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tv   Bloomberg Markets Americas  Bloomberg  February 21, 2020 1:30pm-2:00pm EST

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ovid-19 to the agency, 239 fidelity's. in the past 24 hours, china has reported 892 new confirmed cases and 118 deaths. the significant decline in new confirmed cases is partly due to another change in how china is reporting its figures. concern continues to be 19 tootential for covid- spread in countries with weaker health systems. tomorrow, i will address an emergency meeting of african health ministers held jointly by , and thean union african centers for disease control and prevention. the: the who ads although total number of cases outside china remains relatively small, it is concerned about a number of cases without a clear epidemiological link them as
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such as travel history to china, or contact with a confirmed case. the united states plan to sign a peace agreement with the television a week from tomorrow. negotiators reached an understanding on reducing violence in afghanistan. the fighting there has turned into america's longest-running war. once the agreement is signed, thes will begin between taliban and an afghan government. president trump is looking for a permanent national intelligence director. richard grenell is the new acting director but is expected to be a short timer and overseeing the nations 17 spy agencies. the president told reporters thursday he is considering georgia republican congressman doug collins for the job. but collins said today that he is not interested. germany is stepping up its police present throughout the country. authorities say they will also keep a closer watch on mosques and other sites, as racially motivated shootings that killed
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nine people, a 43-year-old man a frankfurtnts in suburb wednesday, before killing his mother and himself. he left a number of rambling texts and videos portraying racist views. 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. i'm mark crumpton. this is bloomberg. >> live from bloomberg world headquarters in new york, i'm vonnie quinn. amanda: live in toronto, i'm amanda lang. welcome to bloomberg markets. here are the top stories we are following from around the world.
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a tumble in u.s. business activity is rattling investment nerves. the coronavirus is hitting supply chance and creating a warning sign to the world's largest economy. here about the virus has spread to commodities. brent oil is falling, snapping an eight-day winning streak. we speak to the head of the american petroleum institute about the demand for oil. deere posted it on it expected -- an unexpected increase in quarterly earnings. one of there outliers today. major averages are lower. they are off their lows but still down a percentage point on the s&p 500, 0.8% on the dow jones. really, the story is in treasuries. checked the low on the 30 yada yada, and it got to 1.38 and change.
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we are back up to 1.92. it was a massive move in the 30 yada yada, out of risk today. earlier on, what cause the immediate move in a 30-year, the pmi that came out. the initial data for february. the yellow line is the composite. the white line is services, which went into contraction. luckily for the economy, we are still in expansion. the composite for the first time in many months, if not years, is in contraction territory. that servicea: component had an effect on the 30-year. take a look at the positioning on that. we are keeping our eyes on the yield. at a record low now. there are the bearish positions on the 30-year easing up.
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this has been surprisingly volatile in recent months. we have seen some big turns in the yield here. let's check in with luke kawa who was writing about this this the exceptionalism of u.s. treasuries. tell us what you are seeing here. towhat's been interesting watch, we know u.s. stock have been doing great, the u.s. dollar has been doing great relative to global currencies. but it is surprising in an environment where u.s. data, up until today what, was holding up well. you could see the spread between u.s. economic surprise indexes and a german economic surprise index widen. the u.s. inching higher, while german's went into negative territory. backdrop, since the coronavirus was part of the market consciousness, that you would see a narrowing of the
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spread between u.s. and german 10-year yields. when it comes to a flight to safety and everything about the u.s., that outweighs anything having do with the mystic fundamentals. treasuries being first among equals in that regard. vonnie: there is a question about what a 30-year yield at that level means for u.s. growth in the long-term. if this would be a quick coronavirus hit, with a 30-year i really have fallen below 1.90? over the a tough time, past 18 months, going to the bond market, and mapping out no signals on growth. it seems like it has not been too great of an indicator. to read every the last point, i think this has a lot to do with financial markets, search for safety, rather than sending a signal about the u.s. growth outlook. there is something to be said that the more people are going to pile into bonds and
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essentially out of risk assets, the more that raises the risk of manifesting the correction that people would be worried about in the real economy. vonnie: thank you for that analysis. now to one stock in the green today. shares of deere surging. they delivered an earnings surprise, maintaining its annual outlook as well. there is a little bit of recovery in america's farmland apparently. brooke sutherland covers deere. is there a recovery in the midwest or are we just really hoping that this is a sign of stabilization. ? >> i think there is a nascent recovery, but your word is the right one, stabilization. we are coming off a very low levels here. we really don't understand how the coronavirus will affect both demand and supply chain. it is interesting that deere is saying $40 million to export
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freight, to make sure it has parts in its international operations. saw the stock be week, cutting into this report. a little bit of relief in terms of what deere is saying. his is one of those companies like caterpillar, fedex, that we extrapolate to a broader story. can we do that here, they do something very deere-specific? this reflectst the general sluggishness we have seen in manufacturing. there was so much of that we would rebound quickly after we got the straight deal. that has not happened. what we have seen from another of companies is weak fourth quarters, and then relatively sluggish outlooks for 2020. a lot of companies are expecting a second half recovery, but that is a tenuous proposition, not least of all what we have seen from the coronavirus, but it is not clear where the order growth will come from. deere is something of an
