tv Bloomberg Markets Americas Bloomberg April 8, 2021 10:00am-11:01am EDT
♪ guy: thursday the eighth of april. 3:00 p.m. in london, 10:00 a.m. in new york, 30 minutes into the trading day stateside. in london, i'm guy johnson. alix steel is over in new york. welcome to "bloomberg markets." i hate to be a broken record, but with got another one. alix: but the feeling in the market is super calm. the rhetoric is that maybe we are going to see prolonged lower interest rates, prolonged qe, then maybe we even think. that is helping tack, helping the stay-at-home trade, helping the bond market, or you have yields moving lower. then again, it doesn't feel like there's a lot of velocity because the vix is so low. we are at 17, going lower. the implied volatility is actually picking up for the
summer months, just not right now, so maybe there is a little more to come as we reopen in the summer after fullback away should -- after full vaccination or herd immunity in the u.s. we are now below the 50 day moving average for crude, yet no particular shake out as well. it is hard for me to get excited by another record, you know? guy: i agree. it doesn't have that i want a new cap 4000 kind of level. 4089 last time i looked. doesn't feel quite the same. there are plenty of skeptics out there. money market funds continue to draw inflows. let's check and see executive what is happening with the data as well because we can to be tracked that very carefully. jobless claims out once again. it is a thursday. i'm confused. basically it points to a choppy market recovery, yet the data
friday really key. mike, i am finding it hard to put claims side-by-side with what is happening with the labor market data we get, that we got on friday. michael: you are not the only one. take a look at the far right side of this chart. he did see that claims went up -- you can see that claims went up. other indicators suggest that things are good. it may be that we had some layoffs in the auto industry because plans had to shut down because of semiconductor shortages, but more likely it is fraud, double counting, and the mechanics of the system. the important thing to keep in mind is this is not 740 4000 people. this is 744,000 initial jobless claims. some people have to file more than once, and there's a lot going on under the hood. it does not square with the other numbers we have gotten. when we got the jobs numbers,
over one million jobs created in the month of march when you add in the revisions, and at the same time the ism services numbers pointing a strong gain in hiring for services. the labor market seems to be getting better. that does seem to be the direction we are going. the fed seeing we expect that and expect inflation, so don't tell us anything different than charlie evans did yesterday, that it is going to take some time. we expect more of the same from jay powell today. the good news is the market seems to be buying into the fed story. you can see the spikes when we got the jobs numbers and the ism numbers on monday, but since then, yields have done nothing but gone down. the market seems to be accepting the idea that the fed is going to be lagging the data. they are going to come in behind, rather than ahead of, the idea of inflation. alix: 100%. thanks a lot.
markets are also weighing the economic outlook against the prospect of higher corporate taxes to fund president biden's spending proposal. for more on this plan, kevin cirilli, bloomberg's chief washington correspondent. the news today is of some kind of corporate minimum tax and how you wind up taxing the country. kevin: precisely. treasury secretary janet yellen saying that in addition to advocating for a global corporate tax rate, they would stop the race to the bottom on who can have the lowest corporate tax rate overseas. she also noted that she believes in raising -- she believes raising taxes on revenue from offshore gains would fund slightly below what president biden is suggesting his info structure package would cost. back on capitol hill, senator joe manchin, democrat from west virginia, rallying the centrists, saying he's against filibuster reform, saying he's against raising the corporate
tax rate to 28%, so this is just a lot of opening bids and markers being laid in what will be a broader storm ahead on the infrastructure debate this year. guy: kevin, thank you very much, indeed. let's talk about what the market impact of all of this is going to be with patrick palfrey, credit suisse head of quantitative research. i see the vix going down. i see a similar theme in europe. equities continue to track higher, north of 4000 on the s&p. if i came to you and said is now the time to start hedging, is it cheap enough to start hedging some of these moves, what would you say to me? patrick: our expectation is that the market will continue to go higher from here. we expect vix, maybe not in a linear line down, to re-normalize to levels in the mid teens over the next several months. it is not unreasonable that we
get there. the economy is in the process of healing. we are reopening. i think all of that warrants what we see in the estimates of earnings for s&p 500 companies continuing to drift higher and remaining quite robust. valuations are not all that extended, so isaac and all points to continued upside for equities at this point. alix: i guess the quest where within the equity market? we have seen that within value, but we have seen a strong bid into tech. it feels after those dovish minutes yesterday, you're looking at a resurgence of the stay-at-home trades instead. patrick: for us, the issue we are tracking is what is going on in interest rates. to the extent that we continue to see the 10 year rise, and it is our expectation that will be the case, as we continue to see the economy celebrate -- the economy accelerate, we believe the value trade is going to work. that is groups like industrials,
materials, financials, portions of discretionary a going to be the themes that help outperform as we go forward. it is not to say that as we continue to debate some of these tax issues, tech is probably a bigger beneficiary or loser on some of those dynamics. that is probablyk whya we're seeing increment movements. r -- that is probably why we're seeing incremental movements. what i would expect that to be the theme as we go forward. guy: where is the money coming from? i see money market funds continuing to attract more funds. they certainly seem to be coming up over the last few weeks. our people selling out of their bond market portfolios and putting that into working equities? does that trend continue if it is that trend? you talk about the fact that you think yields will continue to go higher. is this a re -- a re-jigging of the 60/40?
