Transcripts For BLOOMBERG Bloomberg Surveillance 20240713 :

We are getting data out of the euro area. Services pmi is 51. 6. Anything above 50 means expansion, but it is a touch below estimates. At the stoxxok 600, for germany is close, so maybe a little less money out there to trade. Brexitf folks will be on and Boris Johnson will Tell Parliament today. Watch out for any reaction in the pound. , itou look at that paring has much to do with the dollar more to do with the dollar than Economic Data out of the eurozone. Is big worry weve seen exactly what kind of economy we are looking at. Coming up, more from the chicago fed president , but first, lets get straight to bloomberg news. Donald trump is seizing on revelations the u. S. House Intelligence Committee chairman adam schiff met with the whistleblower, the person of the heart of the impeachment investigation. This invalidates the complaint about his controversial behavior. He alleges the Democrat Health right original plaintiff but did not divide any evidence. He should resign from office in disgrace. Frankly, they should look at him for treason does he is making up the word. Not only words, but the meaning. And its a disgrace, it should not be allowed to happen. U. K. , Boris Johnson is testing his new brexit plans and parliament and optimistic he has got enough support from hardline eurosceptics. He had threatened to walk away from talks if the eu does not agree with plans in brussels. In hong kong, the government is of ok Emergency Powers to van facemasks according to local news channels. It is the first time in half a century emergency rules have been. They were first introduced in 1922. A spokesman was not immediately able to comment. And indonesias president is promising to introduce sweeping changes to labor. The move would deliver on some major reforms of esters have been asking work. President also said indonesia is not aligning itself with china or the u. S. Indonesia wants to take opportunities so that the trade war does not negatively impact our country we have good relations with the u. S. China, and our most important thing is that National Interest comes first. Global news, 24 hours a day on air, on tictoc, and on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Francine . Announcedthe u. S. Has new tariffs on french wine and cheese amongst other european goods. Thats after he got the goahead from the wto to impose duties on as much a 5 billion of exports from the eu. 15s a 50 year young yearlong battle. To move onxpected its own to be about u. S. Subsidies to boeing. They say the mutual imposition of countermeasures will only inflict damages on businesses and citizens on both sides of the atlantic. For more, our wto reporter joins us from geneva. Who will be affected by these tariffs . European companies will be affected primarily at this moment. When youre talking about airbus planes and producers of french wine, scotch whiskey, spanish olives them and a lot of cheeses. The u. S. Has announced 10 tariffs on european aircraft and 25 tariffs on those goods and 150 of them from europe. Are we entering a transatlantic trade war and where does this and . End . I would not say we are at this moment. This dispute has been working its way through the wto for 15 years. The u. S. Has been fined by the book of the eu is pursuing another case you mentioned. They will have a ruling and 2020 with which they can retaliate. At this point, everyone is following the rules. Were quite restrained and many were expecting 90 tariffs. Of runway tot escalate this disputes if they feel the eu is not responding properly. The wto we followed quite a lot, but how unusual is it to give the goahead for tariffs . Is it usually a done thing . Is quite unusual. Usually, cases are settled far before this point. Dozen. Ave been about two cases that made it to this level usually, they are settled quickly thereafter. I would say this is unusual. ,rancine thank you very much bloombergs wto reporter in geneva. Joining us is the head of u. S. Equities at columbia threadneedle. Thank you for joining us on such a big day for trade. What does it mean for equities . We talked day in and day out about the trade war. Who will lose most . Of the tariffs, we are talking 75 billion, thinking of context of the u. S. China side. Billionready over 250 in the middle of october and talking about another 100 something billion at 15 the issue with the tariffs is that it is basically a tax on the consumer. Ofn we look at the impact tariffs so far, the pricing of those goods relative to all pricing in the u. S. , you can really see a divergence. Tariffs have gone up to the tune of 3 when the rest of the basket has actually been flat. Thatone is set to lose on that airbuseminder also sources a lot of its supplies from the u. S. The supply chains in the u. S. Supply chain includes a lot of people. I think it is over 275,000. Francine consumers losing out, are these u. S. Consumers . The goods tax from europe and what does that mean a further downturn in the u. S. Economy . We already dont have a great picture. What does that mean for equities . Economyrms of the u. S. , first and then what it means for equities. The third are having a letdown in manufacturing that we have had since the beginning of the recovery in 2009. We had a mini manufacturing recession in 2012 when ip contracted. We had another one in 2015 and 2019 we had a contraction in industrial production. It looks as though we are having a third one now. Francine is that because of tariffs or is it cyclical . I think that has been a magnifying factor, but they are obviously cyclical. There is a usual inventory cycle that goes but a lot of people have commented theyre obviously, the economy is not just a manufacturing side and the u. S. Economy has weathered the cycles because of the strength of the consumer. It is 70 of the economy. You can see the economy has been more muted, but the consumer is still in strong shape. A saving grace is high and the