tv Bloomberg Markets Americas Bloomberg July 16, 2020 1:00pm-2:01pm EDT
research. according to the british national cyber security center, therapeutic centers in multiple countries have been targeted. they say the group responsible is known as cozy there and is almost certainly a part of russian state intelligence. trump administration may ban members of the chinese communist party and their families from traveling to the u.s. global the presidential order is still in draft form global. the move would almost certainly lead to beijing retaliating against american travelers. the vatican issued a long-awaited manual instructing shuts and church leaders globally to report cases of clergy sex crimes to police come even when not legally bound to do so. the move is the latest attempt to merge church leaders to protect minors from predator ofests while canonical norms been in place for two decades, some bishops continue to ignore the laws in favor of protecting their priests or victims. 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. vonnie: it is 1:00 p.m. in new york, 6:00 p.m. in london, and 1:00 a.m. in hong kong. welcome to bloomberg markets. here are the top stories we are following from around the world. ecb president christine lagarde five to support the euro economic recovery from coronavirus all not. she vows to maintain the flood of liquidity that has so far calmed markets. morgan stanley wraps up the week for bank earnings. big gains for the trading desk. helped thedfall that group survived the brunt of the pandemic.
the u.s.,ntioned, u.k., and cannot say russian state intelligence is hacking into research enters working to develop a covid-19 vaccine. we will dig into the reports. let's get a quick check on the markets. certainly a risk off day. 500 off of itsp lows of the day, still down about two thirds of a percent. the dollar index, not too much reaction to the ecb but it is lower in that range above 96. the dow is up half a percent. bank of america is down two point percent. let me go back to the dow. that is the transportation average. today butare higher cruise liners and airlines are lower. read into the prevailing may be morehat rail
safe, at least for the moment. european central bank policymakers left interest rates unchanged today. shestine lagarde saying will not let monetary policy be constrained. she also says the ecb assumption is that the recovery fund will be approved. >> an ambitious and coordinated fiscal stance remains critical in view of the sharp contraction in the euro area economy. the governing council urges further strong and timely actions to prepare and support the recovery. it is important for the european leaders to quickly agree on an ambitious package. vonnie: joining us now is james athey. she could not be clearer or more appealing in her sincerity. why is it taking so long, why can't the different parties, including the dutch agree that this is necessary now?
good evening. if only it was so easy in european politics. europe's future was to be decided by the views and desires of the political class in europe , then these things would have been put to bed and decided a long time ago. unfortunately, there is this inconvenient reality, which is democracy and the electorate's that the leaders represent. that is where you run into problems. again, neutralization was not something that was sold to electorate's, neither was dramatic hardship which would come with an internal devaluation and a lot of structural reform. if none of those things happens, the eurozone bumbles along. in this case, while there is a huge crisis facing us globally, that still does not mean that you can just me as the domestic electrics in northern europe.
to be colloquial about it, their hard earned tax money is not just being sent to southern europe, which they bowed would never happen. danced to go through this to try and find something which nobody is happy about that everyone can accept. vonnie: these electorate are not immune to the coronavirus. in the netherlands, 7.2% unemployment, looks like it will be there for a number of years. not the worst in europe, and that means something different in the u.s., but nonetheless, all the countries will benefit from anything that comes out fiscally, whether it is neutralized or not. james: not necessarily. the way this is being
structured, countries like the netherlands will be contributors. when you look at france, which was in one of the weaker positions, going in with large deficits, not great cyclical growth, need for reform, unhappy population, a lot of supply coming into the market this year because of the deficit. then france becomes a net contributor into the fund, so that the money can be transferred into countries that have been even harder hit by the virus. it is right, given the monetary , have a in place dramatic problems in any of the countries or the region as a whole is bad for everybody. but to go back to the politics of this, it is a tough or sell to argue that the netherlands writing a check to the european hand over to larger countries is necessarily an easy win for portions of the electorate. not all of them.
