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tv   Bloomberg Markets Americas  Bloomberg  May 20, 2021 10:00am-11:00am EDT

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♪ guy: turnaround thursday, or is it taper thursday? it can't be taper thursday because they are only thinking about thinking about tapering. alix: it could be talking about thinking about tapering thursday, but if you got initial jobless claims, they are at a pandemic low, but continuing claims still jump. that shifted the market dynamics a little bit. les, i got the day right today. that feels like -- plus, i got the day right today. that feels like a win to me. the nasdaq the outperformer, up by about 1%. tech outperforming, so what do you think happens?
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you are seeing money commended the bond market. yields lower by about three basis points on the 10 year. the dollar also lower. so that thinking about inking about tapering talk taking a break as continuing claims jump. irrespective of that is bitcoin, down by just 1%. iranian president rouhani fue ling the mystic. time is ticking. there's monitoring issues that come off on saturday. we will be watching this space and watching for any actual headlines across, and guess what? i didn't mention bitcoin. guy: some really interesting things happening with bitcoin. the first one is yesterday's selloff i think was going to happen at some point. the real story to me was not the selloff. it was the bounce off $30,000. i thought that was incredible. the buy the dip took us up from $30,000. that is going to be a really big line in the sand. but we are up now back up to
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$42,000. that $30,000 level is going to be really important. but to me, the selloff was going to happen. musk has been pushing a lower -- elon musk has been pushing lower. but the bounce i think is really important to pay attention to. we are back with a $42,000 handle. that bounce off 30 thirds of dollars -- $30,000, really phenomenal. alix: really amazing. we've got succession headlines here. morgan stanley shaping up its leadership, the biggest change in more than a decade, announced two days after jp morgan made similar moves. but the outlook is a little bit different. sonali basak has the latest. sonali: you have two new copresidents at morgan stanley. it has been two years since that spot has been open. they run the world's biggest equities business, biggest stock
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trading business. andy saperstein runs the biggest wealth manager in the country, just bought e*trade as well. have two others in this line of succession. the former cfo, highly renowned with investors given his spot on the earnings call, and back into thousand eight when he worked with all the banks and the heat of the financial crisis at their toughest times. so a new generation rising at morgan stanley. clearly a a succession. we are seeing a new generation rise elsewhere. -- a new line of succession. we are seeing a new generation wise elsewhere. guy: sonali, thank you very much, indeed. the iranian president hassan rouhani says world powers have
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accepted lifting sanctions on his country. the news inevitably having an impact on oil prices. let's find out exact a when this is going to happen, how far along we are. golnar motevalli joins us now. she covers a run for bloomberg. golnar that she covers iran -- she covers iran for bloomberg. golnar: iran agreed with the united nations atomic nuclear watchdog. there's a deadline for that coming up on saturday. it is crucial, according to the european diplomats, that that agreement is extended and renewed so that diplomats can reconvene again next week in vienna. on the assumption that that is going to happen, and so far post implications are that it is going to be renewed, world powers, all those diplomats from the u.s., iran, eu, russia,
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china will gather again in vienna next week, where the iranian negotiator has said he expects or hopes that will be the last round of talks before they hit that final agreement to restore the 2015 nuclear deal the donald trump abandoned in 2018. alix: thanks very much. let's end on an data i was talking about -- on the economic that i was talking about. jobless claims falling last week to a fresh pen them at low. want to get more from bloomberg economist yelena shulyatyeva. the market is not really reacting on those continuing claims. yeah lena -- yelena: i would say the data still shows improvement in the labor market, and initial claims have been falling since the beginning of the year. the steepness of the declines accelerated since the beginning of april, and i think we will
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see even sharper declines going into the summer months and into the fall as we see more states declaring that they are dropping off the unemployment benefits. so more people will start coming back to work, and that will help with restoring some sort of more of a payrolls acceleration. it was in the minutes that they are paying much closer attention to the employment mandate rather than the inflation mandate. in fact, i think they will catch up on the 2% target on inflation next week. but the unemployment gap remains really wide, and that is what they were focusing on. so i think improvement in initial claims is really
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important in that respect. guy: thank you very much, indeed. elaine ashley at yeah joining us -- yelena shulyatyeva joining us on the claims data. the "bloomberg businessweek" event is ongoing, and what a lineup we have for you. david westin currently speaking with dr. anthony fauci, the u.s. national institutes of health director. let's take a listen in. david: clearly it applies to only those fully vaccinated. those of us fully vaccinated feel privileged to have that, but we don't know who is fully vaccinated get if i am running a business, whether it is a small retail store or huge company, i don't necessarily know who is vaccinated and who is not. how do i figure out which is which? dr. fauci: you just hit the nail right on the head of what the issue is. since we are not centrally requiring proof of vaccinations, namely from the federal government on down, you gave an
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example which is a perfect example of what we are facing. let's say i'm an owner of an establishment, whatever that establishment is, and i am aware of the cdc guidelines saying that people who are vaccinated can feel safe outdoors and indoors without a mask. what i don't know is, coming into my establishment, who is vaccinated and who is not, which means you don't know who is infected and who's not, and what the risk of transmitting an infection within my establishment, and it is for that reason why there are some establishment owners and people responsible for the establishments who are saying, for understanding the cdc guidelines, if you want to come into my establishment, you have to wear a mask. that is where some of the confusion is because you are saying, wait amended, the cdc is saying if you are vaccinated, you don't have to wear a mask, and now you're telling me i have to wear a mask if i come in. that is something that needs to be cleared up for sure.
