Transcripts For BLOOMBERG Bloomberg 20240702 : vimarsana.com

BLOOMBERG Bloomberg July 2, 2024

Tom and john are both on a cruise together. I am joined by manus cranny and damien suss our. Manus you will get a lot of guys side notes. Where do you want to go for defense . Lets go long with amazon. I think the street has 65 vibrating and one hold rating. Lisa i was looking at some of the flows and there was the biggest inflow into tech stocks for the past week in the past eight weeks. It feels like i the dip underpinning everything. Maybe this excuse to sell everything yes its geopolitical. Manus when we came in here on monday morning we ratcheted by 15 basis points. Look at the shorts on treasuries and they are building again with open interest bond treasuries. They are rebuilding short positions. Damien rate differentials are the name of the game. We have a lot of Central Banks meetings coming up, we have malaysia, norway. In emerging markets theyve been in front of the fed on cutting rates. Lisa they have been ahead of the developed world banks. We will get the pce figure. How much is not going to give a green light to the fed to never hike again if you get any kind of disinflation . Damien Janet Yellens comment speak volumes that she is trying to say this move in the long and has nothing to do with supplier physical deficits and everything to do with the stronger u. S. Economy. Manus just in a conversation with josh she said i agree with the treasury secretary. There is absolute conviction in the u. S. Growth story. Lisa you said you dont buy it and a lot of people would agree with you. To set the record straight, there is this question that she is hocking her book and she said that yields could come back down and nothing structurally has changed to have yields be higher. Everyone i talked to says thats not true and it ties back to the tech story in addition to a whole host of shifts in spending. Does she matter that she is coming out and talking about her book when everyone else shrugs it off . Damien the buyer of treasury has been the fed, the banks and offshore buying. It just has not been a supportive factor. You see these auctions failed. Its a supply and demand issue. Manus there is a very good note from paul donovan and he talks about the u. S. Consumer. When we go to write history the opening sentence should be in bold, never underestimate of the hedonism of the consumer. They are spending their savings. Lisa what we are seeing in markets is a bit of a lift in equities. It is down 10 from its peak the summer. S p futures are under 4200. 10year gilts are marginally higher but a massive decline on the heels of a strong gdp. There is not a lot of logic in these moves. Crude prices are climbing as fears of escalation. What i am watching for today is personal income and core pce. Dont get in between an american in a cash register. Damien it seems a far cry from the 2 target. There is still some would to stock. And if its 3. 4, three point five it doesnt really matter. The market will just be focused on what the fed does. Lisa President Biden is meeting a chinese minister later today. We will talk to you about this later. How important is it to understand the readthrough when it comes to the middle east and china . Manus the iranians are here in new york and already there has been differences within the u. N. , china, russia and iran taking down some of the measures that were being put forward on the right of israel to defend itself. Lisa we will have Lael Brainard talking about the recovery. Talking about whether they buy the lift coming off the u. S. Consumer. From your perspective, taking a step back. Is this a buying opportunity after a selloff even though there are still all these headwinds . We think it is a buying opportunity for the market broadly. Tech stocks had a nice correction. They are still down, if you look at the top 100 they are down 20, 30 off the market hikes. We are still in of bear market overall. We still have not reached those highs again broadly. Valuation why is theyve been corrected 50 . Tech stocks were overweight stocks. On wednesday, that big down day and we are still underway at largecap stocks. But that is where we felt the most vulnerability. That is why we have been underway. We are legging into the market particularly until largecap growth. Manus when you are at maximum equity allocation. How did you decide to differentiate on wednesday. Was a progrowth and the top seven tech stocks . Steve we are being very selective. I put this a couple of ago, we look sector by sector and there are winners and losers emerging in this new world that we have moved into which does stay up 5 treasury, union wage demands, etc. You have to look for your winners and losers. We like some of the value type stocks. We reported good trends last night. Among the magnificent seven we like google. We like stocks across the market. We like fedex, the transport in general look good two was, some of the bank options are washed out. It is very dark and its always darkest before dawn. What people forget is that things dont have to get better for the markets to go up after they are sold off this far. Manus you correct us, you have skin in the game. It doesnt feel as if it were the most aggressive selloff. But normally you feel something more brutal and it doesnt feel like that. Steve the market commentary is about the rallies off the low from october. We are still in a bear market. It is still down 15 off the highs back in 2019. Nominal gdp has gone out another 50 by 2024. Earnings were hundred 63 and 2019, we have 150 for next year. Stock eats nominal earnings. There is a digestion. Period. It will translate into earnings. The earnings season this quarter, the first of quarter and four. We will see where we end the earnings season next week. We are looking for earnings to end up at 230, the market is at 222. But i think we will