Bloomberg Markets (01/03/2022)

Bloomberg Markets (01/03/2022)

Show Video

From the financial centers of the world. This is Bloomberg Markets with Alix Steel and Guy Johnson. It is 30 minutes into the U.S. trading day on this Monday January 3rd. Happy New Year everybody. Here the top market stories that we're following for you at this hour. It's another year another equity rally record kind. US stocks cheered the

start. Twenty. Bond yields soar while I'm a crime. Cases skyrocket. How much ammo can matter for assets this year and another year. Another Covid record. 10 million people diagnosed with Covid late last week while deaths drop. The hunt is on. Find the peak at another year. Another Tesla record. Tesla reporting an historic quarter for deliveries. Over 300000 cars smashing previous numbers. We're in talks with Colin Bosch Oppenheimer senior analyst from New York. I'm Alix Steel my co-host in London. Dani Burger Guy Johnson is still on today. It's and it's a holiday over in the

UK. Welcome everyone to Bloomberg Markets. Danny is a new year. It feels very similar. Same kind of themes as the end of last year. We did have some interesting price action though right out of the gate a dip and buy the dip kind of scenario. But that's the lay of the land here on this Monday. Yeah and sometimes it's hard to read into that especially on the first trading day of the New Year where volumes are still light. Here I am in the UK markets are still closed. Yes Alex it is definitely the same story but will that affect stocks. At some point we're getting some of the first real time data. The APM ISE here in Europe of

how Omicron is affecting the economy I should say. Just moments ago U.S. construction spending coming out. This is set for November and it is disappointing. Keep in mind Alex this is also before Omicron really is likely to hit. Coming in at point four percent of the estimate had been point six percent. Those are month over month over month figures. So perhaps that's more of a supply issue. But Alex could that get worse as Omicron starts to bite. Yeah. I feel like that's really what's going to wind up

leading the equity market other assets. So want to dig deeper into that. It is our question of the day. How much will Micron matter for assets in the new year. Here to help us answer that Michael McKee. When we're going national economics and policy correspondent Nancy Vanderbilt who covers commodities and many other things up upper Bloomberg Markets live. Guys it's so good to see you Mike. Just to start with you. What do you think. I mean how on kind of effect this would a more real time indicators running get this week. I sure wish I knew I made a list of the things that are going to be worrisome for equity and for bond market investors this year. And Covid tops the list. We just don't know how bad it's going to be and for how long. A

short spike wouldn't be too much in terms of interruptions for the overall economy. But then you have the question of whether consumers continue to spend. Do they keep up the kind of rates they have or now that we see government spending government transfer payments drop off. Do they kind of pull back their horns a little bit. And then that leads into the ESM questions in the PMI questions of supply chains. How quickly did they start to normalize again. A lot of people think in the first half of the year and then we should see a little bit more smooth sailing as the year goes on. But Mike the Fed has been pretty clear on what they're gonna be doing in January and February. Does the data we're getting in the next few weeks even next

month. Does it make a difference. It could make a difference if inflation suddenly skyrocketed. It's already very high. And if it suddenly went up a lot faster you could see the Fed maybe move up some of its tightening and justify the three rate hikes that are already priced into markets as 2022 begins. But where do we go from there. The Fed doesn't want to start raising rates until they finish with the taper and they're going to finish with that they figure in March. There's a meeting on January twenty seventh and then no meeting until March. So unless something really bad happens you can pretty much expect the Fed to stick to the timetable it has laid out. The real question is what do they do over the rest of the year. Okay. Eddie your turn. Tom Keene affect asset prices. Yeah absolutely. I'm with him I think. I think it's very hard to

read too much even into the real time data. The only bit of real time data I think that I'm really interested in in the markets I've read is tell us they're really interested in is got case counts. Right. Because I think one thing that we've seen about this wave of the virus is that it has been it has been extremely contagious. The question is whether that means we're looking for a sharp short impact on markets. And in that case you might very well see the Fed and the markets say look we are going to look through this data. We're going to look through the brief disruption that we saw over the Christmas period post Christmas period and so on and say look you know it's it's reasonable to be optimistic for the rest of the year and therefore that our plans are not affected too much. I think the data is every bit as noisy and almost as meaningless as it was at the beginning of

