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tv   Bloomberg Markets Americas  Bloomberg  April 12, 2021 10:00am-11:00am EDT

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jonathan: not a lot of movement, but idiosyncratically -- alix: not a lot of movement, but idiosyncratic. thanks kickoff earnings. financials barely off -- banks
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kickoff earnings. financials barely off 0.1%. you have reopening of the u.k., but vaccinations picking up in europe as well. which one is going to win? we've had the reopening trade play out in the u.s. and the u.k. does that now shift to europe? also, bond auctions happening. three and 10 today. yields up by about one basis point. also want to hit on bitcoin. i can't keep track. you've got me. the real point is you've got coinbase with a direct listing ipo this week. is it going to train with -- trade with bitcoin? that conversation really developing as well. guy: it is going to be interesting to see how the relationship works. do you value this is a brokerage company? does it come with the volatility of some of the assets that trace the crypto volatility story? quite stable as late, but it
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hasn't been long. in around two hours, biden officials are meeting with top officials from the semiconductor industry, the auto industry. tech executives are going to be talking about the global chip shortage. you've got alphabets -- alphabet's ceo, ford's ceo. joining us as bloomberg's jenny leonard. what is going to change as a result of this? jenny: the white house is clearly trying to show how much it cares about the problem that we know has been ongoing for months now by not only having the meeting led by top advisors brian deese and jacob sullivan, but the president will also make a brief appearance. it is a signal of how high the level of interest is in the
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biden adminstration, but we have been told not to expect any deliverables or outcomes here. the biden team has made pretty clear that there is no short-term fix to this issue, and we have seen this coming on and on, so the biden team -- this going on and on, so the biden team is shifting the narrative towards attacking problems like this on the front end. we have seen the biden team rolled a bunch of policies, including a supply chain issue that we won't see for another two months. this is more of a show of support for these companies, but a real outcome is not to be expected today. alix: jenny, thank you very much. for more on the chip shortage, joining us is our bloomberg
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analyst. what kind of chips are we talking about? where are we getting hit the hardest here that needs to be fixed? reporter: good morning. thank you for having me. this is going to be a diverse issue if demand and supply continue at the same trajectory through the year. demand across the board has been very strong not only for autos, but for pcs, for mobile devices, first servers -- mobile devices, for servers. you are going to see this spread in a much more diverse fashion. right now we are seeing some foundry shortages. mobile chips are being shortchanged at samsung potentially. we are seeing some issues at gmc . so while the auto industry and display panels are seeing
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shortages, i think this is a much more diverse problem and a more acute one before it is all fixed. guy: if you want to put production in the united states, both from a geopolitical point of view, to reduce the risk on that front, also to reduce the supply lines, you are going to have to change the dynamics within this industry. taiwan offers huge incentives. china offers huge incentives. plenty of countries in asia offer huge incentives to these companies to make sure that fabs are built in their countries. we are talking about zoning, tax advantages. is the u.s. going to be offering similar sort of advantages in order to entice companies to reshore some of this production? reporter: if it once to get real about dramatically shifting the geopolitical risk on chip manufacturing, it has to. we have written about this. become a nation of intel's
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weakness and potentially the new ceo among on board, doubling down on foundry efforts, all of those coupled with government incentives over a long period of time can shift some of the dynamics in this industry, which are heavily weighted towards taiwan. in order for that to happen, it is not one thing that needs to occur. it is 10 things that need to occur, and we think the u.s. has a shot. we think intel has a shot, and we think samsung and tsmc are also looking at this and saying i have all of my eggs in the korea basket, the taiwan basket. i want to diversify my geography of manufacturing, as the electronic manufacturing companies have. moving away from east asia a bit. but i think there will be a bit of a renaissance in the u.s.,
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whether it is sustainable, whether it is cost advantaged, those are the questions to be asked. guy: it is going to be a mix, as you say. thank you very much, indeed. that chip meeting coming up a little later on. another story in the tech sector we are watching, microsoft's megadeal, acquiring a company nuance communications. i read about this as a health care deal, but it strikes me that this could be more than a health care deal. we are talking about transcription, ai, natural learning, all of these kind of products coming together within this business. i am wondering, is it just a health care deal, or is this something that could rollout as microsoft more broadly into the
