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tv   Bloomberg Markets European Close  Bloomberg  February 17, 2021 11:00am-12:00pm EST

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guy: from london, i'm guy johnson. alix steel is over in new york. we are counting you down to the european close on "bloomberg markets." the eu tripling its order of moderna vaccine and securing an additional 200 million extra doses from pfizer/biontech, and seeing production at astrazeneca's facility drastically increase. but the recovery remains farther behind. we have seen the data, with breakeven inflation rates widening to a proxy with the unit states. prime minister draghi lays out a far-reaching political plan for his country and for europe, saying a common eu budget is required to put his budget back on track. ford pledges to be all electric in europe by 2030. this is january car sales collapsed in the region to a record low.
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let's talk about the market. despite the amazingly strong u.s. data we have seen today, we are seeing the dollar clawing back gains. we have been tracking lower throughout the day on euro-dollar. we are having a look potentially at one dollar 20 since again -- at $1.20 again. alix: we got some really excellent data from retail sales, higher ppi, industrial production all better. overall, the indices pretty lackluster. the energy index is up by 0.8%. that is an oil story, although many saying that oil is getting bit a little bit too much. the demand we lose from texas is really going to at strip these apply losses. the 10 year yield, you mentioned we are seeing some buying come in. we did hit 1.33% overnight, surpassing that march high. that is leading to a lot of volatility in the bond markets. this is a merrill lynch move index that tracks volatility within bonds. we have seen stock volatility
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moderate, but are we seeing that spread to other asset classes? i did want to highlight the high-yield bond market. overall, high yields are down, but for the double b in the high-yield market, we are now sub three. you pointed this out. i read more about it. it is really unbelievable, and it could go even lower. guy: it is amazing. you are seeing high-yield this continuing to compress and compress. it is going to be fascinating how much more there is in that trade. we are being told there's more still to come. let's get back to the covid story and europe's vaccination program, getting a much-needed boost. the european commission says it secured hundreds of millions of additional shots, and is now bowing to accelerate the vaccine targeting new variants. >> the variants first i didn't fight in the united kingdom,
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south africa, and brazil are a potential paradigm shift in the global fight against covid-19. we need to further upscale mass production of new vaccines, but also of existing vaccines. guy: european commission president ursula von der leyen speaking in brussels a little earlier today. just think about this. europe is in some ways so far behind in terms of the way the market is pricing in recovery and the return of inflation. let's just take a look at this chart. europe being left in the dust by the united states. the data today really speaking to that reflationary frenzy we are seeing across the atlantic. the u.s. very much outpacing what is happening in the euro area, the most in over a decade. the question for europe, will this historic divergence help deepen what already looks like is becoming a double-dip recession in europe?
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as you can see, they continue that spread, it continues to track lower and lower. joining us from london is jane foley, head of fx strategy at rabobank. we've got $1.2030 on euro-dollar at the moment. the data out of the states is sensational. europe is struggling to catch up. do you think the euro deserves to be at $1.20 in the near term? jane: i have been looking for one dollar 20 cents, but to be honest, i think the euro has had some good news as well. we have draghi at the head of italian politics, and that is certainly something that the european markets will welcome. yes, the vaccine news we have had today from europe is good news after all. we have had germany announced earlier in the week that it will be opening up some of those restrictions, and some of those numbers, with respect to covid cases, they are not as bad as
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the numbers we have presently in the u.k. either. we have a much more rolled out vaccination program. so it isn't all bad, but i do think that we are going to have this battle with euro-dollar coming up for quite some while. we are not going to have the trend we had last year of continuous dollar strength -- sorry, dollar weakness, euro strength. so i think we are going to be any a much tighter range. i think it will be quite hard work perhaps to get to $1.23 in the months ahead, but i think there is a reasonable chance we will see that level. alix: is it the u.s. pulling europe up with it, or does europe have its own reflation story on an absolute level, not a relative level? jane: if we go back before the pandemic, if we go back to 2019, for instance -- it does seem along time ago, but there was
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this japanification of the eurozone market. i think we have to bear that in mind. europe was bogged down by a lack of structural reform, maybe buying more sluggish employment. -- maybe by more sluggish employment. we would have years ahead of relatively slow growth perhaps, and certainly sluggish wage growth. those factors that perhaps we need more reform in europe have not gone away. there's always perhaps the potential for the u.s. to be able to reflate more easily, perhaps because of its more clickable labor market. i think these parameters are coming back to play now. that said, we can talk down some of the strength in the u.s. data today because look at the retail sales. we know that in december, there were relief payments out, so clearly that was going to be spent. that's one of the reasons why retail sales were so strong, and maybe won't be so strong in the following months. we can make these arguments, and they have a lot of validity. it will take some months to
