Skip to main content

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

10:00 am
guy: thursday the 11th of march. 30 minutes into the trading day stateside. from london, i'm guy johnson. alix steel is over in new york. welcome to "bloomberg markets." i am still trying to figure out exact a what we got from the ecb. alix: you, me, and probably the markets. does the ecb passed the test considering a huge move into the bond market, or are we more confused? i can't quite make that out. in the u.s., the narrative is very clear. it is definitely risk on. russell 2000 hitting a record high. nasdaq higher as well. the currency market seems to not be reacting in the way you would expect. we will break that down later through the show. i want to highlight the 10 year. you had the 30 eruption, 10 year -- 30 year auction, tenure yesterday, they are doing ok. yields pushing higher as yields keep coming down in europe.
10:01 am
guy: just waiting for the data. we haven't got it on jobs yet. we obviously had the initial jobless claims a little earlier on, better than anticipated. jobs are a forward-looking indicator, though, so it will be interesting to see what we get there. still don't have a number. we will come back and get that number in just a moment. alix: that sums like a good plan. -- that sounds like a good plan. let's get back to the main story of the ecb. president christine lagarde wanting to send a forceful message to the bond market today , began at clearly bond market is being proactive to protect recovery. ms. lagarde: based on a joint assessment of financing good missions and the inflation outlook -- financing conditions and the inflation outlook, we expect the pepp to be conducted at a significantly higher pace
10:02 am
than in the first month of this year. alix: for more, paul gordon, who leads bloomberg's coverage of european central bank. not yet. we are waiting to get paul here. [laughter] we are two for two. guy: doing well. stuff is not there that needs to be there. but we now have the jobs number, and it is ahead of expectations. 69.17. the forward-looking indicators in terms of job openings are starting to pick up quite sharply in the united states. that is a positive sign, a sign that the economy is reopening, a sign probably that the service sector is coming back into gear, as we start to see that reopening, and that vaccination program work its way through the united states. so better forward-looking indicators in terms of what we are getting out of the united states. alix: that is just going to get
10:03 am
better with that stimulus. guy: you will have thought so, wouldn't you? we will wait and see exactly what that means, but i would've thought exactly that this is only going to improve the data over the next few months. basically, you as an employer see what is happening, start to front run that, bring your people back. alix: we can check that box now. paul gordon is good, so we want to go to paul gordon for more on the ecb. what did the ecb do today? what kind of clarity? what is it? paul: we got some clarity, and investors generally got a sign that the ecb is now going to step up its bond purchases to push down on yields. we saw yields fallback in the market's that came out and the policy statement was then confirmed by president christine lagarde. what they didn't get was any
10:04 am
detail. lagarde said don't expect a big bump up in the numbers, which is somewhat surprising in the sense that we've had two weeks of no real increase in purchases. clearly it is going to be a while longer before we get some. but the promise is there, the ecb will steer against higher bond yields. guy: they are not happy with current yields, so they want yields to go lower. but i don't know is what yields with the ecb be comfortable with , and why this isn't yield curve control or yield curve control lite. paul: yes, most analysts would say this is very much like yield curve control. the ecb is being somewhat pedantic when they say they are not doing it because they haven't announced a number, for example, like the bank of japan's 0% on 10 year bond yields, but it is clearly controlling yields, not just government bond yields.