have a good Fourth Quarter. One thing about the consumer. It is not the consumer its the consumers. The perception of income and the economy is jobs times wage growth. We had almost 2 million jobs created in wage growth has been quite substantial. When you at that together in the household net as a lender to the economy. Especially the aging demographic is making money off these higher rates. There are winners and losers with the consumer. Damien have you ever heard the phrase defense wins championships . We have a period of high rates but if i wanted to take a defensive position in equities, how would you suggest i go about doing that . Steve we like staples here. Look at the coke Earnings Report . There are stocks eating nominal earnings. We like that space here now. One reason that people like largecap tech stocks is that they become defense because these earnings are spectacular. They have giant moats around them and a layer of growth ahead. Cashs defensive although we have finally taken cash down to neutral for the first time this week and 18 months. Lisa canceling toms pond. I will have to tell them not. Steve, thank you for taking the time. We have seen this. People are playing out of cash. Damien maybe they will buy this step in equities. Manus always selling something. Lisa coming up, sarah hunt can give some love to the emerging market space just for damien. For you. Oh, genius for more breakthroughs like that i need a breakthrough card. Like ours with 2. 5 cash back on purchases of 5,000 or more. Plus unlimited 2 cash back on all other purchases. And with greater spending potential, sam can keep making smart ideas a brilliant reality the ink business premier card from chase for business. Make more of whats yours. There are no active efforts right now to evacuate americans from the region. Other than what we are doing in israel providing charter flights. We are not parking ships off the coast and getting ready to send marines there. Lisa that was john kirby, he will speak later today along with Lael Brainard as they give the latest state of play on what is going on overseas and how the u. S. Is evolving the situation with respect to troops. Right now and markets you can see a little bit of a lift as we get a sense that maybe its not clear we can ds delete deescalate this. Tom and john are off today and im joined by manus and damien. Things that are happening outside of the israel, gaza fear of war. There were attacks in syria for retaliation. Manus Antony Blinken was warning the members of the u. N. , be on watch. If you escalate this there will be repercussions and iran has escalated the war of words. They said the u. S. Will not be spared in the israel hamas war. Lisa trying to understand it is one of the most difficult things. Kim wallace is trying to help us do that. He is head of washington policy research and i want to start there. What do you make of the strikes that the u. S. Called retaliatory in syria. Kim there is no monolithic power in the middle east, iran is one of the many state actors. There are a lot of militias and groups that work at their behest. Its difficult for anyone spokesperson to speak for all of the elements in the region. From the u. S. Side, the message for a containment has been strong. I perceive that there are many more stakeholders interested in containment than spreading this conflict. Mostly for economic reasons. Manus it is a fine line for everyone to walk. Mike braun has been there biden his been there in a troop of european leaders visiting israel. Is that why it feels like we are in some kind of a pause . It feels as if an allout ground assault may not be as huge as originally planned by the israelis . What do you make of this pause and quasideescalation . Kim were very strong words coming from israel and since that time, calculations for what it would mean to have an allout assault on gaza and whether a regional conflict could be contained if there was an assault on gaza and the cost to israel and allies for that operation given where gaza is has sobered a lot of military planners especially in the u. S. And increasingly in israel. Damien the u. S. And europe have shown solidarity with israel. The United Nations itself, it seems like israels ability to interact with those players is deteriorating by the minute. What do you think the position on u. S. Republicans and democrats are with israel . Kim i will try to address them a little at a time. I am in the camp that sees a lot of interaction in the world in those relationships are changing. It goes back to his speech sullivan made last june. The u. S. Does not always have to have allies as partners. Or that our partners will always be allies. Members in the global south are flexing their muscles geopolitically. I dont see anything unusual about this. In israels case there is a Case International about the government under netanyahu and his stature at home. Those of those complicate war planning and execution. Damien you point out the american war machine is back up and running. U. S. Defense spending rose since 2019. 1. 