Transcripts For BLOOMBERG Bloomberg Best 20240713

I feel like we are playing exactly as we should. Global slowdowns shouldnt sent shock waves around the industry. This is a huge amount of Money Airlines will lose. Super tuesday shakes up the race for the democratic residential nomination president ial nomination. This is a big night for joe biden who eat expectations who beat expectations. The economic race is strong, the fundamentals in the economy are strong stop strong. He said job one is to listen and learn. Its important for me to know transparency what is going on down to our employees. It is all straight ahead on bloomberg best. Hello and welcome. This is bloomberg best. Your weekly review of the most important Business News, analysis and Bloomberg Television around the world. Lets stop start with a look at headlines. Global equity markets coming off their worst week since 2008, investors were already on edge and weak Economic Data from china did not help. Investors racing for more negativermoil after Coronavirus Development and according to the lowest level on record, its bikes around the world. Pmi data way worse than expecting. Got. 3 was what we startednever seen lows in the official number we got saturday, that also came in well below the estimates. Services 29ring, so point six, another record low. The worst showing a bit of science prompted by optimism that Central Banks will once again saved the day. He has signaled that he is prepared to cut rates. Of doj offered to buy 4. 6 sovereign debt. Certainly, the financial markets, turmoil of last week in what you are seeing is Central Banks on a friday that this it is alert that we get, very much in market stability. It looks like we will get a meeting tomorrow. There is nothing that they can do to cure any of us from the virus, but we have had an asset price shock in banks can attempt to dress that and they probably should and that is what the markets will want to hear. Markete a rally in the today, 4. 6 , the again we have on the dow, five point 1 , the since march 3, 2009. For more patients have died in the americas state of washington in a top disease expert says the coronavirus is likely to become a pandemic. The reserve bank of australia cut rates, expected a quarter of 1 . To discussce leaders the response to the coronavirus impact, promising by making no firm commitments. Marker expectations, the g7 use all so they would policy expositions for Downside Risk. They did not say when they would be applied and a market that had come into expecting an announcement of cut rate cuts is disappointed in that. Emergency made an rate cut up 50 basis once and says the virus involves risks. We are now seeing positive market. What prompted this rate cut . Strokebest thing is to throw strong medicine. If youre going to do an emergency move, you might as well do a bigger rather than a smaller step. We have seen spread of the virus in see it spread here a bit in the United States and we saw a risk for the outlook of the economy and chose to act. I think the market was going to do what was going to do whether or not the market was going to react or not. Turned to the bond market, i believe our target of 25 basis points a quarter of 1 on the long bone. 10 year yields following below for the First Time Ever on those fires fears. , one reason they have 10 year yields below 1 in equities falling off a cliff at the moment. Well oniden performing iner tuesday, which puts him what appears to be a straight fight with Bernie Sanders. For viceas a big night President Joe Biden who beat expectations and even able to pick off texas, but it is not over yet. Stop becomes it to this race becomes a twoperson race. Seen the coming together of the democratic establishment, the center of the ideological wing of the party. One week from now, a lot of important state states. Says it is of canada cutting Interest Rates by half a percent. Officials say they would act again to reduce rates of necessary. It is a pretty dramatic reversal. He was one of the few central bankers who did not cut industries last year, but clearly the concerns around the coronavirus have now begun to outweigh any Financial Stability concerns. Capitol hill negotiators have agreed on an emergency spending bill to fund the u. S. Government response to the coronavirus outbreak. It provides much more funding and President Trump requested last week. Stocks rallying, bonds rallying on hopes that governments will fight the coronavirus. We went down 2. 8 and on balance, we were higher than what we were on friday. I think it is safe to say it will continue to be a bumpy ride. Opec ministers conclude they are meeting in vienna. Also, the demand coronavirus, russia not on board. We dont know that the russians are on board. The have shown will russians come on board . The realt is when nittygritty of the kind of pain has become to discuss, how much will the russians be prepared to do . They have to do something. And continue to bounce slightly. Is partly evacuated and research tested positive for the virus. Me, there is no certain amount of money you can end on or the monetary side that will some this problem. What is more needed is get the test kits out there. Ands do the blocking tackling the government is supposed to get. The government needs to act like government when there is a crisis, not just sprinkling money your there. Bell, we areg closing with losses of more than are russell 2000 stop they moving out of the market, what is it telling you . People are selling and going to treasuries. It is not matter if you are offenses or defensive. Yields heading deeper into uncharted territory, investors reeling from a week of volatility after the payroll payroll report does little. Does it matter . It tells you about the underlying resilience of the economy for top it does not economy. It tells you ultimately about resilience. Strong innomic ace is the fundamentals of the economy are strong. We are going to see some issues coming up from the coronavirus, but