tv Bloomberg Markets European Close Bloomberg February 10, 2021 11:00am-12:00pm EST
from london, i'm guy johnson. alix steel in new york. we are counting you down to the european close. -- says that solidarity is still the best strategy. the first dose of the pfizer landtag dose delivers -- the wto clearing this today. it is going to be a while before we have to worry about inflation. christine lagarde says the ecb of -- ecb will look through any shortage in prices. chair bile -- chair powell and governor bailey speak later today. we're all trying to figure out why the stoxx 600 is now down by .1%.
in terms of the other assets we are watching, we are keeping a close eye. again, we are on the move today. as you can see, we now have a 49 handle. we have been moving below that 50 point basis move which is a historic line in the sand. we are going to hear from bailey later on and also boris johnson. it is going to be fascinating to see. alix: optimistic outlook, but there is no inflation. it is very confusing. rollover here in the u.s., the bank -- blame is being placed on the algo's.
we did see a turnaround within small-cap stocks. no corresponding bid with a little bit of money coming into the treasury market. just for fun, i wanted to highlight what is happening with platinum. if you want to look at inflation/reflation, that is something to definitely consider as well. guy: you do wonder whether blow down in the car sector could cause a headache in the market short-term. the european commission president addressing missteps and the vaccine program earlier. she talked about lessons they could draw from the delays when she spoke before the european parliament earlier. christine: it is a fact that today, we are still not where we want to be.
we were late to authorize, too optimistic when it came to mass production and perhaps to confident that what we ordered would actually be delivered on time. guy: joining us now for brussels, maria tadeo. the problems have been substantial, but are we moving on? maria: to some extent, i would say it is a very clear yes to that question. it is surprising because two weeks ago, we know will was under immense pressure. very open questions about her style and communicating. today, this was a much more relaxed -- i'm repeating again that some of the issues she repeats are not because of the commission. it does seem that the deal [indiscernible]
it does seem there has been the general sense that there needs to be an end to the fighting between the different parliamentary groups and that ultimately -- is someone that had the backing of angela merkel. that still counts for a lot in europe, so it is time to move on. i would say this is a very different tone from two weeks ago. the situation has really comes down for von der leyen. alix: what does she .2 to make us think that that percentage is doable? maria: where is the commission getting that information, what makes them think the current rate is when to get us to the summer. what they point to is that in q2, this will open up to the mass public. they think they can guarantee
200 million vaccines to be delivered to the european union. that would be enough to get you to around 60% of the population vaccinated and perhaps even closer to heard in unity. they bet on those 300 million doses by q3, but we know that targets have been missed and the commission is still repeating. if we do all of this, all will be forgiven and forgotten. alix: maria tadeo joining us in brussels. we want to get to how all this plays out in markets. we want to welcome imogen. if you were holding long bonds, you had a really terrible six weeks. we have seen a stronger rise in the backend in the united states than we have in europe. i wonder how you correlate that with vaccine distribution. imogen: i think vaccine distribution has played a part and i think they have received things that have been spread different along the fact that u.s. will yields have been
rising much faster. clearly more optimism around stimulus in the u.s. than there is in europe. there has always been the skepticism around what europe can only do on the fiscal side versus what the u.s. can do. covid trends, we were really expecting heading into this year in europe. all of those together create more optimism around the recovery in the u.s. then we have had in europe. the sad thing i would say is that in europe, there is -- investors are stuck and there is no inflation mindset. we have seen this commodity upswing. even in europe, we have not seen nominal rates captured as much in europe as we have in other currencies. guy: christine lagarde was saying we are a long way away from having to worry about
inflation in europe. how long do you think it is? is there anything in the forecast horizon that suggests the ecb is going to get anywhere close to 50%? imogen: i think we have a more bullish outlook on inflation through this year. we think inflation could get to 1.5% by the end of this year. over a reasonable forecast horizon, i think we are talking about a reduction in this easy monetary policy from the ecb. what we do know is that they are probably quite happy with where financial conditions are right now. i don't think we see them putting their foot on the gas anymore. guy: let's talk about specific