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really clear up this picture. guy: i talked to a lot of people about the dollar, under seem to be competing narratives around it, understandably. there seems to be this view that stimulus in the states will dragon a lot of imports, and that will be dollar negative, but the stimulus effect on the of the economy will be positive from a financial flow point of view because the u.s. may recover a little earlier. it is likely therefore to see a little bit more inflation, and that is going to be positive for the dollar. how do you see these competing factors working and evening out? jane: i think it depends which currency, which country you are talking about. if we do get a better u.s. economy, i still think that is going to be a positive for high risk. i still think that will be a good outlook for many emerging market assets, for instance. i think perhaps you have to look at a little bit differently if you are comparing the dollar to some other g10 countries, where you don't get necessarily such a
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big yield differential. what does that mean against the euro? you could have a position where the dollar is still weakening against various high-yield, but the euro is really struggling to follow that sort of turn. for me, i think you will have a decent outlook for high-yielding em assets if the u.s. is replacing, but i don't think it is going to be plain sailing for euro-dollar. i think it is going to be choppy and a far tighter range than the one we saw last year. alix: what happens if the rising yields -- if the rise in yields brings forward inflation expectations in the rate market? jane: that is interesting because even if the market is going to assume that, it is not going to assume that the fed will be the first g10 central bank to hike. for instance, i think right now the market is thinking 80 norway will go this -- thinking maybe norway will go this year. maybe australia, maybe new
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zealand. so that narrative is going to be out there with respect to other g10 countries, but it is probably not going to be there with respect to the ecb. that is certainly going to be perceived as going to lag on the interest rate hike. so you have a different narrative potentially with respect to the dollar in some of those smaller currencies then you would with euro-dollar, and i think that is a concept that is already entering into many investors' minds, even though the fed will be pushing back on it. it is something which is likely to give the dollar underlying support, and again, that is one reason why i don't think euro-dollar can really manage this uptrend which many people assumed would carry on happening at the end of last year. guy: i want to talk about about what is happening with the pound. we are a little softer today on the cable rate, $1.3845. the pound has had an incredible run over the past few weeks.
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addressing the issue of maybe whether the bank can pull back on its qe program. we've also got boris johnson coming up next monday. how pivotal will what boris johnson has to say next monday in terms of reopening the economy be to the pound's trajectory from here? using we could get through $1.40 -- do you think we could get through $1.40? jane: that is possible. it depends on the outlook for the u.s. dollar, too. what we have seen in the press today is perhaps signals that he's not going to be as positive as many people are assuming. one of the big props for the pound this year has been the fact that the u.k. is quite advanced in that rollout, and that has gone alongside perhaps a more hawkish tone of the bank of england, and of course, the brexit trade deal at the end of last year. so the vaccine trade is certainly part of the reason for sterling strength. what we have seen today his suggestion that they may not be so hasty in rolling back these restrictions because if they do, we may see another push higher
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in cases perhaps in july, and certainly if they rollout the reopening of the schools in march, that might mean the number of cases the pace at which cases are falling may start to flatten. from that point of view, it could be that the market is a little bit disappointed next year, and i thing that is a hurdle for sterling, as well as the fact that we've got these scottish elections in may, and that could unleash a lot of speculation about an independence vote as well. guy: jane, stick around. we need to talk more about what is happening in europe. we will talk more about what mario draghi is going to deliver. jane foley joining us from rabobank. draghi talking about rebuilding the italian economy and the european economy as well. that is coming up next. 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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means suppting european union that will bring about a common budget to combat number states' recessions in this difficult time. guy: mario draghi delivering his first speech as prime minister before the italian senate. he called on his fellow italians to pull together to rebuild their country, comparing it to the postwar reconstruction effort. still with us, james foley, head of fx strategy at rabobank. let's deal with the issue of draghi's desire to see an eu budget. what i am being told from brussels is that the next generation funds need to be spent wisely, they need to be delivered, and they do have a meaningful effect. then maybe the conversation about a continuation can happen. the hamiltonian moment doesn't