i think it will be a temporary problem. The Administration Working on to complement that . We are looking for targeted measures that will do the most good in a short time, not large macro kind of solutions which dont have economic incentives and no permanent growth. We want to get through this and help folks as much as we can in a targeted way. Oppose theaid to plan to cut production, oil down seven plus percent. Work is continuing i can assure you. Like we might be hitting a bottom for stocks. Are we . I would not want to go on record saying we are. When you remove the markets entire confidence of what this outlook will be, it is like you have a house of cards. Everything collapses on top of that. Still ahead, as we review the week, Robert Kaplan on what comes next for the fed. Plus, initiative conversation with a new seo. And coming up, for the weeks top headlines. Creates a 50 billion fund to help the nation deal with coronavirus and set the stage for a coordinated global fund. They would do less than necessary. This is bloomberg best. Lets continue our global tour of the weeks top stories in business, finance and politics. A new chapter in the brexit begin as the u. K. And eu talks to define their future trade relationship. British and European Union officials will start hashing out a posttrade deal as negotiations of the future Partnership Open in brussels and bloomberg sources raised concerns that red lines on both sides could put the agreement in danger by early april. No one is surprised to hear it. He says he does not see a full need for convergence when you look at the european rules, june is what he said will be the deadline and is prepared to walk away without a trade deal if that is what it takes. They say nothing will be agreed on until everything is a great. Turkey says it wont stand in the way of refugees. Way migration could see covering which is artie grappling. From lot of heated words president erdogan and concerns about what this is going to do and some classes on the border. The turkey side is saying up to 100,000 refugees have left the country, but it is unknown if they actually entered the border with greece and bulgaria or whether they are stuck in no mans land. For months now, they have been threatening europe with opening its borders, saying it can no longer look up for a high number more isees because coming across the border due to the conflict in the is would province. The International Monetary fund held a News Conference on its projections of economic fallout from the rented the coronavirus. As i understand it, beside the News Conference, you also had a Conference Call with the top central bankers which includes, steve mnuchin, for example and we had met in regard as well. What was the tone on the call . Very serious commitment to take actions in a coordinated manner. Collectively first with the health system, the measures that are well targeted, third, attention on liquidity, so the message was better to do less thanto do necessary. South korea has joined the ands of italy in announcing economic aid package, including the you are seeing at and this bigbudget is being rolled out on top of an annual budget that was already the biggest on record. Really, it looks a lot like what others have already rolled out, targeted Financial Support for the response as well as the packages for businesses and households, especially low income and jobs. Pledged morehave than 50 billion to fight the coronavirus. Almost been entirely confined to italy. The eu is saying we are seeing ordination between member states, but each individual nations doing their own testing and own rules. After a week of political turmoil, a new Prime Minister who will that abruptly resigned last week after he decided he was the politician most likely to leave a majority in parliament. The extra minister has been the prosecutor over the 1mdb scandal. It was never really out of the picture and says he has the support to form a government. It is to more than you need in he wantst, so confidence right when Parliament Convenes again. Whether that means they go inside i could form a government, i can be minister or they go to a snap election, that is the way this things this thing looks like its heading. Warning Elizabeth Elizabeth warren ending her campaign today. An Important Development where herly were supporters go. It is unclear who she will endorse and unclear where her supporters will go. It now becomes a twoperson race mccollum between Bernie Sanders and joe biden. You are watching bloomberg best. Week, nissan ceo said down with Reed Stevenson for his First Exclusive interview since taking over the troubled automaker. He says he plans to unveil a turnaround plan in may and in the meantime, he is focusing on cost cuts while he works to rebuild the companys culture. Individual, ite is much more than what i know, so therefore, i and saying i the direction we can set up properly will be much better than what we are showing. Apart from costcutting, what investment do you think needs to be made in the business . Investment,lk about for instance, our human asset, that is something we have to continue and when we talk about the new business and the direction, the competency has to be inhouse. As you consider everything that happened with nissan over in past 18 months, it is not easy challenge for any executive and you have come on at the end of 2019, can you tell us a little bit about how you view the challenge and whether it has changed your view on whether success is reachable or not . It is probably going to be absolutely nested there he, but was there anything that surprise do about the scale of the challenges facing you and the company right now . It is my first time in the field so a lot of challenges unexpected, but day by day, i would like to further discuss with a understand how they are. Eeling about the company it is important for me to know transparently what is really having thoseafter or something to be together, i would believe the