tv Bloomberg Markets Americas Bloomberg September 10, 2021 10:00am-11:00am EDT
-- bloomberg markets. guy: i don't think you missed very much. markets are pretty much where they were. we had the ecb, but i'm not sure anything changed. i'm hoping next week a little more exciting. alix: all the major asset classes, ok. that's not too exciting. you can see it in the equity and bond market. we are right where we started. if you take a look at where we are in the market, elevating
that. you have equity up, and it's still tied and energy. -- it still tech and energy. open zak's worrying about complacent -- goldman sachs worrying about complacency. guy: that tells the narrative, doesn't it? you do under all of this chat about the fact that markets a little elevated stateside. in reality, we continue to monitor the data very carefully. we are getting wholesale imageries. we've got .6 in line with expectations. the wholesale price sale. the previous number a little higher. this is important because i
think every market needs to pay attention to the bond market. u.s. producers increasing. this is august data. a little more than forecast. you can see supply chain disruptions continuing. the reason why i say this is important is ultimately i'm assuming you look at the gap, companies are taking this and absorbing this and i wonder whether this is going to show up in the next earnings season. >> let's take a look at what happened with my. we saw the rate come in a little bit lower than the forecast of the headline rate. both training down a little bit. it pushes it up over a year over a year basis, but maybe we are starting to fight now. we can go to the next chart.
this is the good news for equity holders. when you look at what the two components of the ppi report that we have been following, the final demand and the margin. it this is average inflation targets. the final demand number has come down. the ppi for final demand, that is the finished goods. the number four the intermediate has squished down a little bit. the margin compression is not bad. it seems to be getting a little bit better. this tells you the story for cpi and pce. everybody is going to be watching that on wall street. here's why the fed says they are at their target. this is the average for the cpi. this is the average for the pce. they are above the 2% level that
the fed has been looking for as the average so they can start tapering on an inflation basis. we will see will be get from numbers next week. alix: some shakeup in terms of jobs. bank of america announcing its most significant management changes. the bank is replacing cfo and elevating five new members to the senior management team including three women. give us the details. >> we have a new cfo stepping in . he is currently heading the commercial banking division. as a result, we have dean stepping in and he is in a very senior role at the bank. he manages consumer and small business banking. they can more of a commercial role, he will be stepping up.
a number of departures. at some that are related to the previous announcement. if you look at the shares, they have not changed much. we are waiting for later reactions. it may be the market is waiting for existing key players that are taking on more significant roles. we are seeing the five new members that are stepping into the management positions. three of those will be women. the bank is really focusing on showing that it is diversifying both adding females and also diversifying racially across the board. that has been a key focus of theirs and this is really the most significant shift that we've seen in the last decade. ceo brian moynahan is staying on and is basically taking the helm
with new members so we will see how that shakes out and also if the market continues to react in this insignificant way going forward. alix: guy:guy: it feels like it's underway. thank you very much. let's turn to politics. president biden urging china to cooperate on key issues. the biden demonstration a little over what it perceives as a lack of seriousness. i understand. emily, give us the readout. what caused it? what resulted? >> this was a 90 minute call and it's only the second time that these two leaders have talked since biden has become president. it really follows a number of meetings between the u.s. and beijing officials that did not
go the way washington wanted to see it. president biden saying he had heard from his own senior officials that the talks had not been as productive as they were hoping. they kind of had that high profile between secretary of state. it was pretty cordial between biden and the chinese president. this could potentially be a run-up to an in-person meeting between the two of them. the summit is in late october. it remains to be seen whether they are going to be meeting face-to-face anytime soon. >> we just saw senator brown unveil that.
