tv Bloomberg Markets Americas Bloomberg July 1, 2021 10:00am-11:01am EDT
guy: the second half begins, 30 minutes into the trading day in the united states. from london, i'm guy johnson. taylor riggs in new york. alix steel is on assignment today and tomorrow. welcome, everybody, to bloomberg markets. taylor: thanks for having me. we are near record highs on the s&p 500. we will get to see if we close at these levels, but what is so interesting to me is we just locked up the 1st avenue of the year, -- the first half of the year, big tech and small caps, we are actually outperforming for the first half of the year. crude is a big deal. i know that you are one of our oil experts, above $75 per
barrel for the first time since 2018. a lot of news that we will get later. finally, remember we priced yesterday, getting the second day of trading. we are still above that opening pricing of $14 per barrel. i also wanted to have a krispy kreme ipo guy, but i hear you did not bring me donuts, not nice. guy: the donuts are not nice or i am not nice? taylor: i need donuts here if i am going to do a krispy kreme ipo. guy: if you are looking for some volatility, check out hurts. -- hertz. the manufacturing data, the ism numbers, pretty much in line with expectations. pretty much in line with the forecast. it is the prices paid a number that you may want to pay attention to. 92.1. that is up from last time.
new autos also look fairly strong as well. they are better than anticipated. the prices paid from the inflation narrative probably is where we want to go next. we are going to get a supreme court ruling. we will bring up details on that in just a moment. but i want to get mike mckee's take on the data, particularly those prices paid aspects. mike: there's a lot of questions about whether we are going to see lasting inflation. at least for manufacturers and the input prices, the prices paid number comes in at 92.1. that is the highest since july of 1979. so a very long time since we saw that kind of inflation. and that was in the lead up to the great inflation. the manufacturing headline numbers, the new orders numbers, same as in the market number.
it shows that manufacturing is still at a high level. here is the really interesting one besides prices. employment, that is down from 50.9. the expectation was that we would get a solid gain in manufacturing jobs. raises the question tomorrow about what we are going to see with the u.s. payrolls report. taylor: mike mckee, as always, thank you so much. talking, of course, about some of those big manufacturing numbers. of course, we also want to pivot to some other big news in the u.s. as well. the trump organization's longtime cfo surrendered to authorities in new york this morning on what we hear will be tax-related charges. here with the latest, our bloomberg executive editor. what do we know so far? >> after several years of investigation, the manhattan district attorney is finally going to reveal what he knows about alleged crimes of the trump organization. this afternoon, we will have two
indictments unsealed that will detail charges against both trump organization and its longtime cfo. we don't know exactly what is in these indictments just yet. we are told they involve tax-related issues stemming from the cfo's use of a company car and a corporate apartment. what we are waiting for is a sense of how serious the charges are. we are expecting weisel berg to plead not guilty and we will get more information from the da. this is by far not the last piece of information we will get from the da. this should be looked at as basically an opening salvo in this case. the charges will put pressure on him to start to cooperate with the da'd probe. he has so far shown no sign he will be doing that. we've also heard from the president himself on this case who has: a witchhunt and an attack on prosecutors for being
politically motivated. what remains to be seen, how serious the charges are and what sort of time the cfo will face and what potential penalties the company could face as a result of this. guy: we look forward to coverage as the story progresses. we will get details later, we will come back to that as the story progresses. taylor was saying a few moments ago that i was the oil executive on the show. normally, that is the role that alix plays. opec plus a signing today whether to keep turning on the taps. it is a familiar divide across the group. iran's oil minister weighing in on the impacts of u.s. sanctions, so this is one of the critical factors in terms of his country's growth. >> the department of iran has been under the most serious
unilateral u.s. sanctions over the last three years. our industry has suffered greatly. we have maintained production and a reasonable oil export despite the stated wishes and plans for the administration. guy: iranian oil will not be coming back up the market, that is part of the consolation that opec had to deal with. bloomberg oil strategist joining us to talk more about this. the expectation now, and this is what seems to be the talk about, is a 400,000 barrels per day increase. i was hearing going into the meeting that number could be as high as 550. is that why we are seeing oil spiking today? >> i think it is. i think the market was expecting a bit more and was hoping for a bit more. they are still talking, they are
still in bilateral meetings at the moment. we are now waiting for the start of the joint ministerial committee, a smaller group of ministers that the opec plus group has led by saudi arabia and russia. they are the ones who will look at the supply-demand balance and they will discuss recommendations on policy and later on today, all of the ministers of opec-plus will get together to decide what they are going to do. as you say, it looks like there is going to be a series of small increases in production over the next five months, up to the end of the year. those will all be subject to change depending on what happens with the demand recovery, the resurgence of coronavirus and the potential return of uranium barrels. taylor: it's interesting, you
wonder how u.s. shale response. they say they are going to wait for opec first. how does the u.s. respond? julian: this is a really important question. with oil prices now well above $70 per barrel, many people were expecting a quicker rebound in u.s. shale production. i think part of the problem is nobody wants to land to that sector at the moment. i think shareholders are still pricing management for returns on their investment, companies are very much looking at capital discipline rather than previous models of production growth at all costs. i'm not surprised that oil companies don't have that same shareholder pressure, they really make up such a small proportion of total production from the shale, so the boosts
they are making are really not moving the needle that much. we are starting to see the recount creeping up and that, over the next six months, may well result in a higher production going forward. but the increases look relatively small, given that most of the forecasts we see our for a big jump in consumption over the second half of this year. taylor: julian, we follow that closely. thank you, as always, for your time. and some other biggie, breaking news. david westin, on the supreme court ruling decision on voting rights. it looks like a divided u.s. supreme court is upholding two arizona voting restrictions, rejecting claim that it does discriminate against racial minorities and it is a ruling, according to our reporting, that puts new limits on the reach of the voting rights act.