10:05 am
they stressed that red across the curve, what they referred to as downstream interest rates from government bond yields right through to borrowing costs for companies and households are what the ecb wants to maintain. we didn't get much detail on what they came up with. guy: ok. paul, i suspect we are going to get some briefings over the next few days which may clarify some of the issues we are still unclear on. i look forward to hearing from mr. lane in particular. paul gordon, thank you very much, indeed. let's try to get to what is really happening here. david kelly, j.p. morgan asset management chief global strategist, what do you make of what christine lagarde delivered today ako -- delivered today? david: for years, the ecb and the european governments in
10:06 am
general have believed that aggressive monetary stimulus could actually get the economy to grow faster and produce more inflation, and that has never worked. it didn't work before the pandemic and it is not working now. what europe needs is aggressive fiscal action, certainly relative to the united states. europe has been slower in terms of vaccinations, so this will once again give the united states a lead on europe, and i think it is because europe realized too much on low interest rates -- europe relied too much on low interest rates, and low interest rates are not helping them. alix: i wonder if saying the word significant, even though there is no definition, is that enough to keep on yields low enough to wait until we get that fiscal zone at the end of 2022? david: i think europe is going to recover as the pandemic comes
10:07 am
to an end. this is a guaranteed recovery all over the world as the pandemic were seeds. you never get -- pandemic recedes. you never get that, but we are getting at this time around. they will borrow and make investments ahead of rising rates. monetary policy is most powerful when people expect rates to go up, not when rates are low and people expect them to never go up. i don't think it does one ounce of good for stimulus. i think the ecb ought to be working more closely with european governments on trying to figure out ways of accelerating a reopening and vaccination program for europe, but also perhaps they could take a leaf out of the u.s. book on low inflation -- on when you have low inflation, can you afford to be a little more loose. guy: u.s. yield is higher today. in germany we are down by 2.4. do you see the ecb having a gravitational effect on the u.s. market?
10:08 am
if so, by how much? or do you think that just the white and -- just the weight and the magnitude of what president biden is delivering is going to continue that ascent in terms of what we are getting with treasuries? david: people are desperately holding onto the wires of the balloon of u.s. rates, which are just going to go up. what you can see is that as this year goes on, even if we had not seen an enormous stimulus package, i think the u.s. unemployment rate would be below 5% by the fourth quarter just because of reopening those sectors which have been shut down by the pandemic. but this is a massive experiment in modern monetary theory. you've got not just $1.9 trillion, but $1.2 trillion given to low-end middle income households who will spend the money. if you do all of this at the same time, i think you get explosive growth in the united states, the fastest economic
10:09 am
recovery we have ever seen by a longshot, and i do think that means rates will go higher from here. alix: but what is actually priced into the u.s. market? do you get more bang for your buck going to the ancillary and europe, saying we will go higher with it? david: within the equity markets, the european market is more cyclical, so i think there is an argument for investing around the world in emerging markets and the european markets, just to take it vantage of this cyclical -- take advantage of this cyclical increase. you are not getting paid for any of the risk you are taking. i would tend to be short duration and just try to take my risk elsewhere in capital markets. guy: but let's stick to the bond market, particularly the european bond market. btp's are down by eight basis points today. can the ecb anchor them? we were just talking to paul gordon about whether or not this is yield curve control.
10:10 am
can the ecb anchor these rates lower? can it keep spreads tight? david: i don't think so in the end. i think what is going to happen, once you have a boom in u.s. growth, boom in global growth, it may carry them up into the air anyway. i think european rates will be lifted off by this global rebound, so the problem is if you are investing in negative yields to start with, there's not a great place to start in terms of total return. any move up in the yields just worsens your negative total return from the bonds. i am not really enthusiastic of any european government bonds at these yields. i think the spreads are still too tight. they are too tight around the developed world. i think there's a lot of money that's gone into these markets. i would rather take risks with
10:11 am
your credit risk or economic risk in the equity market then in developed country bond markets. guy: so where does that leave the equity story, particularly in the united states? tech has taken a battering. at what point do you think you wanted to stick a -- wanted to take a step back in? do you want to see yields rising before you make that decision? david: i think so. i think this year is going to be a tough one for the relative trade of tech to the value side of u.s. equities because value has become very cyclical. i think 1.5% in the 10 year treasuries really does take a stopping point for a period before rates move higher. by the end of the year, i expect real positive yield in the u.s. treasury market for 10 years, so is inflation is running above 2% by the end of the year, i think the tenure will be above 2% by
10:12 am
the end of the year. i think you are going to see more cyclical rebound in value equities in general, and it is not necessarily that technology stocks will go down. i just don't think he will be the leaders in the market for the rest of the year. alix: what we have seen is we aren't into spitting those higher yields and higher real yields, a rotation within the equity market. but if we get to 2%, do we see it in the asset classes? david: i think that is part of what pushes real yields up because people will realize a strengthening economy is good for the equity market, but it just doesn't make sense if you have one of the fastest economic recoveries in history. it doesn't make sense to have negative real yield in the bond market, so i think money will flow from bonds to equities, and that will obviously really be behind this trend. guy: what you are describing is the biden boom.