patrick: i think you do have traditional investors probably taking a closer look at that traditional 60/40 model, looking at what the options are relative to a fixed income portfolio and seeing that equities in many instances are giving you similar yield on dividends, and you're getting growth against it. i think the other is the fact that realized volatility continues to fall. we are seeing the vix continue to come in. what that allows hedge funds to do is take up leverage. that is going to lead to the increment to demand. that is really where the money is coming from. alix: on the other hand, there are some, ike wilson of morgan stanley and tobias levkovich of citi, starting to warn that we are a little too frothy. the s&p has broken out of the expected trading range with a sense that this time is different.
money flows continue to push d indices -- to push indices higher. where might that be true? patrick: i guess what i keep coming back to is what is going on with the underlying fundamentals. we are seeing growth exploding to the upside in 2020 when is the economy reopens. that is particularly true within value. many growth companies think technology didn't even see a recession last year. so the earnings really exploding to the upside, and that is really what is driving markets. it is not necessarily that we are seeing valuations continue to expand. as we continue to move forward, that upward drift in estimates is going to put downward pressure on valuation, and i think that is going to keep investors incrementally interested in equities relative to the other options that are out there. guy: in terms of which bits you want to be in, small caps have
had an incredible run. that started to fade a little bit. where are my --where my migrating to next? the capture trade has played out strongly in some areas of the market. using that trade still has more to run? do you think you want to be more balanced in terms of the parts of the market you are occupying at the moment? the values played really well. or do you want to be more nuanced in case that catch-up trade has already happened? patrick: if i can think about it from a different perspective, think of it as low-quality. that has really been the area that has been outperforming since early november. it has had tremendous runs, whether you think of it as within the s&p 500 or within small caps as an index. if you ask me where the opportunity still exists, i think small caps still work from
here. they have trim in this operating leverage. if you're looking within a large cap universe, my area of focus would really be within the financial. they are an area that has seen tremendous capitalization in light of the recent crisis, and i think the issues have turned out to be much less of a problem in terms of bankruptcies and some of the things they were reserving for, and as we go forward, the valuations are among the most favorable within the large-cap space, so within groups, i think financials, particularly within the large-cap area, look most opportunistic. alix: financials in the s&p up 17% so far for the year. really good to catch up with you, patrick palfrey of credit suisse. coming up, booking holdings president and ceo will be joining us with his take on the next nine months. this is bloomberg. ♪
♪ alix: yesterday i hosted a panel on behalf of these miss million -- the smithsonian american women's program on leaders in science, technology, and innovation. among those on the panel was the person who led the develop into pfizer covet shots, catherine janssen. >> we are not sure yet whether we need a booster, when we need a booster. so i think there's a lot of work that is currently on going to try to assess if and when. alix: it is hard to overstate the level of celebrity. i don't think i've ever been as nervous as a panel as i was for that panel yesterday. but one of my takeaways when it came to the vaccine from what
dr. janssen was saying was that this is not going to be over for a very long time. we are going to have to learn to live with something like this, and there are more variance that are going to be worse than the ones we have seen. guy: it is going to be interesting whether or not the vaccines are going to be able to stay ahead of this. one thing that is different this time around is messenger rna, which seems to be able to be tweaked relatively quickly. i'm hoping that all of the processes have been put in place to allow us to do as you say, to get boosters with updated vaccines. the same way we do every year with the flu shot. it is going to be interesting to see how that battle works its way out. but ultimately, there are going to be variances. how bad -- to be variants. how bad they are, we will wait and see. alix: they are on it. they're not sleeping. they are working on this, so they've got our backs.
