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tv   Bloomberg Markets Americas  Bloomberg  August 16, 2021 10:00am-11:00am EDT

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guy: 30 minutes into the trading day. from london, i'm guy johnson. the headlines are out of kabul, but the story of the markets out of china. alix: you can see this as the u.s. session get underway. the s&p is down .6%. take a look at crude, down 4%. smaller independent refiners, weaker chinese data coming out. that has been where commodities have been hit. yield down five basis points on a 10 year. the result is a safe haven bid,
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dollar-yen down by .4%. it is hard to make a lot of this because there is going to be light trading, in europe, and you have to wonder what buying we will see on a summer monday. but side of the risk off as we kick off today. guy: and we get powell tomorrow and i wonder if that town hall from the chair is going to be almost as important for laying the groundwork for what happens next as jackson hole is going to be paired that will be the focus tomorrow. today, the taliban taking full control of afghanistan as the u.s. hastily withdraws. chaos raining in kabul airport today. thousands rushing to exit the country after the militant group moved in yesterday and took over at presidential palace. joining us is the national bloomberg security reporter.
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many people are drawing comparisons with what is happening in kabul to what happened in saigon. what is the president going to say? bill: i think you are absolutely right. we still don't know what time the president will be speaking, but he has to. it is politically important to address the country in terms of white people are seeing this chaotic situation at the kabul airport. there were expectations that the taliban could eventually take over afghanistan. i don't think anyone expected it to be so quick with the u.s. basically rushing in 6000 troops to secure the airport. and get the allies out of the country. alix: what do you expect president biden to say. ? bill: what he has said was that the u.s. ultimately went to
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afghanistan to get al qaeda and osama bin laden in that mission was accomplished long ago and as bad as this situation looks, i think he is going to argue there was no better situation. it was a bad and he was dealt and the option would've been to send thousands more troops back in for an indefinite period or that was not a solution he was comfortable with either. it is a situation that will become a political crisis for the president if he doesn't get on top of what we are seeing out of kabul. alix: thank you very much. from geopolitics to domestic politics. the launcher -- president bide'' is long-term economic policy. a timing on the vote of the infrastructure package and the blueprint. joining us is annmarie hordern. what is the procedure?
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annmarie: a lot of pressure on the president on afghanistan. domestically, it is at a standstill. we heard from speaker pelosi over the weekend and she was outlining a procedural vote away that they could vote on a bipartisan infrastructure package in the democrat only reconciliation package. we are hearing pushback from nine moderate democrats saying that is not good enough. we want to vote on this so it can become a law. we will have a call tomorrow with speaker pelosi, the democrats are, and they are coming back next week to vote on this resolution. house moderates are saying when we come back we want to move the bipartisan infrastructure package forward so it can become law. we are in the same place we were when i spoke to you on friday. guy: not a lot of movement
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forward. thank you, annmarie hordern, joining us from washington, d.c. economic data, china's economic activity slowing more than expected in july. further risk to the recovery hit by floods and the faltering global story. fixed asset investment missing targets good joining us is michael mckee, do we have our arms around an understanding of exactly how far the chinese economy is slowing? michael: it looks like it is slowing faster than expected. you can see the numbers. the big missed and how far they came in from the june numbers. demand has fallen off in china as the country has shut down. that may be different from what is happening in other places, because we are keeping our markets open.