6 billion to fund israel and ukraine. Do you think with mike johnson that has a chance to get past . Kim i think it will pass but in what form and when . We will have two or more supplemental bills and the timing of it. There is momentum in the senate. The Appropriation Committee will mark up the war supplemental funding of tuesday next week. The most surprising aspect to me of the request from the president , is that 55 billion is dedicated to the Defense Industrial base investments. That conversation has been overlooked because of the hostilities in the regions. It will be paid attention to in the longterm how the u. S. Is able to enhance its productive capacity to fight multi prep wars. Their ability to do that has been hurt by israel and ukraine. Attached to that is the inability of the u. S. Defense bays to respond quickly. Those are lingering from an investment standpoint. Lisa how surprised that you havent heard more from Senate Republicans to using their influence when it comes to House Republicans . Kim part of the problem is likely the Senate Republicans dont have a lot of influence. That relationship does not execs. Exist. As matt gaetz has proclaimed, they feel that they are in the ascendancy. We will find out how mike johnson manages the factions of this party. Whatever he promised the moderates to get support and how that plays out in the supplemental but more importantly the exploration of the continuing resolution that expires on november 17. Lisa kim wallace, thank you for taking the time. Damien 106 billion on top of the chip socked in inflation relation act, can we afford to spend all that money . Manus the message to the world is that you can afford to spend, you will support ukraine and israel. You will support the pushback against taiwan. Lisa at the same time there does seem to be a bit of a bind between the u. S. Relationship with china. We will talk about that coming up. We are already talking about the inflation data coming out. We will be joined by rubeela farooqi. This is bloomberg. And see how changes you make today. Could help put them within reach. From your first big move to retiring poolside and the other goals along the way. Wealth plan can help get you there. J. P. Morgan Wealth Management. Explore endless design possibilities. To find your personal style. Endless hardieĀ® siding colors. Textures and styles. Its possible. With james hardieā„¢. Nice footwork. Its possible. Man, youre lucky, watching live sports never used to be this easy. 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Lisa welcome back, tom and jonathan are off today and im joined by manus and damien. In the markets we can see a grand selloff. A correction we saw in the nasdaq. S p futures are up. 5 . Semi, the story yesterday out of the ecb, there was nothing shocking. And that was a win for her. Damien when manus says grand i think about evergrande. Manus he just goes straight back to etfs. This is the problem with china. Damien my fear is that no one is talking about what is going on in the south china sea, how u. S. Destroyers are coming close contact with chinese boats. People think the relationship between the u. S. And china is improving. Lisa lets get to under surveillance because that is that is what we will be discussing and im glad you brought that up. Amazon rising in premarket training training. Third quarter revenue and Cloud Computing fell just short of projections. Demand for ai will boost the unit in the future and this is what i was looking for. Some sort of discussion about how new of discussion about how new technology and the Cloud Computing footprint go hand in hand. You can use your Customer Base and get more cloud. Even though they missed on cloud sales, no one cares. Manus if they had reported a few days earlier it could have been more brutal. It was enough to keep the goblins at bay in terms of cloud. Damien i was pleased to see operating commitment improve in those job losses counted for something earlier this year. Its amazing how sentiment has shifted. Lisa and the value of costcutting. President biden said to me with a chinese minister today at the white house. This could pave the way for a meeting between president ching john p and by the next month. Xi, at the same time, have relations improved and that was the question you raise . Damien we have a work conference coming up at the beginning of next week. What we are expecting to see is how they handled the debt problem and they will issue more special bonds. This is extended from the Property Market into the financial sector. Basically, what we are talking about is a credit crisis in china. Lisa it does strike me that just the idea of having a discussion is such a big when compared to the titfortat and lack of communication over the past few months. It seems like the market is reading at that way but i take damiens point, what are you hearing from people when it comes to this kind of softening . Manus if china carries through with that stimulus policy will be good for everyone on the global level. Its about the flow of money. It is already left from china and there has been a d investment from chinese bonds in the story is getting harder and harder to sell. Damien i think it was bank lending and the three components of the index. He was marginalized under president xi and its indicative of what is going on in that market and how under control and no longer free is a once was and Property Rights have been called into question. Lisa we have to move on to our story about the great economist. She stays up too late but she does get things done. Arrows tore surpassed 1 billion. She is one of few entertainers who have raised that status. She added more than 4 billion to the countrys gdp and made it into the beige book. The economic read through, notes from companies that have some association with her just highlights how much economic cap this person has. Manus some of the country she visited, it wasnt just in the u. S. But in parts of asia as well. This woman gives girl power a whole new meaning. Damien have you been watching the beckham documentary . Taylor generated more than emergingmarket countries. She still has 89 more shows to go globally. Think about that. Lisa just the changes she does, clothing changes. Joining us for taylor economics is rubeela farooqi. How long can Discretionary Spending continue . How much are you looking forward to the pc report we will receive . Rubeela we are looking at the trajectory of the consumer, what is sustainable and what is not . We dont think that what we saw the Third Quarter is sustainable. Core services and housing, this Discretionary Spending and travel. They a

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