guy: it has been incredibly fast , the whole process and how it has unfolded. the amount of money that has been thrown at it, the science that has been delivered. absolutely amazing in the context of history. but we are going to be in a battle in the long-term. alix: i ask her, have you slept at all this past year? she's like, not so much. [laughter] there you go. guy: we are all certainly hoping for a holiday right now, maybe to reboot our batteries and recharge them a little bit. let's talk more about that and see which direction we are going to be coming in. glenn fogel is the booking holdings president and ceo, the world's largest online travel agency, with major travel brands including priceline and kayak. thanks for joining us. we appreciate your time today. we are going to be in a battle with this virus for quite a long time. vaccines have really picked up the pace and allow a window potentially to return to normality. what does that mean for you?
what kind of demand are you seeing right now for people to get away? glenn: thank you for having me on, and absolutely, there is incredible desire to get out and travel. we are seeing that in the numbers. we have seen in the u.s. people going through the tsa checks, at a number that is growing rapidly, which is great. that being said, it is still significantly below where it was in 2019, and we need to do everything we can to help make people go out and travel to help bring back the industry, which is why we are offering a huge promotion right now. we are offering people to come to booking.com app, stay in ao -- in a hotel, and get a 50% credit to do so again. we really need people to get back to the industry. alix: i conversation yesterday with dr. janssen on this is going to be here for a very long time, and boosters are going to
be part of managing it. do you favor vaccine passports? glenn: we are in favor of anything that will help bring back travel. the area that has been hurt the most has been international travel. governments are very restrictive , not wanting to have people come and visit who may be carrying the virus. so we need a way that tourists can go to a country but prove that they are safe to travel so that governments are willing to let people come. one way to do that is you take a test three days beforehand, you get that, you prove you have it with you. it is not the greatest system. what would be really great is if there was a technological solution that i could show up as a traveler and say i have been vaccinated, i'm safe, and then the government says, sure, come on in. we can have it done in a way that is not making people not be able to travel at all. you can still go get your test beforehand and do that. but that is clunky. we want to do something that is easier so we can bring back international travel. guy: how is that going to work, glenn?
europe is behind, but it is starting to catch up. maybe there's an opportunity there. maybe there's an opportunity to reopen the north atlantic. then you look at the rates of vaccination in less developed economies, and it is taking a long time. the imf is highlighting the risks to some of these economies that are really dependent on tourism and travel. how do you see this unfolding? it is not just about the north atlantic, it is about the rest of the world as well. if us your impression of how this staggered processes going to work. glenn: it is very difficult, of course, because there are so many areas of the world ready vaccination rollouts are very limited and very slow, and the shortage of supply is a problem because until a large percentage of people are safe throughout the world, we are going to have this issue which was just mentioned earlier, the idea that there are mutants because there's replication and people, so we really need to have a worldwide program to get this
stuff out as fast as possible. the world is only as safe as everyone is vaccinated, and we need better developed countries to provide the assistance and supplies. alix: give us some insight about what summer looks like. i mentioned earlier in my market check that implied volatility for the vix is actually higher in the summer. i am wondering what that is trying to encapsulate. it seems like maybe it is a reopening question mark. what are you seeing for summer bookings? glenn: there's definitely an increase in demand, but it is a race between the virus and the vaccines. the quicker we bid the -- we get those vaccines out, the less chance there will be some mutation that is more effective against the vaccine, which would be a disaster that nobody wants. as you point out, everyone is working hard on ways to tweak vaccines in case there is a virus more resistant to the vaccine.