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what happens in china affects the rest of the world. take a look at imports into china from the rest of the world last month, and they dropped dramatically. if that were to continue happening, that is a problem, not just for the u.s. but with europe as the biggest trading partner. the rest of the world slows down and it hit confidence. the idea that the delta variant is moving fast and having that impact has hit what we have seen in our economic data so far for the month of august, the university of michigan number on friday was a big role over. also -- rollover. also, consumers and businesses worried about what's happening. alix: thank you very much, bloomberg's michael mckee. the s&p retreating after finishing the 48th record since the end of 2020. ritika: kara murphy kara murphy
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-- --kara murphy will be joining us next. this is bloomberg. ♪
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alix: u.n. security council started emergency session on afghanistan. you are looking at the secretary general speaking. he is calling on the taliban to exercise restraint. afghan females need to remain and we must act together and use all tools at our disposal. the question mark is what western countries can do. the story of the markets, we look forward to jay powell and sell retail earnings as well
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paired abigail doolittle has the details. abigail: starting out with jay powell. fed chair jay powell hosting a town hall for educators. some investors and traders looking for clues on will there be talks about tapering. if you look at this chart of the fed's balance sheet, are the pandemic crisis and into present day, $8.3 trillion, a steep uptrend and then a slow uptrend. very likely -- very unlikely that trend will be breaking. we will be watching. retail sales, the actual number is 11.3% good i believe that was the number back in march, were recently dipping. the forecast for the month of july calling for a dip, down .2%. it will be interesting to see if
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that happens this will be a strong talent in terms of the delta variant. is it causing people not to shop? we will watch numbers tomorrow. a big week for retail earnings. tomorrow, walmart and home depot and then on wednesday, target and lowe's and t.j. maxx. and then his questionnaire he spending. it is going to be interesting to see the numbers out of these reports. will fed chair jay powell be talking about the delta variant and what it is doing to the economy at this time? guy: i suspect he will be. i go back to the university of michigan data friday, a really big move down. consumer confidence being hurt by what is happening in the labor market. more importantly what is happening on the inflation front. kara murphy, kestra chief
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investment strategist is joining us. it seems to suggest the data is slowing down. we have seen it out of china. you have seen the data. how much attention are you paying to this and how significant do you think the slowdown will be? kara: i was surprised that economic activity is slowing going into the second half of this year. a lot of this monetary stimulus moved to the system. it is only natural we would start to come off of that. that said, we are still borrowing. there is still a tremendous amount of stimulus in the system there is a lot to be positive about. alix: does that mean bad news is still bad news? i was wondering if bad news was good news and the fed might dial back a bit to let the economy since its way out? kara: we are on this tight rope,
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you want the fed to continue to lean in and provided stimulus but we also know they have to withdraw that slowly. what we want is a relatively slow moderation in rove to give the fed time to react and to prepare for it. guy: do you still want to be long stocks and if so which ones? kara: i do. there is a tremendous amount of momentum. corporate earnings are very healthy, balance sheets look healthy. consumers look healthy. they have a lot of money in their pockets. what we are looking at are a couple of areas, homebuilders, discount retailers, areas that can benefit from continued strength in the labor market, continued strength in extra cash in consumers' pockets. homebuilders are a great example and have done fairly well.
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as home builders bring more supply online into next year, we will have a continuation. alix: that was definitely a popular narrative but the number on friday was so bad and all across all age groups, he saw sentiment really rollover and prices continuing to rise. does that dent this particular part of your thesis? kara: is really a longer term. there is no doubt the increase in delta cases has bent consumer confidence. they will not be impacted by a downturn in sentiment. people are making changes in their lives and moving and this will last for quite some time. guy: you think house builders will be hit by labor shortages? kara: there is always something
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to worry about air not long of a we were talking about increase in supply inputs. now those costs have come down. labor is certainly a concern. the construction industry has had a hard time hiring people. different industries that struggled to higher benefited from increased wages. we think the labor shortages can be met in time. alix: have cyclicals bottomed? kara: on the industrial side as well, there has been a lot of focus on the infrastructure bill and how that can help the industrial part of the economy. there are other longer-term trends. those companies that have a tremendous amount of money on their balance sheets. cash flow has been very strong. you have construction in china and in the supply chain from covid. a lot of these are causing u.s.
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companies to refocus on building inside the u.s.. that be a trend we will see continuing. guy: you step back, this market has gone from strength to strength to strength. i wonder what knocks it off of course. we have not had a series correction. if we get a correction, what kind of big picture environment are you looking at? it feels like the market is incredibly bullish right now. kara: the biggest concern here is inflation, which we touched on earlier. the fed is walking a tight rope and we want inflation to subside but not too much. there is a policy change that has to happen in this will take some time. just looking at the balance sheet. that needs to be unwound over the next year and a half. we will watching that closely to ensure we have a slow moderation in inflation.