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but what we are going to see, and we are seeing it already, is that there are organizations, particularly universities and colleges, who are saying, notwithstanding what the federal government is wiring, if you want to come onto campus -- is requiring, if you want to come onto campus for in person learning, you are going to have to show proof of vaccination. cruise ships will likely be doing that. airlines will likely be doing that. so you are going to have at the local independent level things that the federal government is not going to be mandating. alix: even if i --david: even if i am fully vaccinated, should i be wearing a mask because i am worried about transmitted get to someone else? what do we know about the risk of transmission of those who are fully vaccinated? dr. fauci: that is a great question, and that was one of the three things that the cdc considered when they made the recommendation. they were reluctant early on for the simple reason of what you
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brought as an example because we knew that the original trials of the vaccine showed they were very efficacious in preventing clinically recognizable disease. we weren't quite sure how effective they were in preventing a symptomatic disease. and if a person gets a symptom attic -- gets a symptomatic -- gets asymptomatically infected, the guidance is you should be wearing a mask particularly indoors because we don't know the risk. what is happened since then is that a number of studies have come out which have shown that the vaccines are even more effective in the real world than they were in the clinical trial, so that is good news, but number two, the chances of getting infected in an symptomatic -- in
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an asymptomatic way are really low, and even if you are vaccinated and have a breakthrough infection, your level of virus in your nasopharynx is much lower than the level that you would have if you are not vaccinated, diminishing even more the likelihood that you are going to inadvertently affect someone else. that is one of the reasons why they came around and made a change in the guidelines. david: that is very reassuring, but clarify one thing. when you go on the internet, there is some information suggesting that there might be a difference with respect to the effect on transmission among the vaccines, that is to say mrna is more effective at curtailing transmission then perhaps johnson & johnson. is there any scientific basis for that? dr. fauci: they haven't been compared to head-to-head. most of the data that we have is related to the mrna, either the
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pfizer/biontech or moderna. but if you look at overall efficacy's, all three of them are highly effective vaccines. what we don't know is the question you are asking. did we compare this vaccine with this vaccine as to whether or not asymptomatic infections and transmitter not? we just don't have that data. david: do we have data about how long my vaccination is going to be effective? you recently said we may have to have booster shots every year. we have a sense of exactly how long this is going to be of? -- going to be effective? dr. fauci: we don't know. i made that statement, but probably it was a little bit misinterpreted. i am not sure we will need a booster. we might. and if so, i don't know at what point following the vaccinations we will need it. i think that is still uncharted waters. but what we are doing to try to
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get a reasonable answer to your question is we are following people from the original clinical trials and looking at the level of laboratory indicator of protection, which is the level of your antibodies. if it starts coming down, the slope of the decline would predict how long you might wait before you need a booster. and again, we don't know when that would be. i said perhaps a year. i probably shouldn't have said that because then people are assuming absolutely you are going to need one at the end of the year. i said it is likely that we will need it sometime. we are really not quite sure when that will be. david: give us a sense about the vaccine hesitant. last time we checked the numbers, something like 60% of the country has at least their first shot, approaching 50% fully vaccinated. at the same time, it is perceived that there is a
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significant plurality of the country really resistant to the vaccine. do we have a sense of how large that plurality is? how big is it? dr. fauci: it is unclear. it is looking like it is more 15%. but again, those numbers vary when you take a look at a different survey. but whatever the number is, it is really unfortunate because we are so fortunate that we have, dealing with the most devastating pandemic in well over 100 years, and we happen to our benefit have highly effective vaccines that can protect us, our family, and our society. the idea of not utilizing that, often you have a situation where you have a really serious problem, but you have no solution. here we have a really serious problem and we have an
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absolutely proven solution, so it is so frustrating when you see -- and you know, not to point fingers at all because people have individual reasons that you like to try to explain to them why it would be so important to get vaccinated, yet for one reason or another, they don't want to. but i think when you look at the benefit to you as an individual, to your family, and to society, it is so overwhelming leaning towards getting vaccinated that i would hope as we get further and further that more people see why it is so important to get vaccinated. it is very interesting that the very people who don't want to get vaccinated don't like the restrictions that are put on them by public health. if you want to get rid of the restrictions, get vaccinated and the restrictions will disappear, i promise you that. david: i am curious on that
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point. there's a lot of research being done about this virus, about vaccines. are we doing research about what might change people's mind, those who might be hesitant? for example, what you just suggested is if you want to be able to go back into society, you need to get vaccinated. is that changing people's mind? is giving people free beer, the way the governor of new jersey is doing, going to help? or the way they are doing a lottery in ohio? do we get a sense of what is going to change people's minds? dr. fauci: i don't believe there's any specific research looking at that, but there is something going on, and that is that we have established a covid-19 community cohort, in the sense of a community situation where you have trusted messengers, people who the person or persons who are reluctant to get vaccinated might trust much more a sports figure, and entertainment
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figure, a clergy member, which is very important for some people, or even their private doctor. those are the people we are trying to get information to so that they can go out and try and convince people at least in a nonproductive way to try to explain to them what is the reason why you don't want to get vaccinated. some people say, well, i don't trust the vaccine because i think it was done too quickly. well, there was really a good reason why it was done so, but that is the incredible investment that was made in basic and clinical biomedical research that allowed us to go from discovering a virus in january of 2020 and having doses going into people's arms 11 months later in december. most people look at that and say there is something wrong with that picture. it was too quick. well, it wasn't. it really was a reflection of extraordinary investment.