markets within the euro zone. bcp's continue to catch a little bit. trading by below 50 basis points. real compression with germany. part of that is draghi and part of it is the tech program buying above the capital. how much juice is left in that trade? imogen: i actually think there is a fair amount of dues left. there is a real new era we think that closes that chapter on europe skepticism that the current legislature was really bringing. we think of this as an important shift in italian politics. if we think back to december 2015, which was when the most recent load was expressed, that was the last time we had --
realistically, we are now in an error of much -- era of much lower yields, and we have had this very big innovation on the monetary side. i think 90 basis points is the first target to look at. in reality, i think this is a real hard look at the ecb and where to go from here. alix: will the ecb ever let that happen? imogen: let them go lower? alix: but the price go lower and yields go high by 90 basis points. with the ecb left the happen? just let that happen? imogen: no, sorry i was talking about [indiscernible] alix: if it is going to be a
game changer for italy and potentially growth, why wouldn't we see higher yields eventually. at what point would we have to start factoring that in for europe as well? imogen: thinking about core rate yield, we could see them going higher because we do see this recovery story taking place in europe as well alongside the u.s.. core rate yields can rise. ultimately, we might get more concerned that the level of yields may rise. even if we think beyond the current forecast on the horizon, but well into the future of the ecb stepping down in asset purchases, we are still not talking about the ecb shrinking their balance sheet. as long as you factor in them holding such a huge proportion,
i think you can be fairly comfortable your concerns about debt sustainability are pretty well medicated, mitigated even further by having draghi eliminate that nationalist risk around that sustainability. spreads can stay very well compressed. guy: a month ago, around a month ago, gilts were trading at 17 basis points. they are now trading at 48 basis points. that is a huge move. have we gone too far? we have further to go? imogen: i think it is a similar story. the u.k., and what we have seen is a catching up two other dm markets and particularly, the u.s.. specifically, to the u.k. versus elsewhere, we have seen a big repricing of monetary expectation. the move over the last week has been about moving away from
potentially pricing in further rate cuts to now thinking more about optimism and the recovery. yes, i think there is further to go. i think perhaps long-term, we don't settle too far from where we are in the u.k., but i think there is further upside in yields for the time being. guy: about 45 minutes until we get the comments from the governor. you can see how optimistic how he remains. thank you very much. coming out, we are going to be talking about the earnings season. we will set it up and get guidance and certainly the suggestion at the moment is that european country -- companies are getting their mojo back. this is bloomberg. ♪ when you switch to xfinity mobile, you're choosing to get connected to the most reliable network nationwide, now with 5g included. discover how to save up to $300 a year with shared data starting at $15 a month, or get the lowest price for one line of unlimited.
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guy: live from london, i am guy johnson. alix steel over in new york. we are more than one third of the way through the corporate earnings season in europe. an update on where we are, where we are going. alix: -- more than 60% of companies have reported earnings. so far, that comparison not that favorable. at the moment, the transatlantic comparison not that favorable and 80% of s&p 500 companies that have reported earnings so far, we compare that to the stoxx 600 and we are down 63%. there is some reason for optimism in europe and that is certainly the case when we talk
to our colleagues over at bloomberg intelligence. that is where they see the light at the end of the tunnel. of the european companies that have reported earnings so far, they think 60 percent is issuing positive guidance. if you break that down by sector, we see 88 percent of companies with positive guidance. if you look at how that performance is translated into the stock market, these are the sector leaders year to date. a bit of a year-long rally, but tech and financials not that far behind. we heard from socgen today, the latest to report earnings. the stocks gaining today with the ceo saying the year has got off to a positive start. alix: great set up.