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it is not going to be all that easy. alix: that is what i find to be interesting. the volatility of the vix is up significantly, where the vix is right around 17, and that is pretty disjointed compared to what they usually are in history. what are markets then so worried about when it comes to the vix, unwinding paper without disruption? kara: i would say that is the biggest focus for markets. the fed has been on the side of risk assets. as it starts to withdraw, or risk gets built into the system. as we have seen this withdraw in previous cycles, volatility in the market tends to pick up. that doesn't mean the trend can't continue to remain constructive. guy: we are going to leave it
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there. thank you very much, kara murphy . next, tesla taking a hit. why the u.s. has just opened an investigation into the autopilot system. you can see the effect on the stock, down nearly 5%. alix: we are listening to the un security council meeting underway. you are looking at the representative from estonia. the wind will remain in afghanistan to help afghans, according to the when chief. mr. gutierrez has said they are operating in areas and is concerned about the rights for afghan females. we will keep our eye out and give you updates. this is bloomberg. ♪ >> only a negotiated political solution can lead to durable peace in the country as well as stability in the region. mr. president, i would like to reiterate estonia's commitment
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to the people of afghanistan. however, our cooperation with any future afghanistan leadership will be based upon --
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>> time for the business flash, some of the biggest news. saudi aramco in what could be a $25 million deal on the purchase of a 20% stake in allianz industries. it is backed by an agreement and it could be reached in a couple of weeks. jay-z wants to add -- mobile to get into the mobile sports is in his. it is undergoing a reorganization under michael rubin, the founder and executive chairman who is now taking over as ceo. the u.s. government opening a
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formal investigation do tesla's autopilot program. the national highway traffic safety administration says it launched the investigation after 11 crashes that resulted in 17 injuries and one fatality. that is your latest business flash. alix: let's get more on tesla. dave wilson has been taking a look. dave: beyond that, we are talking about 765,000 vehicles, all four of tesla's models going back to 2014. the question is -- did the autopilot have an issue that led these crashes in the 17 injuries and the one fatality that resulted from them. that is the focus at this point. because we are talking about a u.s. agency, there is the potential for recalls, for other
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corrective actions. you see the numbers in terms of the effect of these crashes going back to 2018. it really becomes a matter of trying to figure out what happened, how it happened, and there will be plenty for the investigators to work through, no question. beyond that, take a step back and look at tesla your they don't spend as much -- tesla. they don't spend as much on research. the revenue has taken off as they have ruled out model after model. that said, you are talking about 5% of sales going into research now as opposed to more than 11% back in 2017. so whether that's an issue, knows. we certainly -- an issue, who knows. we have certainly seen issues with them before. they soared before going into the s&p index. the net, a decline of 2%, even
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though you look over the past year, the shares had been way up. one other piece of the puzzle is tesla's in a different financial position now -- tesla is in a different financial position than it was before. and now the recalls or whatever might happen with the investigation, you are talking more than $60 billion of cash on hand, for five times that a year ago. guy: they will need to spend some of that. thanks very much indeed. i think this is interesting, because you could argue the difference in terms of the valuation between tesla and say volkswagen and other car companies, they can do the engineering pay what they can't is the software and that is where tesla is strongest. if you start to question that, maybe that you wish and cap starts to close.
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alix: i feel like the conversation six years ago was that tesla doesn't know how to manufacture cars. that is what volkswagen is good at. and we are learning that although that is an important component, there is a lot more they are good at, which is a different kind of narrative. guy: volkswagen has invested huge amounts of money in software. that is where they think the opportunity now lies. from a mechanical point of view, they commit cars. in order to be tesla, have to do it all and you have to make the software work and the batteries work. there are all kinds of challenges. software is the differentiator at the moment. it is having a big impact. the nasdaq up by 1.2%. tesla is the biggest element of that within the nasdaq. meaningful impact.
