Transcripts For BLOOMBERG Bloomberg Markets European Open 20

BLOOMBERG Bloomberg Markets European Open July 12, 2024

Amid consulate closures and arrests over spying allegations. Ray dalio warns the capital war could hit the dollar and gold source to a record high. Ryanair says its biggest fear is a second wave of the coronavirus as the Airline Reports a loss for Quarterly Earnings as the u. K. In forces a 14 day quarantine on travelers from spain. Plus, sap plans to spin off its Consumer Survey unit two years after buying the firm. It also beat Free Cash Flow forecast for the year. We are under an hour away from the start of the cash equity trading in europe and the picture, firmly risk on which might seem a little counterintuitive given we are seeing gold at record highs but this is the state of play. Euro stocks futures called 1 5 of a percent higher. Travel stocks could be active given the decision to impose a quarantine on travelers returning from spain amid increasing concerns of a second wave in the country. Ftse futures called higher by a similar margin and s p 500 mini futures in the u. S. , underscoring a wider trend. The index dropped 2 in the last two sessions of last week, a bit of a turnaround. Blockbuster earnings really only start to come tuesday with pfizer and mcdonalds. Bank stocks, developments on a rescheduled congressional hearing on antitrust. Much to as you say, digest. All the reporting earnings on top of that, the resurgence from china to spain in cases. Across assets, a lot of movement. The bloomberg dollar index, down. 6 . We are seeing massive strength in the yen and euro. Gold, a fresh record. Third major spike in modern times. Treasury yields little changed, but approaching the slowest weekly close. Coin inhrew bit because we are back above 10,000. Lets get the first word news. Laura spain is criticizing the uks decision to quarantine holiday goers over a surge in virus outbreaks. Spain is a safe country and working hard to keep infections under control. Airlines Like British Airways and easyjet also hit out at the decision, saying it adds to more uncertainty for their industry. Europes economy is set to outpace the u. S. Thanks to different responses to the coronavirus crisis. Surging cases in america are putting the brakes on its rebound, but in europe, many former hotspots have reopened without a similar spike in infections. The success may encourage people to spend more and businesses to invest. Callsis slamming what it forced entry inputs houston consulate by u. S. Personnel after officials ordered the office to shut. China says the move breaks diplomatic conventions and is bound to respond as necessary. The u. S. Has lowered its flag over the american consulate in the chinese city of chengdu. It was ordered to leave in retaliation to the closure of the consulate. Ray dalio said the conflict between the u. S. Could expand. He tells foxnews washington and beijing could face a capital war. He warns of he says there could even be withheld bond payments. He says policy like that could harm the dollar. Global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. This is bloomberg. Yousef thank you, laura wright in london. The dollar is extending its line with calls rising to a record high as investors look to the upcoming fed meeting. Quite a few drivers. Lets get to bloombergs mliv currency and rate strategist. , gold strengthens and dollar expected to weaken. What have you been piecing together as the currency takes a hit . I definitely see more downside for the dollar, no question about it. All the while, since the start of march, the dollar was bid but it has had a distinct overturn of late and if you put that together with what is going on with the euro and the yen and all of that, there is more side for the dollar, maybe 4 to 5 from current levels. Where do you see the impact of the direction of the dollar . Thet going to be the fed, virus, or the election because if you look at the dollar, it is little changed ahead of the 2016 alexion. Election. Ven i would think the dollar is in for a phase of weakness for the reasons you mentioned. The virus, trade tensions, and all of that. I see that happening maybe until the end of september or early october as investors prepare for the u. S. Elections and going into the u. S. Elections, i think the dollar may be bid again. You look at real rates and they are negative. That arguably is going to be another impetus for gold going higher. How sustainable is even a slight move above the 2000 mark . Gold has plenty of upside over the mediumterm. Pretty much all the factors that guide the trajectory of gold like real rates, 10 year nominal rates, and the value of the dollar are all headed lower. That means there is further upside for gold. My own modeling shows the fair value of gold is about a little shy of 1800 an ounce and given golds latest price of 90. 32 announce, investors may be tempted to take money off the table first, but there is no denying that gold has upside from here, particularly if the u. S. Economy goes downhill, taking down with it u. S. Tenure rates 10 year rates and the dollar. Do you think we are going to continue to see more bitcoin strength . We going to see gold to the upside . Ven that is entirely possible because as you mentioned, some investors see it as digital cold and as long as gold and as long as gold keeps going higher, bitcoin values may go higher as well. Keep in mind, im not a big believer in digital currencies, but as long as gold keeps going higher, bitcoin make it going higher as well. Not to mean there is value in bitcoin, but it is just a coincidental move with gold. Annmarie ven ram, thank you for joining us, of mliv currency. Larry kudlow sees a positive picture and thinks a vshaped recovery is still possible. More on that next. This is bloomberg. Yousef welcome back to the open. 50 minutes away from the cash equities open. Lets get to the Bloomberg Business flash and talked to laura wright. Laura sap is selling its stake in the qualtrics unit through a u. S. Ipo less than two years after buying the fund for 8 