also now, graham of morgan stanley. that was a good set up for emma. i wonder what part of this earnings momentum is factoring in better vaccinations than we are actually getting. graham: when we look at the earnings data, we after a member this is the fourth quarter. this is effectively what was happening at the back end of last year before the latest phase of lockdowns in europe was kicking in. the data itself is somewhat backward looking. nevertheless, we think it is pretty encouraging. your reporter mentioned guidance looks good. there seems to be a lack of transmission between some of the weaker economic data into corporate earnings, which is quite encouraging. we should remember that european companies are very global in their outlook. the weakness we have in european
economies is being largely offset by the strength we are seeing in the u.s. and asia. guy: let's talk a little bit about asia. a lot of european industrials are looking at what is happening in china. is that going to show up next quarter in these european numbers. graham: what i'm hoping as we go forward is that we get an acceleration in momentum in europe. maybe putting a little bit more european exposure into your profile leo because as we get to the second quarter, we are
suffering from europe's recovery being delayed by a quarter. we are starting to accelerate with perhaps the u.s. and other parts of the world perhaps starting to peek out in terms of losing momentum. alix: that is an interesting point. i wander through where and what domestic equities make the most sense to capture that perspective. graham: i think it is banks. you mentioned in your last segment that that is looking encouraging for us. our sector analyst of morgan stanley are looking for 40% economic growth for european banks over the course of 2021. we have got strong growth over the next four quarters and currently beating in this quarter. we are also getting some sort of guidance around dividends as much as these banks can say in
terms of current restrictions. when you look at the european equity market, there is no room for cyclical exposure. i think i can help the valuations of the banking sector while the improving economic outlook helps the earnings outlook. guy: one thing i have clearly learned from this earnings season thus far is that european companies are unlikely to give to a recovery. they have cut costs any can certainly see that as you move through the numbers. my question is, if you are looking to play the reflation trade, are there better options elsewhere because as you say, the european recovery looks like it is going to be delayed by one quarter, two quarters relative to what you're going to see potentially in the united states. are you going to get the bigger bang for your buck over
stateside despite all the efforts the companies have made? i think your point is valid and has been valid for the last two months and maybe for a couple of more months. the question is to which stocks are already discounting that. europe, it is not surprising european equities have lagged. equity markets are also lucky. i think as we move through the next quarter, we can start to look to this quarter when i think the narrative in europe will get a bit better. perhaps the narrative is close to perfect elsewhere and may be, that moment of starts to fade a little bit. we should think of europe as the reflation play. when i talk to our plants, a lot of fund managers are buying stocks for the last three or four months.
you could argue that europe is going to be equivalent because europe was hit hardest by covid in 2020. from a lower base, we potentially have more upside to 21. i'm quite encouraged about the outlook for playing global reflation through europe. we have that sort of high-value exposure within our market, which tends to do quite well when numbers are rising. guy: the time in the sun for europe may be coming. alix: how poetic. guy: we are all hoping for a bit of sunshine and summer coming down the road towards us. it feels like a long way away right now. alix: guy: i'm just trying to be positive about the rest of the year. we will wait and see. maybe boris johnson will tell us the lockdown is going to end
soon. i don't think it is going to happen, but we have got to help. this is bloomberg. ♪ [ sigh ] not gonna happen. that's it. i'm calling kohler about their walk-in bath. my name is ken. how may i help you? hi, i'm calling about kohler's walk-in bath. excellent! happy to help. huh? hold one moment please... [ finger snaps ] hmm. ♪ ♪ the kohler walk-in bath features an extra-wide opening and a low step-in at three inches, which is 25 to 60% lower than some leading competitors. the bath fills and drains quickly, while the heated seat soothes your back, neck and shoulders. kohler is an expert in bathing, so you can count on a deep soaking experience. are you seeing this? the kohler walk-in bath comes with fully adjustable hydrotherapy jets and our exclusive bubblemassage. everything is installed in as little as a day by a kohler-certified installer. and it's made by kohler- america's leading plumbing brand. we need this bath. yes. yes you do. a kohler walk-in bath provides independence with peace of mind. call... to receive fifty percent off installation.