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alix: so is my journal -- so is moderna, stocks down 10%. the nasdaq rolling over the worst performing index on as you pointing out. barely in the green as far as the s&p. yields are basing lower by four basis points. dropping like a stone over the last hour in trying to stabilize. guy: we europeans like to take our holidays. you look at data from both sides of the atlantic. the s&p volume down less than .1%. european holiday story. china's economic recovery. we are going to talk more about that, next. this is bloomberg. ♪
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>> the worst is yet to come,
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because from the policy and the outbreaks, the majority of the impact will be felt in --. i worry about asset, but it should be higher. that number worries me. >> we are expecting the pboc to cut by 10 basis points. we don't rule out a rate cut as soon as today. guy: some of our guests talking about what we are seeing in the chinese economy. the data are showing it is slowing more rapidly than we anticipated across a number of different metrics. bruce pang, head of chinese medicine securities macro and strategy is joining us. the slow down seems to be picking up. is that your expectation that that continues now? bruce: i think the data comes
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clear. the growth drivers like production, consumption, floods, covid-19 cases. alix: what is going to be the policy, appropriate policy response to this considering china and what they can actually push out? bruce: after today's data released, expectations for a rate cut. the pboc would avoid a hasty action behind the july data. the economy is worse than the data reflects. we think that china will adjust and fix the uneven recovery with
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targeted credit support and systemwide using and rarely with the second dish in the second half of this year. guy: one of the data points i'm focusing on is what is happening with unemployment in china. it is taking up and particularly -- taking up quickly. what of the policy for china to do for that? bruce: after the july meeting, they want to have adjustment, that means no drastic shift. continue to moderate monetary policy as well as a proactive fiscal policies. just like the national and local
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issuance for the next two quarters will be the key focus for the market. alix: how much of what we saw today and we will see in the next few months is short-term from covid resurgence, less efficacy of the vaccine versus a moderna and pfizer and typhoons and will it more permanent? bruce: i would say let's wait for one month to see the data to see whether this is a short-term short or more structural story rounds -- slowdowns. there are some weak points. the job market pressure, unemployment rates, age 16 to 24 rose to a record high to 60% in
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july. over 9 million college graduates, i think this may continue to suppress domestic consumption. alix: thank you very much. even if it is a short versus long-term or medium-term situation, it will have enough of any fact eared all you have to do is look at the your stoxx 600. guy: china is the story here in europe today. you look at what is down, the money sector under pressure, you can see what is happening in kabul and in crude people of those markets down sharply. you take a look at what has done well in your, cac come into the record high, powered by
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cyclicals and luxury out of france. most areas could be exposed to significant or sustained chinese slowdown that does come with policy response to change the rates we are seeing at the moment. you look at the german autos and industrials. i don't think today is a good day to judge it on because the volume is light. alix: it is going to be difficult to extrapolate what is happening in china and the rest of the world looking at a delta resurgence. is it more and efficacy of the vaccines and delta versus a broader covid shut down? that will make a difference and it comes to different regions in europe and the u.s. trying to manage delta and staying open. guy: china has a real problem. there is a lot of evidence saying the vaccines are as effective and they are taking a much more robust -- trying to produce a much more robust
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response to any cases they are seeing. part of it is shut down. the implications of that are absolutely huge. you will see the effect pretty soon in new york and in l.a. and in rotterdam. that story is going to be one we will have to live with as we go through the fall, if china's having this problem, the ripple effects in the supply chain we focus on be there for a while, a significant while. alix: 100%, when the production unit shuts down, what are you going to do? in new york city, mayor bill de blasio saying new york city will mandate vaccines for using is -- for museums and stadiums starting tomorrow and the first shot will be required for concerts and theaters and casinos. today it you will have to have vaccines to eat indoors. guy: have unique new doors yet?
