Transcripts For BLOOMBERG Bloomberg Markets European Open 20

BLOOMBERG Bloomberg Markets European Open July 11, 2024

Treasury yield target. Chancellor merkel looks to repair the transatlantic trade ties but bidens Irish Heritage threatens the u. K. s special relationship as his views around a hard border in ireland remains central to brexit talk. Welcome to the program, everybody. Just under one hour to go until the start of cash equities trading. Lets have a look at where users have us positioned. We saw a strong appetite for risk assets last week and that continues with the big news over the weekend about president elect biden. Point 21. 550 futures percent, echoed by ftse futures and dax futures. Buyave a sense of if not everything, buy risk and treasuries. We are not seeing full wholehearted embrace of the fixed income asset class this morning. This is what got on the global stocks outlook. Mastec futures outperforming. A lot of this had to do with hyden the optimism around what President Biden might do around stimulus although there is a senate conversation. What does this mean for reflation . We do need to focus in on what is happening with covid. The global fight against covid, the u. S. Fight against covid. We will continue to do that as we get to the program. Lets focus on the u. S. President ial election. Joe biden is preparing to take office as the 46th president of the united dates. States. Pres. Elect biden i pledge to be a president who seeks not to divide what unify, who does not see red dates and blue states, only sees the United States. Our work begins with getting covid under control. We cannot repair the economy, restore our vitality, relish ,ifes most precious moments days, weddings, graduations, all the moments that matter most to us, until we get it under control. Wanted tohe outset, i represent this campaign, to represent and look like america. We have done that. Who oflmost a view you who voted for President Trump, i understand that his appointment tonight. I have lost a couple times myself, but now, lets give each other a chance. The president elect will begin his transition by unveiling a Pandemic Task force today, signaling his policy irt after global infections top 50 million. Joining us now is ed ludlow. Good to see you once again. Hey busy week for everybody. Finally, we seem to have an outcome. Are we expecting Quick Movement on tackling the virus . The core ed this is policy priority for president elect biden and his team. That plan has been based around testing, tracing, and mass wearing. We expect him to name the 12 strong Coronavirus Task force that will include names like former fda commissioner david tesla, the former Surgeon General, and a source told bloomberg it will also include dr. Marcella nunez smith, a professor of Public Health at yale. We know as well that the biden team have been talking, according to sources, with executives from the pharmaceuticals industry, who are involved in operation warp speed, which is Americas Development plan for a vaccine. What is less clear is how much access the biden timo have for the Current Administration coronavirus given the President Trump President Trumps position on the outcome of this election. Another cause for concern is the General Services administration has not yet confirmed biden as president elect and that is important because until the gsa does that, his Transition Team cannot access federal funding and federal agencies as part of the transition progress so we are wanting to hear more about that as well on monday. Anna we might have to wait until december or january given what is happening with the senate. He heard from certain members of the Republican Party although not a clear picture, i would say, from the Republican Party, as to where they are at this point. President bush suggesting saying he has phoned and spoken to president elect biden and others to congratulate them so have we heard anything from President Trump then aside from the tweet activity over the weekend . Ed aside from the tweet activity, no. Publicly, as it stands, President Trump does not accept the outcome of this election. He goes a step further, saying he believes he won the election by a lot. Sources told bloomberg that within President Trumps inner circle, there is recognition not just that these legal efforts at the Trump Campaign are trying to deploy to alter the outcome of this election, but recognition that the Election Results stand. Although, we are hearing advisers including President Trumps own soninlaw, jared kushner, are still pushing the president to pursue legal avenues. A number of publicans including george w. Bush, senator mitt romney, have come out on Television Shows on sunday and said, ok, the president has his right to pursue those legal courses, but the u. S. Electorate has spoken. At the same time, you have the likes of senator ted kruse and Lindsey Graham also going on the airwaves, supporting the president , who maintains that there has been fraught in this election, malfeasance. It is important to underline at this point that there is no evidence put forward by the Time Campaign that that is the case. They are seeking Legal Recourse to basically halt votes in states where they are ahead or prevent votes from being counted the vice versa. At the end of the day, he is trailing in the states that have yet to be declared and biden is set to receive Electoral College votes putting him comfortably in a position to be president elect. Anna thank you very much. Ed ludlow joining us from san francisco. Global equities had for a record high amid optimism about the outlook under a joe biden president. Lets get into the markets with laura cooper, bloomberg market live strategist. It seems President