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and i think when you get trusted messengers out there trying to convince people of why their reasons for not wanting to get vaccinated may not be valid. david: you say there are a whole host of reasons why different people might be hesitant, but are you also playing against somebody on the other side, particularly in social media? there's a piece out in the bloomberg right now about disinformation on social media, and there are those using data against us. do you perceive them as a substantial foe in this battle? dr. fauci: there are so many good things about social media of getting important to murmuration widely disseminated, but it has really been a very difficult problem of the misinformation, sometimes
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deliberate, which is really unfortunate. particularly talking about the vaccine adverse events reporting that just report anything that ever happens to people. that is not necessarily mean it is related to the vaccine. it is something that happened. if you just look in general society in any given week or months, a certain number of people have heart attacks, are going to commit suicide, are going to be in automobile accidents, are going to get really sick. even without any vaccines being distributed. so when you distribute vaccines and these things happen to people, they get reported. it doesn't mean it is related to the vaccine, and yet sometimes in the social media, they say look, this happened at the time a person was vaccinated, therefore it is an adverse event. that is an egregious distortion of what the reality is. david: there's also a lot of reporting about so-called variants, that tend to get named
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after the country where they are first discovered. right now, india may be the most frightening variant of all. given the fact that this virus continues around the world, we are not stamping it out, is it just a matter of time before there is a variant that in fact is resistant to the vaccines that we have? dr. fauci: not necessarily, david. one of the ways that you can prevent that from happening is treating this as a global pandemic and trying to get the entire world vaccinated. there is a very important tenet in virology, that viruses don't you take if they don't replicate. so if you prevent it from spreading from person to person and replicating, it is not going to mutate. so the easiest way to prevent the emergence of a problematic mutant which would lead to a variant, the easiest way to do that is to get as many people
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throughout the world vaccinated as quickly as you possibly can because if you have a country like the united states which, sometime in the summer we are really in good shape, we've got a lot of people vaccinated, the level of infection has gone way down, and yet you have other regions of the world where there is a very robust viral dynamic and people are getting infected, the chances of there being the emergence of a variant there are strong, and that variant might come here. that is the reason why we've got to treat it as a global pandemic, not an epidemic just in our own country. david: maybe one of the questions i hear most often is about children, about how we should be handling children. we now have authorization to go down to 12 years old to vaccinate. when you think there might be research that will support going below 12 years old with vaccinations? dr. fauci: it is going on right now. in fact, a couple of the companies, including moderna and
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pfizer and others, not just those two, are doing what is called age de-escalation studies , namely since children are vulnerable, as our pregnant women. you want to be very careful when you give vaccinations to them on a large-scale. you want to make sure it is safe and effective in a normal adult population, and then you go down by age. so we know now, at least with pfizer, 12 to 15, you can vaccinate. what we are doing now is going 12 to nine, looking at it that it's ok. if that is ok, nine years old to six years old. if that is ok, six years old to two years old. if that is ok, then six months to two years old. and we anticipate that by the time we get to the end of this calendar year and the beginning of the first quarter of 2022, we likely will have enough information to feel comfortable in vaccinating children of any
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age. david: forgive me, i want to go one halfstep back because i have a question from a viewer about the question of international spread of the virus, and what specifically could the u.s. do to really make sure kobe vaccines get around the world. how can we help the situation in other countries? dr. fauci: we can help the situation in other countries by taking a leadership role in trying to galvanize an effort to get vaccines to people in developing nations, low and middle income countries that don't have the capability or the resources to vaccinate their own population. there are several ways to do that. one is to actually get vaccines to them that you make right here and to ship it to them. the other is to help provide what is called technology transfer, where you transfer the capability of making their own vaccine to countries, for example, and africa, and sat from -- in south america, in
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certain asian countries. so you are actually providing for them the capability, in collaboration with the companies, to transfer their technology to be able to make doses for themselves. if we do that, and i believe we, the united states, being a country that has done that with other diseases, we did it with hiv and president george w. bush when he established the president's emergency plan for aids relief, got drugs and treatment prevention and care to developing nations, particularly in southern africa, to the point that now that program which began in 2003 has saved anywhere from 14 to 18 million lives. so we have taken a leadership role globally with other diseases, and i believe we can do that with covid-19. david: as you know, parts of the
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pharmaceutical industry really have problems with the transfer of technology because it is not just the patents, also the know-how of how to produce this material, particularly when it comes to mrna, which is a true breakthrough as i understand scientifically in using it for vaccines. once you give that to other countries, you can't necessarily give it back. how do you respond to that? dr. fauci: again, i go back to the example with hiv. back then, when companies were making antiretroviral drugs and were selling it for a considerable amount, $15,000 to $18,000 per year per regimen in the developed world, it was impossible for the developing world, particularly southern africa, to afford that. so generics came in and made similar drugs for $100 a year or $120 a year, and people said that is going to destroy the pharmaceutical companies. you can't do that.