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alix: no, only outdoors for me. guy: you went to a bar. i know this to be true. alix: i-8 outdoors -- i ate outdoors in a bar. the place was jamming yesterday because they can't find workers. guy: that is why you are seeing portions of the labor market. we need to get back to the afghan story. pictures out of kabul extremely alarming. what does it mean for u.s. policy. bruce hoffman, security expert, is joining us next to talk about this. this is bloomberg. ♪
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alix: -- ritika: this is bloomberg markets. coming up, 12:30 p.m. in new york, this is work.
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-- this is bloomberg. ♪ the taliban taking full control of afghanistan two decades after they were ousted by the u.s. military. the militant troop moved into kabul yesterday and took over the presidential palace. hours earlier, the american backed president left the country. chaos at kabul international airport today. thousands rushed to exit the country had five people were killed as people tried to forcibly enter planes that were departing. the biden administration plans to introduce benefits, going up more than 25% from pre-pandemic levels for people in the program. billions more in cost for the government. the new coronavirus surge is
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prompting more americans to get oxidative. the u.s. reported a million vaccine doses nationwide on saturday, more than double of the low reached in july. almost 60% of the u.s. population has gotten one dose 51 percent are fully vaccinated. global news 24 hours a day, online and at quicktake on bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. alix: and afghanistan, the possible applications for u.s. foreign policy. joined us is bruce hoffman, homeland security. according to national security advisers, we will hear from president biden later on today and he wasn't prepared for a third decade in afghanistan. what do you think the world needs to hear from president biden and he speaks? bruce: research of u.s.
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leadership. this debacle is on the americans head as much as it is on the afghan government and security forces. it goes to u.s. moral values. totalitarianism something of the past and rights to democracy and freedom is essential. guy: who influences afghanistan? bruce: it is much closer to china in the recent weeks. senior taliban officials were hosted by china. china shares a border with afghanistan. intense interest in that country, both in terms of stability but because of china's economic expansion and the opportunities available in a stable and peaceful afghanistan which presumably the taliban will be able to enforce. alix: with russia, the country
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saying the world is watching in horror and the results are washington's latest experiment. as the threat of the fear of influence moving towards china and russia or is it the fear that we will see u.s. political foreign support eroded? what will be the longer-term outcome of this? bruce: they are compound problems. you are right and i was say for nearly a decade now, wherever the united states has had director sensibility for affairs in that country, whether iraq, yet, or syria, adversaries or competitors have been quick to move in and take advantage. the biggest problem we face in the united states today is let's face it, 20 years ago the war on terrorism had bipartisan support. we are in a country now that is politically divided. guy: comparisons with the
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evacuation of saigon? bruce: useful up into a point, decades of investment in the effort. the fact of the matter is the withdraw from saigon at national and regional implications. the vietnamese army worked going to come after the united states anywhere else in the world. that is why it is an apples and oranges comparison. afghanistan will have far-reaching international security implications, including for the homeland of the united states. alix: if the u.s. foreign team got it wrong this weekly, what else could also be getting wrong? bruce: i don't want to minimize what a colossal blunder this has been. every administration for the
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past 20 years involved in afghanistan got something drastically wrong. the point is now is how we compensate for this. the united states risks being regarded by our adversaries as almost an impotent power. so how we respond is going to be absolutely critical. guy: are people making this comparison with taiwan and talking that taiwan will look at this that you've alluded to that the u.s. maybe isn't the ally that they may be thought it would have been. if i am sitting in taiwan, is that how i should be reading the situation in afghanistan, that the u.s. won't be there for me question mark look radically different. bruce: -- won't be there for me? these look radically different? bruce: you are right.