david, what do you make of this? david: it's not entirely unexpected, there were two restrictions put into effect, one of them had to do with where your vote got counted when you filed an absentee ballot in your own precinct. the other had to do with who could gather the ballots. the government initially did not resist a move to overturn the decision of the lower court. that is to say, the decision to really support what arizona had done. the biden administration change it. the patient is not so much specifically these two restrictions as whether they actually adapted a new standard which would require intent to discriminate and a course, they did not do that. sure, further restrictions, but it does not appear they went as far as the bide trump -- trump administration ask them to go. guy: we always appreciate it, a little guidance on what these rulings actually mean.
♪ guy: from london, i'm guy johnson. taylor riggs is over in new york, in for alix steel. taylor, market are setting a high bar for the first half. stocks in europe are doing well. stocks in the united states, doing pretty well. europe, the second-best half since 1998. could we top that in the second
half? let's talk about the second half of the game. abigail doolittle is looking ahead. abigail: similar to what you were just talking about with stoxx 600 having its best first half since 1998. if you take a look at the energy sector here, up 46%, on pace for the best year ever six months in. clearly, the reflationary trade is happening in a big way. banks, about 25% up. one part that is not playing in this risk on trade, the credit part of the risk asset. the bloomberg aggregate credit index down just a little bit this year. it's interesting it, whether or not that is a sign of some storm clouds or on the other hand, you have trades so tight that perhaps all is well. we do know when we have a banner first half, going back all the way to world war ii, the s&p 500 has gained more than 4.5%, it
has led to at least an 8% gain in the second half. right now, history suggest the rest of 2021 shall be good. i was talking about the reflationary trade. we are going to see is actually a little bit more about the growth rate. what we haven't here in white is the s&p 500 itself. below, we have the equal weighting. nonetheless, both are doing great. it will be interesting to see whether or not the reflationary trade can power higher. taylor: and concerns about how big or not some of those record highs are. let's see more with sarah hunt, portfolio manager. i want to bring you back to some of the headline news, top of the hour, the ism manufacturing prices paid, the highest since 1979. to headlines like that make you rethink how you position for companies who are able to pass on cost to the consumers or not? sarah: you have to look at this
in context of what was going on in the administrations and what is going on now. part of the problem is you have a big moving commodities prices and these huge supply constraints. the question is, will they fix themselves fairly quickly or does not go on for a longer time? i don't think you have the same type of inflationary pressures that you had been -- then. you definitely want to make sure that who you are investing with right now has the pricing power, but the question is whether or not that is only commodity-based or outside the commodity-based area as well. guy: the housing market is pretty hot as well. comments from the fed about concerns, there. the market seems reasonably onboard with the fed thinking that all of this is transitory. yet, the data is pointing to being superstrong, the housing data is superstrong. wti, there's plenty of things to
suggest, at least in the near term, and i'm wondering what the near term looks like in your mind, that we are in an inflationary period. yet growth comes storming back. i'm confused, explain it to me. sarah: i think we are all a little bit confused and we haven't lived through a pandemic ourselves so there are a lot of factors that are different than other cycles we've seen. if i look at what is going on in housing, we see a lot of growth. i think that could be transitory. the question is, does this start to go to wage inflation and if it does, it is much harder to bring wages down than it is to bring commodities down. i think the supply chain issues, people have been moving back out of cities instead of the urbanization that we have seen prior to this, so there is a big question whether or not that strength is transitory or if that is going to continue. that's going to take some time to figure out. the question is, do we get that
way with inflation? so far, we haven't seen a lot of it, but there is reason to believe that we should see some catch up in wages. whether or not that sticks around for a long time is a big question right now. taylor: we were hearing from abigail, this rotation may lead out of value, into growth. citigroup is still one of your top calls. what did you learn after a really rough june in the capital return plan? sarah: for us, it is one of those things where you have got to catch up and you have a better world for financials. the recent flattening deal has not been helpful for this group, but i think a lot of these companies have done a lot of work getting themselves into position, instead of just on loan growth. there were some comments earlier this morning by one of your guests, this is the first time that we've seen real corporate spending coming back, and i
