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

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guy johnson. ♪ guy: monday the 12th of july. 30 minutes into the trading day in the united states. from london, i'm guy johnson. alix steel is back in the house. welcome back. this is "bloomberg markets." it is reasonably quiet today. the rest of the week looks a little busy. alix: i was off last week, and i couldn't keep track. guy: why were you keeping track? alix: that's true. guy: because you can't help yourself. alix: i can't. guy: having a look at the commodities market. alix: i didn't email, though, which was a very big victory. we are getting a lot of stuff in terms of economic data, and powell speaking. but that rotation into growth out of value is continuing as
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yields grind lower after that huge melt up we saw an yields last week. health care, consumer discretionary leading the way. a quick check on the kbw bank index, up despite the fact that they are looking at a curve that is still pretty flat and isn't really going anywhere. we get about $96 billion worth of supply from the three year and 10 year. the other story has to do with china growth and concerns that started last friday, permeated over the weekend. just to illustrate that, copper down about 1%. if china does slow and they can't jumpstart the growth enough, what is the knock on effect? we will break that down. guy: we've got a lot of data coming out of the u.s. economy, a lot of data coming out of the u.k. you've got the powell testimony. it is going to be a busy week. the other thing happening is the
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senate returns to washington. infrastructure on the agenda. where do we go from here? this is critical. bloomberg correspondent annmarie hordern joining us from d.c. annmarie: it is a good question because they only have a few weeks to get it done before the august recess. chuck schumer was saying potentially, lawmakers could be hindered from going home for those recesses. what comes next? we are looking out for a budget resolution. that is really the framework in terms of what the bigger legislation could look like, but we want to see how this is going to be introduced in the senate chambers this week. but naturally the white house looking for a start age of july 16, but will they first go for the bipartisan package? waiting to hear what mitch mcconnell has to say about that. or will they go to the more human, multitrillion dollar infrastructure package?
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these are the questions we are waiting to see, but they are under the gun, given the fact that they have in august recess and they want to get it wrapped up before that. alix: really appreciate that. the other part of it is global tax, which leads us to brussels. the eurogroup of finance ministers's meeting today. u.s. treasury secretary janet yellen will also be there today. bloomberg's maria tadeo joins us from brussels with the latest. maria: yes, and over the weekend in venice, we did get that oecd plan that would see a corporate minimum tax of 15%. it will also give the right to countries to tax multinational companies. coming here for the u.s. delegation, the debate was moving into this european digital tax. the europeans are actually pushing for both pommel and that is eu and the second that is oecd. a lot of this is probably due to
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u.s. pressures, that the european union has since cited -- has decided to postpone the announcement of that european digital tax, so in principle, to cut a long story short, we are looking at just one type of taxation, not two. the reason for this is very much political. the united states has to vote on this thing. it will have to go through congress. for the u.s. delegation, saying we are not only going to tax you on one front, but coming home with two new taxes. guy: thank, indeed. we will be catching up with maria a little later to talk to the austrian finance minister. elon musk testifying in wilmington, delaware in the trial over tesla's $2 billion acquisition of solarcity. musk accused of overpaying to acquire the company and failing to disclose how deep the
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business was in terms of financial trouble. dana howell covers tesla. what else are relearning here? reporter: right now, musk is being questioned by his attorney, going through the rationale for acquiring solarcity, insisting he didn't do any arm-twisting to get the deal approved. he said his born members -- his board members made their own decisions. it is an interesting trial. reporters at the trial are not allowed to tweet, there's no live stream, so we are learning what we can as our comrade in delaware let us know what they are hearing. alix: we will look forward to more details as they come. thank you, dana hull from bloomberg. ride-hailing giant didi warns of negative impact after it
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complies with a chinese order for violation of data security laws. joining us is bloomberg opinion columnist alex webb. this continues, and over the weekend we had a cybersecurity review that basically said companies with data on more than 100 million users would have to seek approval before listing in foreign countries. what is going on with tech in china right now? alex: we saw legislation last year which gave regulators authority to carry out on chinese companies. it is a fall out of a whole slew of companies over the past for five years, many of whom it seems didn't have the businesses underpinning what they were telling the public markets. soother seems to be if you're in china to determine who is taking rides with didi from big chinese
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government authorities. this seems to be a paranoia driving it, a paranoia that they could exert control on some of these massive tech giants. guy: where the value in a company like didi if these sites can't get its apps up and running? what is the business looking like? alex: the main ride-hailing app can still be used. it is some of the peripheral apps that are being taken down. what ramifications does it have for chinese tech growth? there seem to be some question marks over the future of that. guy: we will leave it there. what have we got coming up for you?
