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tv   Bloomberg Markets  Bloomberg  September 22, 2021 1:00pm-1:30pm EDT

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expand production of coronavirus vaccine in order to end the pandemic. he hosted a virtual summit today calling the pandemic quote "a global tragedy." pres. biden: we need other high-end income countries to deliver on their vaccine pledges. that is why we are launching the eu-u.s. vaccine partnership work more closely together and with our partners and expanding global vaccination. mark: the president said the united states will buy another 500 million doses of pfizer-biontech's vaccine for donation abroad, pushing the total u.s. donation pledge 1.1 billion doses. the democrat-controlled house passed a bill to suspend the u.s. debt ceiling into december 2022. and provide government funding to operate passed to the end of the month.
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the political standoff raises the chances of both the government shutdown and default. turkey is sending more troops to northwestern syria as it prepares for a critical meeting with the leaders of russia and iran next week. the government is worried an attempt by russian back to syrian forces to move on the rebel forces would send more refugees streaming toward turkey. the president will meet with the russian president and the iran ian president on september 29. global news 24 hours a day on air and on quicktake by bloomberg. powered by more then 2700 journalists and analysts in over 120 countries. i am mark crumpton. this is bloomberg. ♪
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>> it is 1:00 p.m. in new york, 1:00 a.m. in hong kong. i am matt miller. count down to the fed. we are less than one hour away from the fomc decision. i will be speaking with the former advisor to the dallas fed, danielle dimartino booth, now the ceo of quill intelligence and bloomberg opinion contributor. we have the latest on china's evergrande as a sources close to the government say the real estate drive will be restructured into three separate entities. what kind of fallout will that have? we hear from the cofounders of one of the fastest growing and best-performing firms in credit investing, diameter capital partners. they discuss the opportunity with the fed's move. i want to check on what is going on in the market.
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another day of gains and little bit stronger today. up more than 1% on the s&p 500. we have been over 4400 for some time today. the u.s. 10 year yield coming down as investors buy the government debt. dollar index down 1/10 of 1%. crude up to $71.98 a barrel. something caught my eye today in italy and that is a move in the countries 10 year yield. it took a dip today after bloomberg reported the treasury is planning to skip its usual sale of euro denominated conventional debt by banks later this year. trading at 66 basis points. it would be the first time since 2018 italy skips a conventional debt.
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they are looking to close the gap between italian and spanish debt yields. interesting movement on that bloomberg scoop. with us now for more reaction or expectation ahead of the fed is cross asset reporter katie greifeld. a lot of the times you see almost no movement that i guess today there is a little bit mixed in. katie: if you look at the s&p 500, up over 1% on track for its best day since july, would probably do see mentality going on today. ahead of the fed that is a pretty big move. the consensus heading into the fed is that it will be a smooth meeting. they will set the scene for the november taper announcement but you have a wildcard in that we get an updated dot plot, a look
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at the 2024 dot for the first time for what life after liftoff looks like. that could be a wildcard but looking across markets today clearly investors are not worried. matt: for all of the talk of new records that have been made this year i noticed a chart today showing how calm the s&p has been in 2021 compared with 2020. we saw 110 1% or more moves last year compared to 30 some today including, today, making it 36 moves in 2021. the market is not moving as much or not quite as volatile. katie: it is remarkable. i saw that chart. i was amazed because it has felt pretty volatile but you look at
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that and it would suggest it has not been. we are heading into what could be a pretty volatile end to the year. prior to today's session, if you look at the s&p 500 on a sector level, everything had been in the red in september. that had not happened since march 2020. energy has eked out again, good day for energy stocks. one sector in the green for this month but it could be a volatile few months. everyone wants to talk about seasonality, september pretty shaky month, and we have seven trading days left to get through and a fed meeting today. matt: what is the consensus for the fed meeting? katie: not much in terms of rocking the boat. all the way down it has been pretty clear about the expectations for the economy. they are watching the delta variant. they think inflation is transitory. they are expected to set the