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exception, where we have seen a drop off in agricultural equipment, whereas a slowdown in other parts of the economy has been more modest. certainly the opportunity to see a demand spike, but a number of lingering factors. vonnie: we know the inventory. did we learn anything more about that from the report? --farmers are going to spend and that is not even for sure. we are not sure that farmers will spend on these massive machines, and if banks will lend him the money if they are creditworthy enough, if there will be inventory for them to buy. that has been a key factor for many of the manufacturing sectors. you are not seeing dealers restock inventory when they are not selling. there is some improvement, and that is the encouragement today. but to your point, how long does this last? with the coronavirus, one of the questions is what this means for the u.s. china trade deal. significant agricultural
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purchasing deals in that. that is a reason for improved optimism. but there is also a question about whether they follow through with that. we also have news that they are seeking flexibility on the purchases because of the coronavirus. and even if there were no coronavirus, we were asking whether that was a possibility. brooke sutherland, thank you. amanda: coming up next, mike sommers, american ceo of the petroleum institute. we will talk about what a potential ban on fracking could mean for the economy.
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amanda: this is bloomberg markets. i'm amanda lang in toronto. vonnie: i'm vonnie quinn in new york.
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the coronavirus epidemic has entered a new phase. there are now more than 75,000 cases, and now cases outside china are starting to multiply. it has been described as insidious. infectedortion of people are well enough to go about their daily business, so they could be spreading the disease to others. the coronavirus is genetically similar to the sars epidemic from years ago but appears to be milder in terms of illness and fatality rate. the flu epidemic killed an estimated 50 million people a decade ago. get the virus by coming into contact with droplets admitted when an infected person reads, talks, cops, or sneezes. these can also be transmitted by hands or surfaces. there is good news. simple disinfectant can kill the virus. amanda: one place the virus is certainly having an effect is on
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the oil markets. we saw brent snap its eight-day winning streak. the virus is showing up in global economic reports. institutean petroleum ceo mike sommers is with us now. let's start with a demand picture and your expectations for how long there might be an impact. i think we have significant concerns about the ongoing threat of coronavirus, particularly on the demand side. back at thee look sars epidemic from many years ago as a guide as to where this is headed. that point, it was about a two-quarter dropped in terms of demand from china. at that point, china was in a much different place from a global perspective. the longer this goes, i think we are continuing to be concerned about the demand perspective. amanda: it is an interesting time to be talking about global
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versus domestic, because you have domestic security in the u.s., fracking is a big part of that. push againstrowing fracking, concerns on a bunch of levels. you have a stated view on that front. take it wheno you you hear presidential candidate saying fracking should be banned? mike: quite serious. we will put out a report next week and talk about what it would mean if there was a fracking ban on the u.s. 95% of the wells in the u.s. are currently fracked. this is not some obscure technology. our study will show about 7.5 million jobs are at risk in this country if there was going to be a fracking ban. household energy costs would increase about 50%. farm income in particular is what we are worried about. farm income could go down very significantly, if these
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proposals were to be put into effect. vonnie: you say that, but this is the perennial flight, has been for a long time. it is clear the country is going in one direction. how can you stave it off for much longer? a perennialk it is fight, of course, and the fight is between those who don't think the u.s. should use its resources, and those who think we should maximize the resources. the effect that this has had on the economy is tremendous. from a national security perspective, it's been great. vonnie: put some numbers on those claims. what hasn't met in terms of gdp growth. when you say national security, what does that mean? mike: think about where we were 10 years ago, where we were held hostage to regimes in the middle east, that did not have america's interests in mind. think about what would have off-lineif iran went because of sanctions, or venezuela because of a rogue
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regime, or even russia because of sanctions, or even what happened recently in saudi arabia, when 50% of the world's oil production when off-line because of a bomb from iran. happened 10 years ago, we would have seen a doubling of oil prices. what do you think that would have done to american gdp or jobs? vonnie: but it is not comparable. you cannot say, if 10 years ago, the situation would have been like this. mike: it is absolutely comparable. the u.s. has doubled the amount of oil we produce in this country in 10 years. much less shock was significant, particularly during that attack. we saw an eight dollars spike in the price of oil. it went down a week later. that is because of americans apply that has come online in the last 10 years. expect we would not somebody from the american petroleum it's too to say we should move away from fossil fuel-based energy, but that is certainly the debate happening
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across our countries. stepping aside from that existential question, there's a lot of environmental concerns, health concerns. oklahoma has raised some serious issues about what fracking does on the earthquake front. i know there is mixed science, there always is with these issues, but how do you address is real environmental issues? mike: the environmental benefits far outweigh the cost. because of the fracking explosion in the united states, it is because of that that we have been able to lower prices for natural gas. because of that, we have been able to replace coal, which is a much bigger image or the natural gas, and environmental benefits have been tremendous. we estimate that our air is cleaner today than in a generation. that is mainly because natural gas has replaced coal in power generation. that is an environmental
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compliment that would not have happened if not for american production. question, natural gas is cleaner than coal, wind is cleaner than natural gas. there is a continuum here. i talked to somebody at the u.s. geological survey who says when you are pumping water into rock, it will have an impact. we don't know what it is, but it is common sense that there will be. on makingre focused sure our environmental footprint is a small as possible in our operations. we are also focus on making sure worker safety is in place. this is something we are constantly studying. something that our membership in particular is constantly focused on, making sure our operations are safe and environmentally responsible. amanda: we will leave it there. appreciate your time. mike sommers of the american petroleum institute. the danger of batteries. it was supposed to be a solution to climate change, but is it hindering more than helping?