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kicking off the u.s. earnings season tomorrow. nadia lovell, ubs u.s. equity strategist, joining us next. we will talk about the busy week ahead. this is bloomberg. ♪
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ritika: the european union says it will postpone its push for a digital tax. they will focus on a global minim tax worked out by the world's largest economies. several european economies had already implement today so-called digital services tax aimed at large tech companies
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such as facebook and google. the u.s. was one of the country's strongly opposed to that tax. in haiti, a new twist in that investigation into who killed the country's president. police have arrested a haitian man accused of flying into haiti on a private jet and working with suspects in the assassination. the man was identified. the men was in contact with a security firm that recruited the suspect. a wildfire pushing california towards the brink of blackout. it is raging uncontrollably across southern oregon. california has warned of rotating blackouts and nevada faces a power emergency. 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. guy: thank you very much, indeed. i want to take us back to
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wilmington, delaware, where the solarcity trial is underway. elon musk is on the stand. we just heard and questioned by his him counsel. we are now getting to the meat of what we are talking about. elon musk telling the court that the solarcity purchase was not a bailout. he did not control the directors in this deal, and he denies bowing to retaliate against directors who opposed the deal. so it is now starting to get into the meat of this. we will continue to monitor what exactly is happening here. there are some reporting constrictions around the case. we will wait and hear what opposing counsel has to say and the questions that are asked then. let's return to what this week looks like. earnings season very much getting underway. the big ask are going to be reporting numbers. they're going to be kicking things off. jp morgan, goldman sachs, etc. what are we watching out for? alix: let's get to the bank
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earnings. morgan stanley rounding it out on thursday. obviously we are watching things like reserve relief ratios, how much money they need to reserve. also paying attention to loan demand. that will be key. no doubt, comps are going to be awesome. there are going to be huge profit growth numbers from those companies because comps are so good for the second quarter because last year was so bad. but do great comps and good profit mean a blockbuster market? one element analysts are going to be looking at is profit margins. s&p estimated profit margins, you can see the enormous recovery we are seeing. but have we actually topped out here? what will the head about how we control profit margins going forward, particularly as inflationary pressures are still there and wages and workers are going to be hard to come by? if they can control the margin
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story, do they control the market narrative? guy: oriole ready past peak margins? financials are going to dominate this week, as we know. nadia lovell, ubs wealth management senior u.s. equity strategist, joining us on the program now. you guys like financials. do you think this is as good as it gets? is this peak earnings? nadia: no, not for financials and not for the market. earnings kicked off this week. we think that the set up is still there. while we have seen some of the largest upward revisions on record, we still think that earnings are too low. as noted, the expectation is for earnings to come in at about 60% year-over-year. remember, there are base effects. let's not forget where we were
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last year. i think what is more striking is the fact that consensus is calling for earnings decline versus q1. that doesn't make a lot of sense to us. the reality is that economic growth accelerated in q2, and earnings follow economic growth, so we would expect that q2 earnings to be higher than q1 earnings, so we look for a beat. alix: how is that not already priced in? maybe the numbers are going to be great, but how's it not priced? nadia: if you watch the early reporters, they say beat it by about 15%. we think that trend continues. in q1, a lot of the beats were not rewarded. in q2 we are seeing those beats be rewarded and companies are up on earnings beats. so it is not priced into us. guy: what does guidance look like?
