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tv   Bloomberg Markets  Bloomberg  November 1, 2022 1:30pm-2:00pm EDT

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>> welcome to the bnn bloomberg audience. there was an unexpected rebound and u.s. job openings in september. that is likely to fuel further wage gains and add pressure on the federal reserve to continue its aggressive campaign to fight inflation. according to the labor department, number of positions increased to 10.7 million in september from a revised 10.3 million the month earlier. chief justice john roberts has temporarily blocked the irs from turning over donald trump's tax return to a congressional committee. that will give the supreme court more time to consider the former president's request for a longer halt. the house ways and means committee was set to receive six years of tax returns this week. the oil market could see severe
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supply disruptions as the european union tightened sanctions on russia. vladimir putin may use oil as a weapon. he says it may be in his interest to constrict supplies. spectators at the upcoming world cup football championship in qatar could be able to promote peaceful protest, and even kiss in public. the organizational body behind the tournament. the world cup kicks off on the member 20th of this month. global news 24 hours a day, on-air, and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am john hyland. this is bloomberg. ♪ >> welcome to bloomberg markets.
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>> we did have a little bit of a choppy market session. when you look at the s&p 500, it is down .3%. we open in the premarket up almost 1% on the day, so you are seeing some volatility. not limited to the s&p 500. 4.05 on the 10-year yield, moving in line with expectations . 75 basis points is priced in, but is that taken into account what happens next? we will dive into that with some great guests on the show. as you see the yield moves, the dollar follows. it was weaker by almost 1%, driving some of what was going on in the stock market, as well as commodities market. . flat on the session but intraday it has been navigating the news coming out of china, potential reopening, rumors there, as well as the grains deal.
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all of that together edging slightly higher into positive territory. jon: that commodities story plays a role in some of the individual stock members today. certainly the canadian market benefiting from energy stocks, material stocks higher today, along with financials. as for individual names we are watching, let's watch tech. uber has well-received quarterly results, specifically on topline performance. the stock as a gain of 13%. developments overnight coming off of social media commentary in china. we will see how it plays out but it is still helping out names like alibaba. meta is up more than 4%. tracking some developments tied to one of the fcc commissioner's who gave an interview to axios where he suggested the idea of a tiktok ban in the u.s. beyond technology, we watch
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earnings and outlook story. pfizer, a name close to 3%, after some encouraging news attributed to that company with covid vaccine news. kriti: is inflation going to stick around? president biden in the meantime morning oil firms he will seek a tax on windfall profits. he is getting pushback from oil executives. the former bp ceo spoke with us earlier. he was critical of the potential move. >> it is clearly political rhetoric aiming at november 8 with the midterm elections, harsh rhetoric for an oil and gas industry who is probably producing flat out in oil fields and refineries. taking that money and capital, the ceo of exxon reminded that it goes back into dividends, pension funds, but the rhetoric is quite divisive and unhelpful. >> one could say the dividend in
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your 401(k), but big oil will use that narrative. windfall tax, we will not invest, we will delay our capex. you have run bp. how constrained can capex really be on the back of a one-off or twice off windfall tax? >> it depends on the kind of tax. there was one in the early 1980's that went on for years and it did curtail investment. companies have a capital budget based on their earnings, supply of cash flow. of course they will right size the amount that goes into capital versus dividends versus big investments. it will reduce it somewhat. this is at a time when the oil and gas companies are really turning into energy companies, investing in renewables and all kinds of things which have a lower rate of return right now than oil and gas. that is probably the one that might suffer. it seems counter to but we are trying to do with energy transfer.