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entire 360 suite? >> i completely agree with you. it starts with health care because that is where the portfolio is right now, but i completely agree with you. the implications of the deal is throughout its other ecosystems, other verticals, other products that microsoft has. at the end of the day, you are the machine. you are buying the conversational ai engine, and you can put it another verticals such as automotive. you can put it in your office suite, and your dynamics suite. you can create chatbots that can help people with customer service. i think the applications are tremendous. alix: does it justify the price? $20 billion is some serious cash. >> i read that some people were saying it ko even higher, but we disagreed with that. with the current valuation of
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about $19.7 billion, it prices nuance at about 13 times forward sales, and we look at a bunch of companies, about 10 companies that have similar growth rates of less than 10%, and the average is closer to nine times forward sales. so we think evaluation is fine. in fact, it is a bit premium. but i don't see a reason why the price should go higher from here. guy: i was also thinking about this deal and trying to work out why apple hadn't done this deal. apple has got tons of cash. it also could have made this acquisition. why didn't google make this transaction? are some of these companies more limited than others when it comes to antitrust? could google have made this acquisition? why didn't apple make this acquisition? they are already pretty close to this company. >> when it comes to apple, google and amazon, frankly, that
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is not happening anytime soon. they wouldn't be allowed to buy anything big at this time with so much antitrust stuff going on. alix: such a good point. thanks a lot. always good to catch up. coming up, stocks a little but heavy, falling from record highs as the market awaits some key u.s. inflation data tomorrow. we will break it down with mona mahajan, allianz global investors u.s. investment strategist. this is bloomberg. ♪ mberg. ♪
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sec. yellen: what we are stash --chair powell: what we are seeing now is the economy seem to be at an inflection point because of strong fiscal support, strong monetary support. we see job creation coming in
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much more quickly, so the principal risk to our economy really is that the disease would spread again. alix: that is fed chair jay powell speaking on cbs' "60 minutes" in an interview that aired last night. joining us now is michael mckee, bloomberg international economics and policy correspondent. this was his plea to the people, basically. michael: explaining what wall street has already heard to the rest of america. here's what jay powell was talking about. a long time ago when alix was a little girl, there was a president called ronald reagan. [laughter] and growth in 1984 was about as high as you could get. it was very strong, about 8% that year. we haven't seen anything like that since then. but you see the white line down there, that was last year. that was the pandemic, condemning the economy to negative growth. and look at what the forecast is, the highest growth since that reagan year. what are they waiting
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for, then? why aren't they raising rates? they are looking at how far can we bring down unemployment. here's a couple of measures of what they are going to be looking at. the employment population ratio in white, those numbers should be 2% to 3% higher than they are now. the fed is going to try to get them up there, which raises the question of what could go wrong. obviously, the thing on everybody's mind is inflation. we are watching the inflation numbers to see if they indeed start to rise. the forecast is obviously, we are going to get some more inflation in coming months because of the fact that we are comparing to a drop last year. but the other issue along with inflation, and you can see the forecast there, the question is, is that sustainable. mohamed el-erian writing about this today in bloomberg opinion. you can see that the price to has skyrocketed. another great piece suggesting
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that in 2023 earnings won't justify that kind of elevation. so does the stock market turn into a bubble before the fed acts? does inflation kick off before the fact -- inflation take off before the fed acts? those are questions we will be talking about for the rest of the year. guy: absolutely. main street i think is starting to catch up. you go to the auto dealer, to the supermarket to try to buy a dishwasher or washing machine, you are already seeing some of that inflation come through. thank, indeed. joining us -- thank you indeed. joining us to death thank you very much, indeed -- thank you very much, indeed. joining us now to discuss all of this is mona mahajan, allianz global investors u.s. investment strategist. we may see inflation running ahead of the base effect. how does wall street react to that?
