about policymakers created , anderverse consequence that investors will be bailed out no matter what if things deteriorate. Stop judging whether that is good or bad, lean into it because frankly that is the reality. That well, the reality is this crisis and this recession wasnt caused by excessive in theof Leverage Private sector. It wasnt caused by large financial imbalances or credit bubble. It was caused by the virus. In that sense, it was like a natural disaster. And the policy response to that has been the right one, which is to provide a fiscal and financial bridge to the other side, and to reduce the amount of economic scarring that occurs as a result of this crisis. A lot of the businesses where there will be value will be the covid impacted sectors in leisure, in travel, car, auto rental, those kinds of businesses. Structural headwinds, sort of like brickandmortar retail, if you like, shifting onto the challenges of shifting online. With the rollout of the vaccine, being successive and successful, we will want to go back on holiday. We will want to go back to the cinema. We will want to go on holidays, for example. And sporting events. So all of these things i think ann underlining underlying viable business model. There will be a legacy where we have a lot of debt, no doubt about that. But i also think we will see something leveraging through the course of next year as well, which is 80 favorable backdrop for credit investing generally. Which is a pretty favorable for credit investing generally. Francine when we go back to normality, disinflation suddenly pickup, or are we just above water thanks to the qe that is not doing much except, you know, pushing back the specter of deflation . David i mean, i still think that we are in it depends on, obviously, how rapid and completely the economic recovery is. In that respect, the vaccines announcement has been a game changer. Not least because the efficacy rates are so much higher than have been previously expected, which means it raises the prospect of not only a faster rebound but also a more complete recovery, less economic scarring. Quickly,appens more Central Banks and the fed are sort of committed, behind the curve, that is essentially what they are doing now with average inflation targeting, the ecb and other Central Banks likely to follow in one form or other. I think there is the potential that you do get a later pickup in inflation. Talkedu know, we have about the story of a pickup in inflation for some time, and the bond market is pretty skeptical about that. It is not something which would be part of my best case. But i do think we will see a to 2017, wherear we had a global, broadbased recovery, cyclical assets outperformed, emerging markets outperformed in that recovery. And actually, central bank supported that by maintaining easy policy during that period. The one thing we did get 2017 was steepening in the yield curve. Francine thank you so much, david riley stays with us. Coming up in the next hour, jim caron. That is coming up at 6 00 a. M. In new york, 11 00 a. M. In london. We will ask him about inflation of the growth model. Inflation and the growth model. This is bloomberg. Ritika this is bloomberg surveillance. Im ritika gupta with your Bloomberg Business flash. Credit suisse is proposing that its next chairman be the outgoing ceo of Lloyds Banking group, antonio hortaosorio. He steered lords to profitability and full private ownership after the financial crisis. Credit suisse is trying to avert a run of low profit. Tesla will be added to the s p 500 in one shot on december 21. That is a move that will ripple through the entire market. Money managers will have to adjust their portfolios to make room for a Company Worth 538 billion. S p considered adding tesla into parts because of its size. It will be the seventh Largest Company in the index. That is your latest Bloomberg Business flash. Francine . Francine thank you so much. That is it for the month of november, one of the biggest rallies on record when it comes to stocks. Here comes december. The focus is on oil, from opecplus not managing to find a decision, so they will meet on thursday. The focus also is on bitcoin. Coming up, martin rats will talk about opec. Oil, 45. 38. De this is bloomberg. Its moving day. And while her friends are doing the heavy lifting, jess is busy moving her xfinity internet and tv services. It only takes about a minute. Wait, a minute . But what have you been doing for the last two hours . Delegating . Oh, good one. Move your Xfinity Services without breaking a sweat. Now thats simple, easy, awesome. Xfinity makes moving easy. Go online to transfer your services in about a minute. Get started today. I desperately believe we need more stimulus and we need more stimulus today. To go back congress to work and pass the stimulus bill this week. There is no time like the present. Dollars in consumers pockets would be important. Cofounder of Robbins Holdings speaking to Bloomberg Television raising the question whether we have enough fiscal support. Yes, other saying congress, get on it. Joining us is david riley of bluebay Asset Management. I am wondering from your perspective how important is it that policymakers, not only in andu. S. To make together pass comprehensive fiscal support given how much support they have already provided. One of the key lessons for policymakers on the financial crisis was that fiscal support for the recovery was too quickly. We entered into fiscal austerity in europe, andd also the United States as well. That is part of the reason why recovery was that much a weaker than it otherwise could have been. I do not think there is danger with the prospect of vaccine, concerns around overall public debt. You do get withdrawal on fiscal support. We see that play out in washington. For Different Reasons we are seeing pushback in terms of the european recovery fund. I think that is a danger. In the case of the u. S. , where