don't disagree that the pandemic has made a huge change on the technology side. we don't think that is going away, nor do we think that higher rates are as much of a threat to technology as people think they are. guy: let's talk about applied materials. again, it is part of this inflation narrative. we saw news from ford just a couple days back talking about the fact that it is going to have to slow down production on key plans because of the problems experiencing. talk me through the case around that. why do they continue? sarah: one of the concerns about the suppliers is that you are going to get to see spending and then it is going to slow down again and these are cyclical stocks. we would argue that the stocks that you see in this industry consolidate so much and take some of that cyclicality not
completely away, but if you look at how much semiconductors are used in everything now and how much more they are being built, it shows you how when there is any hitch in the supply chain, you have issues getting production through. people are starting to look at that and say i need some supply that is outside of being too far away. let's push some production in places where it is closer to us. i think you're just going to continue to see semiconductors become part of so many different products that it is hard for us to see why that demand is as cyclical as it used to be because it used to be run by computers and it used to be run by smartphones. now, there are so many more other places, i think that is so much more pervasive than it was historically. taylor: big picture, what cues are you taking for the world of equities? sarah: one of the reasons that i would argue that higher interest rates are not so bad for technology stocks is that you have questions of whether or not
that is because we have higher growth or because people are worried about inflation. if growth is higher, people are not going to be so can -- concern. you seen that two-year creep up. the fact that the yield curve has flattened is, i think, just the market looking for some direction in what is happening and the fact that you still have banks that are very accommodative, so that is keeping rates lower. until that changes, i don't see how long-term rates can go very much higher. guy: sarah, thank you very much for joining us today. greatly appreciated. still ahead, we are going to take a look at what is going on with energy stocks. crude surpassing $75 per barrel in the united states. that's coming next. this is bloomberg. ♪
taylor: live from new york, i'm taylor riggs. guy johnson in london. welcome back to bloomberg markets. we take a look at crude, another three year high, breaking above that $75 per barrel, all ahead of the opec production decision. dave wilson here with a story. energy, performers up 45%. dave: the s&p 500, that first half game, 42%, that was the biggest since the s&p 500 energy index was created back in 1989. you really see on both sides of the atlantic today, with the energy is the best performer not only in the s&p 500 but also in the stoxx 600. so much of this ties into what is happening with opec-plus, the group getting together and deciding what to do without putting possibly a smaller
increase as people were anticipating 400,000 barrels per day per month over five months, stepping it up. you definitely have that in the mix. let's face it. energy stocks have really been in favor this year after having been out of favor for years. and yet, they still haven't even kept up with the pace of increases in crude. take a look at the s&p 500 energy index, it is up 1%, and crude is up more than that. guy: is that gap, should we call that the -- gap? dave: you might very well do that. as much as these stocks have done well, there is a certain percentage that is not interested in fossil fuel production. for 10 best performers in the s&p 500, of course, five of them are energy producers.
diamondback energy, eog resources, all defining, you might say, the push toward esg. guy: we are going to leave it there, great stuff. very well-timed as we get to the headlines coming from opec. what are we going to be doing next? talking about the rates. there is a story on bloomberg right now about a credit squeeze. they are offering midyear's allergy -- midyear salary increases to keep hold of people. everybody is trying to keep hold of people. we are going to talk about this a little bit more. this is bloomberg.
see nearly all of us back in the office but that is with increased flexibility. we are looking at a more flexible approach going or word and i think it will be an advantage for us. ♪ >> that is citigroup's jane prager talking about -- another company is taking a taxable approach. it is allowing bankers the opportunity to work from home two days a week. joining us is bloomberg's sonali basak. peter, thank you for your time today. we just talked to jane fraser. do you think flexibility will be a competitive advantage when it comes to luring talent? what role is it going to play?