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nadia: that is the key thing we are watching for. as you talked about earlier, margins is something everyone is closely watching. we saw margin expansion in q1 despite those pressures, and we continue to be optimistic on companies' abil -- companies' ability to manage through those pressures. all that being said, i think the top line we expect to be strong, and that is going to kick in some operating leverage, and that will overcompensate for any cost pressure. as you know, the consumer remains very strong. we are seeing from some of those early reporters and consumer discretionary that they were able to at passed through some of these pricing pressures. alix: cash hoarding is superhigh , but for companies as well. what do you think they're going to do with all of that money in the back half, and how does that one up affecting how you invest? nadia: i think it is a
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combination of things. i think the capital return story remains strong. we are seeing increases of the dividend buybacks from the banks. we expect to see that as well from some of the more secular sectors in tech as well. the capex story, expect companies to invest. we think that the narrative will shift away from fiscal and monetary to more support from the private sectors and consumers, so we look for capex to pick up. you want to look at those companies that benefit from that up cycle -- that capex up cycle. guy: you paint an incredibly positive picture. you like the cyclicals, yet i am looking at my screen, and the u.s. 10 year is at 1.35%. can you explain? nadia: we think a lot of that is due to technical nature. as we know, the last month we have seen a decline in yield, but it is still our outlook that we expect yields to move higher into the back half of the year.
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our target for the 10 year treasury note is 2% year-end. we think what is going to drive that is economic surprises. we will get a glimpse into that later this week when chairman powell testifies. alix: how do you understand the headwinds that companies may be facing from d.c., whether it is in the form of executive orders or potentially m&a getting more difficult? when you start to calculate that to see margins, earnings, etc.? nadia: in terms of our earnings outlook, we take that as a consideration for 2022, particularly around corporate taxes. we know that the situation remains fluid and there is still a lot of uncertain, and it is very complex, but we think the administration potentially gets half of what they are asking for . as we know, president biden does want to move the corporate tax rate to 28%.
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we think they will settle around 25%. so to get into those higher potential corporate tax, we think it is probably 4% to 5% drag to s&p earnings, but we think the strong economic growth will be able to offset that. of course, from a regulatory standpoint, those are the things we continue to watch. a lot of this has been targeted towards tech. one of the reasons why we have been neutral on tech this year, as well as the potential for higher corporate tax rates that will does proportionately affect tech. guy: a few weeks ago, i was asking is the covid crisis in the review mirror from the financial markets' point of view, and the answer on most across the board wa yes. now it is less so. we got the delta variant sweeping across europe. how does that change the calculus from your point of view? if it does start to slow down economic growth, if it does have an impact on people's behavior?
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nadia: of course, this is something we are closely watching, but what gives us confidence is that the market has seen this story already and has been able to manage very well. more importantly, vaccination is a key difference versus last year. also, big pharma, as we know, is working on booster shots, so i think the economy as well as the market won't be able to handle any spikes we see from the delta variant. there will always be new variants. we don't think the covid story is completely behind us in terms of infection rates. but in terms of overall impact to the economy, markets will be less going forward. alix: nadia, your curtains always put me in a good mood. thank you so much. great to see you. in areas that are not well vaccinated you are seeing cases rise, but i was in massachusetts over the last week and a half, no masks anywhere. i can't imagine what would happen if we have to go back to
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those restrictions. i don't think there is a will to do that again. guy: as a result of which, we will lean heavily on the vaccination programs. there are parts of the company where that is not happening. the next few weeks are going to be really interesting on both sides of the atlantic. boris johnson this evening will basically say he's giving the green light to end the bulk of the restrictions in england. there's a lot of very cautious people around that decision. alix: a lot riding on that politically if he messes this one up. coming up on the program, bytedance putting its offshore ipo plans on hold indefinitely. more on that pressure facing chinese ipos, coming up. this is bloomberg. ♪
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alix: live from your, i'm alix steel -- from new york, i'm alix steel come up with guy in london.