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this is bloomberg. ♪
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amanda: this is bloomberg markets. i'm amanda lang in toronto. vonnie: i'm vonnie quinn in new york. climate change is the issue of our time. launched bloomberg green on that note, using data and in-depth reporting to illustrate the scale of the challenge. focused on the issue of lithium-ion batteries used in electric vehicles. alix steel has details. the 20th century was the image of the internal combustion engine. the 21st century will belong to the battery. 2040, the majority of cars sold around the world balloon powered by batteries, they will make far more pollutants and gas guzzlers, but the elements used in batteries have their own challenges. lithium is a water guzzlers. if lithium prices stay low, it
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may not be worth the cost to mine. the industry would likely opt for the risk your method of pumping salt water underground to extract it a good nickel is used in lithium that are eyeing on cathodes, alarming electric vehicles travel faster and farther. but it is not clear whether minors in indonesia can keep a steady stream of nickel coming. and cobalt present in ethics problem. it helps keep the battery cool during charging and discharging, but they are terrible conditions for minors in congo. the world's top producer. some of the workers that reporters have found are as young as four years old. cleaner car they not be made more cleanly. vonnie: here with more is alix steel. to be clear, that is from a special that will be airing at 9:00 today. some of those details are terrifying. alix: it raises a broader question for any company trying to make a broader transition. is what you are transitioning to going to offset that?
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nothing is a zero-sum game. another issue of how you recycle batteries, similar to how we recycle when the turbines. no doubt, natural gas will be cleaner than coal, but there are other issues related to flaring. even these are the center of that. amanda: it is so important to do reports like this. i hope people tune in. in terms of the complexity of these issues, it is not black and white. to dig into this, do you find pushback from people who say it is still better, so we are going to overlook, or is there an acknowledgment, cobalt is a difficult substance to mine. alix: that is a good question. coming down prices so quickly, it will be hard to make another push into another type of battery because the price differential will not work. as long as prices are low, you
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are going to use it. it is the same with the battery. that being said, there are other things being created like fuel batteries, for example, solid-state batteries. usually there is a fluid that goes between all of the batteries, and that can light on fire, there could be issues there. a solid-state battery would take that away. so other technologies being used, but net-net, if you want to reduce emissions, you have to go there. vonnie: what companies are relying on these metals that are produced? who are the biggest users? the biggest carmakers, obviously, tesla. what winds up happening, these ford,ies like tesla, gm, they end up partnering with battery companies mostly in china, japan. tesla just made a partnership with panasonic, and another
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battery maker in china. that is the partnership that we are seeing now. it is the battery companies that are securing their supply chain for lithium. partnershipssee is we see takeovers between car companies because they need each other to basically have distribution and money, to move into this space, where tesla is so dominant. amanda: thank you so much for that. newcan tune into alix's special, "ev's: on the brink of change" tonight at 9:00 eastern. it will be airing all weekend. from toronto and new york, this is bloomberg. ♪
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mark: i am mark crumpton with bloomberg's first word news. turkey's president is urging russia's president to restrain the syrian government and halt
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the humanitarian crisis unfolding in northwestern syria. in a phone call today, erdogan asked vladimir putin to fully implement a 2018 turkish-russian cease-fire agreement. the conversation comes as tensions between the countries escalate. into theunion nations summit today after 28 hours without reaching an agreement on a budget. four and aed frugal few others are standing firm in their belief the e.u.'s next budget should amount to 1% of the gross national income. the plan, which is meant to fund ambitious plans, is worth more than $1 trillion. british prime minister boris johnson sailed through his new government's first major economic health check as he prepares to lead the nation to a potentially bumpy brexit transition. several indicators this week confirm signs of a


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