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well, the pharmaceutical companies continue to make aliens and billions of dollars at the same time that the drugs are being provided to low and middle income countries. so i am very much in favor of protecting the capability of pharmaceutical companies to continue to make a good profit so they can continue to put what it takes to get newer drugs and newer interventions. i am all for that. but there comes a time when the emergent nature of a situation requires doing things that would allow less well developed nations to have access to these interventions, and in this case, that intervention is vaccines for covid-19. david: finally, a lot of people want to take vacations. maybe go to europe, for example. i would like to go to italy towards the end of august. if we stay on the course we are on right now, obviously things
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could change, do you think i can go to italy safely in late august? dr. fauci: i think that is clearly possible. in fact, there already is discussion on the part of italian, french, british, etc. about opening up the restrictions of travel into their country, and on the other side of the ocean, it is talking right now about when we could start doing that, so i can't guarantee it for you, david, but i would think there is a reasonable chance, if we get to the president's goal of getting that high percentage of people with at least one dose of vaccine by the fourth of july, by the time we get to august, it is conceivable that he will be able to do that. -- that you will be able to do that. david: this is not your first rodeo. this is different from a lot of others, but you been phuoc -- but you've been through a quite a few of these in your career. what you learned from this particular pandemic? dr. fauci: what i have learned is the one prevailing issue that
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i have always said is my worst nightmare, that we would someday have a situation where a brand-new virus that originated in an animal reservoir would jump species, would come here to the world. that would be one respiratory born, two, highly transmissible from one person to another, and three, a high degree of morbidity and mortality, and sure enough, here we are unfortunately living through that worst nightmare of mine, which tells us we must continue to always be prepared from a public health standpoint and from a scientific standpoint because one of the great successes in all of this was the science that gave us the vaccines that would be the solution. david: i have to ask you to be really honest with us. are you surprised we got a vaccine this effective this fast? because a lot of experts were. dr. fauci: i wouldn't say i was
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totally surprised. i had said that given the new technologies, i had hoped we would have a vaccine within 12 to 18 months, and you go back on the record, i said that 50 times. the fact is from january to december was 11 months, so it was even better than i would think. but i am quite pleasantly surprised not only at how quickly it was done, but how absolutely effective it is. to be fortunate enough to have a 95% effective vaccine, we are very fortunate. it is unfortunate we are living through a terrible pandemic, but we are very fortunate to have such a highly effective vaccine. david: we few fortunate to have you where you are as well. thank you so much, dr. anthony fauci, president biden's chief medical advisor. alix: you have been listening to actor anthony fauci, national institutes of health director, speaking to bloomberg's david westin. continue following the bloomberg businessweek event.
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honestly, i could listen to dr. fauci for a really long time and not get bored, and the end was really interesting, that potentially i could be going to europe at the back end of 2021. guy: or potentially, i could be coming to see you in new york. i think that is a huge step forward. everything is caveated at this point, isn't it? you rewind the conversation a bit as well, what is happening with variance may ultimately get in the way. i also thought it was pretty interesting what he said about extra boosters. he's not saying that that is going to be required as well. i think that is pretty interesting because it will be interesting to see ultimately how quickly or slowly immunity does effectively kind of wear off, and the fact that he kind of walked that back up it was fascinating. alix: i was under the impression that we were definitely getting boosters, but i guess there's more optionality here. personally, i have a six and a half-year-old girl, and i was more interested in the fact that we might know if they can get a vaccine by the end of this year,