peter: we have shown we can work remotely effectively. we know we can work effectively in the office. the key thing is to figure out how to do both at the same time. what we have decided to do is be in the office tuesday, wednesday, thursday and work remotely monday and friday. we think this combination is the most attractive. you get the boast of -- best of both worlds. there is a study demonstrating three days a week looks like the best approach, because it is coordinated. you are getting the best of both worlds on a coordinated basis where you do not have to worry about the ledges makes of who is in office -- logistics of who is in office, who is not. sonali: how much of this is
about retention as well? it seems like it is a banker a day moving to a different firm. what is the environment like now out there and how are you taking advantage of it? peter: we think it is great for people who want to come to laza rd. it is a retention and recruitment approach. there is a lot of of competition for bankers right now. we want to stand out as a place -- this is not your grandfather's lazarrd! we are doing a lot of things to make lazard a dynamic place to work. >> are you seeing significant wage inflation at the moment? >> for bankers or overall? >> in the financial sector.
what are you seeing in your business? peter: most of what happens in advisory businesses is when client work picks up, that spills over into compensation. i expect that will occur. it is occurring to some degree already. that is a reflection of how hot the market is in terms of underlying business for everyone and in terms of the labor market . these are very skilled professionals. sonali: i think the main headlines you see is your that analyst level job at barclays. is this happening at the most senior level too? peter: at a higher level compensation is tilted towards year-end bonuses. >> what do you make of what is
happening? can this industry attract talent? these are super skilled people. you need to train them. these people are creative. while they move around within the industry, keeping them in the industry as a challenge. the talent war is now not only within the financial sector, but the tech sector as well. other industries are looking to attract talent. looking at junior bankers, figuring out how to keep them with the heavy workload they have right now -- is that going to have to be the new normal in order to attract people to this industry? sonali: -- peter: you need to make the work as interesting as possible. it is one thing to work long hours. it is another thing to do interesting work. data analytics is a key part.
it takes some of the medial, mundane pieces out of the equation. it is always going to be the case that investment banking takes hard work but it needs to be interesting hard work. this comes back to the work from home key -- creative people want different kinds of environments and sometimes taking out the commute and making it more convenient, making things fit within the rest of your life -- it does not mean you are not working hard it means you are working in a different way. you have to trust and empower people. what we are doing is embodying that and finally i think we need to be investing in the next in ration of people who might be interested in -- generation of people who might be interested in investment banking. we created the lazard vision
project. we are putting high schoolers through program where we teach them basic interviewing hills -- skills. we are building the workforce of the future for everyone. sonali: i love some specifics about your plan at lazard. what will you do hiring in the u.s.? what can we expect? sonali: we are active - -- peter: we are actively hiring. we are very actively in the marketplace. it is a smooth labor market right now. there is a lot of opportunity. guy: can i ask you to put your economics had on? i want to know -- economics hat
on? i want to know if we are close to peak growth. peter: we are at an elevated growth rate. we should accept -- expect deceleration next year. the inflation spike is temporary, not permanent, because growth will decline next year as the fiscal impulse comes off and as many of the reopening effects attenuate. sonali: also for your economist hat, this debate is befuddling so many people. how does it play out and the how will lay meaningfully impact activity among your clients? peter: there are a limited number of sectors clearly related to reopening. and supplied side constraints that are dramatically
inflating the inflation rate. if you look at cars and other things affected by semiconductor shortages, they are adding a hundred basis points to inflation. you see a significant, temporary bump. for the people arguing that we have overfilled bathtub and that is what is causing in laois and in the united state, look around the world. there are many countries who have not done as much physical relief as the united dates and we see significant inflation as economies have opened up. in europe, inflation has picked up a lot and they've done much less physical relief. it is a temporary phenomenon associated with the supply toehold and with reopening -- supply chokehold and with
reopening. it is a particularly uncertain period for the economy. the virus has a mind of its own. we are all very " mission accomplished" a little too early. guy: can you extrapolate a bet on that thought? -- a bit on that thought? some would argue -- certainly some scientistss -- would say that is a mistake. is it a mistake? peter: i am not trying to be too dire here. the concern is not only the delta variant. the point is that the vast majority of the world is not vaccinated. that means new variants can breed in other places and then come back to the places with higher vaccination. the biggest concern is how
effective, even in vaccinated areas, those vaccines will be against a virus that is mutating and has variants that may be more infectious. the people saying " we are done," do seem premature to me. it is good we have had such accelerated vaccination in the united states and europe. we are not where we should be, but it is promising. the vaccine, especially the mrna ones, appear to be effective against the variants. it does not mean they will be effective against all variants. the sooner we can get the whole world vaccinated,, the better we will be. until we had that point, it is premature -- hit that point, it is premature. guy: peter orszag, ceo of lazard
advisory. breaking news right now in the form of data coming from gm, gm saying u.s. duty sales up, however, it expects continued high demand in 2022. it is constrained by low inventories. it ended the quarter with 974 units in inventory, but it is still feeling that pressure from the semiconductor shortage. >> we heard from the 100th anniversary of the founding of the chinese communist party, president xi says china will never be bullied again, big comments about taiwan.