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we are at 1.67% on the u.s. 10 year. does the cpi data start to move that number higher again? mona: yeah, it is a great question and one that has been pretty well publicized and communicated by the fed. i think that has really helped wall street maintain its composure during this time. clearly the fed last year indicated to us that they are willing to tolerate inflation higher than their 2% target. they call that average inflation targeting, and they will then classify over what period of time they will -- and they did not classify over what people of time they would tolerate that. we have been below the 2% target for nearly 10 years now. only a handful of times since the last financial crisis have we exceeded their core pce 2% target. in some ways, a little bit of inflation may be healthy, may be what the fed is looking for. in some ways, the economy shows growth, it shows signs that the
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economy is rebounding, that we are getting pricing power into the hands of small businesses. when we compare the u.s. to japan, where growth is very low, rates are negative. we don't necessarily want to get into that stagflationary environment. don't think that above 2% will spook the fed in any way, and i think the market is accepting of that as well. alix: on the flipside, you have the whole margin issue, peak earnings conversation. morgan stanley getting a little more defensive. bank of america also saying that 2022 is going to be really tough, and part because of margin pressures. how does that positive view feet into the idiosyncratic story? mona: as we get to the second half of this year, we do see a little more headwinds coming to the forefront. we will hit peak growth in the u.s. sometimes and -- the u.s. sometime in 2q or 3q this year.
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growth will still be about potential -- still be about potential. sometimes that is an inflection point for markets. certainly that is a headwind. we could see rates continue to grind higher. we got as high as 1.75% on the 10 year, but over the last 10 years, like we talked about prior to the pandemic, the average 10 year was 2.4%. growth was also in that 1.5% to 2% range. now we are in an environment where growth could be much higher, and rates are still sub 2%. certainly that could be a headwind as we continue to see rates grind higher as well. guy: you talked about that inflection point, and i am wondering when the market starts to price that moment in. i have seen small caps underperforming over the last few days, significantly underperforming. dave had a great run -- they have had a great run.
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has the market already started to rotate out of those stocks that have done so well during this recovery phase? mona: absolutely. we certainly think there's another leg higher in the value rotation as we get through this true reopening of the economy in the summer months. but we are starting to be a little more selective, certainly starting to be more active in the way we think about how we want to deploy new capital, and how we think about the value rotation. certainly seasonal effects may come into play. traditionally has been sell in may, go away. it is delayed a bit, but at some point we will probably face a period of consolidation around these great gains we have seen since really november of last year, when elections happened and when the vaccines were approved. so we've had a great run thus far. you could argue that that early-stage recovery play has probably now been 2/3 or 3/4 through its cycle.
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we are starting to be a little more reflective. would you like some of the higher conviction value rotations, if we think rates are grinding higher. it certainly lends itself well to some yield curve plays if we think this reopening momentum continues through earnings. some of the reopening plays make sense to us. then of course, the biden agenda makes a lot of sense to us. we think he is really committed to pushing it through. areas of infrastructure, even the 5g security market, supporting broadband, and the clean energy story, which we think had a pretty strong correction earlier this year, but as a secular growth winner longer-term. alix: mona, really appreciate it. i should point out, new york city surpassing 5 million vaccines administered. one of margin, thank you a lot -- mona mahajan of allianz global investors, thanks a lot. this is bloomberg. ♪
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ritika: it is time for the
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bloomberg business flash. i'm ritika gupta. microsoft making a massive bet on health care artificial intelligence. the software giant has agreed to by nuance communications and a deal valued at 19.7 billion dollars, including debt, representing a 23% premium to nuance's closing price friday. microsoft has been working with nuance on software that helps capture patient discussions and integrate them into electronic health records. apple has been a laggard in the smart home space, but a new device in early element could change that. the company is working on a product that would combine an apple tv set-top box with a home speaker. it would also include a camera for videoconferencing through a connected tv and other smart home functions. regulators in china have told ant group to become a financial holding company that could be regulated more like a bank. that is the first significant kinds for the company -- significant guidance for the
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company since its ipo was halted. that is your latest business flash. alix: i feel like this is interesting for many reasons, but first off, i wonder, is this over? have we seen the assault on ant and, and this is finally ash on ant -- on ant end, and is this finally over? guy: i also think it is worth focusing on the fact that this is a big fintech company that has just fallen foul of regulators. there's a lot of concern that while banks are pretty heavily regulated around the world, some finance companies that fall outside the traditional bank regulation remit are maybe where the risks lie. that may not have been the case here. this may have happened for a bunch of different reasons. but i think maybe, hopefully