Balance Sheet is strong we still have rising wages and income. Very low unemployment. I dont think we are entering into recession. As it pertains to u. S. Equities, i dont think the backdrop is so negative the markets will make you think. Up later thisng hour, attracting investments to indonesia. We bring you our exclusive interview with the president of indonesia. This is bloomberg. Francine economics, finance, politics, this is bloomberg surveillance. Lets get straight to your business flash in new york city. Allison cooper is stepping down as chief executive of imperial grants after the company warned sales of cigarettes alternatives were falling short of expectations. To keep uptruggled with bigger rivals like British American tobacco. Shares have followed more than 20 . Live up toiling to elon musks hype in the Third Quarter. They hit a record 90,000 deliveries but shares sank. That fell short of the chief executives muchhyped 100,000. They warn revenue may drop and say they are relying too much on the cheaper models to grow. Yesterdays u. S. Auto sales when as grim as the day before. Ford sells a fell, coming in better than estimates. Pickup trucks were a bright spot for Fiat Chrysler and general motors. That is your Bloomberg Business flash, francine. Francine lets focus on the fed. Guy spoke to Charles Evans Federal Reserve Bank President in chicago. Fears of aof slowdown and what to expect as we head towards the october fed meeting. I am openminded about the decision and we will learn more before the meeting at the end of this month. I would say the iso numbers was haveative number and we received reports over the last many months about trade manufacturinghelp enterprises were a bit more reticent to expand capacity and Capital Expenditures which have been very weak. A moreas been confirmation of the reports we have seeing and it has been a very important. Is it enough to tip of them towards a rate cut . Manufacturing is not a huge part of the economy, but it is a significant part. In my district, we have more manufacturing than the average. I have heard reports of the weaknesses and comes from the trade uncertainties. Policyg about monetary and positioning, i deftly think the fomc is moving until last year and headed for slightly modest and restrictive oppositions. Cut being the right decision, i think we will have to go into the meeting and see. Data dependent . That is right. It sounds like we say that all the time, but we are always looking at the state of the economy. Thereat is the job and are many fundamentals which are really quite good for the u. S. Consumer spending is good and the labor market is good. It has been moderated recently. It is definitely the case that business spending has been weaker. The consumer is important for the u. S. Economy. Nevertheless, if the fed waits until there are signs that the consumer is beginning to roll over, isnt that too late . That would be an important concern and that is one reason the committee is trying to get ahead of this. We have repositioned policy towards one that is accommodative eric the question is how accommodative we need to be. Accommodative. The question is how accommodative we need to be. It definitely increases concerns and i am looking at that data. At the moment, it looks like my outlook for this year is 2. 25 , next year about 2 . Trend growth is 1. 75 , maybe 2 . This is a good growth outlook. The question is whether or not we will be able to navigate the uncertainties or shocks that come our way or whether or not there is Something Else that pushes us to decide. That is why we have moved to a more accommodative policy and we will have discussions as to whether or not more is needed at the end of the month. Francine that was the chicago fed president s speaking to guy johnson imagery it. In madrid. We are looking at Monetary Policy closely and what the fed does. Overall, the impact on u. S. Markets, the think the markets have been oversold . Somewhat. Overall, markets represent the manufacturing side as opposed to the economy. They over represent the cyclicality. When you look at the s p 500, you have about 3540 exposure to International Spirit its far less in the u. S. Economy and they are very domestic am only 15 . They are very much exposed to exports and the government internationally. Thats what i mean by that. Perhaps the market is not as good a representation of the health of the economy. Francine where do you see value in u. S. Equities . There has been a massive value and between fears of recession in the market. Stockms of how we look at , we like quality names heard names. Companies that are more than just the top us and the cost of capital can have improved fundamentals. Have seen value within the sector. We have really seen values across the spectrum. Health care is one at that is becoming extremely cheap, because relative to its , you have a lot of dislocation there. And when we look at rates and utilities, it looks far less attractive and there has been more growing. Francine when you look at technology, i dont know what your take on Technology Stocks is. Whether the big overhang is regulation, will we see some of the stocks broken up . Right, that is interesting. When we look at that first of all, it seems as though it is very difficult with the current available to make a very strong argument to break up and amazon or facebook, for example. Ecommerce is still a tiny portion of commerce overall. You would need to have new lows laws in order to make a strong argument, in my opinion, to break up amazon. And it would be fairly similar in the case of facebook. We do think there is more scrutiny the translates into more costs for them in terms of having to police their website. It changes the cost structure, perhaps, and changes the way some of the company organizes themselves. Facebook had to create a new department as a result of the foc see to comply with the requirements they put upon them. But i do not think there is much of Legal