billion to compete with salesforce. Sap will keep a majority interest in qualtrics. It will give the business greater autonomy. Hsbc is denying it framed huawei and said it didnt start a u. S. Probe into the company but only provided information to the Justice Department when it was compelled to do so. The lender is hitting back at allegations it was involved in the arrest of huaweis cfo. Bridgewaters former cochief executive is accusing the firm of threatening to withhold her deferred compensation and after she went public with gender discrimination allegations, shes been negotiating for three months over her exit package. The fight has allegedly dragged on because bridgewater offered her less than managers that werent her senior. Annmarie the u. S. Economy is set for a bounce according to white house economic adviser larry kudlow who told cnn he expects 20 growth for third and fourth quarters under the impact from hotspots in the sun belt is likely to be limited. Has put thean party stimulus bill to replace 70 of lost wages for jobless individuals. House Speaker Nancy Pelosi says the proposal is too complicated. We are joined by the chief economist. The u. S. Economy is forecast to plummet 35 on an annualized basis the Second Quarter get larry kudlow says we are seeing a boom in auto sales and housing. What do you make of his remarks . We do see some recovery nevertheless with the outbreak or the resurgence of some cases, especially in southern states. Economic activity will be affected in q3 as well. We forecast for q2 an annualized decline of 24 to less market isc and the focused on the q2 number that will be published this week. Yousef the europeans put the bar high in terms of what to mold anden it comes to aggressive stimulus plans and you look to the United States now and they are going to have to come up with something equally impressive. Fromare we likely to get congress in the coming days . Even from the fed, for that matter . Expecting a new of 1. 5 trillion, the market is anticipating one trillion. It is necessary given the resurgence of uncertainty in the economic data. For example, consumer confidence, mainly on the fear of new coronavirus cases. If the market is already pricing in a u. S. Fiscal stimulus bill, is now a dangerous time to be bullish on these markets . From ahat we do think tactical allocation point of view that the dollar is under pressure right now and it will continue to be under pressure because interestrate differential is certainly not favorable for the u. S. Dollar and we will certainly here on wednesday from the fed that Interest Rates will remain low for a very long time. Weve seen some record low yields in u. S. Treasuries and im thinking of the fiveyear, but weve seen other key metrics. Fall along the curve, coming a little bit lower. Is that going to take another ideor step to the downs even though other assets are pointing a different direction . Gero we see a flight to safety in assets in u. S. Treasuries, you also see the dollar is weakening state significantly against the g10. Nevertheless, we think the fed is going to signal again that it will remain very accommodative for a very long time, even though we are not getting new dot plots on the trajectory of economic conditions, but the net purchases by the fed are going to remain at the 120 billion a month rate. Annmarie the former president of the minneapolis fed had a Bloomberg Opinion piece. He was saying the fed wants maximum pressure, they should target getting americans back to work, but many expect the fed will be targeting inflation. Do you favor one or the other . What do you think is more effective . It is artainly on, Monetary Policy that the fed is doing. The first impact is certainly on monetary indicators and inflation certainly is the monetary indicator for reflecting price changes. What came out, especially from the minutes in the june meeting is the fed is discarding yield curve control, the rba in australia, negative rates like we have seen in europe but it will focus on forward guidance. Interest rates will remain very of and here, the symmetry the inflation goal will be important so we think chair powell might give further hints the fed is accepting inflation would remain above 32 target for some time to equalize the undershot weve seen on inflation. Greenbackth the making moves lower the way it is right now, you start bringing out some of the older textbooks, recent playbooks in terms of what does that mean for other Asset Classes and you begin to wonder whether that correlation is going to come back. Lower dollar, risk assets, stocks get a lift up. What do you think . In ourure, i mean tactical allocation, we favor relative to the u. S. Stocks, european stocks. We like emerging market, particularly chinese stocks because we do think these markets are somewhat ahead of the u. S. And the stimulus will be impacted more quickly in these countries compared to the u. S. Yousef gero jung, chief economist at Mirabaud Asset Management, we still have a lot to get through. Lets get a preview of what is around the corner. We will get into some of the key calls when it comes to some of the other Asset Classes. This is bloomberg. Yousef 40 minutes away from the cash open, you are watching the open. The state of play. Risk on for the most part across key metrics and the equity space. 