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this stabilizes the situation with ant. but i think there is a wider lesson for fintech here about the kind of regulation, when they get to the kind of scale we are talking about here, they may ultimately have to face. alix: particularly in china. remember when we were looking for an ipo, you had a lot of private equity involved in that, a lot of vc money involved. so if you change what the rules are, ant will have to keep more of the loans on their books today gone more of the risk, that changes the proposition in terms of what money goes into this kind of companies overseas. we talked to a lot of investors during the time when this came down, and they said no, it is going to be fine, this is a one-off, etc. but i don't know. is that going to be true? guy: but i don't think this is just china. this is going to happen elsewhere. alix: but different, right? guy: think about jamie dimon's lecture last week. he spent a long time talking about the threat that is going to come to jp morgan as a result
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of fintech. that was basically a call to regulators, saying look, you regulated us. you've hit us pretty hard. we have done what you've asked us to do. but these guys over here are coming for us, and they are not as well regulated. alix: yeah, look at those guys. don't look at me. look at those guys over there. guy: but i think ant is emblematic of that potentially happening elsewhere. i think there are going to be others that follow. regulators are certainly looking at this very carefully. coming up next, we are going to be talking about the impact of vaccinations on the business story. we are going to be talking to chobani's chairman, peter mcginnis. this is bloomberg. ♪ ♪
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alix: more breaking news for new york city. there will be a dedicated vaccine site for tv, film and theater workers.
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literally in new york city, there's huge tv sets everywhere now, so the idea is to get back to that because we haven't seen that in about a year. this is hopefully a step in that direction. guy: i love the fact that this industry gets its own vaccination program. but i guess broadway needs to get going again. if you want broadway to get going, you want the tv industry to get going, you've got to vaccinate these people. upfront and personal business. let's talk broadly about what is happening in terms of the vaccination numbers. basically, 5% of the population globally have now been fully vaccinated. obviously, the distribution is incredibly lopsided. most vaccines going to the wealthiest countries. joining us to talk about what is happening, europe starting to catch up to the united states, others well behind, is drew armstrong. bring us up to speed with what we need to know. drew: there's quite a bit. right now, the united states continues to lead in the
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vaccination campaign around the world. i think you look at where the numbers are, it is rolling out more shots per day than almost any other country of comparable size. europe is quite far behind. globally, one of the interesting things to see is that the vaccination rate has really begun to pick up some serious steam, where we are almost seeing 20 million doses a day going to arms around the world, and a lot of that is coming from china and india, as well as the u.s. but china and particular is doing on some days 5, 6 million doses a day, which is quite a bit, even though it is obviously a huge country. alix: over the weekend, wasn't it the chinese health official questioning the efficacy of the chinese vaccine, looking to parrot -- looking to pair
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it with a booster from a different vaccine? drew: that will certainly be an issue if that doesn't up being the case, and china has also made a point of sending some of its vaccines around the world. one of the points we don't have great data on because china does not disclose this is what vaccine is being used and how may people have gotten first and second doses there. it is one of the hardest countries for us to get data out of, somewhat unsurprisingly. i think we really do need to wait and see to know more about what the picture is there. we also know that there covid case levels are quite low, or at least they reported covid case levels are quite low compared to other places. so it is a bit of an outlier both from the capacity of the data, the case situation, and obviously those issues that you raised about the vaccine efficacy as well. alix: we really appreciate it. bloomberg's drew armstrong joining us there. chobani is a yogurt maker that
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has been providing some vaccine incentives to its workers. that's get the breakdown with its president, peter mcguinness. thanks for joining us peter: -- thanks you for joining us -- thank you for joining us. on a u.s. basis, how are we? how do you deal with your workers? how do you feel about where the country is right now? peter: we will start with chobani first. one was keeping our employees safe and secure from the very beginning, and the other is our role and the private sector's role in getting the country back to normal. first, we mandated masks very early on, 14 months ago, back in march of last year. both of our factories are in rural areas, and there were no cases at that time. there was confusion around masks, are they effective, do you need to wear them, and we created some really good compliance and behavior from the beginning.