March last year. So if I can try to work through that line of thought then if the market is looking through all Micron if it's looking through Covid at the moment does that mean that the upside potential is less in 2022. If any of the Covid weakness currently isn't being priced in. Yeah it's a good question. I mean look they certainly just broadly speaking there's more to be optimistic this year than they were. There was a year ago right. I mean number one there is. We've seen how we've seen the reaction function from policymakers and from from consumers to some extent when there's a new variance. So there's a few less things to guess. Also the central bankers have come out extremely hawkish. Right. They talk about three rate hikes at the Fed. That gives him a lot of

room for dovish surprises this year. And I think that probably supports equities throughout the year. I'm still bullish. I'm not as bullish as I wasn't quite bullish enough at the beginning of last year. I'm not as bullish as you know as I'm not expecting gains as big as we had last year. But I think there's reason to be bullish this market at this point. And it really does feel like the consensus is you know your long stocks are short bonds and you and you go for a higher dollar. And I'm just wondering what do you think we get either economically or from the Fed that disrupt something that is broadly consensus. Well it would be a question of if we keep up with the spending which will involve the jobs gains that we see and what kind of incomes we see. Do we still see people starting to get more and more in terms of wages or is that going to start to fade out.

You can see inflation versus spending there. And inflation's finally caught up. The other thing would be obviously some sort of disruption to the overall economy which could come from another variant. But right now if everything plays out the way the analysts are hoping I think the best description of what we're going to see at least for equity investors came from Christopher Smart at Barings. You're not going to see record earnings but you're going to see ample earnings. You're going to

see earnings that are strong enough to justify the market's still going up where they end up. The year will depend on all those things we've been talking about that we don't have a clue. Yeah it's been so difficult to predict not just where this economy is going and where this market is going in any. As we've been speaking we've seen two year yields rise to the highest since March 20 20 front end of the curve seeing some pretty severe selling this morning. What do you make of it.

Yeah so the bond market will continue to to to be the tail that wags the dog here. I think that the bond market will absolutely dictate moves in the rest of the markets. I think you know we'll see. We'll see even even things like well and so won't be sensitive to that because it plays into the dollar. It's definitely going to feed into gold.

But I think I think for all of those reasons. For what good. For the reasons Mike said as well I think we're looking at much more of a stock because and of an active managers market this time around. I think asset allocation particularly at this beginning of the yes phase and this next month or so will be we'll be absolutely everything. And therefore we probably are likely to see quite jerky moves as people try and position and try to second guess one another. Oh boy. As if the end of 2021 wasn't volatile enough. Eddie Mike thank you so much. That's Bloomberg's Michael McKee and Eddie Van de Waal on all things

market and crime. Now coming up we're gonna get more insight into just how much a crime against assets in 2022 with Laurie Covid RBC Capital Markets head of U.S. Equities Strategy. This is Bloomberg. This is a market that's changed over the last couple of decades it's just Stalin's big more profitable more sustainably profitable companies. I think you put those two things together. Earnings numbers which should probably be twice as high as they

are right now. And valuations which I think are going to come down a bit but not much. I think year of ingredients. So I think the biggest risk remains not being in equities rather than being out of equities as been laid Larry each year. Our U.K. and global market strategist on the case for equities and 2022. Joining us now for more on insight to the question of the day how much is Tom Keene matter for assets. As Laura CAC RBC Capital Markets head of U.S. strategy. She is an S&P price target of 50 50 for this year. Hey Lori before we get to the Question of the Day just today's price action I mean really bizarre move right out of the open. You have you know the Nasdaq dropping like a stone and then we climb back up. We're pretty

much in neutral volumes. High VIX spikes yield pushing higher. Well what do you taking away from the price action. So look what I'm noticing is that some of the cyclical areas that didn't do so well in the last five trading days of the year areas like small cap energy financials are trying to get off to a good start this today. We'll see if that ends up happening because as you mentioned sort of the leadership has been all over the place. But that's what I noticed. If you look at the last five trading days of the year we actually had a bit of a defensive undercurrent of value did better than growth in those areas like utilities that were really doing the heavy lifting on that side. So I think that we exited 2021 with an upmarket but a bit of nervousness at the

sector level. And what we're seeing today is some of those cyclical area areas are trip trying to breathe a bit of a sigh of relief but it's a hulking one. Well to your point Laurie Mike Wilson over at Morgan Stanley has a similar message as well talking about as we enter 2020 one of the key questions for investors is whether they want to decide to stay with the relative winners or just start bottom fishing the losers. Given what you were just talking about is it then time to start going after some of those losers of 20 21. So I don't know if I would necessarily say the losers of 20 21 but I do know that what you