what is in that and how many more of these can we see? >> i think were going to see -- i think we are going to be preparing to see more addendum's as a larger conciliation package comes together and lawmakers figure out what tax provisions they want in this package. this is a really big bill. there is a sense that this is the last big push for a lot of these lawmakers if they want to get something done and across the finish line, turned into law. the proposal that you saw today from the senators, you are going to be seen more proposals coming out in the coming weeks and months. democrats make their bid to get their priorities into it. alix: thank you so much. we've got president biden saying he is going to order all federal
employees to be vaccinated. is it ministration will issue rules requiring -- his administration will issue rules requiring employers to demand -- to mandate testing or testing -- mandate vaccines are testing. >> 100 more employees, -- 100 or more employees to ensure their workforces are vaccinated or show a negative test at least once a week. alix: this is like the gloves are off when it comes to the virus. >> i think that's exactly right. this is a really sweeping mandate. you are talking about every business. a whole bunch of other on top of that to provide pressure, health care facilities.
the whole federal workforce certainly going to -- how strict is the enforcement? what does that look like? to try to get more americans vaccinated. guy: always good to get the update. thank you very much indeed for updating us once again. another bank warning that a selloff is eminent. this week, not so much. this is bloomberg. ♪
guy: one thing this seems to have change this week is we suddenly got this wave of strategists from all of the top banks on wall street sending out a nervous message about the u.s. stock market. it doesn't seem to have affected that sentiment so far. let's get the details. >> deutsche bank is the latest sounding the alarm on u.s. equities. they say a risk of a hard equity correction, combination of extreme evaluations and rapidly
earning cycle. they are saying the market has already pulled forward that return on the -- on the recovery. investors don't seem to be taking any note of it. going all the way back to november. if you look at -- they remain far off the level we saw in 2020 during the pandemic. highlighting the extent of a bullish division we have at play with s&p 500 longs. they are saying any minor connection -- any minor correction could be exacerbating. alix: thanks. let's get into that even more. all throughout the week, i found note after note about wall street thinks getting more scared and nervous about the market. -- wall street banks getting
more scared and nervous about the market. we've also said extreme evaluations -- two also seen extreme evaluations. are you in the i'm scared evaluations camp? >> certainly seen some of the optimism we felt. we face a new uncertainty. we are seeing that growth, but maybe some changes. we've seen the jobs numbers have gotten a little bit weaker. there's going to be a lot of negotiations. we are likely to see tapering at the end of the year. there are some to the market.
the backdrop is still pretty solid. i think given where valuations are, giving -- given the amount of money on the sidelines we could see some buyers. it doesn't necessarily mean worse for the market. guy: can the market go down if we continue to see the amount of liquidity we see slosh around the system? they tell me that is something they focus on. apple -- there is ample liquidity. that is what the driver is. is not going away anytime soon. >> we are still seeing plenty of liquidity in the market. with the consumer itself, we are seeing an elevated personal
trading. equity markets have returned with -- 20% this year. there is some money to be invested, yet, i do think. we could potentially see turn again. we are in a bearish mode. the expectations are coming down. let's see what happens with the virus. alix: in terms of the other thing to worry about, one thing that i feel is going to come back are higher taxes. the tax plan could come as soon monday. it feels like higher taxes among companies. how do you factor that in? >> it is something that we are already talking about in terms of earnings. earnings are very robust this year. we expect a bit of a slowdown this year.
when you layer on a tax increase, we are not expecting a full 28 percent increase from 21 percent. we are expecting more like 25. that would knock off a few of earnings, but it should not deter growth on earnings. guy: what i think might be mispriced, and you can look at the data, is the fact that we are still not factoring in really what higher labor costs are going to be. we just had the ppi number. we are going to get cpi next week. the two numbers still reading at different levels. it hasn't shown up in earnings. do we get that in the next quarter? >> we are going to see evidence of that because supply chain issues continue to be a
challenge for the overall markets. while supply chain issues have lasted, so has the virus. will bc global supply chain lot down, restrictions and other countries, people getting sick and not being able to go to work that slows things down. these issues have persisted longer then expected. we are going to have to continue to be patient. japan, singapore, malaysia. she really some of this usher later on in the year. you have energy and -- >> you have energy and is is this going to be the playbook? you still have to own some
cyclicals? >> the balance is going to be really important. i do think we can see a second wind and some of these value oriented stocks. we had strong growth. we had higher inflation. we are likely to see rates pick up. if those are the three, at the same time we see the virus twist and turn. both stocks have served both very well. focus on where the quality earning is and all factors are coming through. guy: thanks for joining us today. what's coming up? one of the most bored ets that etf's this week. -- etf's this week. the debate continues. this is bloomberg.
