tv Bloomberg Markets Americas Bloomberg July 16, 2021 10:00am-11:00am EDT
♪ guy: friday the 16th. 30 minutes into the trading day in the united states. from london, i'm guy johnson. my cohost in new york, alix steel. welcome everybody to "bloomberg markets." we haven't had a negative friday for u.s. stocks in a month. alix: and that may be the case again because i'm still buying. that was the take away from the retail sales numbers we had. but that is it great -- that is the great point of it. it is boosting all markets. the russell 2000 small-caps able to outperform even though it is trailing the nasdaq 100, the biggest gap we have seen since about march 2000. the yield moving slightly higher on that stronger retail sales, but just i about two basis points. nothing to write home about.
the dollar kind of going nowhere on this friday. guy: it is interesting because the retail sales number is strong and people are still out spending. we are getting the u mich data. headline number coming in at 80.8, well below the 86.5 the market was looking for, and a big downward trajectory from 85.5. current conditions, 84.5. the market was looking for 91. expectations, 78. the market was looking for 85. what is interesting is the inflation number. alix: that is exactly what is starting to eat into that confidence. the one year inflation expectations coming in at 4.8%. that is really high. transitory still there, but the short-term expectations pickup, and you can argue it is going to dent confidence and dent alix's buying power potentially. guy: potentially.
[laughter] depends on happens with wages which is the critical factor here. it is getting harder and harder to find somewhere to live in america, and that is obviously pushing up rents, pushing up house prices. wonder whether people are going to turn around to their bosses and go, you're going to need to put wages up. this is going to be the story we have to focus on. the retail narrative is also really interesting as well. let's dig into what is happening here. the value of overall retail bridges is rising unexpectedly. -- retail purchases rising unexpectedly. bloomberg's mike mckee is our international economics and policy correspondent. the michigan number i think is really interesting. what do you make of that downward revision we are seeing for the consumer? michael: it just shows how lumpy and difficult it is to read the data these days. we got the 0.6% rise in overall
retail sales. everybody cheered. then you look and see the main number was revised -- the may number was revised down. core sales up 1.1%, but the 0.7% decline in may was revised down to a -1.4%. this is the problem with retail sales, only about half of the retailers have reported by the time they put this preliminary number out, which is why they call it the advanced number. so we don't get a clean read. that is the trouble for the fed because they do believe the consumer is hanging in, but they can't put enormous faith in it. i believe the number everybody is going to look at today is that inflation expectations from the university of michigan, 4.8%. the fed has been worried about, and fed chair powell made a big deal about inflation expectations, and that they want to keep them anchored. this doesn't look anchored to me. alix: not at all. thanks a lot. really appreciate it.
the biden administration is issuing an advisory warning about the risks of doing business in hong kong. bloomberg washington correspondent annmarie hordern joins us with the latest. what are we expecting with this? annmarie: in no way is this saying that if you are a company that has investments and an outlook in hong kong and you want to remain there that you have to leave, but they want to make sure that u.s. businesses and corporations know that they feel that there is a big change of landscape happening in hong kong, and they want to make sure they know that they feel this way when it comes to legal issues, data and financial issues. if you are a company in hong kong, the chinese government can get access to your data. that is what we hear from this advisory, but in no way is this saying stop doing business in hong kong. but it is certainly tension adding to beijing and hong kong. we heard from the chinese administration before the
advisory became public. they said that they wanted the u.s. to stop. they say we urge the u.s. to stop interfering in the hong kong and chinese internal affairs in any form. so very interesting to see what is going on here. it is just another tit-for-tat that we see happening in the tensions between these two countries. guy: thank you very much, indeed. bloomberg's annmarie hordern on what is happening with hong kong. let's turn to germany. the death toll from the floods that have devastated the western part of the country now rising to at least 103. there are many still missing. it is the worst flooding in decades, and we are still sadly probably not getting a clear picture of how high those numbers could go. joining us from berlin with the latest, aggie control -- aggie cantrill. walk us through what the response is now looking like. aggie: as you said, it is a really serious thing because these are the most severe floods that germany has seen in a very
long time. this morning, the cdu candidate and the premier of one of the states most affected by the flooding said that these were catastrophic floods of historical proportions. at the moment we are seeing not just a local and state response, but also a national response. we have seen the defense minister saying this morning that army soldiers that are not going to be on assignment overseas, they are moving a lot of those soldiers over to help with the clear up and looking for people who are still missing. we also have to remember this is germany's industrial heartland. it is where the rhine river runs . at the moment, we are also seeing it affect the ability for german industry and barges to travel through that key artery of the german economy. alix: those pictures are just unbelievable. aggi, thank you very much. bloomberg's aggi cantrill