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seem to be quite there yet. we haven't crossed the rubicon. do you think draghi is the guy to drive this forward? do you think he has the capability to convince those may in germany and the netherlands, finland, etc. to pick up on this? jane: i can't think of anyone else who could do the job better, but that doesn't mean that he will get the job done. clearly with macron, he's going to perhaps give a little bit more impetus to europe. they are, after all, losing merkel in the summer. but we saw last year when the recovery fund was put together there was a lot of resistance, particularly from the frugal four. i don't think there is the appetite amongst the frugal four to really shift their position right now, so there's a lot of work to be done in terms of achieving a common budget, if it can be achieved. i think this is going to be a slow and painful process for europe, and i don't think it is going to be quick. there are going to be elections
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in italy and around two years, for at least that is the latest i think they can be held. if draghi gets that far, i can't see that he will have made an awful lot of progress, but he is perhaps the only person that could potentially offer some hope on this front right now. alix: so what if he can't do it? what happens? jane: first of all, what he needs to do is spend the recovery fund money wisely. it was about the spending office that created the real friction within the previous government anyway. one big question for everybody, particularly italy, is can he invest this wisely in productive resources? we have seen very low growth in italy, and there is a productivity issue, so he needs to show that that can be spent wisely. he needs to get the political support to do that. that in itself is going to be tough for italy. they've had decades of really
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deck -- of really difficult politics here, so he's got an uphill battle. if he can do that successfully, maybe he can win over a few brownie points from the dutch or from the other frugal four team players, but i think this is going to be tough. guy: let's talk a little bit about what is happening with bdp yields, and then talk about -- with btp yields, and then about christine lagarde. we are starting to see yields rising everywhere, and there is going to be a gravitational effect of the u.s. 10 year that isn't even going to reach down into italy. do you think that the ecb is going to respond to that? lagarde in the past has been famous for saying our job is not to manage spreads. that clearly has changed. will the ecb lien and on that? -- ecb lean in on that?
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jane: i think they will. they need to see better signs of growth before they pull away from that position, but i think that is going to be an uncommon attitude. i think the majority of g10 central banks have retained that very cautious position. have seen it from the fed, from the australians, from the swedish. some of these economies have been doing a lot better than the euro zone, so i think we will see lagarde wanting to lean in. clearly when she decides not to do that, it will be because the economic data is looking far brighter, and we are through this pandemic, but i think it is too early yet to expect her to step away from that. alix: i just wonder how the timing of all of this -- like, how much time is the market going to give draghi to get together? how much time will be market give the ecb the leeway to keep doing what they are doing? how much time until budget deficits start to become a conversation? what are we looking at here? jane: quite possibly the second
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half of this year. in terms of budget deficits, as soon as we see signs of better growth, budget deficits will become a bigger part of the conversation. and then of course, budget deficits become much more of a concern if interest rates go higher. so all of these things are going to come together once we have more established and more confident economic recoveries. maybe that will be the latter half of the year. i don't think it is going to be the first half of this year. but in terms of draghi, he's got one, big, strong card, and that his -- and that is that he has credibility. the markets like him a lot, so they will be giving him a lot of confidence. at the same time, i think expectations about what he can deliver are also very high, so if he fails to do that, i think there's a lot of room for disappointment as well. alix: no pressure on that front. jane, it is always good to catch up. thanks a lot. really looking forward to having up again. this is bloomberg --
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♪ karina: it is time for the bloomberg business flash, a look at some of the biggest's mysteries happening right now. i'm korean -- biggest business stories happening right now. i'm karina mitchell. the 5.3% increase beat all estimates and suggested that fresh stimulus helped a rebound in demand. it may influence the debate over president biden's stimulus package. it was another blockbuster quarter for shopify. canada's most valuable company beat forecasts on sales and earnings, and it expects revenue to grow rapidly this year. it's food platform was up 99% from a year earlier. and say goodbye to the trump era in atlantic city. the trump plaza hotel and casino was imploded earlier today. it was one of the premier
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gambling locations in the new jersey resort, but after a series of bankruptcy filings, trump cut ties with the casino into thousand nine. it closed for good -- in 2009. it closed for good in 2014. that is the latest business flash. alix: thanks so much. let's focus on ford for a second, joining the ev race in europe. the automaker is bowing to go almost completely electric by the end of the vector -- is vowing to go almost completely electric by the end of the decade. >> by 2026, all of our electric vehicles will be zero emission capable, and by 2030, we will sell only those electric vehicles in europe. we are investing to transform electrification centers, and this is where we will build our vehicles in europe.