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then we quickly did a childcare subsidy because our plant workers, our hourly workers, their kids are home from school. we did special bonuses. so keeping your employees safe and secure is good for business, and it is just the right thing to do. fast-forward to the vaccinations being available, the first thing we did is gave six hours paid time off to all of our factory workers, our hourly workers. we gave three hours paid for the first shot, three hours paid for the second shot. what we did most recently is three weeks ago, we did an on-site vaccination clinic in the largest yogurt facility in the world in twin falls, idaho. great turnout. last week we did another one. so we have vaccinated people in our factories in idaho, and this week we are doing upstate new york, and we will do another run next week. so we feel really good about where we are with vaccinations,
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and we are going to continue to do on-site vaccinations until we get everybody wants to be vaccinated vaccinated. i think it is the company's job to make it excessively. guy: you just said something really adjusting, everyone that once a vaccine. what about those that don't -- that wants a vaccine. what about those that don't? peter: we are going to continue to keep educating. the more people eat vaccinated, the more that good word spreads. we have education sessions with local doctors so that they can talk to the community about the benefits of being vaccinated. i think more and more people get vaccinated over time, and of course, making it accessible and paying people to get vaccinated only helps. alix: i've heard about that word-of-mouth thing as well. that's got a cost. i am wondering if you can help put in perspective the cost you have to put out for that in addition to any sort of other increase in cost you see as we
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look ahead to tomorrow's consumer price index. peter: sure, and i know you cover inflation a lot. cost of keeping your employees safe and secure is a large cost, but we don't look at it as a cost. we look at it as an investment. if you have a healthy, happy, productive workforce, you are going to perform well as a company. our factory has run 24/7 since the pandemic began because we kept our staff safe and healthy. i think that is an investment, and whether that be a special bonus or childcare subsidy or paying people to take time off to be vaccinated, it costs a lot of money, but it is an investment, and it is the right thing to do. go ahead. guy: how much does it cost to train an employee?
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i am wondering what the relative cost is versus trading up -- for his training up somebody new. i wonder whether you are struggling to find people to do the jobs that you need doing. we still got relatively high unemployment and the united states. is that a problem? or is it hard to find the people you need with the skill sets you need to do the jobs? peter: it is a great question. we don't have any issues on the labor side. unemployment is relatively high, but we have very high retention rates. that goes back to doing right by the employees. being a human company. so our retention is very high because we have kept people safe and supported, and they want to go to work throughout the pandemic. so we have had very low attrition. we have been able to meet surging demand because of our retention, and we are a sought after brand when it comes to hiring, and unemployment rates
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are still relatively high. so no issues in that regard. alix: so finish the conversation about cost pressures. you were mentioning how this cost money, but what about any supply chain issues? peter: i know this is an area near and dear to your heart, and this is affecting all companies. it transcends the u.s.. it is a global issue. labor, steel, lumber, milk, distribution, all seeing inflation across the board. you are also seeing equipment delays because of border closures. i'm happy with how we performed and navigated this because what companies need to do is execute the fundamentals well. we happen to be a food company, and there is high demand for healthy, better for you snacks. we just had to execute well. so we planned and forecasted very accurately and leaned in, so we were able to secure our
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raw materials without any interruption in very little inflation. the one thing we are never going to do as a company's past those inflationary costs onto the consumer. in the end, we are a modern food company that wants to make better food more accessible. delicious, nutritious, natural food that is accessible and affordable. good food is a right, not a privilege. we want to keep that accessibility, and if you perform well as a company, you should not need to pass that on to the consumer. guy: you talk about the pandemic accelerating the process which was already underway. do you see some deceleration when people go back to the office, go back to what is akin to what was normal life? you've done a deal with pepsico as well. i wonder what impact that is going to have on the kinds of channels you're going to access. what does it look like now that