10:13 am
you've used the word boom throughout this conversation. what follows the biden boom? . . is it the biden bust? david: it is a close call. i wrote this article about making rice. you're supposed to boil and you are supposed to simmer. can you get this economy to simmer down in the second half of 2022 without getting it to bust? i think it is possible if you take away all of the fiscal stimulus at the time the economy is getting back to normal. it is a quite stable economy underneath it all, so isaac it is possible for the economy to just coast along at below 4% unemployment for a while, but it is a tricky business. i think it is going to be important to remove some of the stimulus, not to follow with another norma's package in 2022 -- another enormous packaging 2022. alix: you are doing a rice simmering scenario? guy is doing a souffle thing.
10:14 am
are you a cooking channel? [laughter] david: i'm not too good a cook. i tend to burn the rice. guy: that doesn't sound good. it doesn't end well. alix: neither does a souffle that is busted in. does that mean you don't think we will get a powerful infrastructure bill, or if we do come of that the fed is going to have to hike up? david: i think we will get an interceptor bill, but it is going to have to be much more careful compromising. i don't think it is going to be funded by significant tax increases, but more than anything else, it is going to be spread out over years. there's no need to put it all into 2022 anyway. you couldn't get all of these projects started if you wanted. there are other things in that bill, the earned income tax credit. if you try to stuff that all into the bill and have extra fiscal stimulus in 2022, that will be a big question mark.
10:15 am
alix: lots of questions. david kelly, thanks a lot. still ahead, we are going to look at what president biden's info structure agenda means for telecom companies. we will speak to hans vest berg -- hans vestberg, verizon chairman and ceo, next. this is bloomberg. ♪
10:16 am
10:17 am
ritika: let's check in on the bloomberg for ren -- bloomberg first word news. initial jobless claims in state programs fell by 42,000 to 712,000. states have started to ease restrictions on business and coronavirus vaccinations picked up.
10:18 am
president biden is preparing a nationwide victory lap to promote that $1.9 trillion coronavirus relief plan. he will hold a ceremony tomorrow to sign the measure into law. then there will be a series of appearances across the nation to ensure that voters know he and fellow democrats are getting the credit. the bill provides a $1400 direct payment to millions of americans and billions in aid to state and local governments. here in manhattan, apartment renters looking for better places to live lead to a surge in leasing last month. new lease signings jumped in february from a year earlier. it is the biggest monthly gain in almost 10 years. people are capitalizing on record extensions from landlords. global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm ritika gupta. this is bloomberg. alix: thank you.
10:19 am
i want to add a lot more color -- at a little bit more color on what reddick a society -- what ritika was just saying. we had record concessions, about 2.1 months of free rent wrapped up in the concessions, and 41% of all of those sales did come with those concessions, which are huge, especially for new luxury rentals, etc. guy: so what is happening in london is quite a differentiated story. it is worth dwelling on the geography to pick apart the story. what you are getting is central london, where i am now, the city of london really suffering unsurprisingly. it is a ghost town around here. nobody is in the offices. nobody really want to live here at the moment. in the suburbs, northeast london out towards rockford, doing really well.