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scene for a november taper announcement and when you talk to investors across the street no one seems to worried about that. but the dot plot could be a wildcard, life after liftoff. if you look at the, bond market as the five year treasury yield, that is the belly of the curve expected to be in control. investors trying to price the path of the fed policy. that is rising today and if you look across the rest of the curve long-term rates are dropping. you are seeing curve flattening as we await the dot plot. matt: katie, thank you very much. cross asset reporter showing us the market ahead of the fed which is coming out in less than an hour. within four years the cofounders of diameter capital partners but one of the fastest growing and best-performing firms in credit investing. now an exclusive interview with erik schatzker that discussed
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investment opportunities in the next taper tantrum. ♪ erik: many in the markets are terrified by the prospect of a taper tantrum. are you? >> i love it. we might as well lose money at the beginning but we have the watchlist, the process, each analyst is ready. we are disappointed there has not been one yet, and i think that would be a great opportunity for us. erik: because the echo >> what we would rather do -- erik: because? >> what we would rather do than grind returns is just by good risk and taper tantrum's 2013 created the opportunity for that. it was there for three or four weeks and then it was gone. you had a loan market taper tantrum where we put 15%
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of the loans in two weeks. would we be excited for that again? people have been predicting that all year and it has not happened. are you positioned exactly right for it? no. you have to be able to change. what does that mean? run low gross, which we are. s we do notco run grosstt in velocity especially like now. we are being more patient. we are not patient people but now is the time. erik: scott's excitement jumping off the page is where we are different. >> you are saying high quality bond, trade down. they do not go to distress levels. they go from 90 to 98, 98 to 88. these companies are not defaulting. they are down for technical reasons. they look at the yield and say,
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this does not hit the yield bogey. credit people might be having outflows because the retail market might say, bonds are going down. i want out. we have set up the firm to be at the intersection and be able to buy the highest quality stuff when it is down and that is represented by taper tantrum. matt: cofounders of diameter capital partners speaking with erik schatzker in an exclusive "front row" interview. tune in tonight for the whole thing at 9:00 p.m. new york time. what to expect from the fomc rate decision with the former advisor to the dallas fed and the founder of quill intelligence, danielle dimartino booth. this is bloomberg. ♪
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matt: this is bloomberg markets. i am matt miller. facebook feeling the pain from apple's new restrictions on data collection. dave wilson has been looking into the stock for us. dave: back in june apple changed the operating software for iphone which required people to opt in in order to be tracked across the internet. no surprise, most people said no
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and that is become an issue for facebook in terms of their advertising business. they pointed out in july when it came out with second quarter results there was already becoming an issue and it would be even more of a concern for this quarter and next quarter. third quarter is almost over and it came out with a blocked post on their facebook business blog that, among other things, "we have heard from many of you the impact on your advertising investment has been greater than you expected." that becomes, an issue especially in north america where most of facebook's revenue comes from advertising on a per user basis level. far more in europe and far more than other parts of the world. to have this issue with the ios software and apple, it comes at an inopportune time because only
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in the past few quarters facebook has managed to renew its growth in advertising. it slumped before the pandemic kicked in and in the last few quarters you see a re-acceleration of ad growth. have advertisers not know how much they're spending, that is not what you want if you are facebook. matt: dave, thank you. dave wilson looking into facebook for us. let's get to the fomc. rate decision out in about 45 minutes. we want to bring in danielle dimartino booth, former advisor to the dallas fed and the ceo and chief strategist for quill intelligence as well as bloomberg opinion columnist. you have some observations as to how the fed would normally react
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in such a politically charged environment around the debt ceiling debate. danielle: indeed and i think a lot of investors are missing the fact the fed does not make major policy shifts when there is as much drama going on inside washington, d.c. as there is right now. as we were coming into the segment you flashed a headline that said treasury secretary janet yellen is appealing to the ceos for help with the debt ceiling. that is code are saying we are going to try to get the lobbyists to put more pressure on the gop to join the democrats in raising the debt ceiling. this is a very tempestuous subject and it involves the federal reserve directly. i do not think investors are paying close enough attention to the role the fed is going to play and the fact they cannot taper. they cannot do anything until this is resolved. matt: how serious is the situation? can you imagine that we get to a