since then, there has not been a single day. you add up all of the inflows. it is to end of quarter which is saying something for a fund that has over $8 billion in assets. then you take a look at the holdings. you see 10 sent -- tencent. saw that online retailing. when you have presidents xi -- president g -- president xi, put it altogether and there was at
least some sense of confidence of -- confidence among investors that they are going to work through their regulatory issues. guy: thank you. it's going to wake -- it's going to work its way out. what we basically seen is more and more outflows. i'm not sure if the two things are related. >> our numbers show about $353 million of outflows. the bulk of that coming out of energy. it may just be we've seen crude oil stalled out below $70 a barrel. here in the u.s., it's above -- below $70 a barrel here in the u.s. and it's above $70 a barrel
in the u.k.. a broader bed. about 96 and half million dollars. alix: guy: dave, great stuff. what i find fascinating are some of these energy prices in europe are absolutely rocketing. gas prices. we will talk about it later on. it is a phenomenal story. that doesn't bode particularly well for the winter. we've got some ppi data. ♪
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as bottlenecks in supply work out, that the pressures will leave. from my perspective, i think it may take more time. inflation may remain a lot higher. alix: federal reserve board governor talking about inflation and we saw it in terms of price pressure. what is the real read behind inflation? we go to the inflation man. they are basically a consultant that deals with these read my will, we heard from the fed. we also heard from companies talking that they are able to pass on some of the cost to customers. they see higher inflation. what the market needs to understand is at what point does this start to hurt companies. >> one of the reasons we never
paid a attention to ppi was the ability for manufacturers to pass on the cross -- the cost increases was not very good. we are seen for the first time in a very long time higher wages are being passed along, higher raw and intermediate goods are being passed along. even russian stores -- even grocery stores have them and it spells bad things for the consumer. guy: is this transitory? the central bank seems to be continuing to believe the bottlenecks will eventually work their way through and will be dealt with. i think it's starting to call that into question. >> transitory was always a weasel word. the 70's were transitory.
they eventually ended. i think they originally thought transitory meant three of the bat numbers we are going to get and now it is sort of weaseling into her this year and early next year. people are starting -- weaseling into later this year and early next year. demand came back very suddenly and not coincidentally, not randomly. it came back very suddenly because we had a spat steak federal government spending like crazy and -- had a -- had federal government spending like crazy. alix: we look toward the infrastructure bill, the
physical infrastructure bill. this is mean we are going to continue to see the supply constraints for much longer? what would have to happen to end it? >> why does water boil? you can look at the individual bubbles, but if you want water that's -- want water to stop boiling you have to take it off the heat. if the federal government keep spending and the fed continues to do something other than blowback and drain liquidity, what you're going to see is inflation continue to stay higher. guy: there is one view that basically says this is good. we've been wanting inflation for a while. central banks have been pushing for it aggressively. we've also had a productivity problem because companies have had no reason to invest in people because there were so many people that the gap was
global. able to push through and during wage gains and ultimately companies will have to train and productivity will improve. >> the power of labor is cyclical. if you look back toward the early 1980's, the peak of inflation also is the peak of unionization. as consumer prices rise and that gives more power to unions and more power ultimately to labor and the fact that you have, starting to see diminishing labor forces. people beginning to retire and leaving the labor department permanently. that is yet another cost pressure that producers have to deal with. figuring out ways to squeeze
more out of the lemon is always the story of every manufacturer for all time. there's only so far you can squeeze some of those things. alix: that one put -- at what point do these need correcting? one shipping container carrier because they went so fast. their customers were complaining. can we see some of that self-correcting mechanism, at least in some part? >> that is part of the inflation expectation spend. if customers -- expectation. if customers are complaining, the question is will they continue to pay or will they do without? the answer is customers are continuing to pay. the old west high prices are a cure for high prices because if you get spikes like that, people