10:20 am
ealing is up by 13.2%. that is the other side of london . kensington and chelsea right in the middle, that's doing relatively well. that is a prime market. could take years to come back off its 2014 peak. where we are seeing losses at the moment, camden, north-central hamlet, the city of london. it really depends on which market, but generally the sense is that people are gravitating to the edges of london in order to get more space and a little bit more greenery. coming up next, we are talking about the bond market. verizon kicking off a jumbo bond sale today. it basically has the ig bond market to itself. hans vestberg is the ceo of verizon, and the chairman. i will get out of his way because we are talking about him next. we will get a conversation with hans and try to figure out whether or not this is causing him sleepless nights right now,
10:21 am
whether nor not -- whether or not the huge leverage ratio this company is taking on is causing him concern. this is bloomberg. ♪
10:22 am
10:23 am
♪ guy: live from london, i'm guy johnson, with alix steel in new york. this is "bloomberg markets." we've got a jumbo bond sale underway. verizon kicking off the sale of unsecured bonds that are basically going to help at finance its huge investment in 4g. this is in seven tranches, but this one is $40 billion in demand. it could go out in $25 billion, in terms of the deal. telecoms are basically the largest companies in terms of, not financial companies, and terms of their debt loads in the s&p. you can see the breakdown here. a bunch of financials in here,
10:24 am
and you've got at&t and verizon right down here at the bottom in terms of their debt loads. they carry huge amount of leverage basically. this is a company that has just spent $45 billion in terms of its 5g spectrum auction purchase . that is much more than the market was anticipating. now they have to go into the ig bond market, which they basically got to themselves today. everyone else is running away because of the sheer scale and size of this, but they've got it to themselves today. as we all know, huge demand for this kind of paper. alix: huge. you side for american airlines. joining us now, hans vestberg, verizon chairman and ceo. we always love talking to you. i was on a panel with your cfo a while ago, and he said with extra cash, we are just going to pay down debt. so when there is a problem in the market, we have the money to spend. you did that, i know you are adding on the debt. make the market feel better. hans: i think we have a very
10:25 am
clear capital allocation strategy. number one, we invest in our business. we have a great opportunity to extend and accelerate to bring in revenues earlier. that is number one. secondly, we want to put our board in a position to continue to grow our dividend that we have done for 14 years. currently we are paying down the debt. this is nothing new for us. we did the same when we bought vodafone some five years ago. we brought down the debt to around two times, which is a really good measure. now we are coming up again, but it is going to take us for five years. our rating is good, and hopefully the bond market is seeing that we are committed. during 20/20, we refurbished all of our balance sheet again, given the great strength we have as a company. guy: i've just been updated in terms of demand, $115 billion in
10:26 am
demand. i can see the seven truncheons that have gone out. huge demand from the bond market for your paper, which is reassuring. nevertheless, you say you are comfortable with your rating. how comfortable are you? do you have sleepless nights in terms of what is happening with the leverage here? do you worry about your rating? hans: again, we have a really good business model. we are built around our network of service. we have seven vectors of growth coming into play. we can accelerate them with this investment. this is part of our strategy, so we feel really good about it. that is why yesterday in our investor meeting, we talked about our future guidance of revenue coming from 2% to 3%, and up to 4% growth. so we feel good about this, and we can also tally that with coming along with that kind of growth. that will generate cash, and
10:27 am
that will mean we can form our capital allocation priorities and put us in a place where we could be this aggressive in the markets, and the securities spectrum that is so important for us and for generations for verizon. alix: you have all of this 5g spectrum. what are you going to do with it? hans: i think what you can see is that we have several different specifications on the same technology. we have the 5g mobility. we now see a lot of 5g phones coming out, where we are upgrading our customers. then you have 5g home. we can give them all of the flavors with the rollout, which of course in this pandemic has become even more important. finally, we are building 5g mobile edge compute with amazon, and we are now launching it with mike or soft as well. this is built on the same
10:28 am
infrastructure in the same network. that will get the best return on investment for the industry. guy: you have to pay out for that spectrum. were you surprised at how much you had to spend? hans: i think we were very well-planned. we have been planning this in constant contact. we have our capital allocation. this is what it costs. remember, we are more than doubling the spectrum we are getting, and that is since the inception of verizon. this is regeneration for verizon. we will extend our leadership for a long time, and that should be great for all of the bondholders and the shareholders as we are now securing our position for the future. we will be a leader in this market for so long. alix: you mentioned you will add about $10 billion in capex.