but with an election not too far away in the netherlands, the prime minister these to make sure that he is extracting as much as possible from these negotiations so he has something that he can go back on to his domestic all the current and pitch as a success. that is why this is a political process and why it takes longer than is desirable or the financial markets or the economy. vonnie: does the ecb need to change its base case? if not, they will need to find a channel that will work. publicly,course, menem lagarde, as someone experienced in these matters, now representing the ecb, will be positively bullish. i think that is right, there will be some agreement. it will not be everything that everybody wanted. i don't think she necessarily needs to change her assumption. it's about timing, whether we
see an agreement as soon as this weekend, is an open question. , suggesting that the agreement was not guaranteed. we also saw some headlines saying there was not unanimity on the governing council about it, somethingf that she pushed hard in the conference. as always, there is new ones in these things. i don't think the ecb needs to change its assumption at the moment. we are in the medium-term structural damage. it is difficult to judge at this point. markets are calmed. investors for the moment are seeing things half-full. watch and wait from the political side of things. vonnie: not too much movement in the recent days. the euro trading above 114.
in bonds, maybe a little movement in the u.k. basically, pretty calm markets. what can you do to take advantage of this downtime? james: from an investment perspective, it is difficult. one volatility is this love, monetary policy is in stasis everywhere and no movement in the front end, and at the long end, it is becoming less interesting, even with all of this government bond supply, we are heading into summer anyway, central banks are pretty regular in terms of their interactions with financial markets, it is tempting to say that where you want to own and carry. ution from that strategy. i still think we are in the environment where the volatility of volatility is high. i would rather be asymmetrically
exposed to safety rather than risk. there are some things you can do with central banks being supported with rates out five years, but you can still manage the steepness in the forward curve. hunkeringou are just down and looking for better opportunities. vonnie: we have to ask you about britain. more murky for the rest of the year as to what will get done trade wise, brexit relationship-wise. right now, even the monetary policymakers don't know what is coming next. do you invest in britain? james: long-term i'm very bullish u.k. the opportunities that will present themselves over the long-term future or a u.k. economy, which will do some -- we have a strong
institution, rule of law, flexible economy, well resourced economy. there's a lot in favor of the u.k. in the medium and long-term. of course, in the short term, brexit will be destabilizing anyway. in this environment, it is a drop in the ocean compared to what is going on with economic wherewns, with job losses they are, massive damage to economies everywhere. shorter term, it is difficult. i am biased to be positioned defensively because there are difficulties ahead. it is actually a market that we are short relative to markets where we see about it in owning duration. i would rather be defensively positioned. term, medium and long attaching yourself to assets that will benefit from the u.k.'s transition to an independent economy is very attractive, and that means
meanwhile, shares of moderna are rising for a fourth day after earlier trials of the vaccine produceirm to antibodies in the 45 patients tested. for more on these companies benefiting in this race, we are joined by nina deka, robo global analyst. one of the interesting things about robo global is that it manages a health care, technology, and innovation etf. 24% year tois up date, even as the s&p 500 etf is up 2%. welcome. let me ask you about these companies chasing a vaccine. we see the latest company each day -- the latest each day we hear about get results. yesterday, it was moderna.
a study had shown results in may. is there a danger to trading these companies right now? nina: i wouldn't say there is danger but what i would steer people toward is looking at the long-term investment pieces of these companies. you mentioned the etf which moderna happens to be a member. the reason we elected them to be included in the etf is that we are looking at the bigger picture. hype around the coronavirus vaccine, the bigger part of the company's story is going unnoticed. this is the 10th vaccine that they have in the clinic. with every vaccine they have brought to development, they get smarter and faster, which is why they were able to bring this coronavirus vaccine to the clinic so quickly. ai with every use step of their process, which cuts down on thousands of hours of manpower.