1 for ftse 100 futures, moved but the the cac futures euro economy is said to outpace the u. S. In the race to recover from the tigris virus thanks to its response to the pandemic, lockdown measures across europe may have caused a deeper Second Quarter contraction in the United States recent measures of activity suggest they were stronger recovery is underway. Jpmorgan says it will do better because it has broken the chain links to the mobility of the virus. The chief economist at Mirabaud Asset Management is still with us. We put together a chart that clients can pull up on gtv comparing u. S. Gdp expectations to european ones. Do you agree and subscribe to that more positive interpretation of potential that appoints . Gero sure, and we have concrete evidence in recent days. Maybe on friday, we saw the pmi showing positive and rebounding quite strongly, which is encouraging. We also look at highfrequency data provided. This shows in europe, we see some significant rebound, better activity, more mobility across different parts of the economy. The u. S. Is lagging and china is improving strongly as well. Point ina points do the direction that europe is likely to fare better than the u. S. Annmarie i want to ask and push you want at a little bit. There is data pointing to a stronger recovery in europe versus the u. S. , but what about the fact that the u. K. Says if you are returning from spain, you have to selfisolate for two weeks. Could we see that another cities . Will that shake your view on europe . Gero certainly in spain, 13 of gdp is related to tourism in spain and it is certainly have an impact on spain but also a also on u. K. Activity because people are likely to be more reluctant to go, giving you whereuponuncertainty returned you have to stay home for two weeks and selfquarantine are not. That certainly increases pressure on certain industries. That is one reason i remain concretely underweight in airlines, especially in europe because we think the crisis is not over and this uncertainty will remain in place for some time until we have a vaccine basically. Yousef weve seen quite a bit of euphoria after the passage of the recovery package. Bold and brave as it might have been, now the next key milestone is going to be various points of execution. As iat my real risk here look to allocate into some of these european stories . Gero what we do think is the agreement we had at the eu level was a very Fortunate One because it was certainly a time when and rules were broken neutralizing debt was maybe unthinkable three or four months ago and gives flight to a new euet class because when the issues bonds, it is going to be aaa rated. Last, the fragmentation risk is declining because of the probability that one country lead to a decline with this package. We remain in relative terms were optimistic on eurozone assets, he including the euro. Annmarie about switzerland, given the fact you work for the smb, the u. S. Could potentially label it as a currency manipulator as it meets the requirements index report. What does this mean for future Monetary Policy and where do you think this impact the swiss franc . Gero what we do see concretely in markets is the dollar is depreciated more than 3 since the start of the month against the swissie, but what recent data has shown is the s p was undeterred to intervene because we were quite strong since the start of the year. Has significant pressures but we saw it was intervening quite massively. Reachedt euroswissie 105 levels, though not a specific level was targeted, also worth pointing out but if recent experience has shown, and these are special times under these circumstances so there are three criteria for the u. S. Treasury to designate a country as a currency manipulator. It is probably not on top of the u. S. Treasury agenda to designate switzerland as a currency manipulator. Annmarie im looking forward to the next report. Gero jung, chief economist at mirabaud, thank you for joining us this monday morning. Is concerned a second wave could push recovery back until next year. We will get the breakdown in the Budget Airlines quarterly numbers. That is next. This is bloomberg. Yousef welcome back to the open, 30 minutes away from the start of cash equity trading. We are friendly risk on and some of these key equity metrics. Currently, ftse futures just above the flatline, giving away some of the earlier gains. A big week for European Bank earnings. Lets get into that. It comes amid the fallout of that coronavirus pandemic and limited forward visibility. On wednesday, we get the result from barclays and dull two deutsche bank. So this is a heads up of what is around the corner. Santander was going to be around the big lenders. On thursday, watch for earnings from credit suisse. The focus is on cost management, capital, and any dividends. Thats after arrival said it would resume buybacks as soon as next quarter. That also gets results from standard charter, lloyds, and to top it off, bbva. Then you have bnp paribas reporting in france, paris. Out forthe u. K. , watch natwest will be lord. Annmarie its going to be a slew of earnings, as well as big tech, big oil, etc. I want to turn to aviation now. Ryanair reported this morning and they say its biggest fear is a second wave of the coronavirus. They booked 185 million euro loss as the outbreak largely put an end to the september holiday plans. The u. K. s decision to add quarantine restrictions on travelers from spain will likely only make it worse. We spoke to the cfo. Take a listen. Guest youre not going to see profits. Youre going to have to look into next year before you see a recovery on that front. Annmarie joining us now on the phone to discuss, sid. Thanks for joining us. What are the Key Takeaways you found of these numbers from ryanair this morning . Sid good morning. So, the biggest takeaways at the moment are the fact that there are going to be localized quarantines and essentially airlines are seeing more delayed bookings of flights. Ryanair said he does see demand, but it is loaded towards the flights. The onesntly, reimposed in spain will have some impact on demand and customers preference of flying. Theyre also concerned about a second wave of coronavirus, which would be devastating for Airlines Across europe. Yousef what surprised me is that ryanair still has quite a bit of support from analysts, 18 buys, three holds, just two sells. What is the read across other Budget Airlines here . Sid sure, so across the industry, everyone is counting on some recovery for the summer. And given that ryanair and other Budget Airlines are pretty much focused on into europe flying intereurope flying, its going to take the longest to recover. Essentially, analysts are expecting much more from the Budget Airlines as opposed to longhaul carriers. Ive pretty much given u

© 2025 Vimarsana