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but it still leaves questions as to when we can actually get those younger populations vaccinated and really stop any other variants from the billing -- from developing in that publishing -- in that population. guy: there's truly dill a lot -- there's clearly still a lot of work to do. you do wonder whether or not you can get secondary school kids vaccinated, i think it is a huge step forward. we haven't made that decision here in the u.k. at this point. i wonder whether it is going to be made by september, when we will have a new intake into that age group as well. but i think it will be a huge step forward if you can get that age group back to school and vaccinated, and it then reduces and probably downgrades to the age group you are talking about. alix: secondary school, is that highs go for s?
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-- high school for us? guy: yes, primary and secondary. alix: ok. good to know these things. let's get back to the market for a second. bloomberg's abigail doolittle is here with all of the price action. it is definitely a turnaround thursday kind of day, but it didn't start out like that. we deftly had to get there. abigail: overnight futures were lower, but we have stocks solidly higher, especially for the tech heavy nasdaq 100. we had three big down days, then thursday was a turnaround thursday. we also had a big rally on friday. so perhaps we are on the path to repeat last week. it appears the driver for the strength is the fact that there are no signs today of inflation. you had the 10 year yield down three basis points, and the commodity complex sliding once again. crude oil down 1.2%. perhaps some of that having to do with the iran news. it also just seems to be a cooling off for commodities overall, something many people
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may want to see, as long as that volatility does not bleed over into other assets. let's check on bitcoin. what a mild two days -- what a wild two days it has been. over the last few days, now down just a little more than 3%. on the day, actually higher. so again, a big there for sure. -- big moves there for sure. let's take a look at the nasdaq 100 since last monday because we actually have a pretty big slide here. this is the s&p 500. you see a beautiful uptrend. we also see the s&p 500 relative to the 60 day moving average, which is has successfully tested many times during this rally. you can see there are some lower highs there, which tells you that the buyers are a little bit not so competent. it will be interesting to see whether that support holds. clearly, today the buyers are out. guy: the don spac, -- the bounce back, buy the dip, that
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mentality still seems to be clearly enforced. let's talk about whether or not that is still the correct narrative. joining us now for more on the markets, gabriella santos, jp morgan global market strategist. does buy the dip still work? gabriela: good to see you. i think investors are trying to engage with a third phase in this market cycle. we went through the virtual world phase last year from march to november. we went into the return to the real world phase, and now we have entered a third phase. this is really all about what the future expansion is going to look like. where we shake out is it is a moderation and growth that will be coming up after the initial surge. it is a cycle dominated by upside risks to inflation, and investors need to consider the kind of valuations they are paying for certain asset
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classes. for us, that really leads us to still look to the tech complex, north asia, to help us with the growth piece in this more moderate growth that you do see stepping in, buying some of those tech names. it also leads us to some cyclicals as a hedge against inflation, given that inflation breakeven, so you do see some reason to buy on this for things like financial and materials. alix: is that going to be located solely in the u.s.? you mentioned asia, but i am really trying to get europe. gabriela: i think asia is very much a growthy message, similar to the u.s. in terms of an inflation hedge and a region that is still about early on in the recovery play, that leads us to europe and japan, and especially europe.
