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tv   Bloomberg Markets Americas  Bloomberg  January 15, 2021 10:00am-11:00am EST

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>> 3:00 p.m. in london, 10:00 a.m. in new york. i am guy johnson my cohost is in new york, alix steel. it is friday. alix: thank goodness. let's get to the markets. a couple things going on. the s&p down by 3/10 of 1%. the big move continues to be of the dollar. you're looking at two straight weeks of gains for the bloomberg dollar index. a curve that is also flattening. copper getting hit on that stronger dollar. the currency pairs really shaking out. germany sang the eu has notified the pfizer vaccine will be delayed. that bringing euros to a session low. guy: that the data we are just
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getting. university of michigan index, the incoming treasury secretary likes this one. in terms of the headline number, it dipped even more than anticipated. 79.2. 79.5 was the estimate. current conditions were 87.7 down from 90. that is down from 74.6. you want to stop -- start paying attention to this number. this is what the consumer is seeing. in terms of the one your expectation number. that has gone up 2.5%. the 10 year outlook, 2.7. there was an expectation starting to come through everyday life. alix: you're absolutely right.
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he deftly put the kebabs on any type of tapering. we will consider high gains. that really on the table as well. jp morgan, citibank, wells fargo , reporting earnings this morning. the wells fargo about to start. sonali basak has been listening. sonali: people are looking for ways these banks could grow, even with so much uncertainty ahead. jamie dimon said the upcoming year looks better. if the vaccine slows down in terms of a rollout we have big problems not just for the bank but the valuation of the market overall. the only place it will come from is acquisition financing. when it comes to dni loan growth as well.
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guy: what to be citibank numbers tell us about the priority? sonali: we have that trading number coming in below estimates. if we see all the other banks show numbers that start to moderate too much, we will be concerned about the investment banking numbers, which have been a huge growth area. we also want to see them improve . a tough time when the economy is where it is right now. guy: thank you very much. she will be back in the next couple of hours updating us on the calls. joining us is the body mass founder -- and ceo. it seems like it is jp morgan and then everybody else, is that the correct way of looking at it? >> that has been the way jp
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morgan is blazing the trail and everybody is falling back behind. what is interesting in jp morgan numbers is first of all the consumer business is quite well. it was only down a couple percent in terms of revenue. they have very tight cost control. their trading and banking, particular equities trading is looking very strong. that looks very strong at citibank as well. citibank was not a strong. they will talk about asia, latin america, the investment side looks very encouraging indeed. that is very positive what we can see from goldman sachs and morgan stanley. the more you are exposed to capital markets, the better you will do in this environment. alix: let's get to card spending then. that was a good thing for citigroup in the fourth quarter,
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climbed 12% on exit quench a basis periods -- on existential basis. still down year on year. what is the position of the consumer from these banks so far? octavio: the research is it has held up a bit better than people expected. p if -- if you look back, the amounts of reserve those have not come into fruition the way we expected. too pessimistic the first half of the year. things have not been quite as bad as they expected. not great but not as bad as they expected. credit card spending is down. deposits are of quite sharply. people swearing away more money. guy: there seems to be this view about the fact that the biden
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administration will be good for the banking sector, would you agree with that? octavio: last time we had a change, if you remember what happened with donald trump being elected, there is an enormous boom in banking stocks. for a couple of months after he is elected. it seems they are very happy now with trump and biden in terms of the banking sector. it creates uncertainty. for the banking sector in particular. they are relieved they are going through a smooth transition. they will not come into play. more than anything it seems to be the uncertainty being pushed away. the biden administration probably is better in a certain way. much more likely to help out consumers. avoid them declaring bankruptcy and credit losses at these banks. i think there is that aspect of it.