want to do when you're in a rising rate environment when you see the 10 year move up you tend to see cheap stocks outperform expensive stocks. So you know an area like utilities for example is very cheap on a relative forward PE basis. So it makes sense to me that that was kind of doing well to end the year. Areas like financials and energy though also still look undervalued. Now they obviously have a bit more of a cyclical undercurrent. But those are areas that I would think in this early part of the year things like the undervalued cyclicals should do better than areas like the overvalued tech and growth stocks just because markets are still in the process of pricing in higher rates for 20 20 to ties back into crime. That's our question of the day

Laurie. So does Micron matter for assets in 2020. It's going to matter for the economy and inflation in some way. How does a matter for assets. Look if we're going into another year of a hot economy in twenty two and that's what all the current economic forecasts are still showing we'll see if that continues to hold out. But if you're

in a hot economy with really strong economic growth on a year over year basis we should have a really good year in stocks. And it should at least for the first part of the year lend itself to areas like the cyclicals like the small caps outperforming. But we do know of course that all Micron can come in and weigh on things on the short term. So it may impact the positioning trades in the short term. The ultimate question is whether or not Micron is going to derail the economy for the year if it doesn't. The stock market should be able to recover and have another nice year of gains. We do ultimately find that stocks

tend to track GDP numbers over time. So we think if we can sort of persevere. The good news is this is coming at the beginning of the year which makes it less likely that it will derail the year as a whole. Then I think the market should be able to recover and power through. There did seem to be this element last year Laurie where the

macro didn't matter to an extent that it was the micro of margins for companies being able to weather Covid in that way. Do you see that continuing or as you say if there is a greater economic impact from all across from other variance that that idea might change. So I think I think that you have to have both. If you look at the last reporting season what we really saw from companies was two things is one they told us that demand or underlying appetite was still unbelievably strong.

They sometimes had problems meeting demand because of supply chains but they tended to view the demand they meet as the later deferred not completely destroyed. So as long as that demand backdrop does stay strong and companies can't continue to manage through and keep those margins respectable even if not remarkable then I think the market can come through because corporate profitability will come through. And I'll tell you we did actually do a survey of our analysts right before the holiday break and we asked them what was their outlook on Micron. Actually more than half of them said that they thought it was too early to have an opinion on Micron but almost two thirds told us that they thought their companies were well-prepared or prepared to manage through this next challenge. So the stock pickers that I worked with do think that we're

going to continue to see that ability to navigate this challenge in 2020 which is a good sign. How does wage inflation though stick into that. Some might say you want to avoid stocks that have more exposure to say wage inflation. What do you think. I think ultimately it comes down to pricing power and the ability to manage through that challenge as well. You know it's

interesting as we've gone through and read earnings call transcripts for the past year on this labor issue continues to come up and we find that companies are managing around that the same way that they're managing around supply chain pressures with creativity in terms of hiring and finding other ways to suck costs out of the system that aren't directly related to labor. So I think that's just another thing that you put on the list that companies are going to have to manage ramp and they've been pretty successful at it so far. Lori one of the things that stood out to me in your note that you published just this morning you talked about positioning in US equities being high but retail investor sentiment has been intriguing. What are you seeing there. Sure. So we talked about this a bit before the holiday break. You know there's a disconnect between what's in people's portfolios and what's in people's heads. If you look at the weekly AAA ISE survey we've really seen this a couple times since October where the net level of bullishness has been extremely low. So the bears have been outweighing the bulls. So sentiment has felt pretty lousy. And if you look at our own

investor survey which really captures Martha institutions we've seen optimism on the stock market hovering around 50 percent well below the peaks that we saw a year ago. So people that felt great. But if you actually look at the Fed or Federal Reserve flow of funds data for household balance sheets or if you look at the CFTC data on asset manager positioning in U.S. equity futures they're both unbelievably high. We also see that if we look at tactical asset allocation in fact that allocations to U.S. stocks are very very high. So there's a bit of a disconnect now. What's important to know on the positioning side is that

when inflation is running high and really ramping that we do tend to see equities treated as an inflation hedge. And so we do tend to see equity positioning track inflation trends over time. So that's one of the reasons for that disconnect is just the inflationary backdrop itself. So Laurie also the disconnect. One last question on it. Where can you play the disconnect. Like where are we seeing the sort of sentiment bad as well as positioning bad. So you know I think one area you know that continues to sort of intrigue me from a positioning perspective is financials. Now

