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tv   Whatd You Miss  Bloomberg  July 15, 2021 4:30pm-5:00pm EDT

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caroline: from bloomberg world headquarters, i'm caroline hyde. romaine: let's take a look at where financial markets ended the day. taylor: the question is, -- joe: the question is, what is you miss? caroline: anxiety seeming to dominate. we had new york manufacturing data. jay powell still dovish, raising
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concerns about, are we know at peak growth? and nasdaq 100 was lower today. we still nasdaq down. russell 3000 down. everyone is coming out in helen's. joe: camping out in treasuries. 10 year yields low 1.3%. extraordinary levels. what have been seemly unimaginable to or three months ago. 1.972 on the 10 year. pretty extraordinary stuff. for more, let's welcome bloomberg news process at reporter kriti gupta. >> the pun market is telling all the other assets what is up. 124 basis points last week. now we are at 129 once again. the question is, how much lower can you go? what is kind of like limbo. i have not like that in a long
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time. that is what is happening. romaine: were pulling it all the time on the show. that comes at 5:01. the after party. kriti: the stock market is taking their cue from that. take a look at what is outperforming. utilities, consumer staples in the absence of the yield from treasuries. they are getting it in the stock market. romaine: we always obsess over these one-day moves and today is sort of the worst day. there is a general sense. people have not been exiting the market. you sell the dip come in today. we closed lower. what does that tell you generally about sentiment? kriti: there is a lot of action first of all. there is also a lot of cash on the sideline. people are buying the dips but they are also selling the peak. there is a very volatile
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movement. it is interesting to see this was the reaction to a plethora of risks. you have the delta variant. right now, all the focus is going to be on the fed should there is going to be -- romaine: does this have anything to do with powell today? caroline: yesterday, they were like he is dovish. romaine: powell was in person for this at hearing today. yesterday, they did over zoom. -- they did over zoom. kriti: i don't know about that. i can't get into politics. romaine: you have a question? caroline: i do have a question. your theory was that commodities are leading everything. that that is where the worry is. is it still where the worry as? kriti: that is where it started last week.
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what is interesting is it is the margin of the move regardless of what asset class because they are all connected. i don't need to repeat this but the move in the oil market was really strong and that is what the rep. rose:. move for dismissal the bond market it is the acceleration in the treasury yield or the exhilaration or treasuries downward in the yield starting to ripple across the stock market. i'm going to quote andy of stocked and because he did point out if you look at what the stock market is favoring, they are favoring the stocks that outperform to in a little bond yield environment. you are seeing this follow tech outperformance. that is starting to fizzle. now it seems like the question out of the stock market is, do you go for the yield or do you go for the cash? it has been that bid for stocks or risk off completely traders are going back-and-forth on.
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joe: it is a cliche for people to be like, the fed is behind the curve. is the fate ahead of the curve? it was the june fomc meeting they started talking about inflation. concerns grow about a slowdown. is this a situation where the markets are getting a two -- getting a little too ahead of yourself? kriti: the dollar is catching up to where you are seeing the accelerations in the trends in stocks. you're seeing the dollar catch-up because that pivot to the greenback happened after the hawkish pivot. it is still climbing. analysts say it is well in line with the hawkish pivot. caroline: all through these cross as it moves. some hawkish sentiment coming from certain members of the fed today. inflation is that the market of the fed anxiety. michael of bloomberg had jim
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bullard and charles evans on this issue. >> it is clear that some of the inflation will be temporary. how much and how much feeds into more persistent process is the question the committee has to wrestle with going forward. i think we are already above our target on core pc inflation. the committee of the economic projections is projecting 3%. that is excluding food and energy prices. that is more inflation they may have seen in a long time in the u.s. some of that will hang on and persist through 2022. we had hotter reports then we anticipated recently. there is some possibility we would ratchet up our expectations for inflation to 2021 and 2022.