i do think they do need to do additional fiscal support, it is clear that in terms of policy inport that u. S. Households are in a good place. Highgs rates are pretty end there is a lot of money still in u. S. Money market funds. The issue is that the inequality within the u. S. Means low income groups have been the most heavily affected by the economic downturn as well as the virus. Supportneed additional and hopefully we will get that at some point, though i suspect it wont be until 2021. This is sort of the contradiction in your contract and your comments, balance in u. S. Aggregate look pretty good. A marketson from perspective, if you want to take matter forok at that your calls with respect to credit . Will it affect your Investment Strategy if there is not fiscal support past . Primarily an issue of social equity rather than holistic Market Performance . It is important from a ,acro and Growth Perspective not solely about social equity. Will meanthat support that more jobs are saved. That will improve confidence and support Household Income more generally as well. Some extension of things like the payment protection scheme. That was pretty effective in terms of providing support. It is not just about social equity. I do think we will get something dollars. A trillion that is still a meaningful boost, albeit less than we had for the cares act. That willt get that, sort of fundamentally way fundamental change your portfolio. There is quantum risk you are deploying into this higher risk parts of the credit market. Produce but i do not think it changes the overall fundamental story which is that we are going to see, with a successful rollout of a vaccine, a strong economic rebound during the course of 2021. I think it is why investors should position for that. That really is what has been driving the price action we have seen since early november. Francine we are a couple of weeks away from brexit. Ika david [indiscernible] i think a deal will be done. Pop inwill get a sterling on the back of that, but it is not going to be a big deal for the u. K. Economy because it does not cover the service sector, it does not cover financial services, important parts of the u. K. Economy. ,n terms of u. K. Assets certainly Large Cap Companies in the u. K. Are basically dominated by the value sector. On most metrics they look pretty cheap. They are leveraged to rebound in global trade. What matters more for u. K. Assets is less about brexit and the brexit deal that i think it is going to happen and more about, if you buy into this global synchronized recovery. If you do, u. K. Assets offer some value. Francine thank you so much, david riley. Lets get straight to the first world news in new york city, here is ritika gupta. Ritika joe biden setting up his first confirmation fight by naming to be his budget chief. Denomination drew swift objections. Texas senator john cornyn called this election radioactive thats called to the selection mcconnell has set up a vote on the nomination of christopher wallace. Director onsearch the st. Louis fed but mcconnell has taken no action to open Judy Sheltons path to the fed. Her confirmation was blocked before the thanksgiving break. White house coronavirus advisor scott atlas is resigning. Atlas won president trumps loosening restrictions. He was criticized by the white house after having described lockdowns as harmful. Has no background in Public Health or infectious disease. Exxon mobil is about to face the biggest wipe down in history. Thats right down. Right down. The company will drastically reduce Capital Spending through 2025. Exxon has been hammered by the collapse in oil prices and the pandemic driven crash in fuel sales. Global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Ofcoming up as part sustainable business, ned siegel. That is at 330 new york the 30 new york. This is bloomberg. Francine lets talk about the price of oil. Opec and its allies need more time to reach a deal on product production capacity. Yesterday ended without an agreement. The ministers will meet thursday. Joining us is martijn rats. Always great to speak to you. This was pretty surprising the fact they had to delay it for days. Isreally goes to show there so much political uneasiness itut allies, or is strategic, longterm questions they are trying to answer . Martijn i reading of the situation is that there is longterm underlying considerations. Opec faces an increasingly difficult dilemma. Up,question that has come and will come up many times in the future, do we cut production now, which is sort of benefits in terms of defending price, or do we defend market share for the long run . Is an increasingly pertinent choice. In the past, opec always said its oil policy against the backdrop of rising demand. Demand has grown 1. 2 one Million Barrels a day a year for decades. If that were the case, there would be room for everybody. Even the staunchest oil optimists will have to recognize there is some probability that oil demand will peak in the 20 30s, then decline. When Peak Oil Demand appears on the horizon, you are immediately competing for a pool of remaining demands that is finite. It might be large, but is finite. Market share becomes important. Of opection in terms policy is, do we run it short run or long run . Different countries have different tradeoffs in terms of how much shortterm pain they can withstand for longterm benefits. That is ultimately where a lot of this tension is coming from. Marketgive up too much share for too long, you are going to be the one leaving oil in the ground and that is not favorable for opec either. Francine are we going to see countries leave opec . If it does, is that it for the cartel . Martijn to say that this is would be understating. I would not expect that soon. In, this story, or this expectation of oil demand peeking is on the horizon, but still far out. Just being practical, i would suspect that the cohesion that has been built