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the key part about europe for us is it has had very strong outperformance over the last month and a half versus the u.s. that is after 13 years of underperformance, so we are talking about early days here in terms of the upside that we see for europe and an important overweight for us. guy: a number of things caught my eye yesterday. one of them was certain the lack of action in the bond market. the bond market seems to have kind of gone into a period of stasis right now. what is your assessment of when it breaks out of that? are we going to see yields breaking up to the upside? do i want to have bonds in my portfolio? gabriela: that is a very tricky
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question. that's where a lot of the debate is, much more on the fixed income side. we still ultimately believe this is a very challenging backdrop for fixed income because we do think that the pause we had in the move higher in bond yields was just that, a pause. i think we are starting to see bond yields break higher once again. yesterday, really interesting to see real yields move higher by eight basis. that is because of this next catalyst we are coming up to hear, which is all about the talking about talking about tapering discussion that is really going to be the next catalyst moving 10 year bond yields higher. we ultimately still see short-term yields anchored, so it is about a steepening of the curve, so within fixed income, we still feel comfortable shorter duration. alix: the other part of this is commodities, materials for example. are you a believer in the commodity super cycle, or is the other narrative of higher input costs going to wind up hurting
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and sitting on growth for a little bit? gabriela: certainly i think the strong rally we have already had in a lot of economically sensitive commodities, they are supported by the recovery and by structural stories as well, especially for industrial metals , which is all about the energy trend. that has certainly come a long way when we were just talking about a few days ago with copper near all-time highs. so it is part of the story of seeing some consolidation in certain assets that have moved up very fast, but ultimately it is still a supportive environment for economically sensitive commodities which is why we mention this overweight to materials globally. alix: good to catch up with you, gabriela santos of jp morgan. continuing the conversation on commodities, to data when a clock p.m. on "commodities edge
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-- today at 1:00 p.m. on "commodities edge," we will talk about worrisome size on the copper market, citi lish on aluminum, and about a certain type of hydrogen electric truck. very cool. talking about that later, too. guy: electric trucks definitely catching the attention. alix: i figured that would be like, ok, i'm in. guy: definitely in on the truck narrative. that is a huge step forward in terms of the ev narrative. talking about commodities, one thing you didn't mention was oats. we are going to be talking about oats today. oatly looks like it is going out the door today. that is pricing at around $17. it looks like we will get indicated price of around $22. so what is that, $13 or something in terms of the valuation? the ceo will be joining us later on. really looking forward to hearing what he had that's what
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he has to say. is this whole thing just a fad, or do we think oats stick? alix: oats are sticky. go ahead. guy: yeah. but yeah, everyone was them into -- was into almond milk. alix: there's room for almond. guy: there's a whole series of milks that have captured the imagination. alix: but almond milk is still huge. i still drink almond milk like it is my job. i think there's room for all of it as we transition away from dairy. guy: but a lot of people who are more fashionable than i am have moved from almond to oats. what's next? alix: to be fair, allmond does have issues in terms of its production because it uses a ton of water, so there's a sustainability issue for sure. i would never deny that. bugs? bug milk? i'm serious.