joining us. l.a. county now telling residents they must wear masks indoors even if they are vaccinated, the latest in the pickup and cases in the u.s. and worldwide. joining us is max nisen, bloomberg opinion columnist for pharma and health care. tell us about the latest decision from l.a.. max: in many parts of the world and many parts of the united states, they are getting to see an uptick in cases driven by the delta variant. choosing to respond to that by going back on what has been the move in the united states, the push by the cdc, even public health officials to do away with math mandates for people that have vaccines -- with masked mandates for people that have vaccines. i think it is a response that is defensible, given what we are seeing from the delta variant, that it is really able to affect people at a higher rate, especially the unvaccinated. unvaccinated -- vaccinated people are less likely to get the virus, to spread it, much must likely to have severe outcomes. there is growing research that
suggests it replicates in people faster. it sheds more easily and makes many more copies of the virus. if you want to limit transition and get to the end of the pandemic faster, this is sort of the minimum ask that i think does make some degree of sense. guy: interesting to see whether other regions replicate this. the bar is high it seems at the moment. very appreciated. max nisen on what is happening with the virus. what have we got coming up for you? the inflation debate rages on. we will get the view from seema shah of principal global advisors. this is bloomberg. ♪
chair powell: this particular inflation is just unique in history. >> i think a lot of the reopening heat is going to subside. >> i wouldn't be so concerned about an inflation pickup because there will be inflation pickups for sure. that is something that we regard as transitory. >> it is a loaded word, transitory. >> i don't expect monetary policy to be in for a long period. the u.s. is clearly now having a recovery that is much faster than europe, and the inflation rate is much higher. >> we need some optionality on the upside with respect to possible inflation trucks -- inflation shocks. alix: those were some of the "central policy makers that spoke on the heated inflation debate. with us now is seema shah,
rentable global investors chief strategist -- principal global investors chief strategist. we were looking at the university of michigan inflation number, but it is going to calm down and be transitory. what do you think? how do you invest in it? seema: we are also in that camp of saying it is going to be transitory, but we have to admit that it is increasingly difficult to defend that view when you are seeing the upside surprises. a question we got from a client last week was at what point do you start to change your forecast. how high does it need to go before central bankers or investors start saying transitory, when it is 12 months, is no longer transitory? so it can be transitory, but you need to have that kind of inflation in mind right now. guy: what does it look like? what is the best inflation protection? , buying tips, gold, energy
stocks? what are my buying -- my buying tips, gold, -- am i buying tips, gold, energy stocks? what is the best inflation protection? seema: energy will do well, but it is very volatile, so you are more likely to get sturdier, stable returns from real estate. of course, on top of that, there are other things around the world we need to be cognizant of. what is driving that inflation? at some point, doesn't lesion start to wear on activity which is going to impact the way you are going to invest? alix: is that already in some ways happening? what is going to be that tipping point? seema: we are watching closely to see if activity starts to get weighed on by these rising price pressures. certainly, the university of michigan consumer sentiment is a little bit concerning on that side.
at this stage, i think the market is getting freaked out. i think that is what is driving bond yields lower. we have to be cognizant of all of this area but over the six-month period, do we think the market is going to correct? yes. because of that, we still think it is time to be focused on risk assets, cyclicals, equities, but of course, a little more selective in the way you are investing. guy: massive outperformance from tech over the last few weeks. does that continue as well? seema: we maintain a pretty steady allocation to mega cap techs. there's a couple of reasons. one is it is an area which is going to continue to do well, even in the next cycle. technology is really here to stay. if we do have concerns about what the fed is doing and we get this growth we have been seeing, that is when big tech will
outperform. so we still maintain some allocation to very large tax going forward. -- very large tech going forward. alix: what about the russell 2000? it has gotten beaten up in comparison to big tech. what is the weakness we are going to see? what areas are going to have pricing power? seema: when with ink about earnings season, we are actually more interested on what are we going to hear about companies in terms of the margins. how much are they going to be able to passed on those cost increases to consumers? one, it is about how resilient they are. but also, i think it is going to give us pretty clear indication of where inflation is going. is it going to be stickier, or is it going to be more persistent? it is going to be on a company by company basis, focusing on companies which have longevity, but also the business models that can stand the test of inflation and the various pressures that are coming up. guy: do you want to sit out earnings season?