the long going way is if you look at S&P 500 benchmarks funds have been all in on financials for a while. But if you look at the hedge funds they've been chronically and deeply underweight financials including the banks. And if we do get 10 year yields continuing to move higher they've inched up a little bit recently. Our rate strategy team thinks that tenure hits two

point two percent by the end of this year. Trends are going to be off sides on the straight and they're still very cheap. So I think that's a really interesting area to watch especially if the tenure continues to move up. Laurie what a great day to catch up with you on this the first trading day of the year. Thanks so much. Laurie Covid RBC Capital Markets head of U.S. Equities Strategy now. Coming up Tesla heads to its best start to a year ever after smashing its previous record for

deliveries. We'll speak to an analyst who's bullish on the stock. Calling Rush of Oppenheimer senior analyst. That's all next. This is Bloomberg. Welcome back. Now Tesla is surging today in the Martin cash equity trading session. That's after it smashed its quarterly

delivery record. Joining us now to dig into that is calling Rush Oppenheimer senior analyst. He has an outperform rating on Tesla with a price target of 1000 and 80. Call it. Good morning to you. Thanks for joining us. So is this Tesla now finally overcoming any supply chain woes. Absolutely. We're starting to see that begin to ease up across the industry and we'll see how it plays out here in the first part of the year with Omicron. But you know Tesla's done a nice

job of navigating this and leveraging its software defined architecture on the vehicle and really being able to deliver in excess of what street expectations had been. How Colin how did they do this delivery thing when like other companies are really struggling to get all their parts. You know it's really you have to dig into this at the software to find architecture you know the change from you know gasoline driven fueled vehicles into the space. You know we're looking at

a fundamental change in how these these vehicles are designed and how they operate. And so when we do that and the software element of this is far more important to the actual production of the vehicle you can't actually swap out parts. And that's something that they've talked about throughout 2021 and that they've been able to reengineer some of the software to use a different component in various areas. And really that's how they're keeping up with us. But at the same time we're starting to see some of the production on key elements you know start to catch up with the demand side of things. And that's really I think bodes well for 20 22 across the industry. Well how much of that is a Tesla story versus a rising tide

that's going to lift all the easy boats. I think it's both at this point. Obviously they beat numbers by 16 percent. That's a pretty extraordinary beat within a quarter. And as we look at what's going on in our our checks across the industry you know we're starting to see just a little less stress around you know individual elements. And so I think you're going to see the rising tide lifts all boats. But Tesla's really in a position to begin accelerating production both in China and in Fremont but

also in their new factories and Berlin and Austin. And as we see them start to light those factories up here in 2022 we could see a really substantial here again for the company. So is DAX trading at eleven forty nine and your price targets 10 80. You're going to have to increase that. Absolutely. We have to reevaluate that at any moment. You know this morning we wanted to take a look at where some geographic exposure was on these vehicles and we think there's some some significant strength in China. But at this point you know with where valuation is north of a trillion dollars you know a lot of this is really dependent on the self-driving business model. And so there's a lot of information that we think is going to come

out here in the first part of the year for the company. And that's something that we're looking at very closely. And you know as we look at the potential opportunity and the value of the driver time in that self-driving it amounts to almost a dollar a mile. And so there's a multitrillion dollar opportunity just in North America. And as we look at them rolling out new feature sets for the vehicles that's really where the juice is in the stock and our view here. And so we want to be really judicious in terms of what we're saying with with both the price target and the roll out of that technology. Cohen how much are you thinking at this point of the macro factor of higher rates of a Fed that's going to increase rates as well in the impact of that on highly valued stocks like Tesla. You know it is such an important question. It's really essential for the clean energy

space because we do cover it all. The broad complex of folks working towards a net zero and cost of capital is a critical lever across our coverage. And so as we see rates increase we're certainly looking at you know folks looking at the inflationary pressures that your previous guest had been speaking about and using equities as a hedge there. And so we really do think with the move towards not zero and you know the the leaders really kind of starting out in front of their peers here that the kind of top 20 or 25 percent of our coverage with strong management team strong balance sheets and strong technology platforms are really going to outperform this year. And so certainly within that view. But as we look at you know at the bottom end of the