have less money to spend on other things and eventually you will have high prices in some ways is offset by low prices somewhere. that is only true if you don't keep adding money into the system. if you keep adding money into the system, you can pay the high prices over here and pay the high prices over there. the willingness and ability for producers along the way and for consumers at the end to continue to pay those prices and so far it seems like they are able to. guy: what is acceptable inflation? when should we start to get worried? this doesn't feel like the 70's yet. maybe our tolerance is a little lower. >> inflation tends to have long tails. it tends to be cyclical. it tends to be secular. i think that the problem is once you have inflation that stays up for sump. of time that stays up for some
time, and -- stays up for some time, interest rates start to go up and it leads into more inflation so you could kickoff a vicious cycle. that happens partially because you have inflation that lasts for certain time above what we have become accustomed to. it's been a quarter of a century and now it's going to be above -- up around five until at least the early part of next year. that runs the risk of turning around the secular trend. alix: what are the line items you are going to be most interested in watching mark >> -- interested in watching? >> of bunch of video socratic --
inflation had the third-largest change in over a decade. you're starting to see that brought an out in ways we haven't seen it in some time. we also haven't seen rent follow home prices. that's what i really want to watch going forward and we know it's going to happen. rent is going to go up and that 40%. that is one of the reasons. i am looking at the breadth more than any other item. guy: michael, great stuff. thank you very much. greatly appreciated.
a few weeks ago, classes started in l.a.. the school districts will require kids 12 and over to be vaccinated by january 10. for more on how this is going to turn out, let's go to sarah macgregor. what exactly is the l.a. district requiring? is it just vaccinations? >> yesterday the school board approved vaccine mandates for students 12 and older. we have seen over the past few weeks, there haven't been major outbreaks. no schools are shut down. a lot of school districts have been looking to see what it looks like. things haven't been that bad. the school board thought that we need this extra protection. we need these mandates and
teachers have to be, i have to have their vaccines. why not the students? the semester which starts january 11, 12 and over will need to have a vaccine if they want to have in-person instruction. alix: joining us now, fedrick ingram. thank you for joining. if l.a. goes to vaccine mandate, what state is going to be next? >> we don't know, but what i would do is i would applaud l.a. in forward thinking and to protect children. that's really what this is about. we know that the delta variant through us a curveball. we are dealing with this as best we can. i believe this president sets a
pace that will be able to put this pandemic behind us if we follow this and get people vaccinated. we hold true to all of the tenants that are right for our schools. so we need all of these things to keep our schools open and -- keep our schools open. guy: what happens to the kids that aren't? what do they do? >> i think every school district, every state is going to handle this in a different way. what we are certainly pushing for is is a way that we can get any kid or student they can be vaccinated to be vaccinated. we have to have those exceptions. exceptions for health, exceptions for other things that won't allow a student to get
vaccinated. i think there are always going to be some exceptions, but we know the only way to get past this pandemic is get the lion's share of americans vaccinated. alix: should schools be offering remote options? i have a daughter in the public school system in new york, and there is no remote option at all. >> the foremost leader to get our schools back in school. in person learning is the best way for our kids to learn. we know it is for their social and emotional health, we also know kids that are ready for the next generation of work. there should be virtual options, but the goal should be to get all of our kids in school to safely keep our schools open and get us back to some sense of normalcy so that our kids can move forward in the way that we want to accept because i'm a
parent also and i have a 10th grader that is in school in person in florida. i won her to be healthy, safe and i want -- i want her to be healthy, safe and i want her to learn. guy: should we insist on the same thing for the under 12? >> when the cdc done all of their testing, all of the guidelines that are necessary. we should make sure that we have everything in place and be done with this vaccine. when we found out that the vaccine works, will be found out the vaccine was safe, when we started to mass-produce this vaccine, all of those things. i think the cdc is doing all of the right things. we have seen very good progress as a relates to the vaccine. so we hope in the very near future we can get our kids that are under 12 vaccinated and