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this is a different situation than we faced in the past. >> inflation has picked up stronger than i was expecting. i was expecting us to go above 2% this year because of reopening base effects where prices dropped a lot last year. inflation was expected to be well above 2%. i am looking for core pce to be 3% year-over-year at the end of this year. might be a lot domestic given some of the developments. never would have guessed used car prices would be increasing extraordinarily as they have. we have had a lot of unusual developments. i am expecting -- i know it is a loaded word, transitory. i think the inflation pressures
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are going to be more normal next year and i am looking for 2% core pc inflation in 2022. joe: for more, let's welcome michael mckee from the rocky mount economic summit in idaho. thank you for joining us. we have seen this incredible move in the long end of the curve. a lot of it catalyzed by the fed decision in the middle of last month. at what point does some of this action we are seeing start to temper the fed in your view? they are looking and suddenly this is a market that is more concerned about growth than we saw the last time we got together. michael: it is going to be a while. they are not going to be looking at the drop in interest rates as a bad thing at this point. they're still trying to provide as much stimulus as possible. the difference between bullard and evans is one of risk
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management. the rest being inflation gets out of control and the fed has to react or strongly and then you raise the possibility of a recession coming out of it. bullard is thinking maybe prudent risk management would be to move sooner rather than later while evans is thinking they can get away with keeping things unchanged because interest rates are low. because the economy is picking up kid and because there analysis is inflation is going to be temporary. they are at this point being pressured by the markets. they are trying to figure out what is the best possible course without tipping the economy into a problem. romaine: that is a great plane you make. it seems to ratify the general idea the fed is not as divided as sometimes we say here on this network. some of the market participants talk about. there seems to be some consensus
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about what to do. maybe not consensus on how to do. michael: it is really almost a question of when to do it they are talking about. they have an awful lot of stimulus going into the economy right now. neither one had a particularly good answer to the question of what do you get for $100 billion a month you would not get for less? their view is they have told the markets this is going to happen so they need to maintain their credibility by an the markets enough time to adjust to the idea that tapering is coming. as charlie evans told us, the fact you start tapering does not mean you start tightening. as long as you are buying some bonds, you are stimulating the economy. he does not think they raise interest rates until 2024. at this point, i go back to risk management. the risks they feel on the majority side is it is wors to
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do somethinge and actually moved into sit still. caroline: what about any notable takes on the housing market and whether mortgage backed securities might be the way to go in terms of tapering first, whether they are still on the page both will happen in unison? michael: that has yet to be decided. there is an argument being made by a number of members of the fed that the housing market does not need as much stimulus as it has been getting. there was a stronger argument when we saw housing materials prices rising significantly. copper is backed off. those who say they can do it concomitantly probably hold sway at the moment. they do not think they are really causing as much of a problem some people thought. bullard and evans said they are open to discussing the idea. joe: tons of fed speak with bullard and evans and the two day appearance from powell.
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ultimately, should we just listen to powell? michael: yes. he is the chairman. he is the centerpiece. you pretty much know what is going to happen. the one thing i thought we saw during the week from jay powell is him trying to steer a center course. he does not want to be seen as one of those people who might the moving sooner because then we pay attention to him and everybody starts repricing. he did not sound like he is determined to keep think status quo forever. if the data changes, we will change. romaine: michael mckee out there in beautiful idaho. are you just going to stay out there until jackson hole yucca michael: i'm going to quarantine out here i think. romaine: smart man. michael mckee, our chief economic correspondent cared coming up, we are going back to the conversation joe had with the u.s. deputy secretary of the treasury. this is bloomberg. ♪
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joe: i spoke earlier today with the u.s. deputy treasury secretary. talked about the economy, jobs and inflation. >> because we lack supply in some places, we have seen prices go up. we think this is temporary and transitory. we are continuing to think about what we can do to make sure we can grow the economy, invest in ways that create jobs and ensure we expend the potential of the economy going forward.
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joe: what does that look like specifically? you say we are looking at the next round of investment planned for later in the year. what does that look like to expand the potential supply-side capacity of the economy? >> it comes down to investing in two areas. one is infrastructure. the president has put out a plan and we see the bipartisan group working on this. investing in infrastructure will not only improve our economy in the near term that will ensure we expand the economy in the long term and make the economy more competitive. the second part is investing in human capital. expanding the child tax credit to ensure we are investing in our children and our people to make sure our economy is more competitive owing forward. joe: one area that is a source of anxiety and the white house has acknowledged it is housing. there was a statement recently on the awareness of the
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depreciation in home prices. it is one thing to notice it. are there any policy levers the white house has in thinking about housing right now? the housing crisis right now. housing availability. >> housing supply shortages have been a problem we have had in our economy long before covid. it has been exacerbated by the covid crisis. the reality is we need a -- we need more housing. we need to build more housing in our country. like other areas of the economy, as we get more supply online, we expect to see prices normalize. the key for us is to make sure not only rebuild housing but we are improving affordability for people throughout the economy. joe: housing capacity, there are all kinds of constraints. there are all material constraints.