spectrum you know it does make a lot of sense as rates go up that some of those folks are you know are going to see some underperformance here. And certainly we'll be watching this very very closely. Collin it's a great conversation. NASDAQ up a tense despite the fact that yields are shooting higher as well. Congressman Oppenheimer thanks very much. How did you see for President Biden's agenda. This is Bloomberg. One hour into the trading day for twenty eight twenty two Bloomberg's Abigail Doolittle is here at the movers. I feel like it's in the playbook. Higher stocks higher yield higher dollar. Your stole my thunder. Alex ISE just about to talk about that that risk on mood that we had in twenty. Well here we have it in twenty twenty two. Interestingly not so long ago the S&P 500

briefly flipped negative but at this point a four tenths of one percent. The stocks that chip in DAX really on fire of one point nine percent. But to Alex's point really confirming this risk on tone gold down one point four percent similar to last year down 5 percent its worst year since 2015. So we have growth year risk on stocks higher. We have haven gold lower. We also have bonds

sharply lower. That 10 year yield backing up by 9 basis points close to one point six. So let's take a look at this on the sector action because there is a little bit of influence. Now the top sectors energy and this is interesting up one point five percent. Interesting only because oil's not up all that much. But last year's top sector up 50 percent carrying through that consumer discretionary that has everything to do with Tesla. Then the financials really being helped out by those rising yields. The only down sector at this point. Healthcare down about four tenths of one percent off of its lows. So let's look at some of the movers beneath the surface influencing this. I was mentioning Tesla up 9 percent its best day since October

25th. This of course after they put up blow out record fourth quarter deliveries. That's the best quarterly delivery number ever. Nearly three hundred nine thousand vehicles delivered in the fourth quarter of last year and more than 900000 vehicles delivered in 2021. So Tesla is starting the year off right. Wells Fargo up 5 percent. Really being helped out by those rising yields with so much of their business has to do with loans. On the other hand you have interestingly the vaccine makers lower this despite the fact that Pfizer just said that you can use the booster on people who are between 12 and 15 years old perhaps just a little bit of a breather from big gains last year at least for Pfizer because Madrid of course has been under some pressure more recently. And then Danny I would be remiss if I

did not put Apple into this. It is a two day chart. We see Apple spiking higher up one point four percent not far from that elusive at this point but probably to come at some point soon. Three trillion dollar mark. I believe one eighty two spot. Eighty six is the number we're watching. If so Apple will be a three trillion dollar market cap company. Pretty extraordinary. Wow. Back on that multitrillion dollar watch. Abigail thanks so much. Bloomberg's Abigail Doolittle. They're giving us the

overview of the first trading day of 2022. Now another place where the playbook this year seems much the same. Senate Democrats kicking off the new year searching for a path forward on President Biden's economic agenda. Joining us now from Washington is NYSE and Bloomberg Washington correspondent. So Emery twenty twenty two official officially an election year. So what's the agenda. As the Senate gets back to work. Well is a slow back to work because it's a snow day here in Washington D.C. Danny is the federal government is shut down but the Senate will be back this week and the House a little bit later and the

following week. And this is all going to be about the Democratic Party trying to pull together and salvage the build back better agenda when prior to the holiday season we did see Joe Manchin senator from West Virginia walk away. He had negotiated a one point eight trillion dollar framework with the president though. So potentially this is where we can see Democrats coalesce

around first Senator Joe Manchin. It would be about fewer priorities but making sure you fund them for those full 10 years. And also he wants a redo that Trump error 2017 tax cuts. Now that is something the White House and other Democrats definitely want to get on board but this would put him at a crossroads with another important senator. They do need as well that Senator Kirsten Cinema of Arizona as

you can see here the same infighting and stories we had last year are going to carry through for this year. But Senator Schumer has said he wants a vote on this in January. Now do not hold your breath though. Senator Schumer also wanted a vote on this for Christmas. But that came and went. We didn't get a vote. His words were we're going to vote on it and we will keep voting on it until we get something done. So we'll have to see if 2022 will bring the president's centerpiece economic agenda to a vote. And Mary first of all I thought that Covid killed snow days. So if my kid

has to go to school remotely in a snow day I'm just saying. But President Biden is ease with meet with some farmers today. It's really dealing with the food inflation problem those high meat prices. What do we know there. So in July there was this executive order and he wanted to come combat some of this. What he's talking about not enough