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guy: a positive outlook, but for now, the outlook pretty grim for the auto market here in europe. a rough start to the year for european carmakers. car sales in europe slumping to a record low in january, basically thanks to the lockdowns faced by the continent's biggest markets. it is the steepest drop since may. here's the interesting thing. yes, we have seen showrooms close. yes, there is a chip shortage which is having a meaningful impact as well. but the outlook at the moment, judging by the analyst comments, isn't particularly rosy for the rest of the year. we had a conversation with autonation yesterday in the united states, which sounded quite positive. demand for cars is still pretty high, and the outlook is fairly rosy. here in europe, it feels like a very different picture. alix: but i wonder how long that picture lasts.
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if we have stricter emission standards in europe and you have to sell more ev's, europe is already beating the rest of the world on share of passengers car sales on an ev level, and now ford is adding into that. if we tie that into what we are seeing in texas, we are plugging and more stuff. if you are selling ev's, all of those need to be plugged in, and we are dealing with a more volatile climate. do we have the charging stations? can we build them fast enough? what happens if power goes out in texas? you can't go anywhere. you can't even go in your car to get heat. all of this ties into the medium-term shift. guy: there are other factors as well. driving a car in cold weather, it doesn't go as far. i was talking to a buddy of mine of the weekend in a car park, and he just bought a new i.b. three -- a new volkswagen. he was talking about the difference in the distance on a
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hot day and a cold day, and it is massive. you do wonder whether or not the consumer is ready to make this decision. are we kind of putting too many eggs in one basket? is this consumer going to be happy with it? we've had a huge push for diesel, and it didn't work out so well. i wonder whether or not consumers are going to look at this ev shift and wonder whether the government is really selling them the right option, or whether they should have other options in terms of the drivetrains that are out there. alix: if they keep giving subsidies and keep paying them to do it, sure. why not? guy: but the same thing happened with diesel as well. maybe hydrogen needs to be part of the conversation, too. european markets are about to close. we will show you the numbers. this is bloomberg. ♪
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guy: we are counting you down to the close in europe. we will get you through the
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auction and show you the final numbers later. we been fading in the last couple of hours. we saw incredibly strong data out of the united states on the back of that. bonds got bid and stocks consult. we are down around .8%. the rally thus far has been fairly rapid. as a result, mainly better to travel than arrive. maybe the data is that moment. in terms of we are seeing around the original market in europe, we are seeing outperformance in the ftse 100. we are getting that a little bit again today at 6713, only down .5%. the ftse mib also underperforming. the narrative around italy has been positive of late. btp has been catching a big bid. that is reversing. italy trading down by 1.2%. let's talk about the sector breakdown, the all important
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rotation, the turn within the market. yesterday everything green, today everything red. energy is the only outstanding story. a complete rehearsed -- a complete reversal. you could almost take that and put it down to yesterday and bring it the other way around. they reversal in terms of the sector story, which gives you an idea of the more defensive nature the market is taking on today. let's talk about some of the individual names worth focusing on. they have been moving some of the sectors around. miners delivering good numbers. broadly the market is lower. rio getting dragged down by that , down .2%. a positive outlook, the dividend looking positive. the outlook for british american tobacco, the market was much better than this. it is the guidance that a shape the narrative in terms of the price response. this top down 3.8%, nearly 4% today.
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there are certain idiosyncratic factors around what is happening in the sector and there is a clear need to invest in the business. that is one reason for the guidance. the market caught by surprise. the stock that caught everyone by surprise was kering, owner of gucci. we had lvmh numbers a few days back. gucci and kering not delivering , down 7.2%. alix: let's dig in. what happened to gucci? why was it so bad? >> the focus on gucci was on the top line print where the organic growth was -10% for the fourth quarter, which compares to lv's fashion and leather goods segment. lvmh having led the pack in terms of reporting set the bar high.