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this is "bloomberg markets." bytedance pulled plan for an ipo. dave wilson has been digging into those moves in the stock market. what have you got? dave: a company like bytedance, the owner of tiktok, that decides not to go public because it was going to focus on data security as the chinese regulators wanted it to. then you have didi global, where the issue of data security emerged just a couple of days after the company did its $4.4 billion initial public offering here in the u.s. you saw losses after that. friday destocked tried to bounce back, but today it is down again. didi saying other 25 apps were pulled from app stores at the request of regulators, so that is after its main app was taken off of those stores last week. you see it is not just didi that his suffering as a result of
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this, but other companies have gone public here in the u.s. that are based in china, notably rlx technologies, which is in the e-cigarettes business. you certainly have a decline across this group. guy: u.s. banks are going to be reporting. i wonder how many questions will be asked about this subject because u.s. banks are making significant amounts of money as they bring these companies to market. what is the outlook for ipos from china into the united states? dave: that becomes the bigger question here. you think back to the fourth quarter of last year, when jack ma's ant group wanted to go public. ultimately the chinese regulators forced them to scrap that sale. it would have been $19 billion. certainly it is going to be an issue moving forward. you do have to wonder at this point when some of the declines we have seen in likes of didi
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and other companies aced in china, so that is going to be a concern for investors and for the banks that work with these companies for sure. guy: dave, great stuff. thanks very much, indeed. i do wonder whether or not there's going to be some very happy lawyers about what is happening here. some of these companies come to market, then they've been pulled. the one we were watching last week was didi. the lawyers are certainly going to be watching this like hawks. alix: is it anti-capitalism now? do we need to rethink it? what do you do if you are an investment bank trying to ramp up business in the region? guy: i the region. coming up, wall street dealmaking. we have just been talking about it. we will look at the impact of president biden's executive orders. that's coming up. this is bloomberg. ♪
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guy: i from london, i'm guy
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johnson. alix steel over in new york. this is "bloomberg markets." president biden signing a sweeping list of executive orders last friday do promote competition across american industries. amongst the 72 initiatives, the biden administration is calling for updated guidance on banks mergers to toughen scrutinies on deals. sonali basak joining us now as we digest the implications of this. sonali: that point on consolidation was very high up in that executive order. however, as you look at it so far, announced mergers and acquisitions have already surpassed $2 trillion for the first half of this year alone. another interesting point within that is that is being done without mega deals. there have been no deals announced of more than $50 billion in value, but the lion's share are less than $5 billion in value, so that idea about the white house executive order upending the deal market is not yet spooking dealmakers.
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if you take a look at how the banks are faring, we have been watching these get through the bottom line. never before has goldman sachs reached $1 trillion in deal volume in the first six months of the year. take a look at how much that jump is from 2019. it is a massive surge. each of these banks, goldman sachs, j.p. morgan, morgan stanley have worked on 100 more deals in the first half of the year since the two years prior before covid started. these are many of them smaller deals, and outside of the purview of the bonded administration. whether they conduct -- the biden administration. whether they can touch those deals is another question. alix: let's get more detail with frank aquila, partner at sullivan & cromwell. he advised on deals of more than $20 trillion in value. thanks for joining us. it is really good to see you. when you take a look at the
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potential executive orders, what makes you the most nervous? frank: i think i am not particularly nervous because first of all, this is a re-price of an exec it of order issued during the end of the obama administration, and we have to remember that this is not new law or regulation. it is really asking the regulatory agencies to consider new regulations. that is a long path, and as sonali was just saying, most of these deals we are seeing are not the huge mega deals that the administration was really concerned about. it is really much more strategic transactions that we are seeing today. that is the red and butter of the m&a market. guy: why executive orders?