competition in specific market markets. And he did point to the meat and poultry industry. But you have to think the timing of this is very interesting because when you look at the grocery bills of everyday Americans and consumers the highest biggest ticket items are meat. About 14 16 percent was the inflation on meat for November. So this is one of those. Kitchen table policy points that Democrats certainly want to be talking about especially as it is

an election year. So the president is going to be talking to a number of individuals from this sector as well as the secretary of agriculture. And the government wants to put one billion dollars for loans and grants to independent processors because they say that conglomerates are just too big. But I have to say the timing is quite curious because they also want to be seen as they are out front taking Americans concerns about a higher surging consumer products like meat and poultry because inflation is still top of the agenda for Americans. Yep. The question is what can actually be done about it. Short term everything flow. Good to see you again Amy Harder and joining us from Bloomberg. So we actually posed this question because we knew that the White House was going to go after these meat and grain producers. And we talked to Cargill CEO Dave McLennan. It

is a commodity powerhouse a huge juggernaut when it comes to meet an ag trading and processing. And here's what he told us last month on those price pressures. The cure for high prices is high prices. And either it destroys demand and prices come back down or it stimulates competition which increases supply. So it seems trite but nonetheless food markets ag markets have ups and downs and we happen to be in an upright cycle which I do believe as I said we'll come back down over time. That was an indirect questions about President Biden and that was the answer. Courtney Rosenberg answered

Targets Securities managing director for policy research. Strategic is a Baird company. She joins us now. Courtney is this meeting then today with AG producers and me producers. Farmers I should say that is a fool's errand. I mean high prices. Kira's high prices. Well I think it's important to signal Lincoln about an administration both as Emory was saying to voters that they're doing something on inflation as well as they're trying to showcase to members particularly Senator like Senator Manchin that they're taking inflation seriously and trying to get inflation under control because at the same time that they're going to be trying to pass these major legislative accomplishments still inflation is going to be a concern for them. So I think it's politically very important that they're doing this. Is this enough though to bring someone like Senator Joe Manchin onside who again continues to voice his concerns

about inflation. COURTNEY No no no. This alone is not enough. It's about signaling. And you know they're trying to continuously showcase the senator mentioned that they're working that they're moving in his direction. Senator Manchin last month put failure on the table. And I think the White House is taking that very seriously and trying to take concrete steps towards getting Senator Manchin to a yes. And towards getting an agreement for him to go back further. And that's where I feel like Covid and inflation sort of meld in D.C. because if we have restrictions or even people

having to stay at home for five days even if it's 10 or five days that's going to hurt workers. That hurts the supply chain. That's gonna lead to higher prices which kind of has his virtual circle then. Is there anything the White House can actually do to fix it in the short term to then get BBB passed. Well I think the move to change currency requirements from 10

days to five days. That was important in terms of being workers back to work. But in terms of you know a short term fix to build back better we don't necessarily see when there's a lot of issues. Senator Manchin is not the only problem here. There are problems with build back better. Aside from Senator Manchin like Salt Lake Immigration the parliamentarian that had nothing to do with him that we're going to lead to a long time to get to an agreement. So potentially we could have an agreement in practice by the end of January on build back better. But we're probably looking towards the end of one cue to actually see something get

passed. Well of course the background for all of these timing type concerns is that it's an election year. How much time do they really have to get something done before the campaign season gets into full swing. Yes I think that there's this misconception that just because

it's an election year means that nothing gets done. We have the Affordable Care Act which failed several times but eventually ended up getting passed. That passed in 2010. In a midterm election year. So it's certainly possible that they can get this done. They have with this reconciliation instruction until the end of September of 2022 to get this passed. So they have plenty of time. It will become more and more difficult the longer it takes not just because it's a midterm election year and because you know people want to go back to their districts to votes but also because you have this legislative pinata kind of hanging out there. And the longer that this takes to pass the more you could see lobbying efforts the more you could see members come

out against things. So we think that you know probably getting this done by the end of the first quarter would be their best chance of getting it passed. But they do have some time here and it's not out of the realm possibilities. Months pass it later this year. Something that we often hear when it comes to stock market or the economy is that consumers have a lot of money in

their pockets from all the stimulus from Covid and from the government. So I'm wondering though the child tax credit has ended. That was a huge support for a lot of people. What's your expectation for what actually happens to the economy. Slash can the White House revive that immediately in some capacity. So there could be a little bit more time until we see an impact from the child tax credit. Because remember the American rescue plan and the monthly payments for the child tax credit did not