10:29 am
when do you expect some of these airwaves to be in use? by this year? hans: the auction has two pieces. one piece of spectrum coming later this year, and another piece in 2023. we secured most of the spectrum of all contenders in the first trench in the second tranche -- the first tranche and the second tranche. the other junk is coming in 2023, and then we go over 250 billion. that is how it works, so we are getting the spectrum cleared because the satellite companies are clearing in different spaces. guy: what do you think the demand is going to look like? what do you think the u.s. economy is going to deliver this year? we are seeing a massive stimulus package about to hit the u.s. economy. i am wondering what impact you think that is going to have and how quickly this economy bounces back as a result.
10:30 am
hans: of course, there are far better people than me to think about that, but really, this stimulus package is important. we have to remember we are still in a pandemic, and the most vulnerable in our societies are suffering, so i think this is where we are needed and where it will be of most use to those that are most vulnerable. that means our economy will get a boost. clearly, that is positive for the most vulnerable in our society. you need everyone in an economy to be part of the economy, and this is what this stimulus package is doing. alix: now the conversation turns to what next. what have your conversations been with the government in terms of what is going to be in that infrastructure bill when it comes to broadband, 5g, etc.? hans: we've had lots of discussions around that. of course, we have leapt from five to seven years in the digitalization of this pandemic, from schooling from home and all of that. that means we see a digital
10:31 am
divide happening. that is why it is so important right now to close that gap and use the 21st century infrastructure. but remember, it is accessibility, affordability, and usability of this technology, and you need to work across all of them in order to see that all of society is included and everybody has a chance to be part of this digital economy. so i think that conversation is going well. yesterday i represented the business roundtable, and spoke to the media about how we have articulated several different recommendations for the government when it comes to investment in digital infrastructure. guy: you were there to provide the spectrum. the chip industry is there to provide the horsepower in terms of computing. are you seeing bottlenecks in the future of this industry? we seem to have a shortage of silicon right now. we are not manufacturing enough maybe where we need to manufacture. you are already seeing it in the
10:32 am
car sector. is this going to hit your industry as well? hans: i cannot answer for the whole industry. i can answer at verizon. we have been very digital it. we have long lead times. we secure our supply chain. that is why yesterday i said that we are already working on 7000 to 8000 sites that we are going to deploy this year, and we also said earlier this year that we are going to do some 14,000 new millimeter wave sites , the highest spectrum. we have secured all of that, so i don't think that we as a company will be hit because we have been securing this in work very closely with our suppliers that also have secured their supplies. you never know, but clearly our team has been on this for a long time, and i am very confident that they have this fully under control. alix: at&t took a step to get rid of their tv provider business last week. you are still in the game. how long are you in the game? hans: i don't know, but for me,
10:33 am
when it comes to our media business, i have to say the team has done a fantastic job. we took over that business and changed our business model. they reshaped everything we are doing. the fourth quarter you might have seen, they are growing almost double digits right now, so they have done a terrific job , and i am so proud they are part of the family. it is great to have them. guy: a real pleasure. nice to speak today. thank you for your time. hans vestberg, verizon chairman and ceo. let's turn our attention to what is happening in the united states with the rollout of the vaccine. dr. fauci sounding more optimistic than he did a month ago. he just said in a tv interview that the u.s. will be back to some sort of normalcy by "mid to late summer or early fall." meantime, vaccine distribution still facing challenges. for more, bloomberg's senior
10:34 am