>> it is time for the bloomberg business flash. u.s. plans to force the sale of tiktok's american operation to oracle. walmart has been delayed indefinitely. president biden will review donald trump's efforts to address security risks from chinese tech companies. meanwhile, emily chang sat down with the ceo. >> i think tiktok has achieved a lot of success in being able to take a new-media format like short form video and create a very interesting property. we had a very crisp vision of what we would want to do with it. including, for example, addressing some real concerns around national security. >> you can catch this exclusive
the price action. most of europe has been boring today. corporate numbers have come through, they did not really move things. i think the market has been waiting for powell. you can see a really tight range , and something happened in our ago, i haven't put my finger on what exactly what has happened. maybe a delayed reaction, no clear reason for that. but we saw this earlier, this is down about 3/10 of 1% or the price action not really happening in the last hour, early in the session nothing doing. the miners have had a better day and big names out of the u.k. have been performing and providing some balance, the ftse 100 is down, and the dax is down by six tense of 1% and the cac
is down 4/10 of 1%. yesterday was a difficult day to discern the trends in the market. today it's more mixed, but there are some trends you can pull out. you have basic resources trading up, banks, we talked about socgen. the dividends here looking more positive, industrials are trading higher, technology is down, as are some staples. chemicals are down. it's really hard to discern a clear trend and narrative coming out of europe. let's take a look at some individual names. we have had some real big names coming out today, socgen up by 3.29%. this is the first up in ages,
but the narrative looks more positive and the commentary looks more positive. heineken cutting loads of jobs, trying to get in gear for the recovery. and in terms of beer volumes, this is a difficult narrative and i think the analyst community was uninspired by what was delivered. ap moller-maersk, let's talk about with happening here. i will give you the price action and alix will give you the real story. we will get you the story from the analysts and ceo as well. down 7% while shipping rates are sky high. what's going on? alix: rates go up, rates go down. i think the guidance for some of the analysts were disappointing, but they have been approached by a competition watchdog and authorities over skyhigh rates which have surged over the last
few weeks. if demand rolls over globally because of the distribution of the vaccine -- there are lots of different moving parts of this story. let's get to the ceo who spoke to bloomberg earlier. he expects that great rates remain low. >> i would expect the rates to remain at an elevated level for a while, for the first quarter, and after that we will see normalization of the situation. >> so normalization in freight rates and the demand story, all of the containers in the right place and that's in the second quarter? >> we do expect some sort of normalization through the year, as we say in our guidance for 2021, we expect to have a better first quarter then fourth-quarter that we were just out of. which was the best for our transport and logistic businesses. but after that we expect the
impact, though restocking cycle in the domestic demand we have in the u.s. and europe, to fade. >> and the chart that hillary showed us with shipping costs from shanghai to rotterdam, it spikes like bitcoin, like gamestop shares. have you had complaints from clients? from governments or regulators about these rates? >> obviously when the rates go up, it creates tension in the system. it is really supply and demand and an extraordinary demand situation. in the first half of last year, the volume went down somewhere around 10%. and now we have the 10% we did not ship in the first half of 2020 and want to ram it into the second half and that puts
pressure on the fixed capacity system. the ships do not get bigger just because the demand is higher. so that's really the mechanism going on. guy: that's the ceo speaking earlier. let's figure out whether or not the best is in the rearview mirror. david kirsten is joining us now to give his take, the price target is 175,000. let's talk about the story going into 2021. soren was talking about the fact that the freight rates are likely going back down again. you have huge demands of people unable to enjoy services focused on goods. what just 2021 look like? -- what does 2021 look like? can freight rates normalized by the end of the year?
david: that's a difficult question to answer at this point, given that the current rates are about three times higher now than they were a year ago at this point. they are about double the four year average. they need to go down quite a long way to get to a more normal level and that's unlikely to happen in the next one or two quarters. i think the amounts will remain strong until the end of the second quarter, largely driven by a restocking cycle in the u.s. where we are still seeing inventory levels at record lows. this will support the global trade i think in the first half of this year, and likely support the container freight rates. alix: who ends up paying for the high rates? the consumer? the company ordering the goods? i wonder at some point is there a rate that is too high and it
will dent demand? david: it will eventually be passed on in the supply chain, shippers will pay, they will try to pass the costs to the consumer. when you look at the demand which went up by more than 10%, we see in trade from china to the u.s., up more than 20% in the fourth quarter. demand is going up and it's difficult compared to the second half of the year. and as a result is likely to come down. for 2021 overall, volume is expected to go up 3% to 5%. likely lower in the second half. guy: normally people would build ships at this point. soren saying that this is not
happening. do you think others might? david: some have recovered given the current high freight rates, the sector was at about break even up until last year with some distressed balanced sheets -- balance sheets which has substantially improved. we have seen new ordering, and this moved up by about four points, just about 10%. it seems like a decent level going forward and it means the market will drive this in the coming years. the key to ordering new capacity these days is that the industry is trying to become carbon neutral by 2050 and there is still uncertainty on what type of fuel and engines can be achieved. traditional fossil fuel vessels
do not contribute to meeting that target. i think this is also why maersk is not looking at any major new professional orders. they will probably do this three to five years down the line when there's more clarity on what fuel to use. guy: he was very called on hydrogen earlier on, so that pours some cold water on that idea. david, thank you for joining us. we are through the close here in europe, this is down a little higher for the ftse 100. the final numbers looked quite mixed, little negative but not by much. we are drifting sideways at the moment. full coverage at the top of the hour, speech by governor bailey at 5:00 and press conference by boris johnson. we will cover both of those and we will take you through that hour.
