Transcripts For BLOOMBERG Bloomberg Surveillance 20240713 :

BLOOMBERG Bloomberg Surveillance July 13, 2024

Down the fort. Action, and as well in those money market funds. I was looking at the statistics. Money market funds pulled in 150 billion this week, while surpassing the peak of 2008. That is where we are seeing the stresses this week. Everyone just wanted cash. Francine whats amazing also is that the conversation started with small and Mediumsized Enterprises that may actually need support. Are we going to have governments take over in chunks some of the Big Companies to make sure they are safe . We will have plenty more on the markets and the economics of things, but lets get straight to the bloomberg first word news in new york city was Viviana Hurtado. Viviana the highest death toll from the coronavirus is in italy, surpassing chinas numbers. Italian fatalities topping 3400 is a nationwide lockdown continues. Europe remains at the epicenter of the disease. France reporting a 41 rise in deaths. Spain, an increase of get percent. Now to the state of california, and governor gavin newsom. Hes ordered all of the states 40 million residents to go into home isolation. The move is the most stringent measure in the u. S. So far to curb the spread of the disease. It allows people to leave their home for groceries and medicine, but otherwise, requires limited social interactions. Businesses not deemed essential are to be shut. The cap negotiators of postbrexit trade talks between intain and the eu are now isolation. David frost isolating himself, according to a british official. Mr. Frosts counterpart Michel Barnier announcing on twitter he tested positive for the disease. Sellingtors stock in january after receiving private briefings about the coronavirus. This sparking concerns that they put their financial above the completed sales ahead of time when the white house was downplaying the threat of the outbreak. They denied any wrongdoing. Global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. Im Viviana Hurtado. This is bloomberg. Francine thank you so much. That was, theres a little bit of relief when it comes to stocks. The dollar actually ending its rise for now. Overall, this is the picture in europe. They are gaining some 4 . I think it started in the u. S. Yesterday when you had some Companies Like twitter and netflix rebounding by at least 5 . It is not over yet. I think what traders may be looking at today is reassuring words from President Trump, asically trying to sure people that he is helping during the crisis. The mood can shift, but certainly, it is a very big different from what we saw yesterday morning. , theean bonds, also italian 10 year at 1. 57 . Taylor it was the best day in a while for most countries across the board. As we await the u. S. Open come also looking like an improved day. A more constructive for percent tone, and that means youre still getting a drawdown in yields on the 10 year, back down to 1. 03 . Youre seeing buying in both risk on an risk off sentiments. One notable thing we have been talking about all week, for the first time in nine days, the bloomberg dollar index is finally weakening after seeing record strengthening levels yesterday. King dollar certainly was the place to be. The vix down at 65. Certainly feels less panicky than at 80. Francine it certainly does. Lets now get straight to mark haefele, ubs Wealth Management global chief investment officer. He always has great insight and perspective. What can we be sure of right now in the markets, that we are going to see a lot more volatility, or that Central Banks and governments have kind of put a floor to the bottom . Much,well, thank you so francine. We have to start by big knowledge and human tragedy here, and the job losses that are already starting. Numbers of my own family in the american heartland have been laid off, two weeks of pay. Thats one part of it. Toall know what it means bend the curve, but i think the real question is, can governments fill the gap . Theres a lot of analysis out there, and talks of cuts to economic growth, but what we wanted to do was really think about this from an investors perspective, and what it means when you put together the growth downgrade, but with that policy that has been rolled out, as you said, and of course, the Federal Reserve has rolled out its entire Global Financial crisis playbook in three days. Withe has gone well beyond the pandemic emergency purchase program. To put have these plans very large fiscal stimulus in. 16 of gdp in the u. K. But is that enough . That is what we focused on. What we are looking at is if you want to pay the half of the small and Mediumsized Company ,mployees out there per month we think that is a little bit less than 1 of gdp. Add in some bailouts for larger companies, and we are looking at the governments need to fund between 1 and 2 of gdp per month. Think about some of these bailout packages. If they are effective, they do have a runway of more than several months in the plans to fill that gap while these mitigation efforts begin to take hold. Scenario, this does take a while, but the support is enough to prevent us from a meltdown. Thatine are you confident if there is more of a downturn, and we are seeing in italy lockdown efforts have not 100 fully worked, so they are going to lock down a bit more, but if this were to be the case elsewhere, do Central Banks and governments have more firepower to throw out the problem just throwat the problem to at the problem . We do know they have more [no audio] francine i think weve just lost him. Happens, as we try to keep all of our people safe. Couple ofhad a thoughts about where risk premium is. We will get back to mark haefele as soon as we have him on the line. The other story is what is happening with oil. I know youve delved into that quite deeply. We heard from russia, saying this is blackmail. They are