power comes from their. Strength woulder be [indiscernible] coming up, compelling conversations. Hong kongs financial secretary explains why the government is handing out cash in its latest budget. What a week it was for the fed, two important insiders next. Current not about the stock market. We can meet at any time and move at any time in this situation. This is bloomberg. When you move homes, you move more than just yourself. Thats why xfinity has made taking your internet and tv with you a breeze. Really . Yup. You can transfer your Service Online in about a minute. You can do that . Yeah. And with twohour Service Appointment windows, its all on your schedule. Awesome. So while moving may still come with its share of headaches. No kidding. Were doing all we can to make moving simple, easy, awesome. Go to xfinity. Com moving to get started. Beyond the routine checkups. Beyond the notsoroutine cases. Comcast business is helping doctors provide care in whole new ways. All working with a new generation of technologies powered by our gigspeed network. Because beyond technology. There is human ingenuity. Every day, comcast business is helping businesses go beyond the expected. To do the extraordinary. Take your business beyond. Bloombergback to best. Hong kong got another dose of gloomy Economic Data this week. Retail sales in january declared declined for the 12 straight month. That comes days after the government announced it will give cash handout to all adult citizens and permanent residents. We spoke with hong kongs financial secretary about the exceptional budgetary measures. Measures inal exceptional circumstances. People are suffering, businesses are suffering. Have a pretty handsome fiscal reserve, i think spending some of that help businesses and help people is in line with the expectation of the people. With a cash handout of this stop people from saving this in a bank or spending it overseas . They will spend depending on their circumstances. But we would encourage them to come out and spend, and encourage the business sector to inventive programs to tempt people to come out. What do you say to economists that say this cash handout is not targeted enough, that it is a drop in the ocean for many and you can use the same amount of money to help people in need . What do you say with to people with that view . People in hong kong like to have choice and in a difficult situation, i think individual circumstances very. Vary. By encouraging people to come out and spend at businesses and encouraging businesses to have incentive programs, i think of course,d depending on their own personal circumstances, would support us and hong kong. Around thetral banks world consider policy responses to the coronavirus, the governor of the reserve bank of india spoke exclusively with bloomberg this week. That he expects to work with other Central Banks on a coordinated action in coming months, and also believes the r. B. I. Has room to cut rate if Indias Economic situation warrants it. In a situation like we have today, coordinated policy action has become that much more important. One of the things we might be looking at is inflation coming down quite sharply from the relatively high january number, maybe even falling by a full percentage point between january and february. Does that take some of the pressure off and give you more room to respond . [indiscernible] decisions outside Monetary Policy. Cut, wenterest rate have said clearly we want a policy committee. Ive also said it in my minutes. There is space for another rate cut. That is one option available. Another option is in terms of supporting the markets by liquidity, creating confidence, or using various other tools or instruments to deal with emerging challenges. Ready. Perhaps the most consequential news of the week was the fed decision to cut rates by 50 points. Next weeks before the scheduled fmoc meeting. Movelked about the unusual and the path ahead. Lets talk with the Dallas Federal Reserve president , Robert Kaplan. If you had asked me two weeks ago, i was saying publicly, lets see how this unfolds and i will make a judgment at the meeting. It is too early to comment. What happened once the virus got to south korea and then to italy and it was clear there were diagnosed cases in the u. S. , for me at least, the probability of a material deterioration in the u. S. Economic outlook, the probability of that increased to a point where i came to the view that we would need to take action at the fmoc meeting. Then i felt that the situation was changing so rapidly that i thought it would be wiser, and i will explain a little bit why, to act now and only and boldly where it could make an impact. It will not help with the number of diagnosed cases and it will not get people to want to go out. It will not do anything about the containment reaction if the casessis the diagnosed spikes. If we have a severe slowing in the economy that lasts for eight period of time, accompanying that is likely to be tightening in financial conditions. What Monetary Policy can do is if we go into this with somewhat easier conditions, i thought and i still believe it will help to moderate or mitigate some of that inevitable tightening of financial conditions that will happen as a result of this spike in cases and the containment. So the judgment about the wisdom of this is more looking ahead to what is going to happen in the next 68 weeks, not what is going on right now. In that regard, i feel as confident today that we did the right thing as i did on tuesday, and i will say one other thing a number of people had a reaction because the market on the day we did it sold off. I will tell you, if the market had gone up that day, he would have given me no comfort whatsoever that we made the right decision, and by it selling off, it did not make me feel it was not the right decision. This is not about conditions right now or the current stock market. It is about mitigating a tightening of financial conditions that will