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unfortunately gucci cannot clear it. some of this was a result of self-inflicted wounds such as a strategic decision to under emphasize wholesales which is long-term a good move but it hurt the company a lot in the short term. guy: in terms of gucci, it is 100 years, the anniversary coming up. can they make something of that. will that provide a more positive tailwind for 2021 and how big would it be? >> that is the messaging around what is being planned for 2021, the centennial celebration, they're planning a lot of events and it is a question of how to reengage the consumer wants the stores reopened into a more immersive customer experience. last year was the industry -- engagement with the local european consumer was another region for the wide gap between its performance. i think that is another thing
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they have in mind for this year is to commit to and engage for the local european consumer cohort. alix: here in the u.s., midtown is a wasteland, but if you go out to brooklyn where i live, the small stores are jamming, it is totally different circumstances. you mentioned gucci going out of the wholesale market and that will be a long-term positive. what do we see the fruits of that? >> we are already seeing fruits, the company prior to the pandemic had about 22% of sales for the gucci brand from wholesales and by the end of this year they expect that will be less than half. that is another region -- another reason for lv's success. the further gucci goes along that trajectory, the better it will be for the brand longer-term. guy: let's talk about fashion. i leave fashion to others. alix: let's not talk about
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fashion. come on. [laughter] guy: not my strong suit. i remember tom ford turning gucci around in the business being bought out. michaela did the same thing a few years back. have they lost their way from a design point of view? >> fashion tends to be cyclical. michaela when he came on the scene reinvigorated the brand with a lot of exuberant fashion and colors. it may be one of the elements that during the pandemic people did not have a lot of events to go through and that type of fashion resonated less. perhaps they dropped the ball a little bit in terms of innovation. i think that should be fairly complicated to rectify through a wholesale designer change again. alix: guy has three pairs of
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shoes. that is why he is not allowed to comment on fashion. who benefits from gucci as they are to make this happen? >> in the near term it is clear the share of market growth accruing to the competitors is greater with the vacuum left by gucci. prada recovery has been impressive. by the end of december they said they were back to flat retail sales. lv is in the firm ascendancy. if i were to look at this as a marathon this would be point and the race where there is one leader that has broken away from the rest of the pack. that would be lv -- that said, this is a fragmented industry. of the $281 billion of sales that it generates annually, the top 100 companies generate only an average of $2.8 billion in sales. to be among the top five, which is where gucci is, is not something to be sneered at. alix: i should point out -- guy:
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i should point out alix has just moved apartments and she has a special cupboard for shoes. alix: a shoe drawer where you can slide it out and see all of your shoes. >> lucky you. alix: you get it. [laughter] guy: these are important things, apparently. we have mx this week, montclair this week, what are you expecting? >> a mixed bag. it is clear lv's performance was one-of-a-kind. that said, the exit rate, performance in q4 is what everyone was looking at. a steady delivery story. you will never see them report 45% revenue growth which is what gucci was doing in 2016 and 17. a fairly predictable set of numbers from the company. montclair will be interesting because they are heavily reliant on travel into europe which did not materialize this winter. in china, there has been a huge
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rise in appetite for skiing and the country ski resorts are enjoying a golden age. it'll be interesting to see whether they will be able to get some of those forgone sales from europe in china. guy: it will be interesting to see what data comes out of the lunar holiday. interesting to see what happens during this period. a lack of travel in china, maybe that will impact the numbers. alix: thank you very much -- guy: thank you very much indeed. let's talk about the final numbers in europe. i want to show you what is happening. we are starting to get the final figures. a little bit lower for the ftse 100. dipping just a little bit. what you're getting there is a settlement, a little bit of a negative sentiment for the end of the day. this is bloomberg. ♪
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karina: this is bloomberg
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markets -- european close. i'm karina mitchell in the principal room. coming up, goldman sachs global head of corporate engagement at 12:30 new york, 5:30 in london. this is bloomberg. guy: the eu wrapping up its vaccination push, tripling its order of the moderna vaccine and finalizing an agreement with pfizer and biontech for 200 million more doses. the belgian also ramping up as well. sam fazeli of bloomberg intelligence joining us on the line. there has been much criticism of the way the u.k. has operated from the continent. we are now starting to see the continent getting its act together in terms of delivery. what is the prospect of being able to catch up? sam: as you know, ordering doses and receiving them is not really , that does not cover the