and the company focuses on a new type of therapy called mrna. today, there are no commercially scenes on theback market, but once it is approved, then everyone can get excited about all of the other therapies in development. drugsa has 20 other mrna in development. the 84 as you look at companies in the etf that you cover, what other companies have a good shot of arriving at, not the vaccine, but in addition to the search? nina: one thing you want to know about the company is looking to make a vaccine is that most of them cannot do it on their own. they have to partner with somebody to help them develop or manufacturer. aderna has partnered with commercializing drug manufacturing company based in switzerland. they have also partnered with
another company to help them manufacturer for clinical trials and beyond. there are a lot of other companies that stand to gain from this. the united states has allocated $10 billion to help accelerate development. they have not just invested in one company, they have invested in a few. a lot of these companies have to partner with other companies. if you look at where that $10 billion start to get allocated, it gives you an idea of the broad array of companies that stand to benefit from this funding. vonnie: genomics robotics, telehealth. how concerned are you about the idea that russian intelligence is trying to hack into research centers? could it be detrimental to their efforts? i know the j&j cfo spoke about it this morning briefly at high level, saying data security is a large part of their overall
focus. what i will say is, as the world gets more and more digitized, as health care gets more and more digitized, we will be exposed to that type of risk, as we have been across every other sector that has gone to the cloud, digitized over the last couple of decades. it is something that we have to be aware of. want to be investing in companies that are paying close attention to cybersecurity. vonnie: is there a point at which you want to get out of these companies as an investor? we are all watching them as human beings, hoping that better health care and vaccines armored from these efforts, but as an investor, with a 25% gain in the etf, should you cut and run? nina: i wouldn't think so. we are only getting started, particularly in health care. if you look at telehealth, we
are still in early days of overall virtual care adoption. in the next 5, 10 years, virtual virtuallyunderlie every facet of health care going forward. we have only scratched the surface over the last couple of months. there will be broader use cases of adoption for surgical robotics, and then potentially using the internet and 5g will expand the use, so that you can rgery and potentially reach people who cannot get to a hospital, in rural parts of the world. we are in early days. as we see further adoption of 5g, better internet service, key medication platforms, we have just scratched the surface of health care innovation. genomics, gene therapy, there is so much more to come, in cancer therapy, diabetes innovation. vonnie: looking forward to
seeing you again soon. hopefully we will know more by then. nina deka, the robo global senior analyst. on the race more for a vaccine in the latest edition of bloomberg businessweek, which is on newsstands today. morgan stanley seeing its best quarter on record or profits and revenues -- for profits and revenues. we will discuss in today's stock of the hour. this is bloomberg. ♪
this was that crisis and this is what we delivered with a 50% plus roe. i think invalidates the strategy, but it is our strategy. it is not for everybody. vonnie: that was james gorman speaking earlier. morgan stanley is our stock of the hour today. joining us now for more is scarlet fu. scarlet: another bank delivering big. morgan stanley posting its best order on record for revenue and profit. like goldman sachs and the banks before it, trading revenues surged. total, they posted $30 billion in trading revenue. or morgan stanley, it was up 60% versus last year. trading was a star, almost tripling from last year. morgan stanley's recent success was in its stock trading operation but they rely more on its prime brokerage business and
unds.ies with quant f they were less actively trading in the second quarter compared to active ones. morgan stanley lost that equity crown to goldman sachs in the second quarter. vonnie: the stock has been performing interestingly today. it is the best performer among the five biggest banks. having said that, it is only up 3% this year, reflecting the struggles that all the financials have taste. was talking about their strategy coming out of the wealth management crisis. managing other people's money and taking a percentage of the assets they hold is a more reliable source of revenue than depending on volatile market conditions. we heard from banks in the past that markets were not volatile enough, or bad volatility did
not lead to a surge in trading. wealth management revenue rose 6% in the second quarter. analysts were looking for a 10% drop. morgan stanley is still on track to close its a trade deal. they see that acquisition as giving them more digital offerings and bolstering margins, which it anticipates overall should be in the 28 to 30% range. james gorman also said that he is on the lookout are possible acquisitions as well. vonnie: thank you. coming up, retail recovery. u.s. retail sales surging, but what is the data really saying? this is bloomberg. ♪
pass the virus relief package in the coming weeks. the speaker said she believes republicans will ultimately agree to spending levels closer to the $3.5 trillion democrats are pushing for. republicans have agreed at least $1 trillion is needed. both sides are set to begin negotiations on further stimulus as early as next week. a shakeup of president trump's struggling reelection campaign. manager brad parscale will be replaced by his deputy bill stepien. the move comes as a new quinnipiac university poll gives joe biden a 57% to 36% lead over the president. it also said more americans trust biden's new a better job on the economy. scathing mary trump memoir about her uncle has sold a million copies on preorders alone. simon and schuster said the book ind a record 950,000 copies combined print, digital, and
audio editions since earlier this week. another trump expose from john nearly 800,000 copies in the first week of its release. the president tried to block both books from coming out. judges in each case denied requests for injections. in a sign the coronavirus maybe dissipating in the city that was africa's first virus epicenter, health officials moved to reduce the capacity of a covid-19 field hospital in cape town. a decline in the number of patients from to the decision. nick woodman from the facility will be sent to other parts of the country, including johannesburg, where virus cases are surging. 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.