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is it because nothing else is working? they are clearly concerned about concentration risk. why go down this route? frank: we started to see a lot of executive orders during the obama administration. then we saw a plethora of executive orders during trump. i think we are going to see a lot of executive orders during -- we already have, during the biden administration. you have very little that gets through congress, particularly a senate that is as divided as it is. the consequence is you are going to have the party in power, the party in the white house, seek to use their regulatory authority to move the needle. the problem is that regulators' actions can be challenged by the courts. the federal courts are a mix of judges appointed by the two bushes, by the clinton
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administration, by the obama administration. those judges are much more moderate, much more traditional than some of the judges that joe biden has already appointed, so we have to remember that a lot of these decisions and a lot of these regulations are going to wind up being challenged at some point. alix: if the back of your desk is any indication, you're still keeping busy, no matter what. frank: i like busy. it's been a busy first half, and i think the second half is going to be equally busy. if this regulation does anything, i think it is going to motivate boards and managements to try to move forward quickly with deals they are considering rather than waiting for the regulatory process to turn on and potentially make it more difficult to get certain transactions through. guy: in terms of -- the
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political objective is clearly to reduce concentration, to foster innovation by allowing more companies a shot at becoming bigger. i am wondering ultimately how you see this working out. what do you think of the aim and the objective of what the biden administration is trying to do here? frank: i think the aim is really wonderful and very good. i think one of the things that is often overlooked is the fact that we are living in a global economy, and you can't just look at the fact that in a particular space, there were three u.s. competitors because they are competing with their european, asian, latin american competitors. keeping u.s. companies smaller
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doesn't always mean they're going to have more competition because sometimes we have to be larger in the global space to be more competitive. i think you will see in a lot of combinations, what companies are going to argue is you need to be a certain size in order to be competitive with competitors around the world. i think when you make those sorts of arguments, when you look at the broader competitive landscape, when you look at the efficiencies that are brought to bear and the innovation that a larger company can bring, you will see that that happens. the reality is that larger companies are constantly being disrupted. there's no real basis for arguing that smaller companies can't come in and disrupt their
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larger competitors. alix: we have been talking a lot today also about china, and how the end of capitalism feel is permeating in china. are you still busy with any deals in china? how do you see that evolving? frank: i am personally not busy in china at the moment, but my colleagues in our beijing and hong kong office certainly are. china is the second largest economy in the world. it may or may not at some point become the largest economy in the world. but it is certainly extra nearly important economy. i think that anyone who suggests that we can ignore china as a competitor, ignore the chinese market as an economy, is being foolish and shortsighted. we need to engage the chinese,
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recognize the issues and challenges. we need to recognize that it is part of the global landscape. guy: on that note we will leave it. thank you very much, indeed. frank aquila at sullivan & cromwell. coming up -- >> 3, 2, 1. release, release. clean release. a mission -- ignition. guy: one small step for richard branson, one large leap for space tourism. that conversation with chris kemp, astra ceo. this is bloomberg. ♪
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ritika: this is "bloomberg markets." coming up, the oklahoma employment security commission
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executive director. that is coming up on "balance of power" at noon in new york, 5:00 p.m. in london. this is bloomberg. ♪ let's check in on the blooper first word news. in cuba -- the bloomberg first word news. in cuba, the state-run media has acknowledged the outbreak of antigovernment protests. since the pandemic struck, the government blames the protests on u.s. agents and what it calls neoliberal opponents. president biden called on the cuban regime to listen to its people. the u.s. infectious disease chief anthony county says ideological rigidity is preventing people from getting coronavirus shots. vaccination rates are lagging in southern and midwestern states. felty made the rounds of morning talk shows to reinforce the administration's position that the vaccines are indeed safe. the white house is stepping up its effort this week to
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counteract republican laws to restrict voting rights. vice president kamala harris will discuss a bill to restrict voter access today. 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: virgin galactic founder richard branson becomes the first-ever owner of a private space company to launch abort his own spacecraft. bloomberg's ed ludlow spoke to branson after he returned to earth yesterday and asked about his plans for the future. richard: for the children, we got to get building as many spaceships as we can as fast as we can. one day those kids will have the chance to have a similar experience to what i had. and that we will do. alix: interesting response. bloomberg's ed ludlow joins us now from the new mexico desert.