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i don't think the banks and the capital market market side of things will be terrible about that. alix: no kidding. the changes on the j inside. jp morgan, cfo on the call talked about how there is limited employment opportunities. we will see what that could be on the back half of the year. how these banks could drum up more demand. octavio: what he is really saying is we have lend as much money to as many people as we can think of. there's no one left to lend to. that is basically what he is saying. how could they deploy that capital? they could invest it in other ways. people are up to their necks
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indent. only if they could lend it out. if they can't lend it out, we are sitting on this access. just sort of a millstone around their neck. that probably means lowering lending standards. taking on a bit more risk. alix: that pairs up with the biden administration. thank you so much, really great to see you. joining us is walter todd, large-cap strategy portfolio and he owns bank of america and morgan stanley. jp morgan totally crushing it. i'm wondering how you look at them in the back half of the year. you have stimulus issues. how does that come into play? >> there is a lot to like in the quarter. the question is, iris -- you're
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seeing this a little bit. how much of this good news is in some of these stocks? the market more broadly speaking, in the short-term there is a lot of good news baked in. you are seeing some giveback. the set up for these banks as it relates to reserve releases, what should continue as the economy continues to heal, a very good private backdrop and should ultimately lead to higher prices down the road. probably going to take a little bit of a pause here. guy: if i want to play the u.s. recovery in 2021, how high up the list do you think the banking sector is? walter: i think it is one of the core sectors you would look at. you look at the performance of the markets, since the announcement from pfizer, financials has one of the top performers. to the extent we continue to get
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interest rates to push higher. the curve is flattening a little bit this morning. we continue to see the steepening of the curve. rates move higher. given another 1.9 trillion dollars in stimulus announced last night. that is a great backdrop for financials and banks in general. alix: the flipside is higher taxes and more regulation and oversight on buybacks and dividends, etc.? walter: jamie dimon talked about that on the calls. he talked about the regulatory environment given the new administration. he admitted it is likely to be tougher. the tax issue i think is a good point. i'm curious with all the good news we are looking at with the second half of the year, what point does not come into focus. i think the administration has to be careful not to bring that up too quickly.
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at some point we have to start click -- paying for this. we know higher taxes are coming down the road. it is just about one that becomes an issue for investors. guy: one of the things the pandemic has accelerated is fintech. we have to target the potential fintech through 2021. jamie dimon was talking about it. how much do you think there could be as a reaction to this acceleration? walter: talking about this on the call, jamie dimon referring to tougher, faster competitors coming out of fintech. it is an area they will continue to spend -- i thought it was unfairly given
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a lot of regulatory oversight. i think that is a possibility. the issue is i think you are a couple of years too late. when you look at paypal or some of these other companies, they are quite large. some of these bigger, more established players, i think that is tougher given evaluation. guy: sue at the spending is like in terms of the organic moves they will have to make. stick around. we have much more to talk about. we will get his thoughts on the vaccine story and the vaccine rollout. what impact that will have. we already touched on it a little bit. more on the stimulus, this is bloomberg. ♪ (announcer) do you want to reduce stress? shed pounds? do you want to flatten your stomach? do all that and more in just 10 minutes a day
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>> vaccines offer so much hope. we are thankful for the participators. it is led to millions of people around the world already being vaccinated safely. the vaccine rollout in the united states has been a dismal failure so far. alix: looking to overhaul the u.s. virus vaccination program. he will announce his detailed plan later today. for more, lori trammell, she joins us now. the association represents 3000 local health departments. so you really have a good read on what they need. what is the biggest issue in getting the shots?
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>> unfortunately there is more than one large issue. the largest mass vaccination on record in this country while still needing to address the active spread. there are other issues around resources and financing of the vaccine distribution effort. there are a few different major issues. >> guy: before we continue this conversation, i want to bring up this topic out of europe right now. it seems as if the eu has been notified i pfizer that it will not be able to deliver the latest batch of vaccines.
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it now looks like a key group of eu countries basically indicated the vaccination will be delayed. you are already behind. as we get more details on this we will come back to it. this brings us to the point that you have been making about getting vaccines online. having some degree of predictability. is starting to improve? do you think that as we start to get into this process, most of these early hiccups will be dealt with? walter: over -- lori: over time, eventually. the issues with the local health departments result in things like they can't plan the mass immunization sites or they are scrambling day today --
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today-to-day. this is not really what we need at this moment in time. we need these clinics rapidly and be able to preregister people and have them know they will be able to get the vaccine on the day they are assigned. alix: is the problem that they are somewhere in the state and not getting where they need to get? or they just don't have vaccine? it is not yet made? walter: i think -- lori: it is a combination of a few different things. there are specific allocation formulas for states. those allocations have to be spread out among different partners. they have the pharmacy partners doing long-term care facilities.