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place where the united states of america, not because we can't afford to but for political reasons, doesn't make an interest payment on debt. danielle: i think that kind of nuclear moment, if you will, i think we are closer than people appreciate. ironically enough there was a blueprint laid out when bernanke was running the fed in 2013 about how the treasury might go about strategically defaulting on treasuries that were on the balance sheet. at the time jay powell was part of an emergency october 2013 fomc meeting and powell commented he would see such a move as the fed helping facilitate a default on treasuries as being "loath some." i am right there with him. that would be a terrible position for the fed because that would make monetary part of
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politics and that is prohibited in an institution that is, by design, independent. matt: let's talk about the dots. do you see any movement? do you think what most people are going to pay attention to today? danielle: i do. it is that lucky number seven and if we see it move up to eight or nine, especially given the construct of the open market committee is changing so much in january, you have three hawks coming in in addition to a known -- christopher waller is on the federal reserve board. you have four known dissents in 2020. if we see the number of individuals increased to seven, 8, 9 or 10 advocating for that taper in 2022, that changes how
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the market perceives the fed despite what chair powell may say at the press conference at 2:30 eastern. matt: first of all, thank you. kathleen hays always does a good interview. danielle: seriously. matt: it is continually climbing and even a taper is not going to reduce that. they are going to add to it at a slower pace. do we ever reduce the fed balance sheet? is it necessary? danielle: that is a good question because that was an experiment that ended up being a failed experiment. the quantitative tightening, and to the fed credit the only major bank trying to pull back and tighten strategy and reduce the size of the balance sheet after the crisis, but that did not succeed. right now we are just talking about tapering but to bring back
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word we have not heard, what about reinvestment and holding the balance sheet at a steady state? that became a subject of debate in and of itself, to say nothing of raising interest rate itself. there are a lot of moving pieces and these markets, as was on monday, are very vulnerable to any excuse for a selloff at this point. matt: danielle, thank you very much. danielle dimartino booth, ceo and chief strategist for quill intelligence and also bloomberg opinion colonist. you can sometimes see her work on the terminal. coming up at the bottom of, the hour we have the special coverage of the fed. will be joined by tom keene, jonathan ferro and kailey leinz for that. one thing fed policymakers are definitely going to be asked about is the situation in china
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with ever grand. we have the latest on a possible restructuring next. this is bloomberg. ♪
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♪ matt: this is bloomberg markets. i am matt miller. ahead of the fomc decision at the top of the hour one wanted to dig into one of the markets' main concerns.
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one would always like to understand the may concerns. evergrande is what i am talking about. according to a report from asian markets, the company will be restructured into three separate entities at the turnaround plan finalized by the chinese communist party. joining us to discuss his and a andy browne. investors want clarity. they are less freaked out than they were on monday but they would still like to understand the details of the plan. what do we know so far about with the communist party plans to do about the evergrande mess? andy: i think the first thing to note is that this whole evergrande mess has been choreographed from the start by the government. they most likely want this because it signals to them a completely new phase in the direction of the chinese economy.
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what the shape of a future evergrande looks like i think is completely unclear. i think there are two considerations top of mind. one is social instability and that means delivering homes people have paid for but have not been built. and secondly, unemployment. that means pending evergrande's suppliers. these companies employ millions of people across china. next would come banks and i'm afraid to say at the bottom of the heap is foreign investors. matt: i think the most interesting thing here is that the common prosperity push. he wants to stop the inequity from diverging home prices and at the same time does not want to crush a whole investor class does he? andy: ping sees himself as a
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historical figure. he wants to reengineer chinese society to make it less unequal. in doing that he has to rework or reinvent the chinese economy because the current growth model tends toward inequality and that is what the evergrande implosion signals. matt: thank you so much for your time. it was brief but appreciated. andy browne talking about evergrande. coming up, special coverage of the fed. the fed decides with tom keene, jonathan ferro and kailey leinz. this is bloomberg. ♪
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