Trump is still taking the legal course, but i read some views which suggest markets are trading as if this is no longer a contested election. What do you make of the early response to president elect biden . Laura what we are seeing in the price action is that there has been some pentup demand coming from investors so the fact that we do have some election clarity with resident elect biden, we are seeing global stocks really take that in stride and we are seeing Global Equities climbed to new highs. I think that could potentially be a nearterm story. The narrative can shift quite quickly just given the fact that a number of uncertainties will remains so yes, beyond the senate race not being determined until early january, i think focus will turn back to this surging virus count that we are seeing in the u. S. And the potential for tighter restrictions, and that overlays with the fact that we are not still in this period of fiscal gridlock so we are not necessarily going to get that needed Government Support in a timely manner as Downside Risks now. Anna the biden bump is present in asia. And futures suggests we will live another day of that. When it comes to the gridlock and hopes for stimulus or expectations around stimulus, some suggest we might have to wait until january to get clarity. This will be something that fixed income markets, treasuries, will be really focused on. Laura absolutely. I think it does capture the uncertainty that lies ahead. Onot of that is predicated said monetary support. That has been a key pillar underpinning risk sentiment so on so expectations are still the fed to step in amid this fiscal gridlock, and ultimately, this does portend to potentially the end of the America First narrative at least in terms of equities because equities are quite strong in terms of valuation and if you do actually see a divided congress, that could temper some of bidens policies and ultimately, that could lead to unchanged tax policies which could be favorable to european equities. It could potentially be less combative foreign policy, more favorable global trade prospects. Ultimately, i think that this does portend to a rotation away from iraq, notably as the virus count and gridlock will come into view, notably more in the u. S. Anna interesting to see Risk Appetite listing all kinds of assets including oil. Laura cooper, thank you so much. Birds market live macro strategist. London. P to 7 10 in risk assets are bid higher as they look forward to joe bidens presidency. Will they stay that way for long . We will speak with a representative from aviva investors, next. This is bloomberg. Markets will probably show that election. The lay of the election is not there either. They will try and gain exposure to Chinese Markets rapidly and they have chosen to gain that exposure through the bank consensus names. Yes, it does feel like a very strong, euphoric rally. There is a genuine belief that the equity premium is being attached the markets which were u. S. Centric or u. S. Connected and has gone down. Biden will be a little more nuanced about this. His room to maneuver is limited because the washington republican democrat Business Community are fairly united around the fact that the united dates has to do something about china and it tough. On theill be focused deficit between the u. S. And china, the trade deficit. Renewing the trade war is unlikely. Which is generally positive for equity markets. Looking more broadly, more conciliatory relationship with other countries, there would be less rhetoric about the trade balances generally, we think of it as a net positive for asia. Anna risk assets became more enamored with projected president elect joe biden in asian trading. The Bloomberg Markets live team is asking how far the rally can go. We heard some of the responses to that question. Send us your responses if you would like to be part of the conversation. Ib tv if you would like to have your say. How high can biden push these assets . Market check for you. Asiapacific up i 1. 3 . Futures pointing to the upside. Nasdaq futures even more so. We are joined by the senior Portfolio Manager for fixed income at aviva investors. Lets start with the question of the day. To you as well. How high the you think risk assets can go on a president elect biden . Markets are treating this election outcome as somewhat of a goldilocks scenario. That can certainly continue in the short term. There is likely to be or have been significant cash on the sideline that was waiting for the uncertainty to clear. I think that is in large part one of the reasons why we are seeing such a melt up in risk assets. Which this can continue depends on policy support going forward. We are seeing a third wave of covid infections in the u. S. That will need some fiscal response. Once net position squaring has happened after the election, investors are going to focus back on the things that were happening preelection and it to ongoing economic recovery, covid dynamics and government court. Word you mentioned the goldilocks. Equate that with goldilocks. That works when things are good but when things are bad and when things require action such as the fight against covid19, that gridlock might not please markets for long. Jub thats right. It is an important point that what markets would ideally have in terms of a covert response is one that is very proactive and we would be more likely to get that under a democratically wave down under the biden government where any policy response is much more likely to be reactive. For does really matter parts of the risk assets back from so things like cyclical equities, highyield credit, etc. , but the goldilocks dynamic that does support markets for the gridlock dynamic that