ritika: this is bloomberg: markets, the european close. the microsoft ceo joined studio 1.0 at 1:00 in new york. this is bloomberg. ♪ guy: 42 minutes past the hour, at this point, 130 8 million vaccine shots have been distributed worldwide, israel is among those topping the list, given more doses per capita than any other country in the world and have vaccinated more than one third of its population. one of the companies involved in the vaccine distribution has a representative joining us now. thank you for your time, great to have you on the program. everyone is trying to figure out in the pharmaceutical sector,
what they can do and how they can engage with this process. tell us how you are going to engage, which companies are you talking to at the moment? what manufacturing capability can you bring to bear? >> we are engaged right now, we undertake the full adjuster cooperations for vaccination programs in collaboration with the state of israel. we pick up the cargo from the cargo plane and take it to our distribution center, security and freezers -- secure it in freezers and get it to vaccination centers all over israel, we make sure it gets there on the right time for the number of people getting vaccinated. it's a logistical exercise we are proud to be part of and it's working very well. that's not the only area where we can contribute, we have a big global manufacturing footprint.
we are supporting some 200 million patients, and there's also api on vaccines and finished packagings. but we have never done research in that area. we are in discussion with some of the originators who have come up with vaccines. we don't have deals or arrangements with anybody and i can't really comment on the discussions we have for comparative reasons. but we want to help where we can , and we want to help with distribution in the u.s., we have a distributional company there. so those are some ways we can help on the practical side. alix: to be clear, you will never be making a vaccine, this is purely the distribution and manufacturing pipeline question mark kare: we -- pipeline? kare: we don't have plans to go into vaccine research. we work in partnership with a
company that develops it. so we don't have any research or scientific abilities -- capabilities. guy: to be a little clearer, do have the capability of making rna vaccines? or is this the more traditional vaccine group? kare: we can manufacture api for an rna vaccine and we can distribute it. that is something we can do. but we don't have the research to invent an rna vaccine. alix: so you were talking about flipping a distribution to the u.s. and companies, can you -- about distribution to the u.s.. can you give us a timeline? kare: it all depends on the u.s., we have a distribution company that distributes products everywhere to any pharmacy. so whenever a pharmacy might be short, they can call and get it in 24 hours. that company, some but he wants
assistance in vaccine distribution, can also assist in that aspect. we don't have any current arrangements. guy: let's talk about what you are doing right now, you've been with the company three years, you have tried to reform the business, to figure out where the business goes from here, you have voiced frustration in the past about the slow progress being made with the legal settlements that you need to pursue. do you still feel frustrated? do you still have that feeling, do think that the pandemic might be making things going slower than you originally anticipate? i wonder when progress happens here. kare: i want to know the same. the framework that we have with the states and the lawyers really will benefit u.s.