amanda: i'm amanda lang in toronto. welcome to bloomberg markets. vonnie: i'm vonnie quinn in new york. we are joined by our bloomberg and bnn bloomberg audiences. here are the top stories we are following from around the world. retail sales exceeding forecasts as economies begin to reopen. americans are returning to spending, but can it last? russian hackers target vaccine data. the u.s., u.k., and canada confirming russian intelligence is trying to coach research for a covid-19 vaccine. mounting alexion risk. we will speak to solita marcelli from ubs global wealth management. let's have a look at the markets. amanda: positive retail sales data acting positively on stocks. the markets are a little lackluster, seeing a repeat of
recent sessions, even when we have had gains. tech,e a rotation out of leading the declines once again across the s&p 500. that is the group moving most significantly to the downside. no help from financials as we hear from the banks, basically flat on the day. utilities and materials is where the market is rotating into today. similar situation in toronto. one of the questions will be the pace of recovery. as we start to get markets reopening across jurisdictions, in what fashion will businesses manage to rebound? we are reading the tea leaves on that sales data. we see a rebound, weaker than may, but will it last? is this the back to normal that we can count on, or will we see a hiccup as government checks begin to disappear?
with us now is mary epner. numbers,look at the there is pent-up demand, of course, but are you confident it a lasting? mary: no, i'm not, actually. there about to head into second busiest time of shopping, back to school. everything is uncertain, jobs, safety, whether students will return in school in person or remotely, we have the economy, the election, and then the stimulus. all of these things are up in the air. you have heard from everybody, including me now, that it is unprecedented. we are not confident about it. almost school is so big, $80 billion. if that is at risk that puts the start of the fall season at risk. it really includes all income levels as well. so to answer your question, not there yet. factor in the resurgence
we are seeing in parts of the u.s. do we have to start to think about what happens as we see more closures, less willingness to shop with masks on, all of the effects that the covid-19 resurgence may have? mary: yes. in many of the informal talks i've had with retailers across the country, they are not sure what they'll be doing, whether opening or closing, and with the uncertainty of the virus, it sounds like many regions will play it safe. again, this is literally a day by day thing. intelligence in order to see what customer demand and sentiment is. it is changing all the time. until we get some certainty as to what is happening with back to school, back to college, and therefore how people can go back to work, if at all, we will
remain in this spot for the short term. vonnie: is it possible to know how much stockpiling contributed to this? therech pent-up demand is that we will need to do see -- see filled, as soon as we can? the pent-up demand will be seen in shopping in the next six weeks. last month, before people were excited to be out there, but we also know that they were getting checks and they had literally not shopped in four months in a store, and they got out there. there were things they needed to replace. kids outgrew their clothes from last year. there is pegged at demand, real need. again, it will go into the fall season. the other thing i want to mention, a wait and see, the big ticket items. technology will become even more important if we continue to do remote learning, and we are
seeing a lot of families have had to convert part of their homes to offices, work, study ,reas with improved wi-fi tablets, and so on. it is an added expense, and it is not a small expense. if it moves to technology, a customer will presumably not buy as much in apparels and shoes. claims 17.34 continuing claims.on continuing if the government does not issue more stimulus either by checks or unemployment benefits, or if they take down the extra benefits, as they are promising to do, then what happens? our people forced to reign it in ? mary: absolutely. it will be a disaster if we don't have support from the government in the coming months.
