Transcripts For BLOOMBERG Bloomberg 20240703 : vimarsana.com

BLOOMBERG Bloomberg July 3, 2024

Thermometer but the correlation to equities bonds is really rich. The team leave for me on a monday morning is i see japanese yen just creeping ever so slight. It is just a bit of a weakness. Jonathan 149. 74 at the moment. We averted a shut down and we will get payrolls friday. Ultimately we will do this again. Lisa i cant wait until november when we can do it all again. What i find interesting is the threat of higher rates and the lack of economic weakness on the heels of a Government Shutdown is what is spurring the concern in markets today. All of the sudden people are taken the bond who seriously. Jonathan energy prices, rates, apparently this is the quarter when this consumer frame begins to crack. Tom is the basic theory and then you talk to optimists and there are a number of them and they say no, you saw that in september. I had a great conversation with neil by the neal dudda. He said is not about 4 growth it is tuition to issue two ish. Jonathan jane fraser at city talking about people with though Credit Scores seeing weakness. It is there. How big it is going to be and whether it grows in q4 is the big question we need to ask. Lisa does it grow enough to reduce the Inflationary Pressure in certain areas. The Housing Market is dealing with a lack of supply and you have Services Prices that have hung in there. If you have inflation rate pressure and weakness, is it enough to achieve what the fed is looking to achieve . Jonathan here is the price action at the moment, the s p 500 was positive then it fades. We are up by 0. 06 and going nowhere. The 10 year, 4. 63. 11 weeks of strength against the euro. Do we shift from a twoyear fed analysis to a 30 year bond real economy analysis . It is breaking out the new highs. Jonathan this morning, for quick 74, yields up for basis points. Lisa 4. 74, yields up four basis points. Lisa we have had almost a year of contractionary readings. It is starting to inflect upward. When you have the kind of Inflationary Pressure in areas that have been in recessiothat suddenly are covering. Tom it is nonlinear. From 50 to 49 is different than from 49 to 48, every point matters. Jonathan the difference between expansion and contraction. Weakness in manufacturing, resilience in services. We have asked the question is whether manufacturing comes up to services or Services Comes down to manufacturing. The bearish have been saying services will come down. What we have been seeing is manufacturing start to lift. Lisa especially given the fact that the chinese Economic Data seems to be on the rebound a touch. We hear from jamie dimon who will be speaking with emily chang and london. I will be curious to see if he reiterates what we heard from jay frazier. The fed speak lineup includes 11 00 a. M. Fed chair jay powell and Patrick Parker harker. Then we have John Williams reprising his speech last week and then the cleveland fed president. Will anyone say anything to give the market conviction where they are looking at uncertainty . Tom you think they compare notes . Do think they have a Conference Call beforehand . Jonathan you have to think williams views are closely aligned to powells. It is interesting. Williams will give you why they might deliver cuts down the road. Lisa wonder if he feels bad about doing that and having that be the focus are few wants to be the leader having this discussion. They are in a nowin situation and do people listen to the speeches and parse through . Jonathan is this actually the speech from friday . Lisa he is speaking a different speech at 7 30 p. M. He did release a text of that speech. Jonathan i wondered if he was going to turn up in person and just read it. Burning us is lori kelby sena lori calvasina. We took a number of different issues in shortterm puff of the table for a month and a half or so and we will see how long it lasts. We always look at these episodes in markets and say where was sentiment . I dont think it got bad enough for any springboard. We were looking for commentary in this thing has been kicked down the road. Sentiment never got that bad we saw concern come back last week, not fear. If you looked at the survey, the fourweek data point average was about flat. You contrast that and we were at 20 or worse for four weeks in a row. We are just not anywhere near the point where we can say it is so that we have to go higher from here. Tom once again, small caps disappoint. I have a chart that i keep and it is a chart of failure. What should these companies do if they cant get value from the market . Two they go private, merge, should the zombies go away . Lori i think there is always going to be that zombie element in the russell 2000. I dont think they are going to disappear anytime soon. We have to keep an eye out to see if there is more m a activity, particularly in the industrial space where we often hear from smallcap Portfolio Management that the quality of business is high. Frankly, small caps just have a problem at this point in time after the last fed meeting because while i think 2024 cuts are on the horizon, there are starting to be doubts about comedy cuts and when that was the about how many cuts and when. Also an air pocket of uncertainty right now and small caps needed to see incremental boozy has him enthusiasm and instead we have gotten uncertainty. Lisa ago you expressed caution but were not bearish and saw equities muddling through. Am i hearing you are in more bearish now after seeing where it bond markets are and how height yields are in the fact that rate cuts are not being priced into the market and shouldnt the price in . Lori we have shortterm issues we have to run through. There is definitely a camp of strategists who are very much in the doom and gloom camp for next year and i would put me in that. I do subscribe what you were alluding to is the resiliency of the consumer. I just think