but we know that people want to travel badly. that is why we are offering people this incentive so they don't do it just once. we want people to go to the booking.com app and do it again. that is what we need. guy: you are geared to europe as well, glenn, so i am curious as to what you are seeing and expecting from europe. i just got an email for my colleague maria tadeo in brussels saying she's seen evidence of a real acceleration in the vaccination rates in europe. i talked to michael o'leary of ryanair the other day. he expects to be flying 70% of capacity pre-pandemic this summer. do you think that is realistic? glenn: it is possible for sure. it is going to be highly dependent on how fast these vaccines can roll out. we all know europe got a very bad start. on the other hand, you look at the u.k., a great effort. they are doing a great job. prime minister johnson talking about potential opening in the
middle of may, which would be really fantastic. it is going to come down to how the governments feel in terms of safety, and is this a level of vaccination that will enable people to travel more freely, or is there going to be concerned that we are not sure we want to open up the doors quite yet. it is really just how fast we get those vaccines out. alix: we want to ask you about the evolving conversation about taxes in d.c., higher corporate tax. it seems like there is negotiation around 28% or lower. the global minimum tax we heard overnight as well -- we heard overnight, as well as how companies are taxed. thoughts? glenn: everybody wants an equitable tax system. everybody wants that everybody pays their fair share. the problem is the system, the way it is right now, is very unshipped -- is very unfair. some companies are paying a lot more than others, so we do need some fairness. the problem is this race to the
bottom that secretary yellen talks about. we know that is true, but i'm not sure how easily she is going to be able to convince other countries that there's an advantage to that, to join in on this idea of getting rid of their advantage. i would love if there was an equitable system. i would love it to be at a rate that will help promote development by our companies instead of our government to make things great. taxes are good, but on the other hand, it always hurts the companies in terms of developing new things, innovation. that is what i hope we don't hurt. alix: i don't think anyone ever likes paying them. just like the idea may be of what it is going to go to. glenn, thanks a lot. glenn fogel, bookings holdings president and ceo. this is bloomberg. ♪ this is bloomberg. ♪
alix steel, with guy johnson in london. this is "bloomberg markets." cyclicals taking a bit of a break here, as utilities and health care shares are leading the gains in the u.s. but i wonder, have we hit peak optimism in the u.s.? the conversation is unfolding. guy: it is a question of whether or not we have hit peak pessimism in europe and whether that is starting to reverse. we are seeing vaccination rates pick up. people are going to be going out again. as people start to trickle back to the office, to bars and clubs, are they going to be wearing different kinds of makeup? are they going to be spending more? we will be speaking about that with the owner of avon and the body shop, executive chairman of natura joining us next. this is bloomberg. ♪
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she's in new york. -- is in new york. this is "bloomberg markets." the owner of avon and bodyshop has shifted very much to e-commerce. it's asia business saw fast growth in the first quarter of this year, and it sees recovery in europe and the americas and the second half of this year. let's talk briefly about what is happening with the stock, up 50% over the last year, but it has been really choppy and going sideways, slightly lower over the last few months. so what is going to be the catalyst to get this to start moving again? join us now is natura's executive chairman and ceo roberto marques. it looks as if we are going to get a reopening. it is already happening in the united states. it may happen shortly in europe. what impact is that going to have as people return to not pre-pandemic kind of levels of
activity, but certainly higher levels of activity? what is that going to mean in terms of demand for your products? roberto: thank you for having me. it's true, we are excited about the reopening and things starting to get back to some level of normality again after people get their vaccines and get immunized. if you look at the previous crisis, what we see is after people feel more confident going out, etc., we see pretty high growth in the beauty sector as a whole. categories like makeup, fragrance, which were the categories most impacted during the pandemic. so we are excited about the prospect. at the same time, excited about all of the transformation that happened especially last year through the pandemic, where our business was able to really show a lot of resilience moving to e-commerce in a way that i
believe we are going to build from this new foundation of a business that became even more on the channel than in the past. alix: when i talk to women, myself included in this, we don't always do makeup anymore. we are going to do i makeup -- do eye makeup, and that is going to continue. it is all about skincare. do you see a shift in that? roberto: we saw some of that shift. there's a lot of similar capacity for more personal care, skincare, and we are seeing high demand on those products. we believe makeup is still going to have an important role. we are developing products where makeup is more skin friendly, with a lot of natural ingredients and biodegradable ingredients, so we think the technology will continue to evolve to produce the products that the consumers are looking for.