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there are constraints and regulatory constraints in states and cities that make it more difficult to build. what kinds of actions can the white house take to grease the skids? >> part of this is making sure we get the incentives right. a big piece of that for us is ensuring we provide tax credits for those building affordable housing. it also provide incentives to improve zoning in various communities to ensure we are in place where housing has been built near the city center in places where people have the ability to live where they work in order to ensure we have economies that are growing and providing people with the opportunities they need to grow their families. joe: that was part of my conversation with the deputy secretary of treasury cared we talked about a number of other things. a big day for the treasury because the first of those child tax credit checks went out. there'll be a check every month.
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this is like a centerpiece of medical policy for them going forward that maybe one day this could be a permanent thing for parents, which they hope would cut child poverty on a permanent basis. romaine: we talked to the senior advisor to the biden administration about the tax credits. i'm interested in what happens next because some of these measures they seem to be taking, there are still -- they are still relatively temporary. they don't have the support of congress to do this long-term so you wonder what is the next step. caroline: and how many republicans can fight back. and having the added support, the narrative support that inflation is on the way up. that eats into the lower income families. joe: even if it is temporary inflation, it does not work well politically. caroline: a great interview. romaine: good interview, joe. caroline: we both agreed -- romaine: we both agree. caroline: we are still waiting
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on biden and angela merkel. how will they tie up this loose end? talking nord stream 2, talking china. this is bloomberg. ♪
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joe: we are awaiting a joint news conference with president joe biden and german chancellor angela merkel. earlier, the two expert -- two participating in an expanded lateral meeting. bloomberg chief washington correspondent annmarie hordern standing by at the white house. what you want to learn from this press conference daca >> they
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just -- this press conference? >> they just recently wrapped up the meeting. we should be expecting the press conference relatively soon. what i am looking forward to hearing is potentially what they say about nord stream 2. we know there was no deal and no agreement that would come out of this meeting. they will have to address questions from the press about nord stream 2. we know that is a point of contention between berlin and washington. the second thing is about china. resident biden is trying to take a multilateral approach when it comes to confronting beijing. germany is interesting because they have massive trade -- their number one partner in terms of trade. they sell way more cars to beijing. what she says on china if president biden is able to get her to take a tougher line, that is the key for what we should be watching for in this press conference. romaine: there is a broader
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discussion between the leaders of the u.s. and the leader of germany that did not take place during the previous administration. the idea of a shared commitment to global prosperity and global order. >> i thank them having this joint press conference, the fact that the chancellor, this is her swansong. she is on the way out. this is president biden's chance to have that reconnection with some of america's closest allies. in the 2017 g7, after that summit when talks broke down, we know her and president trump had a combustible relationship. she famously said the days of relying on your allies, those days are over. this is a reset. it is interesting. there are nuances to the relationship we have seen change from the trump administration. i would point to the most recent summit between president biden and president putin. following that summit, chancellor angela merkel and president macron of france said
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if the u.s. is going to have this race with russia, why should we wait for the u.s. to sit down? we should have our own direct conversation. it is interesting to see what foreign policy is projected after this relationship between president biden and chancellor merkel because the trump years did change a little bit of that transatlantic partnership. caroline: bring all her european expertise to the white house. we will wait on that bilateral meeting as biden does sometimes seem to run a little late in those press conferences. what else could we were talking about? nord stream 2, the like. joe, what are you looking at? joe: 10 year yields. is anyone going to ask about 10 year yields? caroline: maybe crypto. romaine: got to talk about
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crypto. joe: bloomberg technology is up next. romaine: have a great evening. this is bloomberg. ♪
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>> from the heart of where innovation, money and power collide, in silicon valley and beyond, this is bloomberg technology with emily chang. emily: this is bloomberg technology. coming up, the race to space. we look ahead to jeff bezos' fligh flight

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