editor for health care drew armstrong joins us now. what do you make of those comments? what needs to happen to make that a reality? drew: i think the main thing everyone is talking about when they get these timetables about when we will be back to normal, right now we are in a supply constrained environment with not nearly enough vaccine for all of the people who want it, but that seems to be shifting in the coming weeks with more and more vaccine coming online, at least according to what you factors have told us -- what manufacturers have told us. a lot of that comes as more people are vaccinated and protected from this virus. alix: but what we did see in the relief bill that passed was billions of dollars to go to testing and ramp-up vaccination sites. what is going to funnel down? how is that money going to be most effectively used to get to where we need to get to? drew: there's actually quite a
10:35 am
bit of vaccination capacity out there right now. we have a lot of these mass vaccine sites that are up and running. drugstores are being brought online to use some of the existing community infrastructure. the main limitation right now has been supply. basically, if you look at the numbers that we follow with the bloomberg vaccine tracker, pretty much every dose that goes out is being used quite rapidly. sometimes there's a little bit of lag in terms of getting things up and running we are seeing right now with the j&j vaccine, but really, supply is the limiting factor in getting this done at the current moment. guy: j&j, single shot. when do we think that is going to have an impact? as you say, there are issues with it right now, but once resolved, how big a factor will that be in terms of accelerating the united states to what dr. fauci is talking about? drew: it is pretty massive, and
10:36 am
i believe we will begin to see the impact within a week or two. most of their supply really starts to hit at the back half of march, and then accelerates quite rapidly after that. if you thing about the one-shot versus two perspective, you need half as many appointments, half as many syringes, half as many people doing vaccinations. you don't need to go back for a second appointment. it just essentially doubles your efficiency of vaccine administration right off the bat. anytime you can gain a 100% improvement in how quickly you are doing something, that is a substantial gain change. alix: drew, we really appreciate it. bloomberg's drew armstrong breaking it down for us. that's dig a little deeper with dr. lucy mcbride, an internal physician at foxhall internists. thank you for joining us. i want to ask you a similar
10:37 am
question to what i asked drew. we are going to get all of this money now from a relief package for vaccines, treatment, and testing. or should it go to be most effective? dr. mcbride: thanks so much for having me this morning. i am delighted to be here and talk about vaccine distribution because as you know, the more shots we get into arms, the closer we are to reaching some sort of normalcy. the money from the relief package really needs to go to getting more vaccine into people's arms, so we are hoping to get 3 million doses out. that is the goal for next month. we also need to reach populations who have been hardest hit by the pandemic. black and brown communities where we need that dosage to be distributed. guy: where are the bottlenecks? where are the problems? dr. mcbride: the doses are there. i think there's a lot of administrative redtape keeping patients from actually getting
10:38 am
the shot into their arms, but there's also vaccine hesitancy, and as you know, there's a lot of worry about the variance, and people are naturally afraid that perhaps the vaccine might not work against a new variant, so people are actually not going to get there vaccine like they should. one of the things i am recommending in my newsletter and my public safety role is know that these vaccines, all three that are available now, are highly effective at preventing death and severe disease, and they are going to work against the variance well. alix: when are we going to get more community distribution? anecdotally, here in new york city, there's big sites in colleges like the javits center. it is the small local pharmacies that could be very effective in getting the vaccines out. they are not really readily available yet.
10:39 am
when am i going to get to go to my local duane reade? dr. mcbride: that is the million-dollar question i am getting asked all the time. people who don't have underlying health conditions are going to get there vaccine by may or june. here's the thing that i am heavily promoting and hoping for , that primary care doctors like myself who are set up to deliver direct care to patients will be involved in the district and process. who better than your trusted physician that you talk to about everything from your headaches to your depression to your sleep habits to deliver your vaccine and to restore hope and faith in the vaccines, which are extremely effective? dr. mcbride: in -- guy: in terms of what comes next, we've got variants running around the united states that we don't really seem to have a handle on. are we going to need a third round, and you think we are set up for that?