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blood protein is huge. why can't you make ash bug -- bug protein is huge. why can't you make a milk? guy: we will stick with oats. alix: you heard it here first, bug milk. coming up, automakers could be seeing a $110 billion hit to sales due to supply constraints not cording to consulting firm alix partners. we will speak to the cohead of automotive practice. this is bloomberg. ♪
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ritika: coming up, tony peterson, o.a.t.l -- oatly ceo. this is bloomberg. ♪ let's check on the bloomberg first word news. u.s. secretary of state antony
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blinken told his russian counterpart the u.s. once a more stable and predicable relationship -- and predicable relationship with moscow. they raised a number of issues, including the syrian civil or and the health of dissident alexi navalny -- syrian civil war and the health of dissident looks navalny -- incident alexi navalny. -- dissident alexi navalny. >> i don't remember a time in this industry when it hasn't and competitive. what i will say is i am really pleased with what we have been able to accomplish. it is fun to be able to say we have really driven the direction of computing in the industry. it is fun to be able to say that. if i look at some of the things we have done over the last five years, we have really changed what people expect from high-performance computing. so i would say it is a
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competitive world and we are going to be very competitive in the process. ritika: yesterday, md announced a $4 billion -- yesterday, amd announced a $4 billion share buyback, the company's first since 2001. 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: thanks so much. the conversation also talked about the chip shortage as well. taiwan semi makes the chips that amd wind up selling. now we know taiwan is having to shut down different areas because of resurgence of the virus. i wonder how sticky -- or how much clarity you can really have. guy: i think certainly they probably have a better idea than they did a few weeks ago, but as you say, maybe they still don't have a full picture as to what is happening because it is a moving target. we don't know what is happening in taiwan. we are seeing local lockdowns coming into force.
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there's all kinds of issues. but it is interesting as well, she talked to their about the fact that they have been really innovative and how they have pushed forward, and they have become a much stronger competitor over the last years, but in many ways, the chip shortage at the moment isn't in that super high-end stuff. it is basic nuts and bolts chips we are missing. that is where the real problem lies at the moment. alix: i also have to wonder if i knock off is going to be going from adjusting inventory to building an inventory of chips, and how that winds up distorting or changing the supply chain narrative for years and years to come, particularly as the administration is trying to change and onshore more chip production, for example. guy: the chip industry in the states is calling on the u.s. government to allow similar sorts of incentive structures because the incentive structure in taiwan is huge, from a financial point of view, a zoning point of view, all of
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these things come together which is why taiwan has become so successful in that space. are you going to see that happening? europe is doing the same thing as well. infineon pushing back on that. i think what companies certainly need to do is have a greater understanding of their supply chain going forward. i think a lot of businesses and ceos and the people that run their supply chains will now be managing it in a very different way going forward. alix: totally. and front and center for that exact point today, the u.s. commerce department is going to be meeting with companies affected by the global chip shortage. bloomberg's jenny leonard joins us now. what are the incentives that we are going to hear? are there any? jenny: i think all of the stuff you guys just discussed is what commerce secretary gina raimondo is hearing from companies about. the three topics that are on the agenda for today are how the
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semiconductor shortage has impacted industries, which we all have heard for months now, how to improve transparency in the supply chain for these chips , and how the incentives you just mentioned force semiconductor research and development should be used to prevent shortages in the future. when you talk about incentives in the u.s., you obviously need the congress to move this funding through. so nothing really happens fast in the u.s. congress. we have been debating, if you remember in february, we reported that top security officials reached out to their counterparts and nothing really has changed, so participants today do not expect there to be a breakthrough, but it will be a good meeting for the commerce secretary to gauge and hear
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from affected industries directly. guy: thank you for the update. looking forward to the coverage. let's talk more about it. carmakers could lose output of 3.9 v in vehicles -- of 3.9 million vehicles due to the chip shortage, according to consultant alex partners. joining us as their head of emotive practice, mark wakefield. let's start off with where we are and where we are going. we know there is a shortage. are we starting to get visibility in understanding when that shortage is going to peak ? when do you think that is likely to happen? mark: yes, i think we are getting more visibility, but it is a pretty fluid situation. the latest virus outbreaks in taiwan, the differences we are seeing on the standardized chips versus the more specific ones, means it is not a generic discussion. it is a chip chip discussion --