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taiwan could be directly affected from what as -- what is seen as a week u.s. foreign policy. friends and allies of the united states everywhere, now especially, the trip administration which had more isolationist approach, and we see that replicated and people will have profound doubts. alix: as we end up seeing the pictures trickling out with people having difficulty getting out, what does the u.s. need to show within the next 48 hours that the u.s. is not impotent, as you put it? bruce: protecting civil river teas and rights of the afghan people and indeed of taking care of and providing for the safety of all those supported us, but not only interpreters, humanitarian relief organizations, ngos that
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promoted women's rights and the ability for girls to go to school. we need to tell the taliban that those people need to be protected. people will be allowed to leave the country if they choose to do so. certainly if the taliban begins persecuting and executing supporters of the previous regime of the united states that the united states leads the charge in sanctions. guy: let's talk about what could happen next, and that is a situation where afghanistan sucks in foreign fighters and spit them out again for the rest of the world and those represent a huge threat. how does the u.s. -- how does forces prevent that from happening? bruce: it is already happening, in fact. according to successive united nations reports, the taliban has closely consulted with al qaeda
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every step of the way with negotiations and in this rapidfire -- of afghanistan. we need to go back to the future in essence. same responses we should've had in the 1990's to -- would have to be revisited and re-examined. guy: thank you very much for the insights. this is bloomberg. ♪
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>> time for the is this lash -- the business flash. kkr being bought for $2.7
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billion. the chain is betting on growth in vacation travel despite the pandemic. they will go into 11 new european markets. green bonds more investment in the social and governance metrics. the bank says it is part of a strategy to link sustainability to all forms of finance. the financial services is leaving york offices. they plan to close to midtown manhattan offices. the company says staff will work motley or from buildings in new jersey and connecticut. -- will work remotely or from buildings in new jersey and connecticut. alix: you don't return to the office at all and that will have issues in new york real estate and what about the businesses
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around their? it is the triple -- around there. it is a triple threat and how new york can recover. guy: where one goes, do somebody else step in? don't know the answer. i get really different ports on what is happened -- happening in the london real estate market. i walked around the streets and nothing is happening. there are different parts that are busy. the west and is busy, but the city is not. the coffee shops certainly suffer and you can see that around here. try getting a haircut on a monday or a friday, as i have found. alix: you have it easy. new york city mayor bill de blasio mandating vaccines for museums and stadiums.
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he will not impose a mandate for schools. why are they not going to impose it for child care but for theaters? what is the logic? drew: what you are seeing with these mandates from new york city is basically it is saying if you want to go to these places, you can choose to go and recreate and have fun, places where you being there is not related to your employment, you have to be vaccinated. these are also crowded spaces and lots of intermingling. when we talk about offices, schools and childcare, that will deal with employment issues, union issues as well. it may be those are harder to execute right away. we have seen a lot of employers require mandates already. i wouldn't be surprised if the conversation about those places is ongoing. that may be a much harder bridge
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to cross than what we are seeing right now with more recreational venues. guy: is there a sense in the united states that companies are going to be better at getting their staff vaccinated than government is at the moment? it looks like the u.s. is starting to fall behind and many people are becoming increasingly hesitant about getting a vaccine and it is just turn to show up in the data? you look at the comparisons between europe and the u.s., is there a sense that companies will be better added and be able to communicate with workforces and persuade them this is the best way forward to mark drew -- weight forward? drew: i think they will. it can say if you want a job here and come to the office you need to be vaccinated. they had the legal ability to do that. government a lot of times may have to make up laws to do that. it is a longer process and may
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be more susceptible to challenges. alix: what percentage do we need to get to to get to herd immunity. bruce: -- drew: it is going to be a moving target. guy: there is a strong debate happening in the u.k. that you never get to it that this becomes endemic and you live with it and you are going to transmission and that is going to be part and parcel of life going forward. great to talk with you, bloomberg's drew armstrong. we are counting down to the european close. the macro chief global strategist joining us to talk about what we are seeing for europe. this is bloomberg. ♪
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europe. this is bloomberg markets, european close with guy johnson and alix steel.
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♪ guy: monday the 16th, 30 minutes until the close. copper and crude both dropping it sharply on the back of week chinese and u.s. data. european stocks are down, europe sending aircraft into afghanistan to evacuate citizens and allies. it is unclear with the situation on the ground will be when they arrive in kabul. the airport looks like a real mess right now. there are large numbers of fatalities being reported. we will see what that happens as the evacuation continues. the german radar and battery tech night -- technology


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