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at the same time, virgin galactic stock sinking today. more shares being issued. go to space, get the hype, then issue shares. ed: but the answer was in richard branson's words, build more spaceships. i spoke also to the ceo michael cohen glacier. the whole act -- michael colglazier. this is a supply constrained business. it sold 600 tickets at $250,000 a pop. if they launch in early 2022, they are going to have to do 100 missions that year with one single spaceship. that seems unlikely. they want virgin galactic to build a factory here in new mexico and create jobs, but all of that seems far away. it is a capital-intensive business, and it gives you an idea of the timeline of how real this is, how far away it is from being commercially deployed.
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guy: what does the branson trip change? what does it accelerate? how big of an impact is this going to have? he loves the publicity, but he does it for a reason. ed: 100%, this was a marketing exercise. the wall street notes all say that. i don't even think there was a secret to that. a lot of the staff were pretty tense in the morning, and everyone relaxed the moment he touched down on earth. it was a risk, but it caught public attention. it was a very similar story with spacex and elon musk. the american public, the global public are kind of falling back in love with space. but remember, in v irgin's case specifically, that tragic fatal crash in 2014. the whole point of today was to reassure them that the technology works, it is safe, that he was supposedly testing the paying customer experience.
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it is for him to say if richard branson can do this, it is accessible for me, too. although i don't know how any people would part with 250,000 dollars for four minutes in space. guy: we will see. you are off to see mr. bezos's trip as well. we look forward to fantastic coverage of that. birds ed ludlow covering branson trip, the bezos trip, and you've got to wonder what comes after that and how big an acceleration we are going to see. joining us now is chris ke mp, astra ceo. we had him on the program back on july 1. it is the first space company to trade on the nasdaq. he previously served as chief technology officer over at nasa. how big is what richard branson just achieved, not just for his company, but for the whole industry? chris: i think we have seen the dawn of real consumer access to space. what richard has done is put
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space travel into the hands of consumers. it is the dawn of a new era. alix: do you at astra capitalize on that, or the enthusiasm and do something else that is not human spaceflight? chris: i think space is a huge new economy. it is a trillion dollar economy. if you look at space travel, space tourism, it is very small. if you look at if we can put satellites in orbit to connect billions of people to the internet, we can observe and really improve life on earth, that is the majority of that new economy. i think this is just drawing attention to this massive new economy with new entrepreneurs coming in. guy: presumably it frees up access to capital. the more people that are doing it, presumably the costs start to come down even quicker. is that the right way of looking
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at it? chris: that's right. scale really drives economics. whether you are flying people or satellites, what we need is more access to space, and we already have entrepreneurs. well read have capital. what we do not have is access. i think the space launch business will be the first wave of new innovation, and it will be followed by a bunch of applications in space. alix: when we talk about scaling up and talk about the space economy, how much can that be? how quickly does it get there? chris: i think we are starting to launch payloads this summer. we will be providing monthly, weekly, and then daily flights to space, as you see the tourism and other commercial operators increase their flight rate. we will see the starship come on -- come online at spacex. we will see more frequent launches of falcon nine. i think this is just an accelerating curve over the next few years.