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a chip i chip discussion -- a chip by chip discussion. but we are seeing improvement coming through with a little less of the allocation that is going on right now. but still, a lot more pain to go from here. alix: i guess that is sort of dealing with the short-term issue. longer-term, we obviously want to avoid that in the future, and the government wants us to pick some supply here. talk about that being a desert wasteland where companies have to transition their supply chains. can you walk me through what you are thinking about? mark: it is a very difficult one because it used to be all through various tears, and a lot of just in time. i spoke to the guy who coined the inventory and production piece last week, and he was saying that i all along, strategic inventory should be in the chain. so i think people are reorienting to have more
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inventory or planning to have more inventory, and if you have it closer and more controlled, you have to have less inventory in that chain. so it is a number of factors. how do you get capacity up, how do you get visibility through the chain where you used to trust the guide in the next point, and now the automakers need to look deeper down into the chip, down into the wafer, and that is a difficult process. guy: ford out with its new f-150 yesterday, the new electric version. how different is that vehicle versus the internal combustion engine in terms of the requirements for chips? what does that tell us about the scale of the problem we have as we make this transition towards ev's? mark: ev's are a very small percentage right now, so they are not the ones really making the shortage or consuming it. guy: but mark, they are going to get bigger. over the next few years, they
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will be here in europe. the targets are huge. we will have to make a very big shift in this industry in a relatively small period of time. mark: the timeline they are on to grow is a timeline you can build fabs on and plan for. now, all you need is one chip not to be there in order to not make a vehicle. so something like the electric truck released yesterday definitely has more semis in it. however, there's hundreds of semiconductors in each right now, and you're looking through and making sure you have enough access. and you only need to be missing one to not build a vehicle. and as you were saying before, these are not the most advanced. these are the 200 nil a meter more standard stuff. however, they have been made into very specific chips, from the antilock brake system, steering, the radio, infotainment. those can't be just swapped.
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so it really is a ground game of figuring out each one of those streams where they come from. it will be more on something like an electric pickup truck, but it is something that can be planned ahead and ordered ahead. right now we are in the whipsaw of more of a supply chain issue than a design issue. alix: if we were going to transform the industry and want to build more foundries here in the u.s., what kind of money, what subsidies, what is going to get this all going? mark: it is billions to put up a fab plant. alix: but if you look at the administration, looking at $52 billion, it's got to be more than that. mark: that is helpful because right now we have a whipsaw just of not putting the orders in, and as these things grow, we have plants coming on in the u.s., already coming on in china , so this year we had more fab capacity coming in.
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this is making it more economic to do it nearshore, which is very helpful. the key things for us is also getting better designs in the sense of more standardization, delaying when it becomes specific to a vehicle. all these sorts of things, it may sound like walking and tackling, but the industry really does need to move through that. i work with clients in this industry. we are helping them get that visibility to plan, and once you can do that, you can say now how any plants do i need, and we are not really at that stage yet. guy: mark, thank you very much, indeed. mark field of alex partners. i got there eventually. you would think alix would be a name i could say very silly. alix: and the spelling -- very easily. alix: and the spelling is the same, but i won't take it personally. i find it interesting that the industry isn't prioritized. this is an important industry that employs a lot of people.
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it is very visible. it wants to be prioritized in terms of chip access. alix: terry haines of pangaea just wrote a note about this, saying if the goal is to have the government have more say in the kind of chips we design and how we design it in terms of r&d, that is a problem, versus actually trying to incentivize lance being built. totally different thing. guy: absolutely. i don't think governments should be in the business of chip design. you want them to be pushing that kind of stuff forward. the european close is coming up next. seema shah, printable global investors, is going to be joining us next. this is bloomberg. ♪
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>> the countdown is on in europe. this is "bloomberg markets:
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european close," with guy johnson and alix steel. ♪ guy: 30 minutes to the close. what do you need to know out of europe this hour? easyjet downgrading summer vacation plans as auras johnson urges -- as boris johnson urges vacation goers to avoid amber list countries. a broad outline for a deal to end sanctions on iran has been reached. and oatly's ipo in new york is about to happen. the ceo is going to join us this hour. let's talk about what we are seeing in these markets. bounce back thursday. we are up by over 1%. it has really kicked into gear over the last hour or so in the u.s. markets, and as you can


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