up over the past few years will last a little longer. As time goes by and this issue themes more pertinent, oretition for market share within opec itself, becomes ever more intense. Circumstances there are only two options that are stable. It is either more countries joining opec so the entire oil industry becomes coordinated, which seems unlikely, or countries leaving opec and competing for market share in their own right. Still quite a few years off, but ultimately that is part of the range of possible outcomes. Lisa u. S. Shale production used to be some sort of pressure to opecplus. Has that diminished greatly as a result of the decline in production . Martijn yeah. I would take a more cautious view. There is widespread expectation that this u. S. Shale production will decline next year, and almost inevitably. The failed to such low level that decline is likely. Interesting. Ery reached 44 a barrel at the start of august. That is not a price anyone needs to speculate about. Ai is a company you can lock in. From the middle of august until last week, we have added 75 horizontal rigs. We have been adding five rigs a low since wti got into the 40s, which clearly signals that low 40s passes through a number of very important breakeven levels for u. S. Shale. The recount came from exceptionally low levels. His decline in the first at desk is hardly baked in. Another five dollars, it will continue to grow because you are looking at breakevens and hedge of all oil prices that are attractive. Rates, thenother 75 same as we have done of the last 15 weeks, we end up with 360 horizontal rigs in the United States. Againen arguably growing in 2022. When that comes on the horizon, you have to look slightly longer into the future. Lisa we will have to get you back in the not so distant future. Thank you for joining us, martijn rats,. Coming up on bloomberg technology, Morgan Stanley vice chair of wealth management. This is bloomberg. Francine ritika this is your Bloomberg Business flash. Jp morgan plans to raise annual bonuses. Same time, payouts will decline across the rest of the bank. Traders may see bonuses rise by 20 . Generated 23. 9 Million Dollars in revenue. Michael corbin is pleased with joe bidens pick for treasury secretary. That the Banking Industry had a Good Relationship with her. Elected, or voted into the seat, she will do a great job and i would expect that relationship to continue. Out, anothershout Glass Ceiling broken in terms of her becoming the first female secretary of the treasury. Was Michael Corbat. Catch David Rubensteins full interview with Michael Corbat this friday at 10 00 a. M. Eastern to find out how citibank is managing the covid19 crisis and the potential impact on bonuses. That is your latest business flash. Francine after more than four credit chief is stepping down. The departure follows clashes with the board over bank strategy. Latest is th the with Bloomberg Opinion who specializes in banks. Thank you so much for joining us. If you look at the disagreements board, it seems to be all about unicredit buying would it make sense for unicredit to buy this old italian bank . There has obviously been pushed back by the outgoing ceo on this deal notwithstanding the fact he has been pushing for he has been seeking assurance from the government on any bills. Mostegically it is not the obvious of deals because it reinforces unit credit while enforcing it [indiscernible] i suspect the cost might have been something he had considered. Francine the share price yesterday was down 5 . Today, almost 6 . What are investors worried about . One is the strategic challenge and whether theres no means unicredit will be more see the state , but he does on leave a vacuum. Businesses that were potentially highgrowth. Targetset up clear ahead of the time frame. Crowded a very credible leader. Now he lives a vacuum. More italian at all costs, what does that mean in terms of strategy . Given the Economic Uncertainty that lies ahead for investorshis is what will now be worried about, that somehow a new management that follows mustier will be last diligent in its analysis of growing in its home country at a time which the surgery of the economy is going to be severely hit from the pandemic. Which leads them exposed on the tourist sector. Lisa it raises a question about crossborder banking and whether in europe there is opportunity for unicredit given how old the banks on a lot of the continent is. There are still significant hurdles to that crossborder combinations. Able to move capital freely between nations and that makes any crossborder deal less appealing. There are those who push in europe too deep the banking units. And those opportunities will come up. Of the namessome that could replace mr. Mustier, they are all italian names. Almost none of them except for one are banking names. Government and for Government Intervention once more for italians ahead . I would caution this is the early days in that search for candidates. At the moment, we are seeing italians, not necessarily from banking, up for leadership positions in italy. Not just inseeing italy but across europe, we have onovernments being significant amounts of lending that banks have extended on the governments behalf. Tighten theevitably links between banks and their governments. Francine thank you so much. Elisa martinuzzi. Up next Morgan Stanley Investment Management text portfolio manager. Lisa opec breakdown. The group relates talks until thursday after ministers fail to reach a deal. Unicredit ceo jeanpierre mustier is stepping down. As the search for his successor, shares sink. Pfizer, just had news they will than someval sooner of their counterparts. For thend biontech covid19 vaccine. Surveillancemberg. Keene is still going after his thanksgiving leftovers. He has been posting a lot of cooking on twitter. [laughter] lisa he evidently has as a companion. Francine always in blackandwhite. [laughter] lisa tom crean has his