begin until July of last year. So there's going to be six months of rebates that come out with taxes in this year. So they're potentially buying themselves a couple of months before we feel an impact. But it certainly is an issue. And it's when you're talking about Senator Manchin talking about potentially passing a piece of legislation for build back better. That doesn't

include the child tax credit because it's so expensive. Now that's going to be a point of contention. There could be an opportunity for them to do something on a bipartisan basis and do a smaller one year extension with more income limitations and try to get 10 Republican votes. That's that's certainly a possibility. But it's going to be an area of focus for the White House because certainly ahead of a midterm election year people are going to start missing those monthly payments that they have been getting for the last six months. So if we do have these potential areas of agreement that could indeed pass. Courtney you write about how investors have faded the build back better

passage. Does that mean that there are indeed areas of opportunity. Again if we do see some sections of this bill actually pass. Yeah it's been interesting. So we have a build back better portfolio and it heats right around the November inflation print. So it seems like investors saw that November inflation

print saw the reaction. Some there mentioned some of the other members and thought that the build back better was not going to pass. But right around December 20th saw right around once and their mentioned came out against the against the package. We started to see it turn up a little bit. Started to see some outperformance. We do see some opportunity. If you look at climate related stocks those have really really struggled over the last couple of months. And I'll be at the bottom of bill by credit. This is a major climate bill and climate provisions could potentially get bipartisan support if they were done in a different fashion in a standalone bill. So we see some opportunity in climate see some opportunity in some of the

health care provisions which have a lot of bipartisan support. Housing is another area that has support within the Democrats as well as some dimension. We could see something come into a package with that as well. Right. Of course climate already a big macro theme as it is. Courtney so great catching up with you to. That's Courtney Rosenberger Strategic Securities managing director for Policy Research. Thanks so much. Now coming up Pfizer's booster is cleared for kids 12 to 15 years old. More on dealing with the virus front with Dr. Katherine Paling of the Wake Forest School of Medicine next. This is Bloomberg.

This is Bloomberg Markets could get drawn you're looking at a live shot of the principal room. Coming up New York City Mayor Eric Adams. That's at 12:00 p.m. in New York 5:00 p.m. in London. This is Bloomberg. Let's check in on the Bloomberg First World News Armour's can get to a record 10 million people were diagnosed with Covid-19 in the seven days through Sunday almost twice the pandemics previous weekly high as IBEX continues its spread. Weekly deaths dropped. Russia reported the lowest number of cases since June whilst Germany is weighing new measures in the face of rising infections. Goldman Sachs is asking it to US employees to work from home if

they can until January the 18th. The move comes after most of the bank's major peers including JP Morgan Chase and Citigroup have adopted a more cautious stance as the Annmarie Horden variant has spread. Goldman's had been one of Wall Street's fiercest champions of getting stuff back into the offices and U.S. airlines greeted the New Year with more than six and a half thousand weekend flight cancellations causing what's been a bumpy holiday season for travelers. A winter storm pushing eastward and staff shortages caused by the rapid spread of the IBEX variant helped cause the trouble. Many dropped US flights

are expected to peak today. Global news 24 hours a day on air and on Bloomberg Quicktake powered by more than twenty seven hundred journalists and analysts and more than one hundred and twenty countries I could get to. This has been bad Alex. All right. Thanks so much. Vertigo sounds terrible. All those cancellations. Let's see if the virus per second up there. Anthony Bout you said the testing requirement could be paired with the shortened isolation periods for those who test positive for Covid-19. The CDC decided that they would cut that down to five days if the person remains asymptomatic so long as when they do go out in the second five days of that 10 day period.