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kriti: when it comes to the federal reserve, consensus is that peak inflation is not in the rearview mirror, but a windfall tax could all mean far more upside inflation risk than the market is properly priced for. joining us for more on this topic is andrew patterson, senior international economist at vanguard group. the market is pricing in, inflation is only going to go down from here. is that a fair assessment to make given these new developments in the commodity space? andrew: there is going to be risk going forward, as the fed hopefully starts to make progress in terms of their goals, getting inflation back to 2%. we think in terms of policy this week, 75 basis point hike is all but locked in. certainly during the statement, the subsequent press conference, likely acknowledging some of those pressures that may continue to put upward price
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pressures on inflation going forward, including not only things like commodity pressures, commodity prices, but owner equivalent rent. acknowledging how long it will take to make real progress on getting inflation back down to target. jon: staying on that theme, following on kriti's question, for a world seeking low and stable inflation, what is your own timeline of how long it could get to take to get back to that level? andrew: in terms of getting back to 2% inflation we are probably talking late 2024, if not early 2025. by the end of this year, we would expect inflation, depending on the metric you are talking about, if you are talking about cpi, maybe 7%, falling toward three by the end of next year. the flight from three to 2% maybe even more of a struggle than we are facing right now,
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particularly if the price of food and energy starts to come down by then. we are talking about a multiyear effort here. we think it is incumbent upon policymakers to be clear with the public and financial markets about that. kriti: what about the fiscal response? we have been talking about what chair powell may be doing, at the same time, a scathing letter coming from elizabeth warren talking about the extra pain that families in america may be facing. are you concerned at all about the fiscal response from the biden administration and other congressmen presented us? andrew: in terms of lack of support or spending, putting upward pressure on inflation? kriti: both. andrew: again, kind of a rock and a hard place there. actions like the inflation reduction act, while positive long-term, are unlikely to have meaningful impacts in the near-term, particularly fighting against inflation. it is an increase in spending
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although marginal when you look at it compared to the entire budget. the hope is, over time, it can increase the productive capacity of the economy. you are talking years, not months, of time to pass before it starts to have implications. in terms of support packages, depending on -- recession is the base case in 2023. the depth and breadth of that could call into question the need for some sort of fiscal response. again, that is something we will have to see when we have more information. jon: before we go, andrew, the state of the jobs market, what kind of support does that provide for the fed? obviously we are worried about this continued weakness for the economy heading into next year. andrew: job markets seem to date be in pretty good shape. good shape if you are not
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looking for a weakening job market. numbers came in today up 500,000. those are pretty volatile especially around seasonal transitions, holiday. going forward, we hope to see some weakening in the labor market that would help some of these wage pressures that are putting upward pressure on prices. kriti: andrew patterson, vanguard group senior economist, thank you for your time and insight. coming up, china's stocks are surging in the session on speculation that beijing is getting way to phase out covid zero policies. even as the nation's foreign ministry said it was unaware of such a plan. this is bloomberg. ♪
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kriti: this is bloomberg markets. i'm kriti gupta. chinese stocks listed in the u.s. are gaining in today's session fueled by speculation beijing is preparing to phase out covid zero policies. this comes as even china says it is unaware of such a plan. joining us now is john authers and caroline wilson. i want to start with the idea that china may be investable again. does this create a long-term bull case for chinese stocks? caroline: that is the question for everyone and today was the mini base case scenario. it is speculative news, but we saw it hit market. it was not only limited to the asian markets although we saw some gains there, but we saw copper rebounding, iron ore futures up, almost every emerging-market currency gaining
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on the speculative news. jon: john, in a recent piece, you spoke to a few china watchers about what moving away from a covid zero policy may look like. it almost feels like when we are talking about trying to roadmap when the fed starts to cool off on interest rates looking into next year. john: another pivot. no question, if they do lift covid zero, that is by far the single best piece of news that china and chinese investors could have. covid zero has done great damage to the chinese stock market, chinese economy. that said, i find it surprising, given that there was so little attempt at the big party congress, which is the natural time to start introducing such ideas. given there was no attend to
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trail this then, i am still dubious that we will see any move until next spring, which is when most people seem to expect it. certainly would be a good reason to buy china at current prices, if they really do end covid zero earlier. but i am dubious. kriti: john, i also want to hit on your column today, pivoting from china to brazil. china is brazil's largest trading partner, one that is affecting the commodities space, as well. we are still waiting for bolsonaro to concede to lula. what kind of repercussions are there when it comes to exposure in brazil when it comes to, say, mexico, where you spent a lot of time? john: the rule of thumb for the past 20 years is that mexico is exposed to the state, next door,
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china is exposed to brazil. sorry, resilience exposed to china. for most of the past 20 or 30 years, you have wanted to be in brazil because it has that direct exposure. it sells all of that stuff to china. that plainly suggests this is not a great time for brazil. certainly implies that we will not get the extraordinary rally that we did after lula won in 2002, commodities gains which led to outsized gains in brazil. that said, you have a relatively diversifying economy. brazil is in a better state than it has been financially for a very long time. amazing to relate the central bank of zillow -- brazil, was far more hawkish.