likely happen some number of weeks from now, and increasing the likelihood that as we come out of the situation, we can come out more strongly. Have done a lot since your 50 basis point cuts. 40plusdown by 2 , downward move on the 10 year. Anything changed for you since four days ago . Obviously theres a lot of volatility in markets and that is not surprising, everyone is trying to get a handle on how to price in trillions of dollars of stuff all around the world. I think we are all struggling to understand what the effects of the coronavirus are. I am not surprised by volatility in markets in that kind of situation. Powell said, jay cut to restore, not to be rude, but you failed. Is there anything a central bank can do to save face out there . I think we correctly positioned the policy rate given what we knew as of the mondaytuesday timeframe. We are willing to do more but we are monitoring the situation. Moven meet at any time and at any time in this kind of situation. Like we are playing this exactly as we should. There is Downside Risk to growth and we will see how it plays out, it kind of seems like the market is pricing in the very worst case, ok, but we will take that on board and monitor this day by debuted day by day. Have you ever had less visibility than you do right now . There are times of uncertainty you can point you in the past that are similar to this. We have had viruses in the past. H1n1, sars, ebola. There are precedents, and i would prefer to stick to those precedents for this case and not make the jump over to other types of crises we have dealt with in the past. Youre watching bloomberg best. Lets resume our roundup of the weeks top business use with a focus on companies and industries. Airlines are taking a big hit from the coronavirus as companies restrict Business Travel and consumers. Carriers around the world are feeling the pain. Is cutting some shorthaul flights, mainly to them from italy. They have seen a significant drop in bookings in the late march and early april period. Just the latest airline to warn over the effects of the virus outbreak. British Airlines Says it can no longer given earnings forecast for this year. 25 ofsa will cut up to shorthaul flights in the coming weeks. Some of the developments in the last couple of months have demonstrated some airlines are disappointing disappearing. I think airlines will definitely fail. It will accelerate the demise of a number of weaker carriers. All of my experience suggests this will be a reasonably shortlived phenomenon. There is a little hysteria at the moment. The International Air transport association warned that the virus could cost 113 billion in revenue this year. Are seeing a customer demand crisis for the airline. And ae been tracking it lot of European Airlines have done this already and now we are seeing it in the u. S. United saying theyre going to flash domestic flights by 10 , and International Flights by about 20 . A lot of it has to do with transpacific flights. Jetblue is cutting capacity 5 . Southwest is cutting the revenue view. Declining customer demand. The air Transportation Association bracing for 113 billion in lost revenue. Lier this week that was earlier this month that was 40 billion. Airlines are gonna lose a lot of money. Boeing is apparently going on a hiring spree in anticipation of the return of a seattlebased factory. They are hiring in anticipation of a resumption of 737 max production . Exactly right. They have made a point of not laying off the 737 max workforce. It turns out that not only are they not laying anyone off, they are adding people. Theyve brought in about 737 machinists in the middle of december. The Company Thinks it will have a lot of work on its hands the next several months. It has said it will start production on the mask the max a few months before the end of the grounding. At the same time it will have 400 planes in Company Storage that need to be delivered to customers as well as roughly another 400 in the hands of airlines that need to be prepared for flight. General electric is warning investors and will take a hit from the coronavirus and they just came out with adjusted firstquarter profit forecast that misses estimates and sees about a 2 milliondollar cash flow from the industrial division. What we know relative to the First Quarter is we will see to 500 300 million million of headwind, and then operating pressure from the effects of the coronavirus, potentially into health care. Corporate chinas rise in the world stage, stepping up stakes in everything. The government has stepped in to take charge to help the repay debts of about 75 billion. What does this mean for hna . The end of an era, really. The beginning of the end, as we have seen it. They can no longer manage the big pile of debt they have, and over the weekend, the government stepping in and assaying they are going to form a working group with the company to better manage the financial liquidity of the company. A big challenge ahead of a, but it remains to be seen if they can steer the boat. Equipmentboratory maker making a 10 billion purchase. I think coronavirus is the link. Coronavirus helped this deal happen. The companies were in talks late last year when we broke the story, and they came out and said we are not reaching an agreement we like so we will call off the talks, call off the process. That was on christmas eve. You can imagine that ruined a lot of holidays, the shares tanked. They went back to them in recent weeks and reengaged. The deal iseasons happening now, the ceo said uncertainty helped the parties get to a price that was in between and helped get the deal done. Twitter surging today. Bloomberg reported at the weekend that Elliott Management is pushing for changes after taking a 1 billion stake in twitter. The changes could include replacing the cofounder and ceo, jack dorsey. How much of this is about jack and how much is about the product itself . I think it is quite a bit about jack, actually, and part of the