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guy: i'm spending a lot of my time at the moment talking to technology officers from major aerospace companies, and their biggest aviation industry -- their biggest challenge is how to de-carbonized the aviation industry. chris: when you look at rocket engines, it is burning liquid oxygen and an incredibly efficient form of kerosene. so if you plant two trees for every launch, you are carbon neutral on the left side. alix: that is impressive -- on the launch site. alix: that is impressive. chris: as we look at new technologies, hydrogen and liquid oxygen as a fuel, the only byproduct will be water, so i think that where the technology is going is these will be some of the most
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efficient and clean vehicles ever created. guy: ok. that is impressive, chris. i hadn't actually considered that the chemistry would work as efficiently as that. chris kemp, astra ceo, thank you very much, indeed. let me turn our attention to the news we are getting. the u.k. health secretary is speaking in the house of commons right now ahead of boris johnson addressing the nation at 5:00 p.m. london time. he's painting a picture, talking about the fact that we will have to maintain tough measures at the borders, basically talking as well about the idea that we are going to see significant numbers of cases that could reach 100,000 a day over the summer, but he's also reiterating that maybe there is an idea that you want to do it now rather than waiting for the winter, when you're going to be dealing with flu and a number of other factors, and many more
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people will be indoors, so i think a lot of people are looking at what happened last night with the football game and will argue that we could be seeing a lot of people in very close proximity generating some fairly significant case numbers over the next few days. but he is pointing to that, talking about a pretty big gap in the number of cases. we will monitor this. alix and i will breathe -- will be on bloomberg radio at 5:00 p.m. to bring you that press conference live. this is bloomberg. ♪
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♪ ritika: it is time for the bloomberg business flash, a look at some of the biggest business stories in the news right now. bloomberg has learned that microsoft has agreed to buy security software maker risk iq. the price, more than $500 million in cash. the deal could be announced in the next few days. risk iq makes cloud software that helps clients understand where and how they could be
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attacked. nordstrom is trying to boost its appeal among younger shoppers. the department store chain is investing in one of britain's best known apparel brands, pop shop, and several other brands owned by asos. it will become the brick presence for the brand. this could be the biggest jet order ever for air france klm. they started talks with airbus and boeing for when 16 new -- four 116 -- for 116 new planes. that is your latest business flash. guy: thank you very much, indeed. i saw this story this morning and actually laughed out loud because i find it staggering that anybody believes that air france klm is going to be buying the 737 max. of course, it is a duopoly. you have to talk to both companies. you don't want to go to one and
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pay the list price. but air france has basically just taken a huge amount of money from the french government. where do they make these aircraft? they make them around various parts of europe and asia, but to lose is a pretty but toulouse is a big center for it. i would be very surprised. alix: yes, and the french finance minister i guess called on air france to be a good customer for airbus. that feels like a non-subtle push towards the airbus direction. but also, doesn't this read like a broader issue? if we talk about the nationalization of some of these air carriers that have happened under covid, and then in some ways they are directed to do business with certain other companies, at some point that is not going to be an efficient business model if you can't buy the planes you want for the price that you need. the same thing with workers, for example. guy: it has always been a slightly odd relationship,
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inasmuch as this would be a huge shift for air france. nevertheless, most airlines are either boeing or airbus customers. ryanair, for instance, flies boeing. to shift to airbus would be a huge undertaking. so there's always this idea that was companies are involved in big ids, but nevertheless, the reality of it is a little bit more complicated. not come located, depending on your point -- or not complicated, depending on your point of view. take a look at the air france klm share price. we will talk about what is happening with christine lagarde. she gave an incredibly important interview to bloomberg over the weekend. jeremy stretch is joining us next to talk about it. this is bloomberg. ♪
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>> the countdown is on in europe. this is "bloomberg markets: european close," with guy
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johnson and alix steel. ♪ guy: monday the 12th of july. 30 minutes to the close. what do you need to know out of europe this hour? christine lagarde tells europe that investors should prepare for new guidance from the ecb at its next meeting in 10 days. we are going to hear from madame lagarde in just a moment. boris johnson will confirm at five and lock p.m. tonight in london that most of the remaining -- at 5:00 p.m. tonight in london that most of the remaining covid restrictions will be lifted in london. the eu postpones its push for a controversial digital tax, handing treasury secretary janet yellen a big win in brussels.


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