we feel pretty good about our ingredients, how we are sourcing a lot of that coming from biodiversity from the amazon, with very strong work with the local communities. we think that trend will continue, and i think we are very well-positioned to capture some of those new trends. guy: you bring up the amazon, so i have to ask you about what is happening in brazil right now. the numbers we are seeing on our screens every day are really alarming. what is your sense of what is going on? do you have a sense that this is going to impact your business? is it impacting the way your staff are working. just give us a sense as a brazilian company what this is meaning for you. roberto: there's no question that there is much more to be done in brazil, and unfortunately, a lot of things are results of probably a lot of
changes and a lot of not focus on health care and following science. we are seeing that also another geographies. we are seeing positive signs in the u.k., and asia, but in some countries in latin america and europe, countries are behind, so brazil is suffering a little bit on that. i thing there is now an effort, including from the private sector, working with the government and working with health authorities to make sure we can provide the ingredients for the vaccines and trying to accelerate the vaccination. so there is still a lot to be done in brazil, as well as some of the other countries that we operate, and hopefully over the next couple of months as the ramp-up of vaccines continues to progress, we are going to see a better situation in those markets. alix: you do have a unique view in that you have your hand in so many countries, and we honor
that everyone is going to recover at some point. i am interested in the speed, whose first, whose second. how quick does that catch up with like? roberto: there's no question that the u.s. is progressing pretty well, showing that when you follow science and follow the recommendation of the health care authorities, things are starting to move in the right direction, the same thing we are seeing especially in the u.k., asia, probably also because of the first continent affected by the pandemic is now coming out of that, and we are seeing some very strong results in our business coming out of asia. i would say latin america, parts of africa, and europe are probably the ones that need to accelerate their level of vaccination, and i think all of the work together with the government and private sector
organizations like the world health organization, you in global compact, in terms of ash organization, you in -- organization, un global compact, probably mid this year as we think about the second half of this year, the situation will be in a better place for most of those countries hopefully. guy: you've extracted significant synergies from the avon purchase. you are ahead of where you end is baited you would be able to deliver that. are you able to get more out of that process then you initially thought? it has been accelerated, but in terms of when you look, do you think you will have extracted much more from this transaction than you thought you would? roberto: we are extremely pleased with the results thus far. there's no question that a little bit of the silverlining of this pandemic has been a lot
of the synergies that have actually accelerated, so we talk about the adoption of social selling, which is something that we always wanted to expand to avon, and we saw that really growing exponentially. in the u.k., the brochure which used to be the paper catalog is now done through social media and social selling, growing over 200% last year. so a lot of those initiatives that we had planned probably for two or three years and up actually being ash years and up -- years end up actually being accelerated. during the pandemic, we actually do business in a different way. so it has given an opportunity to accelerate some of the other plans we have in our pipeline in terms of synergies. one of them is in latin america, where we have the biggest overlap between avon and the
torah -- and natura, we are accelerating our revenue to be able to sell not only one brand, but both brands in a more productive way. alix: what kind of texas are you looking to pay? it looks like the u.s. is trying to convince 139 countries to go with a global minimum tax and change the way that taxes are distributed, where they pay taxes and where you actually sell the products. that would definitely impact you. how do you look at it? what are you modeling? roberto: tax is a very complex topic for every business that operates in different jurisdictions, with different tax treaties, etc. we believe the most important thing for us is how we drive the business the right way, how we comply with local legislation, but at the same time, we welcome
some of those reforms to level some of the distortions that happen in some of the markets. so it is a very complex subject, but one that every group of companies needs to face, and one that we are very open to the discussion about how to create a little more equal taxation across the globe. alix: thanks a lot. we really appreciate your time. coming up, morgan stanley telling investors in the auto industry if you don't own tesla, you risk losing out. we will talk to the analyst to make that call, adam jonas. this is bloomberg. ♪