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we have hospitals during health care. they have the mass vaccination clinics with the priority groups. all of these allocations have to be balanced and managed. you risked some vaccine not being used and we can't wait for the next group. this is a very large issue. they have a lot of moving parts. guy: we appreciate it and good luck. lori trammell, thank you very much. still with us from greenwood capital, walter -- let's talk about what the expectation currently built in the markets is in terms of this vaccine rollout. ultimately it will determine how
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consumers are spending money. how the economy is going to recover. we have seen the michigan data coming through a little soft as well. this hinges on vaccine rollouts and the health authority being able to get a grip on the situation. is this too optimistic? walter: given the move the market in certain sectors have had going back to that early november pfizer announcement i think we have gotten a little bit over our skis. you could sometimes trip on being too far ahead and it is right in front of you. these very important details you guys were just discussing around. the market, really focusing on the good news and not really considering what can go wrong. the perfect example is this announcement out of europe with the delay in the vaccine from
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pfizer. there are some pickups i could've occurred on the back half of the year. the market has been relentlessly higher for the past two months. as painful -- nobody likes a pullback but it is probably a healthy and needed thing at this point given the dynamics we have seen. alix: where you go for safety in the meantime? walter: i think it is just holding some cash in reserve and being more judicious and putting new money to work. picking price targets and entry points. i think that is the way to handle it. alix: this is bloomberg. ♪
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alix: live from new york, i'm alix steel with guy in london. u.s. listed commodity exchange funds last week following two weeks of inflows. no surprise, precious metals have really led the outflow. the industrial metals aside, they have done so well. precious metals have taken a bit of a hit. guy: you talk to most of the commodity people and they are super excited about commodities. whether or not the precious metals complex will have a part in that equation, some will, some won't. you've also seen the big drawdown in bitcoin.
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i hate to bring that up. it is going to be interesting to see how these wider commodities do. we will be talking commodities in the next hour. a lot of people protecting real upside in the industrial metals. alix: many strategists are saying gold will take a break. inflation could move higher. unless you have the fed capping a rise in yields. at some point you will get a rally, gold over 2000. i think the other interesting point is why we are getting the rally. many are saying it is because of china and because of supply issues across the board. also because of the investment into energy. a lot of the stuff you need to build it, copper is in it. those are structural changes that are a little bit different than a commodity super cycle led in part by china spending.
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guy: there is a broader dollar story, i listen to a lot of financial news obviously on a daily basis. it is that the moment. you have concerns about the currency, the volatility and the lack may encourage people to look more former. we will see. we will talk more about the economy. we will get the view from adam. we will talk more about this package from the biden administration as well. this is bloomberg. ♪
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president-elect biden: the failure to do so will cost us
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dearly. we will pay for it by making sure that everyone pays their fair share. not punishing anybody. alix: that was president-elect joe biden on his plans for one point $9 trillion in immediate relief for the u.s. economy. the peterson institute economics international president. the peterson institute -- we will dig deep into that. adam, good to talk to you. many analysts who have written on this are thinking it will be about $1 trillion. this is a starting point. what will get the job done? adam: thank you for having me. i think those analysts are underestimating what biden is going to get. in terms of an ideal design, most of what is in this package is very useful. the state and local government aid. the money for vaccines, education.
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the part htat is more dubious is the $2000 per person. that is not as necessary and useful. that will be the most politically sticky part. they might constrain more on what income you could have before you are cut out from that, which would be fine. it will come closer to $1.4 trillion. let's not forget when we are talking hundreds of billions of dollars, those are significant differences. guy: on the screen right now, we are calling at one point $9 trillion in stimulus. the stimulus may come further down the road we will get the unveiling of the infrastructure program, how big is the stimulus
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need to be? the irs director urging the u.s. to go big. guy: as we have seen with the republican official, glenn hubbard saying this is big. combine this with what is past in december and we are talking in a normal share of gdp. as terrible as things are in human terms, the economy has recovered a lot. you're absolutely right. in particular to the spread and management of the pandemic. assuming the vaccine gets properly distributed for the due date, this is going to be a big help to the economy. in terms of what is coming down the pike, that will be more of
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that structure. is there a green budget? when talking about the next package of stimulus, that maybe the label that is somewhat misleading. alix: biden tied vaccine to covid really. he has made the link between the two, which could also help. does this further the idea that the u.s. could stay exceptional? that idea was sort of tracked in 2020. a few months ago europe was going to pick up that helm. europe is dealing with the virus. do they get another leg up? adam: the real reason -- i think the relative will get a leg up. putting resources and being more
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competent about the vaccine distribution will get ahead of what trump did. is it a lasting thing come the 2022 election or 2024 election? i'm sure you get a lasting leg up on the u.s. versus europe. guy: we are talking about fiscal policy. let's have a quick beat on monetary policy. yesterday, the idea that there will be a taper. when it does become appropriate he said for the committee to discuss specific dates we will let the world know. we will communicate very clearly to the public well in advance of active consideration of a gradual run through.