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population. you need to get into people and they have to organize their infrastructure. the u.s. had all of the doses, there was nos, maybe a little bit of a supply delay, but certainly nothing problematic there. the issue was there to get the system running. that is what the european needs to do and we will see how that pans out. alix: we have also been hearing in the u.s. a conversation about spreading out the doses more than 12 weeks, which is what the u.k. has been doing already. what is the validity there? sam: we know with the data that has been published, which is all we have ever asked for, show us data come the astrazeneca's seems to do better when you spread it out to 12 weeks or more. that is fine. it does mean that while you're
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waiting for your second dose you have to be very careful. the pfizer vaccine, we do not know how that works and data has to come out. the u.k. can produce data. that is what they have been doing. we have just had data out of cambridge that shows that those over 80, about 50% of them seem to not get enough antibodies after one does, which means they are still at risk of catching covid, but what is good is you did have an activation by another arm of the immune system equally well after one or two doses which could prevent severe disease or hospitalization. one step there, but not quite. alix: which i feel like encapsulates the vaccination process. thanks a lot. sam fazeli of bloomberg intelligence. let's turn to covid-19 treatments. even if you are vaccinated by one shot, you can still catch it, but the varied is a question
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mark. we welcome to -- we want to welcome welcome trust's nick. you do a lot of research. what kind of therapeutics are we still going to need to have if we are starting to realize covid will be with us for a while? nick: thanks for the opportunity to talk about treatment, which has to be part of the global response to this vaccine and diagnostic test. we saw a great data this last week from the recovery trial -- which gives the benefit of one more saved life out of 25 people who were in hospital come in a severe state of the disease also having oxygen. we need more treatment at that end of the spectrum to stop people progressing through this
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pure period of the disease. ultimately, we want to find treatments that will stop people getting at the hospital in the first place. even now, we are rolling out the vaccine, it will take a couple of years, 18 months to two years to vaccinate everybody around the world. in that time we've been going for just over a year. that means a lot more deaths from covid if we do not find treatment. finding drugs that will stop people going into hospital, or if they don't the hospital, getting them out quickly. guy: can we talk about one of the things that is causing concern at the moment, that is new variants. i am wondering whether therapeutics are better at keeping up with the new variants and providing a safety net against new variant that the vaccine programs are not? nick: the front running
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therapeutics, which are pretty exciting, are monoclonal antibodies. they are human so we have the benefit of knowing they will be safe. the disadvantage is they are susceptible to variant changes. it is not proven in the clinic yet, but some of the front running monoclonal antibodies are affected by the south africa and brazil variant. there will be others behind that. we will talk in parts of that spike protein on the virus, which are concerns across what will be effective. behind that there'll be other drugs that target other parts of the virus. the new virus will not be susceptible to those variant. we have a little bit of a setback with the variants appearing, but we should get back on track, particularly with
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the monoclonal anybody's very quickly. alix: something that has also emerged as the long-term effects of covid. what kind of therapeutics are being worked on to address those issues. nick: still thinking the virus is hanging around. direct antivirals may have a benefit and we will see that tested once we have them available. equally, i think that continued evaluation of the range of other anti-inflammatory drugs, it is the whole second phase of the disease very much an over exaggerated inflammatory reaction. continued evaluation of those drugs may reveal additional options that have benefit in long covid. guy: one of the things we are witnessing is an incredibly brief flu season. that will probably not be the case next year if we do not have
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the lockdowns. how much of what is being developed on the therapeutic side will also be useful for influenza? influenza remains a significant pillar most winters? nick: the first thing we did -- influenza remains a significant killer most winters. nick: the first thing we did when covid-19 came along was test all of the drugs for infections, including the flu. they do not work. there is no overlap. we will need the flu approach alongside the covid approach next winter. alix: something else we are trying to figure out is what the role of hospitalizations will become. if we get a point where we can get covid but not be hospitalized and we are ok? will there ever be a point where that is our baselevel? nick: if you are vaccinated you'll be in great shape. alix: even without the