Support to break them up. Francine think you so much. We talk the impeachment inquiry and what a prolonged investigation could mean for the markets. This is bloomberg. This is a fraudulent crime on the American People but we will Work Together with shifty schiff , pelosi, and all of them. I had a great call with the president of the ukraine. Believe it or not, i watch my words very carefully. There are those who think i am a very stable genius. Ok . I watch my words very closely. And facility to get up and totally fabricated a conversation i had with another leader and make it sound so bad, it was so evil. Francine that was President Trump lashing out at democrats ,nd adam schiff, specifically saying he read out a fake version of his call. Nokia from columbia threadneedle is still with us. Nadia from columbia threadneedle is still with us. Its curious to say that the real winner of this could be Elizabeth Warren and a very different type of u. S. Economy. At what point do you change or calls on equities depending on the race . Is stillght now, it very early and we dont know who the winner of the democratic primary is. , biden versus warren, they would have very different set of policies to there would be a different impact on the market. It still a bit early and the market has to move as i mentioned earlier, been grappling specifically on the health care sister sector. Policy wouldrens mean for the sector, particularly as it pertains to Health Insurance. We had that overhang on the sector for some time. Even though fundamentally, they dont believe the outcome for Health Insurance actually would be as bad as what the markets fear right now. Francine peggy for joining us thank you for joining us. Coming up, we talk about attracting investment to indonesia and h m. Francine new aircraft and french wine and cheese gets slapped with new dutyies. Tariffs on new products. Under pressure. Will the fed be forced to cut again . Prime minister have enough support to finally get a deal . Good morning, everyone. Good afternoon if youre watching from asia. This is bloomberg surveillance. Im Francine Lacqua. Anything below 50 means it is in contraction. The estimate was a 50. 3 figure. A little lower than expected. The pound is waiting to see what happens with brexit and were expecting Boris Johnson to answer questions on his new plan he will put before the e. U. And parliament today. Lets get straight to the bloomberg first word news. Were going to put an exclamation point on what you were talking about. Otch, wine, dutyies on 7. 5 billion of good will kick in. Washington getting the go ahead from the w. Nombings retaliation for e. U. Government aid to airbus. The largest award in w. T. O. History. The e. U. Will retaliate when they rule on their complaints over u. S. Subsidies to boeing. Charles evans told us weakness in manufacturing hasnt convince him of the need to cut rates again. He spoke to guy johnson. We have repositioned policy from being headed to slightly restrictive policy to one that is accommodative. How accommodative we need to be is the question. I would say the weakness in the i. S. M. And manufacturing is something that definitely increases concerns. Global news 24 hours a day, on air and on twitter powered by more than 2700 journalists and analysts. Francine thank you so much. Shares surging this morning after the swedish retayler reported its first earnings rebound in two years. It is a rare bright spot after the bankruptcy of forever 21 earlier in the week. We will be joined with the Financial Officer who joins us from stockholm. Thank you so much for joinings. Give us a sense how you achieve this profit rebound. A lot of people say it is due to lower markdowns. How much have you sold full price and how much is unsale . Thank you for having me. The customers appreciate what were offering and the whole summer experience in physical stores and online. In all of the investments we have done, have seen a sustainability. I think that is taking off. As you mentioned, we have come down in our redetection reductions. Also in the investments we have in our supply chain. That of course is helping us to deliver a good result in the Third Quarter despite the headwind that we have had, a very strong u. S. Dollar which is affecting our purchasing prices negatively. All in all, i think it is always about the sorment. Also to remember all of our colleagues worldwide who is working very hard and we are and ann 72, 73 countries offering is getting stronger and also more local locally relevant. Francine can you give me a sense of how much more markdowns youll have to do and what sales were like. Have they been gaining and will that continue in the Fourth Quarter . It is far too early to give a guidance when a it comes to markdowns. We have still two months to go. We are convinced that over time we have the potential to come down further in the reduction levels. It is more connected to q 1, q 3, which are the reduction quarters for us in our industry. But over time, yes, but it could vary from quarter to quarter but all the investments we are doing in the supply chain, the sorment, we think over time assortment, we think over time we will continue to improve that francine what is your outlook for fullyear sales deprothe . The online is a very strong channel for us and it is getting more and more strong when we are getting it more like connected to our physical stores. We believe in both physical stores and online. A strong performance. 25 up in local currencies. It is well received and we are still doing a lot of improvements ahead when it comes to different futures to connect the physical store with the dot. Com. We see positive things ahead we see positive things ahead as well. Francine give me a sense of how worried you are about the trade war and whether that will affect your supply chain and where you actually make some of your clothing. Of course we are monitoring it. It is a lot of things happening. It is not only a tough industry wh