healthy and safe so they can go to school. alix: something that i know a lot of parents are looking into is what will trigger a school closure? that will have huge ripple effects across the work chain. two cases and then four and that made a very big difference. the school was closed for two weeks. do we know what the right criteria is for that yet? >> for this mutation of the delta variant, it is at a surge. in my home state of florida, we have not dealt with it in a -- we have not dealt with it in the way that we should. we are not advocating for that. in certain circumstances, we have to have a point. those points will continue to evolve as the mutation evolves. i think it's going to be
community by community. i don't think there's going to be a blankets do this or do that. it just depends on the productivity rate. a depends on who is actually getting the virus and what are the applications around it. guy: a question about how schools are coping with shortages. we are seeing a shortage of truck drivers around the united states. i hear that is now impacting the availability of bus drivers to transport kids to school. i imagine that is impacting the school system and other ways as well. these shortages are showing up. how are schools in your district coping with that? >> school districts around the country have been dealing with feet -- have been dealing with shortages for the better part of a decade. it has been a pretty bad circumstance. we believe our government has to do more to entice our young
people to become teachers and we have to do more to retain our teachers. the pandemic has only exacerbated what we are ready was there. is there a teaching shortage? absolutely. how we are dealing with that is we are trying to make sure that we can retain the educators that we already have. that -- when you have governors like rabbits and desantis who make -- when you have governors like governor abbott and governor desantis, trying to do harm to those superintendents and those school board members that are trying to do the right thing by educators. educators want to be safe. we want to go to school. we want to love -- we love our kids. we want to have the respect and we want to have a community of people around our profession
that will make it more enticing for people to stay and for more people to,. guy: we appreciate your time -- more people to -- >> more people to come. guy: kids need to go back to school. the need to be safe. the need for the parents to be able to go back to work. this is a huge piece of the puzzle. i don't think we still know how it's going to fit into the bigger picture. alix: the teachers union hold an anonymous amount of sway, at least here in new york. -- amount -- hold -- at least here in new york. guy: american air, the company ceo coming out.
to wind up buying gas. you are going to go to call instead. no matter how much you want clean fuel, you may be forced to go in and buy coal. j.p. morgan is looking at about 200,000 barrels will be moved from gas to call because of this price rally. guy: it's a really big story. we've got to talk about it in the next hour and a little more detail, but today is a significant day. the very controversial gas pipeline from russia into europe has been completed. it is not operational yet. nevertheless, we are looking at a huge green space. you've got competition between european gas buyers and asian gas buyers. it is something the russians are keeping. it is not just the gas market.
at the white line is natural gas. you can see that pushing higher, that it is also affecting the price of carbon, electricity. we are going to be want -- we are what you want to think about this toward christmas. alix: we also have breaking news. president biden in a bid to pressure beijing. they are looking into a new investigation into the chinese subsidies and the damage to the u.s. economy. that comes right after that 90 minute phone call between biden and xi. alix: we are what -- guy: we are one to talk about that. this is bloomberg. ♪
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johnson and alix steel. guy: friday the 10th, 30 minutes to the close, what do you need to know? despite construction of the controversial nord stream 2 pipeline being completed today, gas prices soar in europe to fresh record highs. you want to pay attention to the story, it will have an interesting implication. battle lines drawn in europe. finance ministers diverge on whether spending limit should be imposed. u.k. growth grinding to a heart as the delta variant hits the reopening and consumer spending stories. today we are down a little. we are down by .2%. it has been a flat