in his speech celebrating the anniversary of the founding of the chinese communist party. >> the chinese people will never allow any foreign forces to bully, coerce and to us. anyone who tries to do that well break their heads on steel wall built on the blood of the chinese people. ritika: that was xi speaking in beijing. powered by more than 240 journalists, i'm ritika gupta. this is bloomberg. >> let's do more on this, that 100 anniversary. we are joined with some of the
takeaways of that big. i mentioned -- that big speech. what were some of your key highlights? >> this was a strong, nationalist message from xi jinping, taylor. china has stood up 100 years of communist party rule. it has left a china's from a backwards agrarian economy to now one of the world's largest economies. with that rise in economic power, comes an increase in geopolitical have to and the message from president xi -- china is not here to be bullied. china will continue to set its own path. guy: is that message for domestic consumption or consumption in washington? tom: the narrative china tells itself about it history was that
there was 100 years of humiliation from the opium wars and the japanese invasion end under the communist party that humiliation has turned to renovation. you heard huge applause for him as he had those talking point. there was a message for those listening in washington dc, brussels, tokyo and with china's increasingly hard-line nationalist position, the compromise, agreement on issues around trade, technology, territorial sovereignty and human rights, the compromise on those areas looks increasingly small. taylor: we had manufacturing data at the top of the 10:00 hour. what does this tell you about
the economy and inflation? ritika: -- tom: from the sweep of history to the my new show of what is happening now -- minutiae of the is happening now, the latest data is telling us about a slowdown. china is part of the rapid phase of the covid recovery. the economy is slowing act towards trend. what numbers tell us is moderation in the pace of growth is continuing. export orders are starting to grow at a more moderate pace. in the global debate about inflation, the pmi data is telling us that china's import and export prices are coming off oil, some reassuring -- off
known as old ironsides, is the world's oldest commissioned warship afloat. >> we really bring that history to life. >> it earned its nickname during the war of 1812 when british cannonballs were seen out sing off its == bouncing -- bouncing off its wooden hull. one of those guns has a new name. >> when they had gun teams, they rallied behind a mascot. >> most sailors back then could not read. no records have survived for the original gun names on the uss constitution. some have names based on records from her sister ship. >> we have got in to name a few -- gotten to name a few
ourselves. >> walsh was sworn in as the first female petty officer in 1917. >> she was the first woman to an list, which was unheard of -- enlist, which was unheard of in 1917. >> it was streamed on facebook ahead of the ship's reopening to the public. >> they will get a tour, meet our sailors, and then they should see the museum. >> it sparks excitement about our maritime heritage and -- we are so excited the constitution has more female leaders than it has in its history and they
banded together and named a gun in honor of an early female u.s. navy sailor. >> the newly named perfectus is one of only 2 named by the current crew. >> to be assigned to this crew is amazing. i am so lucky every single day. i wanted them to realize how far we have, as a military in general and how much women have strived to overcome challenges. our history as a navy has grown. ♪ taylor: guy, i hate to bring up some bad feelings between the two of us, but i think we were the original brexiteers. we broke away. guy: you could see it that way. in london, i don't want to fuss
with it to be honest. alyx is on assignment. the pops looks like an incredible day at tanglewood. fireworks -- all sorts of things going on. taylor: the fourth of july spectacular -- a huge day! guy: absolutely. it's that big a deal? appropriately, the european close. mark andersen, head of asset allocation will be joining us. get his take on what the second half will be looking like. that is coming up. this is bloomberg. ♪
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european close with guy johnson and alix steel. ♪ guy: 30 minutes to the european close. what you need to know -- stock surging as the eu launches its vaccine passports. london is looking at quarantine free travel for the fully vaccinated. he sees capacity nearly doubling over the rest of the summer. rishi sunak is vowing -- the chance is we will see significant divergence from eu rules. we will hear from the chancellor this hour. crude continues to climb.