♪ let's check in on the bloomberg first word news. president joe biden today will announce he is taking executive action to tighten gun restrictions. one of those actions will be aimed at so-called ghost gun's. people are allowed to buy kits to build guns in as little as 30 minutes, called ghost gun's because they don't have serial numbers that can be traced by the police. tesla is blasting germany for what it calls that euro hitting approval process for the factory it is building near berlin. they say the country should cut red tape to speed up projects that help fight climate change. the government says it is not allowed to legally differentiate between climate front lead projects and those that may be polluting. 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: morgan stanley says president biden's and for structure bill is going to be
very good for tesla. adam jonas is the global head of auto and shared mobility research, and rights "auto investors face greater risk not owning tesla shares in their portfolio than owning tesla." he now has an overweight rating for tesla. adam, i feel like it was in some way they reluctant called because you were underweight over the summer. did anything change fundamentally with tesla, or is this more of a macro call now? adam: tesla, we just get is a must own here. i say that because we frequently speak with investors that say i want to put together a long-term ev or av exposed portfolio, but i will never own tesla. we kinda take a deep breath and say, then you run the risk of not opening the company -- not owning the company that could make all of the other stuff you do own obsolete. while we do have better ideas in our recommendations other than
haslett, one of the most important messages to investors is that you still have to own tesla as a bit of insurance due to their leadership and their ability to deploy capital. i think in the next year or two, you will see them really dial that up as they become an infrastructure company drafting a lot of these projects and infrastructure bills all over the world. guy: just to be clear, you are not saying that you shouldn't own other ev companies. you are just saying that tesla needs to be part of the mix in terms of the portfolio that you are putting together. adam: yes, but also that due to the fact that tesla has zero internal combustion and is in a position during an arms race type of forces to attract capital and talent perhaps more efficiently, more advantageously , without having to defend any of the -- if you listen to what
they are saying, they all sound like they are tesla, and in many ways they are frankly obsessed with tesla. if you listen to 30 seconds a volkswagen or gm, you would think they didn't sell any internal combustion cars, and it turns out they sell 98% of them. guy: they start from a much lower multiple, and tesla's trading onto pretty punchy multiples, you could argue. we could debate that point, but let's park it to one side. volkswagen has gone from 120 to 140 in the space of a few months. you wonder whether there is more. these guys were valued as if they were going out of business. now they are starting to get a little bit of the tesla halo. i am just wondering whether you get a bigger bang for your buck by owning a mix of all of these rather than focusing on tesla. adam: it is a great question.
we think there is great potential for volkswagen and many other legacy oam's. the value of their assets may potential he still be very undervalued by investors. the thing that we think is being ignored is the 98% of their revenues coming from i.c.e. may be undervalued. we are running scenarios where the value is massively negative, so these companies have the burden of managing out this toxic tobacco like liability and still being able to attract esg money to be a winner, and we think that is going to force these companies into these uncomfortable but necessary strategic outcomes. alix: but it is not like everyone is owning an ev tomorrow. it is the same thing as the oil and gas industry. it is not like no one uses coal
or oil anymore. adam: it is not about tomorrow. the investors we engage with understand this will take decades to see through, and analogies to the rollout of the electric utility grade, you know, candles didn't collapse overnight. carriages share the road with automobiles. fixed wing aircraft and dirigibles were in the sky at the same time. what we know is happening, those are the bets being made today. guy: where is the value in tesla? is it almost as an infrastructure company? is it in the chemistry? i would be curious to know who you think is going to come out with a solid-state, and if that is not tesla, is that a problem? you are more cautious on china as well. i am interested to see where that valuation stacks up versus the others as well. what is tesla? because years after tesla is launched, i'm still confused as to this shape shifting valuation
model applied to this company. adam: i think if you thing about the value of tesla, think about apple, one of the worst kept secrets in tech is that apple is developing a car. how would a company like apple or other mega tech companies approach transportation? how would they approach autonomy, electrification, networking, software, ai? it is more than just unit times price. if you solve for just units for tesla, you get these really ridiculous things like tesla needs 70% market share, and of course, that reinforces people saying we are going haslett. but we think tesla is an installed base play, growing one million cars on the road to 40 million by the end of the decade , and getting an average revenue per unit from their monthly active users and getting software like revenues from that install base. when you start doing that, frankly, you have tesla not covered by old fashion auto