reason i think that is because it has been brought up that he has two jobs right now, and being a huge issue and one of the reasons elliott is taking the stakes. Runs twitter but he also runs square and is splitting his publicly traded companies. There is the belief that if someone were to be a fulltime ceo at twitter, they could capitalize more on the business and usage growth they are seeing right now headed into a really important year. Twitter is in a position we have looked at quite some time. We have a lot of respect for elliott. The governing structure at twitter, having a ceo that is the ceo of two Different Companies is high different unusual. Is jack dorsey special enough to be the highly unusual ceo . He might be. Morgan says Ceo Jamie Dimon is alert and recovering well after emergency heart surgery yesterday. He suffered an acute aortic dissection, a potentially fatal condition. Felt chest pains before work and checked himself into a hospital. Life, ande saved his investors were concerned, especially given the fact that right now we have the coronavirus. Shares of jp morgan fell. Edward jones analysts said the bank is in capable hands, adding that jp morgan has perhaps the deepest bench in north american banking. Welch, former ceo of general electric, has passed away at age 84. At one point he was the opinion me of managed the epito managerial excellence. He did make some decisions that came under scrutiny but he pushed ge into a variety of businesses, including finance and media and at one point it was one of the most valuable businesses in america. Bloombergs subscribers can run the function on their terminals for our quick takes landing page. You will find the latest headlines from the bloomberg news, and analysis on companies affected by the coronavirus. Are about 30,000 functions on the bloomberg and we enjoy showing you our favorites on Bloomberg Television. I. B. They will become your favorites. Maybe they will become your favorites. This will lead you to our quicktakes, or you can get fast insight into timely topics. Here is a quicktake from this week. Decarbonization is a key factor in the fight against climate change. The goal is simple, to reduce Carbon Dioxide emissions around the world as soon as possible. Our planet cannot be saved must we leave fossil fuels in the ground where they belong. Decarbonization requires a Sweeping Change and incremental steps, working industry by industry, and every major country in the world. Sound expensive . It will be. But the Science Community agrees that to avoid global catastrophe, we have no choice but to mobilize and take on this monumental challenge. Energy like Wind Turbines and solar panels as long now along with electric cars, are popular topics. Other sectors are less discussed, and changes there are equally important for deke organizing the planet. Cement, steel, and agriculture. These sectors combined makeup almost 40 of carbon omissions in the world. In theon emissions world. Cement is the most widely used manmade material and existence. When combined with water and aggregates, it can be poured into whatever shape is needed for construction. It has been used for millennia to build roman aqueducts, the pantheon, highways, and lots of parking garages. Globally, production of cement accounts for about 7 of yearly becausesions, largely of how it is created. Requiresingredient limestone heated to high temperatures. It is usually generated by fossil fuels. Inside the kiln, even more co2 is released in the process. Reducees are trying to the amount of clinker use. The drawbacks are serious. These new techniques come with a price tag that sometimes triple the cost of the traditional process. Since cement is holding many structures together, alternative recipes make contractors or regulators uneasy. Andl is just as important, as cities grow, demand is expected to rise by 50 between 2019 and 2050. It involves purifying iron ore in blast furnaces with a refined type of coal called coke. In europe, furnace owners are Testing Hydrogen as an alternative to take carbon out of iron ore but it is way too expensive to go mainstream, about double the cost. There is one thing you can do with steel you cant do with cement, and that is recycle. The set of producing more steel in the first place, we can use what we already have, increasing the use of steel recycling. It is seen as critical to reducing carbon emissions. Agriculture requires a multipronged effort, as it is responsible for nearly 25 of global co2 emissions. The practice of controlled burns ther harvest and destruction of rain forests and even livestock flagellants all need to be addressed to put a dent in agricultures carbon output. Some hope can be seen in the u. S. As demands for beef products have dropped significantly. Additionally, interest in alternatives like beyond meet soared inat have recent years. Implement think Solutions Globally remains an uphill battle, even as more people in the europe and u. S. Take on vegetarian alternatives. Globally, consumption is expected to rise 50 . You are the last, best hope of earth. We are in the beginnings of a mass extinction and all you can talk about is money and fairytales of eternal economic growth. How dare you. It will take policy makers and companies years of diligent growth diligent work and collaboration to move the industry away from its polluting methods. Some executives are confident they can be green and show a profit. That was just one of the many quicktakes you can find on the bloomberg. Also find them at bloomberg. Com along with the latest Business News and analysis 24 hours a day. That is all for bloomberg best this week. Thank you for watching. This is bloomberg. Lender serves the clients in 170 countries and processes more than one million transactions a day across Asset Classes from currencies to commodities. The hub in dubai takes care of customers in the middle east and has been operational since 2009. We sit down with the ceo of saxo bank, kim fornais, in dubai