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vaccination, with the therapeutics? nick: without the vaccination, companies like lily and regeneron have shown if you get the antibodies for infection or just on infection, it will have a massive effect to prevent you going into hospital. i hope if we get all this right, vaccines, drugs, the diagnostic test, covid will become a manageable disease that will not involve the large numbers of folks ending up in the hospitals and some dying. guy: a final quick question. do you think this areas getting enough funding? nick: we worked out about 3 billion -- sounds like a big number -- would deliver what we need for treatment, particularly down to the oxygen needed for the folk hospitals around the world. 3 billion. the world economy coming back after that would be dealt with in about the date of the world
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economy. 3 billion is peanuts to get us all back on track. guy: i think most governments would agree with that considering how much has been spent elsewhere. i guess it is just the sequencing and the ordering, making sure it all happens correctly. thank you much for your time. we appreciate it. thank you very much. this is bloomberg. ♪
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alix: live from new york, i'm alix steel. guy johnson is in london. this is the on bloomberg markets. we want to focus back on taxes not catching a break after hours without power another winter storm is on the way. joining us with the latest is david westin. you have a congressman from texas on and i'm curious as to the line of questioning, there are so many ways to parse this and it feels like it has become
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partisan already. david: this is a congressman asking questions himself. he is one of 10 democratic congressman from texas. al green from southwest houston. they have asked questions of ercot, the texas organization supposedly for energy reliability, asking probing questions about when to shut down, what is your plan if this does not work, they are answers by today. they are impatient. guy: is this a texas issue or is this a d.c. issue? david: it may become a d.c. issue. texas may be unique among the states where they say do not bother us too much with a federal matter. we will have a different way of approaching our power grid, we will be less regulated, more decentralized. the question is, a good one for alix, will this trigger more federal regulation to protect people like this. alix: i do not know how you
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regulate it if they are not hooked up to the grade. they do not want to correct -- to connect to the rest of the grid because they do not want that regulation. there is no price incentive to fix stuff. you will not insulate a wind turbine or get better pipes to heal -- to deal with coal because financially there is not the incentive to do that. to do it you will not -- you will need regulation i'm not sure if this episode will be enough to financially incentivize. david: this is in some sense a business model problem. texas seems to have a different business model for its energy. they have regulated with regard to price, but bailey to maximize profits for the companies within texas, and if you maximize profits you do not have excess capacity and do not worry about problems like cold. guy: you have to have a plan b in this episode is proving a plan b would be useful. that is how most grids tend to operate. the federal government is about to spend a ton of money on infrastructure.
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he must have a voice of the table in terms of how that money is ultimately spent and used by states like texas. david: absolutely. infrastructure plays into this. one of the issues is about wind power and is there a weakness of wind power. we have not invested in infrastructure yet. as alex knows well, it looks like people came out with talking points. thing is all the fall of wind. now it appears that ercot has a chart saying wind has been overproducing what was projected. i'm not sure we can blame it on wind the way some people want to. alix: you cannot cure it there are problems with wind. -- you cannot. there are problems with wind. you need insulated turbines and storage. this has been a problem with natural gas and solar and wind. the back load for energy, they do not have that. that is where the problem is.
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natural gas was the big issue across the board. we had plans go down, we do not know why. david: they rely so much on plants, but i've heard the frigid cold interfered with the pipes and a lot of the equipment. do your point, it is so powerful. there are ways to winterize. they do it in other parts of the united states. texas decided not to spend the money, perhaps because it does not get cold in texas. given what is going on in climate, it anticipates extreme climate going forward. guy: looking forward to the show and the conversation. answers are required. david will pick up with balance of power. alix and i are off to bloomberg radio the cable show. join us on dab digital. this is bloomberg. ♪
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david: from bloomberg's world headquarters in new york to our tv and radio audiences worldwide, i am david westin. welcome to "balance of power," where the world of politics meets the world of business. we will start with a check on the markets and turn to abigail doolittle. softness in the equity markets but the nasdaq is what jobs out at me. abigail: that is the case. the nasdaq and big tech underperforming on the day. for the first time in a long time it does not feel like the one side of the reflation versus the stay-at-home safety trade. it feels like big tech is selling off. a piece of it is apple, we did get news of the 13 as that berkshire hathaway did trim their apple position. still there top holding, -- still their top holding, but may be cautionary move. the stock is down. back below its moving average, the worst day since january 29. since the

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