not going to play the game the saudis one them to play. So watch out for a leg lower on oil, and also what that means for the global economy. Taylor u. S. Shale producers in texas start to cut output. I was hearing about 10 or so. That would be significant. I was hearing from our Annmarie Hordern earlier about how that would be a big help. Mark had really smart scenarios in both the upside and downside scenarios. The best Case Scenario for him would be a vshaped recovery, and theaped, a u, Downside Risk, looking at an lshaped scenario. Looking at government transfers back to the private sector of gdp to really help boost this economy as we go into lockdown mode. Have a lote will more about that shortly. Coming up also on bloombergs the open, it is a conversation with mom adele arian with mohamed elerian. York, 1 309 30 new in london. This is bloomberg. The oil price roiling Global Markets looks set to continue. We had a bloomberg scoop yesterday that said russian president Vladimir Putin will refuse to submit to what the kremlin sees as blackmail from saudi arabia, according to bloomberg sources. For more on that, we are joined by our Annmarie Hordern. The words were pretty strong. If russia now sees saudi arabia is blackmailing them, theres no chance we are going to get opec back in place. What does it mean for the price of oil . Annmarie pretty much everyone on the street is saying prices are going to dip below 20 a barrel. People i am speaking to say on wti, you could see single digits. With this incredible scoop from our moscow team, basically they are saying that russia does not want to be the ones that blink first. Theres a line in there that talks about they would be willing to come to the table, but i dont think putin is going to be the one to pick up the phone and call the crown prince first. He handles himself is this strongman. We have seen time and time again that this is someone who just doesnt give in. Francine we heard from President Trump. Is there anything the u. S. To try to mitigate the situation . Annmarie first, as you say, President Trump said yesterday he is aware of the situation with opec, and that they have power over it, and critically, he says he will intervene at the appropriate time. The second thing is that texas, for the First Time Since the 1970s, is potentially willing to cut production. That would be massive, and really would be viewed as a huge win for riyadh and moscow. Taylor for u. S. Shale in texas, that is a big deal if they start to cut output for the First Time Since the 1970s, as you mentioned. Is that an indication of how much pain it is to be 22 a barrel . Annmarie yes, completely. If you look at the permian prices, it is 16 and change. You can buy a barrel of oil for cheaper than going out for a steak dinner. We see everyday, s p, moodys, they are cutting these companies. Theres going to be less spending. Everyone says theres going to be consolidation in shale. The fact that the railroad commission, which is actually not railroads, but his oil and gas in texas, is saying that potentially come of this is what we should be doing, we should be cutting, is huge. Taylor what is consensus on any further Downside Risk from here . I keep hearing we could do 12 a barrel, and i also hear that this feels like a floor and theres not much further Downside Risk. What is it . Annmarie i think because you see a lot of statements about oil is going to be ramping up, but april is when it is physically going to be in the market. Thats why everyone is saying this is just the beginning. You will see a downside to the price when we see those physical barrels of oil come onto shore. Taylor we thank bloombergs Annmarie Hordern for staying on top of all of those. Bloombergn daybreak americas, a conversation with lori calvasina. At 8 00, noon in london. This is bloomberg. Francine this is bloomberg surveillance. Lets get straight back to mark haefele, ubs Wealth Management global chief investment officer. We were talking a little bit about what Central Banks have done so far, whether they have put a floor under these markets. My question to you now is how much more can they do without going into the danger zone . Ts you worry that this ge worse, and we could see a depression . Mark im not worried about that right now for a couple of reasons. First, when the fed first announced last week or last week and what they were going to do, there were some questions about their authority after doddfrank and some things. Those were answered, and as you guys pointed out, right down to supporting the money markets. Secondly, these government stimulus is that have been put forward are of sufficient size to carry the kinds of government shutdowns we are seeing for months and months. There is a scenario out there, if we get to august and we dont have containment and we are on severe lockdown, that they are going to have to come back and say can we really fund this, but that is a ways away. Again, china has shown stability in eight weeks. If the west can do this by july, that is something us to consider. Francine what are you telling your clients to do right now . Do you go to gold . Do you go into cash, or do you stay invested . Mark everybody is trying to scramble for hedges. As you know, it is the kind of or somethinguts like that, that is too expensive. The number one thing you can do to hedge right now is asset class deficit and global diversification. There were seven pandemics in the last century. There were wars, revolutions. The only people who really suffered in a recoverable total loss or those who were concentrated in one country. Thats the first thing. I think there are a lot of opportunities we are looking at. The 5g rollout in asia, for example, that is something that what we are seeing in life after this virus is more money is going to be directed towards online consumers, cell phones, things like that. We certainly see