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let's talk a little bit about where you think the fed is and where you think the fed is going. there has been a division within whether or not we need to be talk about this. when do you think it comes? we will see the u.s. economy bouncing back in the second half of the year. the yields will continue to rise. we are seeing some data out today that within a year's time. adam: powell and vice chair clairton early in the week were very clear that they will start hearing various bank reserve presidents, it was the most important for this purpose.
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to the degree they will have any traction is going to be talking about financial stability. even then i don't think you will get much traction. there will be plenty of noise. in the end it will not taper anything until we've got some sustained inflation. it has to be over 2% for a year. i don't thing we will necessarily hold them to that. the market start creeping up a little bit. the bottom line, i don't think there will be any tapering until the fourth quarter of 2022. there will be a lot of uncertainty. how much is a temporary response to demand and ongoing inflation?
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how much is being infected by low-end inflation coming back? i think i would take the oversight. it could raise rates to people. alix: that brings us back to the question about the actual stimulus, when it comes. it depends on what fiscal multiplier we see. that really depends on what projects and what things get past in a real stimulus bill. what do you think is ready to pull the trigger on that could meaningfully move that scenario? adam: at this point, the sizes big. the composition is how much is sustained. you will be having almost certainly the budget that comes
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out after america recovers or whatever they are calling it it will be passed on the reconciliation and will include tax increases on capital gains potentially a little bit on some individuals. that will be a headwind. we are also going to have how much room do you go? i think -- guy: could i just come back to this issue of whether or not the u.s. has the potential to deliver all of this better than europe? this europe versus u.s. comparison at the moment, much was made of europe's hamiltonian moments.
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the next generation funds and this will be spent on a green revolution. when it comes down to it countries like italy had a very poor record of spending large amounts of money. the italian government is potentially about to fall apart over this very issue. do you think the u.s. has a greater capacity, a greater bureaucratic capacity to spend money? do you think the united states has a better capacity than europe? adam: the reality is hidden in the political system. they're hoping for a stable government. what money they get from europe. i 50 answer unfortunately still lives with emmanuel macron and angela merkel's successor.
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how it gets dispersed in gets viewed. maybe they will hold off. how that will be politically and financially. i think the u.s. will potentially outshine europe. i will come back with two points, even if you are behind here, it is still a better place that is smaller than it would've been without the step forward in european capacity. on a relative basis, europe is bound to collapse. the u.s., unless we get some political reforms, whatever things they do, it may not last.
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the trump administration and previous congress sort of put us behind this. guy: adam, stick around, we will need to talk about the priorities. particularly when it comes to the multilateral architecture, trade architectures that exist in the world. we will get more on your thoughts on where we got here and where the administration should be going, next. this is bloomberg. ♪
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ritika: i am live in the principal room. guggenheim global cio today. that will be at 7:00 p.m. in london. this is bloomberg. ♪ ♪ alix: live from new york, i'm alix steel along with guy johnson. today marks the one-year anniversary of phase one of the
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u.s.-china trade deal. president-elect biden said he would not make any immediate changes but plans to work with new allies. here with moore's michael mckee. michael: remember a year ago we were talking about the china trade deal as being the news for the year? the phase i trade deal was an agreement for china to buy 200 billion more in select products from the united states over 2020 and 2021. they are nowhere close to that. you could count it both ways. chinese imports or u.s. dollars. china was supposed to buy its own currency. 86.9 billion dollars worth of goods this year. the u.s., 82.3. for the first 11 months of 2020,
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china is about 58% of what the u.s. target is. where are they falling short? in agriculture they have only bought 62% of their targets. 76% of the u.s. targets. they were going to buy a lot of liquefied natural gas. they are only at 58% in energy. you're looking at a real shortfall in terms of this phase one trade deal. does the biden administration do anything about it or do the chinese agree to ramp up purchases in the next year to hit the target. the goal the trump administration has is reduce the bilateral trade deficit. they might have. you could see the ups and downs,
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we are coming way down again. we only have data in the u.s. through november. right now it shows the trade deficit was 280 $3 billion year-to-date. $319 billion for 2016. they will be about the same. this was a chart i was talking about to start with. the red and blue lines are the chinese and u.s. targets for 2020 and 2021. we are about where we intended to be with the phase one trade deal. as alex said, that has kinda followed by the wayside as a news issue. guy: very much. still with us to discuss more of this is adam from the peterson
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institute. the agenda for training bilateral, with economic allies, we have targets in the u.s.-china trade phase agreement. adam, the incoming administration has a lot to think about. how high up should trade be? adam: it should be secondary but near the top. they are international issues that are critical to things the biden administration wants to do. vaccine distribution, competition, one of that goes to directly control the pandemic. another is climate change where they are ahead of the u.s. a third area is tax collection.