10:40 am
will it just be a continuation of the current process? dr. mcbride: we don't know if we are going to need booster shots. my suspicion is that we probably will, but it may not be for many years. our immune system works in two ways. it makes antibodies, and we also have a strong t cell response to the vaccine when it is injected into our body. the t cell response is lasting and durable, and is showing right now, we are seeing that the durability of that response is going to probably be for months, if not years. if you look at other rna viruses like the coronavirus, the immunity from vaccination is akin to or less good and durable immunity. if we can get shots into arms and get the herd immunity on our side, we may not need booster
10:41 am
shots. it is something we are watching play out in real time. alix: do we know yet how long this immunity may last? in terms of transmission, it seems to be somewhat thought that we are not going to pass on a symptom at a trend is in -- pass on asymptomatic transition if we are vaccinated, but that seems to be a game changer. dr. mcbride: there are two goals of the vaccine. number one is to predict the person getting the vaccine from illness, and the vaccines do a marvelous job of doing that. they are pretty close to perfect. the second goal is to prevent the person receiving the vaccine from transmitting virus to other people. there is abundant evidence and clear evidence that the vaccines do reduce transmission. it is impossible, however, to completely sterilize the vaccine recipient. it is impossible for a vaccine to completely rid the person getting the vaccine of any possibility of sharing the
10:42 am
virus, and it actually doesn't matter. as long as we reduce transmission, we are going to be able to resume normalcy. guy: dr. mcbride, we are going to leave it there. really appreciate your input today. thank you very much, indeed. plenty of breaking news to deal with. we are getting some details coming through in terms of the order book from the spectrum's bai -- the sect from sale -- the spectrum sale. verizon has delivered $109 billion. there had been talk that it could be as high as in hundred $15 billion. nevertheless, an awesome amount of money being bid for this. alix: especially if you look at what happened to american airlines yesterday, no doubt that verizon would be bid.
10:43 am
apparently, new york city mayor el de blasio is saying governor andrew cuomo must resign -- mayor is saying governor andrew cuomo must resign. no surprise there. we will speak to the founder of a top commodities hedge fund, dwight anderson of o spree -- of ospraie management. this is bloomberg. ♪
10:44 am
10:45 am
ritika: coming up today, we will hear from martin franklin, mariposa capital ceo and founder. that is at 1:30 p.m. in new york. this is bloomberg. alix: live from new york, i'm alix steel, with guy johnson in london. this is "bloomberg markets." commodities have really benefited from the reflation trade. traditionally they are thought of as a nice reflation hedge, but i want to show you how much
10:46 am
they have benefited. the white line here is the bloomberg commodity index. as you can see, the yield bottomed in 2020 and started to climb higher. so did the commodity complex, led by oil, copper, tin, iron ore, even nickel. now the ags are starting to pick up as well. the question becomes which are fundamental and which are getting caught up in the reflation trade, and is that the right trade going forward? guy: can't believe you didn't mention the two words super cycle. alix: i didn't for you. i'm a very considerate coanchor. [laughter] guy: dwight anderson, ospraie management founder, is here. ospraie is a purple you management firm -- a portfolio management firm. first of all, happy birthday. great to have you here on your
10:47 am
birthday. alix didn't mention it, let me mention it. are we in a super cycle? if we are in a super cycle, where is the sweet spot? dwight: the terminology for us has a dual meaning in terms of scope and scale and duration. we believe that this is a cycle that started last may, but the buy any commodity and they will go up phase is transitioning to where it is going to be a little more idiosyncratic. so yes, it is going to be a cycle that is super. here, you need to be more selective. as you saw a 20% selloff in nickel, that is something where people were just trying to dump
10:48 am
a potential cycle. a lot of those stories are priced in. we need markets that are still to come, whether it is natural gas, copper. i think there's still another 100% to go in the total commodity index, but it is going to be much more stock selection specific in terms of the commodities securities. alix: just to two dear horn here, natural gas you picked before -- to toot your horn here, natural gas you picked before it had that run up. dwight: natural gas was amazing around the world ended a number of u.s. regions. he went from under three dollars to over $600. you got the explosion, but the main -- for futures went up. whether that price is 6, 10, 12, it is that 100% plus move that
10:49 am
we think is like the majority of outcomes you should see for that price point. guy: a lot of money is being thrown at the wall right now, and governments are hoping it sticks. you are certainly seeing that in the united states. massive stimulus being applied to the economy, but being applied in relatively short order. do we get a boom, then do we get a bust? dwight: i think you need to go out to the individual commodities that have their own unique microeconomic fundamentals. relative to the investment and the change in demand profiles for certain economies, with people fixated on carbon and carbon illumination -- carbon illumination -- carbon elimination, those are the ones that are really going to lead from here. crude oil next year is something that is interesting to us. it has been tighter to a greater
10:50 am
discipline than we expected. i think you will see really strong markets for that, especially wti, over the next 18 months. grains have had a really solid move. we are still positive for them in the back were dated markets -- the backward dated markets, but it is tough to see something more than 10%, which is going to take commodities higher from here, but you need an incremental catalyst to get a massively higher percentage boost. alix: aluminum, i will have to start saying alu-minum now. some of those in which you invested are actually going to make the super cycle a nonevent because you will be able to ramp up faster, deal with issues better, get more out of what you planned. are you noticing that in ags or other commodities at all?