those kinds of opportunities. Another one that people may not think about right now, but remember, the best time to be a private Equity Investor was when there was a lot of stress in the market. That was the time to be signing up to be one of the investors. So that is another thing we are looking at. Also, we have seen that assets like u. S. Highyield and emergingmarket sovereign bonds that are dollar denominated, they are pricing in much more of a downside scenario now than some of the other asset classes. That makes some sense, that these kinds of assets would come out of a downturn faster than some of the equities. Class asset diversification sounds good in theory, but we have seen a massive breakdown and correlations this week. Then what do you do . Mark this week, we saw a lot of deleveraging. It in this, you saw huge dollars bike, hedges were not working and people needed to buy treasuries into dollar spike. It took a couple of days. That liquidity crunch is being eased, and there will be some normalization. In that case, as you also know, the gold broke down as the hedges fell, although we do think as some of that normalizes, gold can also appreciate because it does remain something of an insurance policy for nervous investors. Earlier this year, we were all complaining about heightened valuations, with the s p trading at more than 20 times forward pe. Now at about 13 and a half, devaluations look good . Mark valuations look much better in our base case, but the s p 500 can start to trade on forward projections of growth themarnings closer to 2650 where it is now. Than where it50 is now. That is as restrictions on travel and work remain until midmay, and that the stimulus efforts are not perfect in preventing layoffs and bankruptcies. What do you do with currencies . Are we going to see more volatility in currencies, or inequities . Or in equities . Mark i would say the number one thing people should be looking at is the pound because that really had a downturn versus the dollar in this liquidity squeeze. Should the centralbank action work, believe some of that pricing will normalize. Francine thank you so much. He is mark haefele from ubs. On that call yesterday with the bank of england, explaining some of those moves with the pound, those were on the movers on lockdown in london, which would also hurt financial services. We have a big current account deficit in the u. K. , so you will see dollar moves because we have a much more open economy than others. This is what i am looking at in the markets. A little bit of respite. We are also hearing from germany, setting up a 500 a 500n setting up billion euro rescue fund. We are hearing this from the spiegel, usually a reputable source. Taylor we go from a bailout over there to conversations of more bailouts here in the u. S. As we await our third stimulus package that could come hopefully within the next few days. We look at how that is translating into the equity market. A firmer, more constructive tone today within the s p 500 after surprisingly, no big down moves in either direction. We will take after this week. The 10 year yield coming down 10 basis points now to 1. 04 . The bloomberg dollar index coming off the record strength we saw yesterday, weakening here 1. 2 . This is bloomberg. Is bloomberg surveillance. Moments ago, crossing the bloomberg terminal, germany wants to set up a 500 billion euro rescue package for firms in difficulty because of coronavirus. This comes on the back of interesting comments from german finance minister olaf scholz, also putting his weight behind putting stakes in German Companies to help offset the impact of the coronavirus. We will have plenty more on that throughout the day. Now lets get to Viviana Hurtado in new york with the bloomberg first word news. Viviana we begin with the highest reported death toll from the coronavirus. It is in italy. That country surpassing chinas numbers. Italian fatalities now topping 3400 as a nationwide lockdown continues. Europe remains the epicenter of the disease. France reporting a 41 rise in deaths. Spain, an increase of 21 . The top negotiators of postbrexit trade talks between britain and the eu are now in isolation because of the coronavirus. After showing symptoms of the virus, u. K. Chief negotiator david frost isolating himself. This is according to a british official. Earlier on thursday, mr. Frosts counterpart Michel Barnier announcing on twitter he tested positive for the disease. President donald trump has waited into the Oil Price War between saudi arabia and russia. The president said he could intervene, and wanted to break the deadlock. This as he faces calls from lawmakers to help the domestic oil industry. Yesterday seeing the biggest spike in oil on record, following the lowest settlement price in 18 years. We end with Teva Pharmaceuticals planning to donate 6 million malaria tablets to help u. S. Hospitals. It is a drug that has been touted by President Trump is a potential treatment for coronavirus. The Israeli Company is one of the largest producers of the drug. Global news 24 hours a day, on air and on quick take by bloomberg, powered by more than 27 hundred journalists and analysts in more than 120 countries. Im Viviana Hurtado. This is bloomberg. Taylor thank you. Ive been desperate to get some smart analysis on what is going on within u. S. Equity markets, and of course, the dollar that we keep talking about. Joining us now is Patrick Armstrong, Plurimi Wealth cio. Note,reading through your and there is one line here that stuck out to me. All it says is, u. S. Strength has been shocking. Says is, usd strength has been shocking. Walk us through what has been happening with the dollar. Plurimi we didnt expect patrick we didnt expect it to look like this. Is basically the safest place right now. No one wants duration, equity risk, or cred

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