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a real initiative on making sure national companies -- the fourth key area will be digital oversight. that involves the and regulation. how much is there in terms of constraining china's economic behavior? do we keep the wto functioning? there is a long list. a lot of it is directly contributing to the domestic agenda for the administration. ultimately, they will be scared politically to make the trade a centerpiece. i understand that. i think there are constructive things they could do on wto, on subsidies on on the agreement
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and how to deal with it. there are things they could do and they don't have to be controversial. alix: i'm wondering what part of that is going to involve the relationship between the eu and u.s.? the eu has said we are competitors and sometimes china just as bad stuff. they have to try to diverge the two. something president trump was able to do is unite europe. they have to run on their own. what happens now with that relationship? adam: in our rebuilding the global economy project we think not everything should be driven by china. the issue is easier said than done. we just saw the announcement of the eu-china deal.
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that sort of undercuts some of the things the biden administration was thinking we could propose. things that could've been done together. worrying about technology or joint approaches to intellectual property. the key with trump is you will not be as happy with your allies. alk about having both cooperation and collaboration. there's a confrontation bucket on values. human rights, forced labor, safety. there's a safety bucket that should be there in terms of vaccines and climate change, which is what obama and xi did together. in the middle there are economic topics that are subject for negotiation. that is a process where you need
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europeans and some other allies to join on. guy: do you think europe and the united states could come to an agreement on a tech package? adam: i think it is much higher probability then you think. the amount of disdain and distrust for the major thing companies -- faang companies is pretty bipartisan in the u.s. my calling jason furman has played a lead role in the u.k.'s digital competition. that is a middle point between where the eu is and where the u.s. currently is. looking back and looking at what the judiciary committee published in october, i think you will see a new regulatory
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initiative. the question is could france and others put digital taxes on the u.s.? alix: adam, it was really good to get all of your perspective. we really appreciate your time. thank you very much. this is bloomberg. ♪
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alix: the nasdaq off by about 7/10 of 1%. the question becomes what about options? did this lead to the selloff? do we see some options come into help support the market? abigail doolittle is helping us break it down.
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abigail: we recently had them pushing to record highs. getting into stocks. it could have what some are calling a negative feedback. something we saw back in august with the nasdaq 100. you had the nasdaq 100 surge of 20%. it turns out a lot of that has to do with options. as a result, the dealers had to buy the underlying securities. the dam apart where you need to hedge against that, you have details with calls to hedge against all of it. volatility. guy: what does this mean for small caps? abigail: this time around it is really a small cap. over the last three months you have it up almost 30%.
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you have the federal reserve pushing folks into trying to find yield. now it is small caps. when we bring in the volatility for small caps, it is not as bad as the nasdaq 100 index back in august. that probably has to do with the fact that it is spread out. the russell 2000 is the most extended ever. what comes up, must come down. there could be some volatility ahead. august and september provide precedent. that will be the case for the russell 2000. guy: thank you very much. up next, alan ross can of deutsche bank. this is bloomberg. ♪
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guy: i am guy johnson stop alix steel is with us. alex, what is turning out to be a busy day with policy dominating the agenda this friday. in the netherlands, the coalition collapsing. we are one hour away now from the start of a meeting of the german -- over the weekend, the success of angela merkel. that could have huge implications for germany and also for the european union. italy is tightening coded restrictions. germany's test toll hitting attend deming high. in the last hour as well, we have learned pfizer is having production difficulties, which means that there are going to


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