supports markets is the fact that we are not going to see a roll in things like from tax cuts. But that are likely to stay with a loose policy and also not likely to see a significant rise in u. S. Treasury yields. Those are the factors that do support markets in a gridlock scenario. Anna no rising yields or risks to the downside. Goldman sachs facing the risk of lower yields hated 2021 get fiscal delay. What do you expect to see on the treasuries . Jub we expect there to be not that much to see, to be quite frank, in the treasury market. It looks quite range bound. We have the new wave of covid infections and that will definitely bring the fed at least into play and they will possibly deliver more qe either with increased purchases or by extending the duration. But at the same time, we are likely to see some more modest fiscal responses from the u. S. Administration and we are also awaiting results from phase three trials for a number over the next couple of weeks, so there is this push and call factor and treasuries going on at the moment. Its going to be something quite range bound and its difficult to see big moves in either direction. Anna you are holding various long inflation positions. To wind backme some of those inflationary trade . A bit more interesting than the nominal treasury market at the moment. We know the fed are going to do as much as they can to keep nominal rate low and support the economic recovery in that sense but that does not mean the real yields cannot move significantly especially now that we have an explicit average inflation targeting regime. Get more of an economic recovery, at some point over the next two years to three years, it possible we will test the framework if we see inflation above that target. The fed says we are happy to let this economy run hot and you could see a massive move in breakevens at that point so we positioned long for a number of reasons. Anna stay with us. Jub hurren from aviva investors. We will get further thought in our next conversation. Lets get the bloomberg first word news update with laura wright. Laura Vice President elect Kamala Harris is giving america a number of firsts. She is the first woman, the first lack person, and the first indianamerican in the role. Her husband will be the first man in the first jewish question person to be spouse to a president or Vice President. Firstle i might be the woman in office, i will not be the last. Girlse every little watching tonight sees that this is a country of possibilities and to the children of our country, regardless of your youer, our country has sent a clear message. Anna a chaotic weekend in turkey. Soninlawrdogans unexpectedly resigns one day after the Central Bank Governor was fired. He cited unspecified Health Reasons for stepping aside. He was widely seen as being groomed as a potential successor for erdogan. Thailand, they used Water Cannons to disperse antigovernment protesters in bangkok. Demonstrators wanted to submit positions petitions. Two people and one officer were injured. Protesters demand into the march after the police action. 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. Anna. Anna laura wright in london. Back to the markets for you. A quick look at where we are as we finally fully digest president elect biden now and this is what got on the dollar, a continuation of the dollar weakness trend. The dollar against the chinese currency, 655 is where we trade. The s p futures to the upside. 1. 6 to the upside. Nasdaq futures up by more than 2 . The pandemic shows no sign of slowing down as global covid19 cases past this is bloomberg. 15 million. Anna welcome back to the European Market open. Under 40 minutes to go into the start of the equity trading session. Euro stock future for trees pointing to the upside. The dollar continues to downtrend that was very much a chair of last week. The latter part of last week after we got over the earlier turmoil. The pandemic shows no signs of slowing down. Past 50 million. We have europe as a hotspot after being the epicenter earlier this year. Jub hurren from aviva investors is still with us. Interesting to think about how we translate the fight against covid into your strategy. You are constructive on credit. We are in particular are you constructive at point . Jub the most attractive part is highyield. Well in anticularly ongoing economic recovery and while that is likely to look and be over the next couple of months, over a more mediumterm view, we think the right way to be positioned is for an ongoing recovery, but the dominant factor in the credit markets is the Technical Support as it has been for the past six months or so. We had significant qe sliding into the market now with both the fed and the ecb buying corporate directly. Example, there is a negative net supply as the ecb are bound to credit. That does filter through quite meaningfully into the highyield market. Spread keep a lid on any widening as a result of growth downside over the next couple of months. What is the significance of the second wave of lockdowns we are seeing . Tougher measures in many european countries. Can economies week havoc from the first law and through the second or do we risk a doubledip . Jub the clear risk is a doubledip and it is likely we will see significant hit to activity in q4 has a result of these fresh lockdowns. For markets, what matters is not just what is happening but also what is happening on the other side of things with policy support and that does remain in place in europe. The ongoing support via Job Retention schemes, that remains in place through 2021. I thinkets, has the the impact will be incrementally smaller. It is much more of a known entit

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