society. it's an agreement were five companies have agreed to form a cache, and we will -- i think it makes sense to put this agreement into a firm agreement. but there's a lot of parties involved. even though each settlement will be for each company, without some pressure from a legal proceeding to move on, i'm in doubt whether people will get to sign on the dotted lines. we have had negotiations with the states, we are ready to do a settlement. we need everybody to come together and get signed in order to get implemented. it would be nice to get implemented and would benefit the u.s. public. alix: do you have any sense from
u.s. authorities on when that might happen for the two major cases? a couple of months? a couple of years? kare: i don't know. there was a positive sign, there was a settlement with the 50 states which was a positive sign, but they did not settle with the 1500 lawyers who represented cities and counties and so on. we would like to see a holistic settlement to the benefit of the u.s. population and people suffering from substance abuse. we think that would be the best way. guy: you sound pretty glum and frustrated. kare: it's just the kind of -- because we don't get to the finishing line and we don't start helping the american public until we get across the finish line and the money gets
spent on improving the situation . and we want to give this to all 50 states to help treat more people. guy: the frustration may not come in terms of relating directly to this, but in relation to the fact that you cannot move on while this is happening. and you took the job to move it on. are you thinking about moving on yourself? because this feels like it could drag on for a while. kare: i'm not feeling any inclination about moving on myself. i have always finished the job that i have set out to do so i will stay until he gets done. and i think i am moving on very much, because we have two legal situations that are very old, like 10 and 20 years ago. we are doing every day in the whole company is moving on to operate our manufacturing and to
launch products. i think the business is very much moving on and the organization is moving on. we are communicating and have made great progress on our earnings and margins. we will continue to reduce things over the next 10 years. i think our operational parameters are moving on. and you can see the legal situation, one day they will be over and that will be nice. that does not stop us from improving the operations. guy: to finish on a positive note, thank you for the time today, we wish you well with your efforts in the rollouts for the vaccine programs we are seeing around the world. thank you. this is bloomberg. ♪ ♪
johnson alix steel is in new york. andrew bailey will be making a speech and we are getting -- i am guy johnson in london, alix steel is in new york. and bailey will be making a speech -- andrew bailey will be making a speech later. here's a preview of what we can expect. peter, the message we got from christine lagarde earlier on is that we are not worrying about nation, the message from the fed is that we are going to get some inflation but we are not going to worry about it. in today's press gave some credibility to that argument. peter: the core inflation came in and zero change in the month. the headline came in at 0.3 expectation. so this is of course excluding food or energy. and this bolsters the argument that there's really nothing to worry about with inflation right
now. every time someone brings it up he says we will think about it when the time comes but now was not the time. alix: what kind of pressure do you think will have -- what kind of pressure do you think there will be if we get a key when day -- q and a? peter: you will not shift the conversation and that direction, he will carry those questions and say right now the bigger concern is deflation, the economy performing under where it is supposed to be. he will say we are prepared to do something when the time comes, we have the tools to extinguish inflation. but let's not prematurely going that direction. guy: do you think you will be
asked about the vaccination program? andrew bailey was positive last week on the u.k. economy talking about the bounceback, which is being driven by an above average vaccination performance for the u.s. is catching up. you think powell will be talking about that and the impact it will have on the u.s. economy? peter: great question. i don't know. i think in the case of the u.k., andrew bailey is certainly not one-sided optimistic. he has pointed out that the u.k. is suffering through its deepest recession since 1709, which is an amazing statistic. and the risk is further weakness . he, like powell, is mainly concerned about getting inflation up to wheshou we really appree it.wn. thank you.
an interesting side note, governor andrew cuomo is talking about the vaccination program in the u.s., saying it cannot rely on the existing health care system and is advocating a state and federal partnership to open mass vaccination sites. new york and particulars using things like shea stadium to vaccinate area -- vaccinate. guy: the bigger the site, it does seem to deliver more efficacy because you get more throughput and you get more out more quickly. you don't waste as much. scale does seem to matter. alix: and you have to do it before the other variants take hold and we are racing against time. we are set here, coming up, the u.s. chamber of commerce and aco will be joining david westin. this is bloomberg. ♪
headquarters in new york to audiences worldwide, welcome to "balance of power." today is the second day of the second impeachment trial of donald trump. as the house managers move onto the merits of their case. to put this in a broader perspective, welcome someone who has defended a public official in the senate, then went on to write the definitive account of the impeachment of andrew johnson. david stewart's latest book is "george washington: the political rise of america's founding father." you do understand the history of these impeachments so well, as well as the way they operate. put this trial in a broader perspective prepared to what has come before. >> we are looking at an impeachment that has higher stakes than -- several of them. we have had five