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more and more people are being vaccinated? peter: we saw a surge in demand like many food companies did early on in the pandemic. with us, the surge became the baseline. so healthy habits have been created as more and more people seek out better for you snacks and healthier for you snacks. when we look at nielsen march over march, we actually grew when many companies did not, and that is exciting to see, that behaviors are then created, and that is a new baseline. so we have not seen any slowdown in demand at all, and we think that will continue because healthy habits have been formed. the pepsico partnership pilot program in the northeast, which was geared around convenience, goes back to that mission, and they have a very sophisticated distribution network that can
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get into certain pockets that our products were not available in. so this is two weeks old, and it is really encouraging so far. we are seeing an uptick in sales and excitement in areas that our products weren't as available before. that is super encouraging right now. we are only in the pilot, but so far, so good. guy: i'm glad to hear. new access, new channels, new customers, hopefully. peter, great to talk with you. thank you very much, indeed. peter mcguinness, the president of chobani. a bit of breaking news out of germany. the cdu is going to go through somebody break -- some pretty big changes. angela merkel is going to step down. who is going to replace her? two will fight it out. how quickly is it going to work? how is it going to happen?
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one is more popular. will i give him the edge? german politics maybe start to get a little more interesting. alix: my husband said something about cdu, and i was like, oh, christian democrats union? and he was like, what are you talking about? [laughter] guy: in the last five minutes, you have become a political nerd making jokes about germany and at inflation nerd. alix: coming up, alibaba investors are thinking regulators despite a record fine. we will tell you why next. this is bloomberg. ♪
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ritika: this is "bloomberg surveillance -- this is "bloomberg markets." georgia senator jon ossoff joins david westin on "balance of power." this is bloomberg. ♪
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let's check in on the bloomberg first word news now. i'm ritika gupta. today, congressional democrats will start considering biden's $2.2 trillion spending and tax proposal. it is up to house and senate leaders to determine how to package the proposal. his american jobs plan focuses on infrastructure and some social measures. the president is expected to ask for another massive investment in programs focused on health and families. iran has blamed israel for an attack on the power network at its largest uranium a richmond plant at a time when diplomats are trying to -- uranium enrichment plant at a time when the mets are trying to revive the deal that contained iran's nuclear program -- a time when diplomats are trying to revive the deal that contained iran's nuclear program. israel denies response of the the attack. -- denies response ability for the attack. 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.
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guy: it is a busy day for u.s. tech. a busy day for chinese tech as well. beijing slapping alibaba with a fine, and investors are respond with gratitude, saying it would not have a tr -- not have achieved growth without government regulation. bloomberg's alex webb joins us now. the stock is up today, so what am concluding here is this could have been worse, and it is nice to have the risk crystallized. walk us through the fine and the response. alex: what happened was at certain times, alibaba expressed with a great deal of pride the extent to which it had exclusivity on big brands in china. it seems actually that what they were doing was saying that you
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are using alibaba's services, you can't use anyone else. that is classic anti-competitive behavior. that is what they have been fined for. there has been a certain amount of pushback towards the jack ma empire, which is alibaba and financials which spun out of alibaba a while ago. that is why they are approaching this regulatory crackdown with a certain amount of gratitude because they are trying to limit the amount of damage. of course, the investigation itself is only four months or so. there is perhaps good reason for gratitude. alix: fair enough. but i wonder who is next. how much is this specifically in alibaba thing versus how many other companies and investors need to be worried. alex: we certainly look at what