that is what the big wait and see will be. are they going to have money, do jobs?ave their do they have any sort of security or do they feel like somebody is behind them? that is one of the things that we are waiting to see before we determine how this will play out. need to be filled in, so to speak. amanda: we have seen a lot of concern about what will happen to malls, not just because their health concerns. one of the last places to open. what is your outlook on malls? mary: very concerned. in the midst of all of this, we see more bankruptcies, closings, and unfortunately, we don't just see it in the big cities, we see it across the country in some of the more underserved areas, in some of the lower incomes. are the lifeblood of
those areas, towns. you close three or four of those stores in the mall, and it can affect the way the people shop, socialize, get out and about. i am very concerned about that. we have known for a long time there are too many stores in the united states, but once again, we are at a point where every other day we share something new about a bankruptcy, more stores being closed. i suspect this will continue through january 2021. amanda: great to have you with us, mary. appreciate it. mary epner, the cofounder of re/agent nyc. with all of this uncertainty and economic data tentative, central banks around the world are pledging their support. recently we heard from the bank of canada. they are suggesting they will keep its accommodative stance
for many years until the economy recovers. >> we are seeing some good numbers, but it will be a long climb back. considerable policy support will be required. fiscal policy is taking the lead. monetary policy has an important complementary role to play. we wanted to be very clear to canadians that the bank of canada will be there through the full length of this long climb back. i know we have seen your projections out to 2022. you are projecting growth for the economy if all goes well. how long do you see remaining accommodative? there's a lot of uncertainty so we did not provide a regular projection. we provided a central scenario to highlight that it is highly conditional on the course of the virus itself. we expect a recovery in two
phases, expect to see a good bounce back through the third quarter, but then we see a longer, slower, bumpy recuperation phase. our message is that the bank of canada will be there to support recovery through both phases. message clear, we provided an unusual amount of forward guidance indicating the policy rate would stay at the effect of lower bound until sonomic slack is absorbed that inflation could come to our target of 2%. withinforce that continuing commitment to our quantitative easing program, to buy at least $5 billion in government of canada bonds per week. we did not put that forward guidance on the calendar. i expect other forecasters will. if you look at the monetary policy board, it is pretty clear from the chart provided, in our
central scenario, in scenarios close to it, the policy interest rate would be at the effect of lower bound for at least two years. is a lot of uncertainty around that scenario but the message is pretty clear. interest rates will be very low for a long time. amanda: some of the uncertainty is around what the recovery looks like. we have seen this gradual reopening in canada, we don't know if we will see any spikes in covid. as you say, there are so many unknowns. are you pretty confident about the path we are taking? i think it is hard to say that we are pretty confident. we are very confident that a considerable amount of wanted terri stimulus is required and that we are going to have to keep that stimulus in place for a considerable amount of time.