we want to get a lot of information in the here and now. They are not saying anything useful looking at conferences or Earnings Reports. That is a problem when you have a year like we have had, doubts creeping in about the economy and we are not kidding a lot of stars to navigate by. Jonathan unlike to the rest of this year, Consumer Discretionary is starting to crack. The equity market is showing weakness. The story of the year has been Consumer Discretionary has performed strongly. What do you take away from the weakness in the equity market for discretionary . Have we discounted enough going into q4 . Lori it depends on what part of discretionary you are talking about. We talked about smallcap discretionary are more domestically focused and they priced in a recession last year. The s p discretionary stocks did not. While valuations dont look terrible they havent been looked to in our model. We talked about higher bond yields and that is really one of the biggest problems we are dealing with. The problem is that the sectors that do the most poorly when bond yields are rising are things like Consumer Discretionary communications. You got aside that never got cheap enough and you have the bond yield hitting precisely at the wrong time. Tom james dimon will get all of the attention today. Are the banks the mother of all value trips . Lori financials should be outperforming at a higher bond yield environments and they are not doing that to the extent they should be. Energy has sucked some of the benefit out of the other parts of the value trade. I think it depends on your time horizon. I like financials in the s p. We are overweight and we like energy better. You are seeing a recovery in the bank space in particular but we havent crossed over into positive vision territory. I find when you see earnings revisions turning but not across the territory you have doctors in the trade and that is a Good Opportunity to come in. Theres money to be made longterm but you have to have a stronger stomach. Jonathan thank you. Good luck for the rest of the week. What the quarter we leave in in q3, the 10 year yield by 70 basis points. Look at what has happened with yields and what hasnt happened with financials. It looks like hi yields in the banks dont help them. Tom i think we are not in a textbook time. What is so important looking to q4 is the basic idea of ambiguity. Every single narrative we talk about can cut two ways. When you overlay 30 narratives on top of each other, it becomes a toxic brew. Jonathan lori made the point she doesnt think the weaknesses over. Equities negative on the session. Lisa it was amazing what was said that you can have this much value destruction and bonds without being some stress somewhere. Where is that going to show up . Jonathan a list with an all of that good stuff. Tom i believe in third quarter. Jonathan comes of it data and a little fed speak. It from new york, good morning. No more calling coworkers rock stars. Look, its great that you use workday to transform your business. But it still doesnt make you a rock star. So unless you work with an actual rock star. Hi, im ozwald. Hello ozwald. Pam, you are a rock i wasnt going to say it. Explore endless design possibilities. To find your personal style. Endless hardieĀ® siding colors. Textures and styles. Its possible. With james hardieā„¢. Last night we passed the funding bill. There should be a crisis. Consequently, i strongly urge my republican friends in congress not to wait. Dont waste time as you did all summer. Passed a yearlong budget agreement and honor the deal. Stop the games. Jonathan the stopgap funding bill that will take us to november 17. He ultimately wants the aid for ukraine. On the s p 500, totally unchanged. You do not get the spike you were looking for. Yields higher by five basis points on the bond market. Foreign exchange, dollar showing strength and euro showing some weakness. The resilience of the u. S. Dollar, 102 is what they are looking for in the near term making news and a bit of splash from citi. Tom this is on the certitude of greater demand. The move up to 120. And the important conversation this morning in abu dhabi talking about the overestimation of demand coming on. Jonathan the quote as the pandemic factors continue to beat, peak transfer and nonopec plus suppliers. That is the call coming from citi this morning. Tom that falls into our efforts for Energy Independence in the United States. As we recalibrate for the Fourth Quarter and 2024, it is timely to talk on the themes a bit removed. We do this with the United States undersecretary for growth and energy, Jose Fernandez joins us. Thank you for joining bloomberg. Lisa abramowicz and Jonathan Ferro have important essence on lithium and the rest. I just need a panda update. When do we get pandas back at the washington zoo . You are directly involved in the negotiations where china i guess correctly took the pndas back and all they have done to save these beautiful animals but what i te plan of the second term of the Biden Administration to place pandas appropriately in washington . Jose i am sorry to see the pandas go because they were some of the best ambassadors. Our relationships with china are as we have talked about several times, it is about competition when we have to compete and calling them out on the concerns we have in the market practices, human rights practices and intellectualproperty practices. You are talking about a country that is one of the largest trading partners and we also have to work with them as well but i am sorry to see the pandas go. Tom i know you did this in inorganic chemistry and dartmouth that we are losing lithium to china. Front and center in the technological battle are these rare minerals. What is the to do plan to help the United States participate in the mining, distribution and use of the minerals . Jose from day one of the administration, President Biden has talked about the need for us to