10:51 am
we definitely see higher productivity growth over time in agriculture. in some areas, it is an accelerating trend in terms of food and food production productivity, but it is really going to hit much more in terms of f -- in terms of fresh fruit and vegetables first. it is really tough not to have that demand in the short term. it is that ag tech which is going to dramatically change the footprint. as you go to a truly controlled environment, you can cut pesticides, cut water use. this companies out there which can put farms in your neighborhood, and that is going to revolutionize the fresh market much more. guy: what kind of timescale are
10:52 am
we talking about with this, in terms of the impact? how long will it take to get this up and running? i was reading a piece over the weekend about local salmon production. you basically sell out huge pieces of water and grow salmon, but you do it close to the market. how is this going to change the whole infrastructure of the way we produce food, not only the way we grow it, but move it? dwight: the production systems you have now still rely on centralized locations which have to truck or rail everything. the revolution which i think we'll have a material impact to carbon footprint and logistics is really going to be available in a number of diverse regions as soon as 2024, 2025, and are medically expand in this decade. it is those people who can put a
10:53 am
very low capital-intensive unit, low carbon, low inputs that can deliver it fresh without the problems of disease, limited lot of the wastage, and you are talking about something that you should start feeling that impact within three to five years, which is nothing in an investment time period like this. alix: dwight, always good to catch up with you. happy birthday. i hope you can do something fun. but anderson -- bright anderson, ospraie management founder. coming up, green plays ceo is helping turn his play -- this is bloomberg. ♪
10:54 am
10:55 am
10:56 am
guy: coming up, the european close. two themes dominating the european agenda today. one is whether the astrazeneca vaccine causes thrombosis, i.e. blood clots. you have the danes saying we are going to stop. i think the doctor going to carry on. there's a clear division here. draghi and von der leyen are going to be talking about this issue. the other is the ecb. is it yield control? is it not yield control? bun i wil -- bhanu baweja of ubs will be joining us next. this is bloomberg. ♪
10:57 am
10:58 am
want to save hundreds on your wireless bill? with xfinity mobile, you can. how about saving hundreds on the new samsung galaxy s21 ultra 5g? you can do that too. all on the most reliable network? sure thing! and with fast, nationwide 5g included - at no extra cost?
10:59 am
we've got you covered. so join the carrier rated #1 in customer satisfaction... ...and learn how much you can save at ♪
11:00 am
guy: from london, i'm guy johnson. alix steel is in new york. we are counting you down to the european close here on "bloomberg markets." the ecb says it will buy bonds at a faster rate over the next quarter. yields drop sharply. president lagarde says this is not yield curve control. denmark and other european nations suspend the use of the astra vaccine on concerns that it might cause deadly blood clots. the u.k., italy, and poland say it is safe. a major market review designed to give the city of london an edge. nothing is off limits, according to the economics are terry john glenn -- economic secretary john glenn. in the german 10-year, to basis


info Stream Only

Uploaded by TV Archive on