Back to work or back into society that they diligently wear a mask. You're right. There has been some concern about why we don't ask people at that five day period to get tested. That is something that is now under consideration. The CDC is very well aware that there has been some pushback about that. We also learned earlier today that Pfizer their booster has been cleared for kids aged 12 to 15. So joining us now from more is Dr. Katherine Paling Wake Forest School of Medicine professor of Pediatrics. Doctor it's a real pleasure to talk to you today. In the US schools reopen for the first time after Christmas

holiday. Most schools I should say can they stay open. Do we have the right policies in place. I to set my child back to school today and Im hopeful. And it depends on how we approach this. We are in much better position despite the wide spread of Covid-19 because we have many more tools. We have Covid of vaccines are available. We have and we have treatments and we know that masking and social distancing work. And so if we use all the tools available I think it's possible that schools could stay open. Dr. Paling great to speak with you this morning. Do you think

schools at the moment you say they're making progress but are they making enough progress as you say to approach this the right way to make sure schools stay open. We hope so. And you know with the spread and the contagious ness of Covid I'm a variant of Covid-19. It's important that everybody who's eligible get vaccinated for Covid-19. And we heard that there's going to be expansion of booster since that is going to be discussed by the ECI came later on this week. And so if we use our tools available we can get to the other side of this one. One one tool though doctor that we've had that I feel like has fallen woefully short is testing it there. That could pass it first of all to the current tests that we have. Are they sensitive enough to detect Armageddon. And can we actually ramp

up testing enough either infrastructure wise like can schools actually do it. And we really have the tests available. We are going to need to work together and to do that. The positive test is very helpful. It has been shared that sometimes it can miss detecting Omicron. So we're going to need to be cautious. And if you have symptoms o macron and you've been exposed then presume you are positive. It's possible. And we just need to get to the other side of this. If we look at South

Africa it went up quickly and then there's going to go down. So can we for the next month really work together and help let this virus pass on. So if you have symptoms presume you are positive especially if you've been exposed to someone with Covid but Dr. peeling a lot of these symptoms you've been hearing about Omicron are a lot like the common cold. Is there a fear that there are many people out there who have Covid that aren't getting tested or unaware just because these symptoms aren't necessarily the traditional ones that we associate with Covid. Yes that is the case and so this is where we're going to need to ask everybody to be cautious. And if you have symptoms of the

cold then stay away from other people wear a mask and don't go to work or school. You mentioned earlier in terms of the testing issue etc. I guess it's a concern that some schools are open some are not. There are some that have closed. If we're going to peak in the next three weeks or so why not just close schools for a month

get the peak over with and then reopen. We are all faced with very difficult situations and schools need to make the best decision. We also know that there's a mental health crisis going on in our children and children do need to be in to see others and to be around. And so we need to balance all of these needs and depend on everybody working together. All right. Dr. Paling thank you so much for joining us today. That's Dr. Catherine Paling Wake Forest School of Medicine

professor of pediatrics on all things getting back to school. This is Bloomberg. It's time for the Bloomberg Businessweek look at some of the biggest business stories in the news right now. Amateurs could get to AT&T and Verizon have rejected a US request to delay this week's launch of a new variation of 5G mobile service. The

airlines say might interfere with aircraft electronics. The CEOs of the two companies though say they would be willing to pause deployments for six months near certain airports. The industry maintains power levels are low enough to avoid interference. Chinese developer shares dropped following local media reports

that China's emigrant group has been ordered to tear down apartment blocks and developments in Hainan Province. A local government in Hainan reportedly told Evergreen to demolish 39 buildings in 10 days because the building permit was illegally obtained and Turkey's inflation rose to thirty six point one percent in December. That's the highest. Going back to 2002 and doubled the central bank's forecast price gains ended 2021 almost twice as high as the center runs full cost of eighteen point four percent made in October. A weaker currency higher minimum wages and a hike in utility prices in that country will likely keep inflationary pressures high in the coming months. And that is your latest business five. Danny. Thanks so much. Now we have just about 30 minutes until the European clothes. Let's get a check on your markets. Now of course U.K. markets are closed today but that hasn't stopped the European stocks index from trading just around all time highs.

We've dipped under that levels to red the highest since November of this previous year up about four tenths of one percent. Autos leading the gains. A lot of that likely has to do with Tesla's stellar delivery. A lot of the exposed stocks also moving higher like Volvo. One of the biggest gainers now we are looking at a broadly stronger dollar today. That means the euro is also weaker down by about seven tenths of one percent as the ECB stays committed to this idea that they can stay where they are for 2020 to finally the lira. It's up against the dollar at one point. Alex was as weak as 5 percent after those big inflation numbers coming out from Turkey. Now I don't even know if like big covers that. I don't know what you do. But look try and break that down in the next hour. Coming up on the European clothes Stephen Richter University of St Andrews

professor of social social psychology will be joining us on the virus and potential restrictions in the region. This is Bloomberg.

2022-01-09 22:35

Show Video

Other news