your the need to diversify. The need on lithium is the largest need we have. We will need 42 times the amount of lithium we use today by 2050 if we are going to reach our goals. Right now two thirds of that is either processed or mind by china. Had the need and the vulnerability. What we have done is create a mineral security partnership, 13 partner countries across the eu working together to share information about mining and processing to invest jointly to work on recycling which will be 10 of the ev battery content in 10 years. And we will do this observing the highest esg principles because what countries are telling us is that they do not want to choose between Economic Growth and environmental degradation and we need to find ways to work with communities and countries so they benefit from these kinds of investments. Tom part of the matter is is china going to play by the rules as stated by the undersecretary . Lisa at is the thing and the other is difficult to present view of the United States went it is so hotly contested and we are dealing with strikes right now that go to the core of some of the electric co. Policies we have in place. How difficult has it been to represent the u. S. View when the policy is sort of unclear and being contested by workers at home . Jose there is great interest on the part of producing countries. I have been to several countries talking about minerals cooperation. The congo, zambia, africa, chile, there is great interest and no one is questioning our commitment and the Biden Administrations commitment to clean energy. The inflation production act is the latest example of that and we will continue to pursue these clean energy policies. Lisa you think it makes the u. S. More secure are less secure in a world that is very much tied to oil that we have seen consistently when some of the production of the tools that go into electric equals have been tied to governments that are to necessarily ones that are longstanding relationships of the u. S. Where the environmental practices of those minerals is in question . Jose we have to work on our vulnerabilities not only having to do with Critical Minerals but you see the several similar on her abilities with vaccines and semiconductors. Similar vulnerabilities with vaccines and semiconductors. We have entered into conversations with many countries that want u. S. Investment. There is interest on the part of u. S. Companies and companies elsewhere to work in these countries. In the critical mineral space, this is a once in a generation of for countries to actually use the resources and so in a way that is responsible and that benefits their people. Jonathan thank you for the update. Jose fernandez there. How difficult it is to make this transition at the moment and then throwing the uaw negotiations in, nothing easy. Lisa throw government shut down in you wonder where the emphasis is at a time when there is huge disagreement about how quick this transition will be an exactly where the investment is going to come from. Tom my challenge to his good comments are is that they are made in this righteous vacuum and they have a plan and i dont see out there other nations voicing the same theory as the United States. Jonathan europe has come up with its own plan and there is clearly attention at the moment. Tom when we were in london we saw the ev force in the United Kingdom and i wonder how alone we are on this debate. Jonathan payrolls friday just around the corner. We thought maybe we might not get the data on right if we had a government shut down. We will the data here what are we looking for . Tom for jobs report that moves the market and i am not sure it will because everyone will stagger the Inflation Report and with jamie dimon speaking to us today, his Earnings Report may have just as much weight as the payrolls. Jonathan 1. 65 is the estimate for payrolls on friday. Live from new york city, this is bloomberg. Jonathan coming off the back of a we four weeks of losses on the s p 500 down on the month and quarter. Equity futures totally unchanged. Government shutdown averted. No one cares. In the bond market, huge moves on the quarter of the month, on the 10 year of high more than 70 basis. Unbelievable. And we have q4 moving higher by six basis points. Tom, what is your view on the long end of the curve. Tom 10 out of 30 and the u. K. Particularly in japan there is no icc. And in america i did not even look right now, let me do it right now, you can lisa told me that, the 10 year and thirtyyear up up and away. Jonathan i would say avoid that. That is a story for bonds. Equities down for four weeks. The dollar coming up with the back of the strongest quarter of the year so far. 11 we of Euro Weakness and dollar weakness. We are negative by. 3 on dollaryen. It is closely to 150. And last week boj had a nibble at the japanese bond market for it to do more. Lisa wednesday there will be another on purchasing nomination in japan. This is their fourth unscheduled bond by operation in since july. And there is a push pool with the currency and bond market. They are moving at odds with one another. If they support the market they will basically weaken the currency, if they weekend the currency, that changes things. It feels like it is increasingly unsustainable. Jonathan is it too early to draw conclusions based on but there thoughts are . Lisa i dont know. It seems like they are spinning late. Spinning plates. They are biding time. Im not sure if they are choosing one or the other they are laying them off of each other. Jonathan strategically moving. If there is a strategy there, i do not know if there actually is. The u. S. Avoided a shutdown. The pressure remaining on House Speaker Kevin Mccarthy with florida congressman matt gaetz saying he will file a motion to remove mccarthy from his position this week. The politics in the house in washington. Tom i read very c

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