analysts like me. i genuinely believe this, if we got morgan stanley -- if we at morgan stanley do our job, it will be covered by our tech or software team because that will be the model, and they can come it versus those types of stocks instead of looking at a legacy auto company and saying tesla looks expensive, and then dropping the mic. alix: that's one way to look at that, but to the tech companies become car companies? adam: yes. alix: how do you see the apple card playing out? adam: we think -- the apple car playing out? adam: we think you could say elon might be annoyed or a little distracted by volkswagen, but what we think he's really focused on are the apples and that genre. those are the ones that could really get a big chunk of the market globally and in the u.s.. we think those risks at tesla are mega tech, getting into
transportation, and being able to do things that tesla does and even more, considering the capacity of the ecosystem. the other concern, and it is not really to single out china or even tesla, but we think as the automobile becomes a transport utility like telecom and electricity, you will see national champions and national security walls going up where this industry isn't global anymore, and it is not right to have a u.s. private company taking people around in the streets of wuhan overtime. guy: one final threat which i always said about when i thing about tesla as well, and i appreciate what you're saying about the migration to software like multiples, what is your modeling telling you about the evaluation of tesla if we get bond yields as 1.6% now, say we get to 2%, 3%, 4%. how does that change the valuation case for tesla?
adam: mathematically, it can only heard it. there's no way around that. the question is does it hurt it more than any other opportunity that is looking at a $5 trillion or $10 trillion chance to disrupt it. you got me. i think it depends who you ask, though. if you ask software and the tech hardware people about tesla, many of them looking at it as good value. if you ask auto people in my world about it, they can say i can never own it. it is ridiculously valued. maybe the truth is somewhere in between. maybe it is both. guy: and on that note we will leave it. adam, always a pleasure. really appreciate your analysis and you walking us through what. . is happening here. -- what is happening here. adam jonas of morgan stanley. interesting conversation. this is bloomberg. ♪
bloomberg business flash, a look at some of the biggest business stories in the news right now. the white house is considering whether to nearly double the u.s.'s previous commitment to cut greenhouse gas emissions. the biden adminstration may propose to reduce emissions by 50% or more by the end of the decade. that would require dramatic changes in the power, transportation, and other sectors. warren buffett's berkshire hathaway has sold $1.5 billion in yen-denominated bond to give japanese investors an opportunity to buy into global companies while getting a bit more yield than is generally on offer in the local market. that is typical for a foreign debt sale, which is generally perceived to be more risky. credits we ceo thomas gottstein has a tough crowd to deal with these days, he's on bankers -- three days -- these days, his own bankers. credit suisse stands to lose as much as $4.7 billion. the head of archegos may be the
greatest trader you've never heard of. he's a master $29 billion fortune by betting and stocks, and lost it all. alix: on that point, "bloomberg businessweek" has an amazing article on how to lose $20 billion in two days, probably something none of us ever want to try and do. it is a really in-depth look into the history of hwang and his idiosyncratic nature, like don't curse in the office, yet really under wraps when it comes to social activities, yet he is this huge person on the street with these big trades. guy: absolutely. i do wonder whether you want to compare and contrast, in two days, how much did credit suisse lose? we are still trying to figure out exactly what that is, but
reputation lay, just how big an impact did this have on this business? absolutely huge, i would have thought. radical changes badly needed at credit suisse, and arguably the worst thing they could do would be to maintain the status quo with only cosmetic changes. change is required. a valuation it has taken place. alix: "the ft" had a really great article about the level risk managers knew was going on with hwang's business, and still let the trades goes through. it was really a wow moment. coming up here, the european close. this is bloomberg. ♪
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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." brussels urges unity on estrus vaccine -- on astra'a vaccine -- on astra's vaccine. vaccination rates are starting to pick up. accounts from the latest ecb meeting highlighting concerns that the slow rollout have vaccines will hit growth. "weakness in activity might continue well into the second quarter." we were talking about tesla just a moment ago. the company slamming germany's approval process for its new factory, describing the timeline as "particularly irritating." let's take a look at where we are with equities in europe and where we are with euro-dollar as well. the dollar starting to come under a little bit of pressure.