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it started hiking rates in the spring of last year. it has now gotten far enough where it can pause. inflation is coming down significantly. has more space to try and develop elsewhere. but the big test of whether brazil really does become a great investment, whether the kind of political angst has created a good buying opportunity, whether they can diversify beyond china. jon: does that line up with some of the commentary that you are hearing from market players looking at what is going on in brazil right now? caroline: it absolutely does. brazil is a lone bull case scenario among an otherwise battered emerging-market complex. the brazilian reality is the top currency, one of only three gainers. it is interesting, we also see the most bullish bond bets in 13
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years for the country. not too long ago, franklin templeton said brazilian stocks were the hottest trade in town. a lot of optimism therefore the local assets which would continue to be boosted by a peaceful transition of power. kriti: caroline o wilson, john authers, thank you both so much. we are covering a pretty broad spectrum on the em space. breaking news on twitter, with the new regime under elon musk may look like. according to his twitter profile, he says he plans to adjust the blue price, one of the ways that twitter blue was going to make money. he also says that twitter blue will have a pay wall bypass for some publishers. it is fascinating to see this monetization plan is being put into action so quickly. jon: the one thing we knew about elon musk's twitter, he hoped
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greatly to increase the amount of revenue that was not coming from advertising to reset scription. -- through subscription. we are also tracking a trading halt that we saw earlier today in toronto, extended outages that have now been resolved. we will talk about the cause and why it is not the first time, next, here on bloomberg. ♪
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jon: this is bloomberg markets. i'm jon erlichman. trading across toronto equity desks have resumed after an outage across three stock exchanges today. joining us from toronto is jeff morgan. your story is one of the most read on the terminal in the last hour. to say that investors were frustrated by this is putting it mildly. jeff: very frustrated. one said to us that they didn't want to be trading on a "third world exchange." very frustrated to have trading down for about 40 minutes today. another investor said they decided not to trade for the rest of the day. the tmx group, which runs the exchanges, says there are still investigating what caused the connection issue. what happened to create a connection issue? until they can answer that
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question. another fund managers so that they would avoid the exchange. 440 minutes, to have the toronto stock exchange, alpha markets down, was very frustrating for these fund managers. in addition to that, all the stock whose stickers began with the letter m, all the way through s. in canada, that would be companies like man u live through suncor, treating was disrupted in those stocks for an additional half hour preceding the outage. fund managers were furious that i spoke with this morning. kriti: s reminds me of shopify, the heavyweight on the tsx. talk about the president. when was the last time we saw this? geoff: this has happened in 2020. the exchange came under a lot of fire. the ceo at the time said that they would work on making this
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an absolute focus, ensuring reliability. for this to happen again two years later was frustrating. another fund manager said this outage happened two years ago, but also fund managers had an issue with their internet provider, which also made it difficult to trade, not six months ago. the system wide rogers outage. it is a very festering situation for people trying to trade here who are being interrupted by these outages. if it is just the stock exchange, that is two years ago, and now today, frustrating. a mobile internet outage six months ago. jon: before we let you go, just some context. we have seen massive consolidation within the exchange industry over the last decade plus. the tsx is the dominant player but not the only player here. geoff: it is the dominant player
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and fund managers were clear, if they wanted to, they could trade on other exchanges. but you are looking for volume especially if you are a large fund manager. all roads lead back to the toronto stock exchange and for the smaller mid-cap and small-cap companies. the venture exchange and alpha markets. there are smaller platforms that do exist within canada, but as you said, as a result of consolidation, this is the big game in town. kriti: geoff morgan reporting on that toronto stock exchange halt. thank you for your time and insight. jon, stateside, we are seeing a potential rally on our hand if the market turns around. the s&p 500 paring some of the losses from earlier, down still .4% but not at session lows. the russell 2000 is soaring, up .7%. meanwhile, bonds, the dollar,
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retracing the moves that we saw earlier. intraday volatility is the story. more markets ahead. for jon erlichman, i'm kriti gupta. . this is bloomberg. ♪
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john: keeping you up to date with news from around the world, here is the first word, i'm john hyland. in ukraine, president zelenskyy said he held a with french president emmanuel macron. ukraine is hoping to rebuild its infrastructure. a massive wave of missile attacks disrupted water supplies and other services across the country. president biden's promise to post higher taxes on windfall profits comes as gasoline prices are still high before midterm elections. president biden: oil companies record profits are not because they are doing something new or innovative.


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