the purpose of putting out a central scenario is, even though there is considerable uncertainty around it, it is the scenario that guided us in our policy deliberation. as data comes in, we will be evaluating that relative to that central scenario. if we need more monetary stimulus, we will do that. was the governor of the bank of canada. a hackingnext, blockbuster. three countries are accusing russia of trying to steal covid-19 vaccine egrets. how will that affect the race for a vaccine? ♪
vonnie: this is bloomberg markets. i'm vonnie quinn in new york. u.k., and canadian governments is saying russian state intelligence is hacking into research centers. it comes at a delicate time in geopolitics with the u.s. election looming and the global economy in a recession as a result of the epidemic. joining us now is bill faries. if three governments are working together on research are saying this, can we believe it? bill: especially with the u.s., to do a lotot tend of joint announcement with other countries, it is quite notable that you have these three countries coming out at once to say in such a critical time in the pandemic, they believe russian state intelligence services are targeting all of
these vaccine operations, research operations around the world. it's a pretty significant developments. the russians have denied it so far, but as you mentioned, it comes in the context of a biggie u.s. election as well, which was last played by russian hacking in 2016. amanda: definitely a hot topic. is it unusual to see this kind of thing made public? even unusual to see the three-way statements made, but why announce at all that you have been hacked? linux is the door quietly and use the normal channels to respond? bill: [indiscernible] vonnie: bill faries is our
election is 100 plus days away. for more now we are joined by solita marcelli, ubs global wealth management chief investment officer. she just published a note on election risk. why is this time different? solita: all campaigns are contentious affairs. the contest will be held in the midst of a global pandemic which has triggered an abrupt increase in unemployment, wide in the economic disparities. anxiety levels are rising. i think it is bound to have an impact on the presidential and congressional campaigns. that said, you mentioned the report that my team at ubs put
out. recently, we laid out the four most probable scenarios. our conclusion is the election will not have a significant impact on the market regardless of which scenario plays out. the markets are predicting a blue wave. even in that case, we will see short-term volatility which will likely give way to a more measured response from the market. of course, the winners and losers are going to be different depending on which scenario plays out. it may actually have significant impact for certain sectors within the u.s. equity markets. vonnie: what will have been the dominant thing that voters vote on, the pandemic? pandemic is top of mind today.ricans
as a result of that, also the economy. the economy is key. as we know, in the beginning of trump's election to lose but the pandemic changed everything. has high levels of unemployment. the pandemic has been handled, where we are heading in terms of the economy, will be the most critical issues for the selection --this election. amanda: let's talk about the sectors and stocks that may do better. investors are trying to get ahead of any big moves, if we see biden coming out with a sustainable energy platform, for instance. are there places that you would put your money based on the potential outcome? in a blue wave scenario,
green energy, infrastructure, materials, industrials should benefit. parts of tech also, utilities would be beneficiaries in a blue wave scenario. ,n terms of the red wave finance and energy would benefit . they would see some sort of relief rally when the regulation and higher tax concerns fade away, if a red wave takes over. in terms of negative impact, we would see some impact from the blue wave on financials, health care, energy. energy would probably be impacted the most, given the ambitious plan around climate spending and regulation. , i believe, would be impacted on the margins. most of the regulation that would come would be around
consumer protection, not necessarily a wholesale change in that regulation. regulation would be pretty targeted. in terms of health care, they some commono find ground with the republican side of the house. vonnie: would all of this be by --h so, yes. ,hen we look at the markets depending on where we see fears around the second wave, when they increase, what the rest of the world is improving on that we arethat is when seeing the rest of the world performing better.
there is definitely going to be a balance. when you look at the overall believe thectually trend higher that we have seen over the last few months in global equities, it will likely continue in the second half. inwill not just be u.s., fact, supported by the international market as well. a couple reasons for that. get those have to reasons next time. unfortunately, we are out of time. that is solita marcelli. looking forward to getting those reasonings. this is bloomberg. ♪
>> it is 2:00 p.m. in new york, live from bloomberg world headquarters, i'm caroline hyde. working to steal coronavirus data, that while twitter looks to see how a cyberattack came from the inside. it is a crypto scam. we dissect with intelligence experts. take a leading u.s. stocks -- tech leading u.s. stocks over. nasdaq is down. the s&p is also in the red. havens could catch a bid. and sustaining the rally, netflix reports after the bell, wall street looking to see if it can maintain its too hot to handle streak after a blowout in april. romaine: you mentioned investors rotating out of the high flyer names. we saw that yesterday. they