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is going to happen it tencent, which dominates social media and the music industry, for instance, and china. the difference is that the chairman of tencent and founder is perceived as being a little bit closer to the ruling party, and therefore maybe -- and of course, he keeps a lower profile than jack ma does, which china tends to appreciate. there is suspicion that might help him a bit. but if the fear is these companies are getting too big and holding too much clout in china, there should be no good reason why tencent doesn't at least warrant some close-up looks. guy: let's come back to the share price reaction. the share price is up today. is baba in the clear now? can investors understand the risk profile a little bit more now? sam: -- alex: i think it
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certainly seems that way. that is the line the company is pushing. they say they don't think there are any other probes that are ongoing or looking at their business. that doesn't mean that ant financial is in the clear. there was also some news today that they are going to have to change the structure of ant group to ensure that it is regulated more like a bank rather than a tech company. that of course is exec a wet tech companies in the u.s. have been trading very carefully, trying to ensure that they are not banks, even if they push into some financial products. alix: appreciate it. good to chat with you on this. alex webb of bloomberg opinion, thank you. coming up, why wall street is about to get 100 billion new reasons to bet on bitcoin. we are going to break down coinbase's ipo. this is bloomberg. ♪
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ritika: it's time for the
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bloomberg business. i'm ritika gupta. more than a dozen ceos whose companies are desperate for semiconductors head to the white house today to meet with the biden team. the leaders of gm, ford, and google are among those taking part. the administration has said there is no short-term fix for the shortage. british security company dark trace announced plans for an ipo in london, the first major company to plan a listing on the exchange since deliver room -- since deliveroo flopped. the comely was founded by veterans of u.s. and british -- the company was founded by veterans of u.s. and british intelligence. coinbase will cement its position as the big board of the u.s. crypto exchange. they are expected to go public with a valuation of about $100
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billion, more than the combined value of the new york stock exchange and the nasdaq. that is the latest business flash. alix: for more on coinbase, mike mcglone of bloomberg intelligence joins us now. it is an exchange, but it is going to trade like bitcoin. mike: they make money. they are a liquidity hub. remember microstrategy? they bought most of their shares on coinbase. i like the way you started that segment, that $100 billion. where is that going to go? i think a lot of that is going to trickle down to bitcoin. people are using this as a hedge for part of their bond portfolios, replacing gold with bitcoin. it is part of that whole infrastructure. typically this is a really strong year. guy: we just compared it with a bunch of exchanges. is that the best comparison? is it an exchange, or more of a brokerage firm? mike: i think it is both.
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part of it is it holds a lot of custody. it makes money on the custody. it is like this new world where people just love to trade. as an ex-trader, i dream of those spreads of 20%. it is just wonderful. to me, this is what happens. the money pouring in is going to neutralize this, but a lot of the money is probably going to keep the infrastructure going. alix: you call me a nerd? come on. he dreams of spreads. [laughter] once may have -- once we have more decentralized finance, is this going to go away? mike: that could happen. the key thing you learned in markets is once you gain that liquidity hub and you know it is a liquidity hub, the market is
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going to go to you. it is like bitcoin. it has already won the race of adoption. coinbase has won the liquidity race. bitcoin trades 24/7 on notes that no one essentially manages, and that is impressive. guy: it is going to be interesting to see the volatility we get, how it translates into the volatility around the stock. we will wait, we will watch and we will see. mike mcglone of bloomberg intelligence, thank you very much, indeed. a bit of news out of the ecb. it has just increased its pepp program. it has purchased around 17 billion last week. they are stepping things up. the european close is coming up next. this is bloomberg. ♪
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guy: from london, i'm guy johnson. alix steel is over in new york. we are now counting you down to the european close on "bloomberg markets." gyms, non-essential shops, hairdressers reopening in england. how much of the 100 a billion pounds of saving -- 180 billion pounds of saving will be spent? darktrace confirms plans to list in london. the security firm's ipo could value the firm at upwards of 300 billion pounds. a quick look at the markets just to see where we are this monday. european stocks on offer, down by around 0.4%. as the u.k. starts to reopen, the pound is bid. sterling trading higher. alix: and in honor of that, i


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