for the last few quarters, earnings season has not been kind to stocks. some of that may have been front running, but the market has generally done nothing or been slightly negative during these periods. how does this one differ? does it? seema: one of the reasons it hasn't been so good previously is because expectations get so high that you get really strong performance before earnings season, and it is almost a nonevent in some ways. think this time, what earnings will be helpful with is giving us a sense, reminding us of the fund a metal strength of the underlying economy. so we are expecting another strong earnings season, but we have to continue to watch how that goes. i think it is going to be important. alix: the other piece of news we are digesting this week is the news out of china, putting the pressure on tech companies, the u.s. putting pressure on companies that do business in china. i was listening to barry knapp during the open, and he was like, we have to stay away from
china. how do you factor that in when the geopolitical risk seems to be heating up even more, but that is normally where you go to take advantage of stronger growth? seema: i do think emerging markets is a challenge. specifically on china and geopolitical risk, every year we are asked what is your forecast for next year, what are you most worried about. typically, geo political risk only has a knee-jerk impact on markets. there's never anything sustained unless there's something really meaningful. china continues to perform. it is really about what is going on domestically. the thing we need to watch is those credit easing measures. are they going to have a balanced landing? i think we are quite confident it will happen, but over the next few months, i think there's greater challenges in terms of covid, and terms of supply bottlenecks, which we are more concerned about. guy: as i go into the summer, do
i want to position my portfolio for a correction? if there is a correction, will it be a buying opportunity? seema: this summer, i do think there's going to be some volatility that's going to be challenging because markets are still trying to understand what the market is going to do, as well as what is going to happen with regard to the outlook for inflation. so there's a lot of challenges ahead. i don't think that people should be positioning in a way for corrections come but keep a longer perspective. it is very difficult to time it perfectly. if there is a correction, it is the time to add risk because we have a good sense that the global recovery is going to be strong, if you think about international markets as well. once the u.s. is done, there's europe, and of course emerging markets. guy: has a great weekend. thanks very much, indeed. what have we got coming up?
it's quite a show we've got here. alix: we've got the e-commerce entrepreneur and the mlb all-star, mark loh -- mark lori -- marc lore and a rod, in their first interview together. how do you do that in this environment when there is so much private capital? guy: we should probably ask about what is happening with the yankees as well. alix: look at you talking baseball. guy: i know. i'm the cricket guy here, but we can talk about a spell as well. alix: it's true, but if you had a soccer player on your set, i would be like, i've got nothing. guy: i have at least been to a baseball game. alix: fair enough. guy: that imminently qualifies me to talk about it. but i think it is interesting what is happening in sports more broadly. they are all being disrupted by covid. should all of the players be mandatory vaccinated?
how does this work? it's chaos across the world in terms of sports. alix: totally, but also longer-term, how are people watching sports is totally changing, and has been for the last few years in terms of streaming. that is creating a lot of disruption, which means opportunities. we are looking forward to breaking that down. this is bloomberg. ♪
ritika: it is time for the bloomberg business. i'm ritika gupta. moderna is in record territory again after it set marks three of the last four trading days. moderna developed, of course, one of the first to u.s. vaccines authorized for covid. netflix is coming to new york, opening a massive new tv and film studio in brooklyn.
the streaming giant has pledged to spend more than $100 million in the city. it is part of netflix's plan to build the world's first global tv service. it already has production facilities in madrid, toronto, and london. get ready for sticker shock. if you are buying a used car in the u.s., average used-car prices went over $26,000 last month. it is a record, up almost 30% from the begin of last year. a combination of the pandemic and the global semiconductor shortage led to historically low inventory in the new car market, and that pushed up demand for used once. . . that is your business flash -- that is your business/. guy: thank you for that -- that is your bloomberg business flash. guy: thank you for that. you can blame alix for that. we will be talking to pendragon in the next hour, one of the u.k.'s biggest car dealerships, to get their take on where this story is going. let's get what is happening in
the markets and a little more detail. etf managers are having a great year as investors flock in to exchange traded funds at a record pace. our senior stocks editor dave wilson joins us now. he's been running the numbers. dave: you are looking at $492 billion going into u.s. etf's so far this year. to put that in perspective, the record for an entire year was $497 billion last year. put the two together, you are talking close to $1 trillion. you want some perspective? that is how much, and terms of assets, u.s. etf's had in total back in 2010. the numbers are just staggering, and there's a clear preference at this point for etf's as opposed to traditional mutual funds, where you saw $500 billion flow out last year. so the idea of having that day-to-day ability to trade,
minute by minute, actually. it is certainly winning out, and in terms of who is winning, it is vanguard this year with inflows, specifically into the s&p 500 total stock and total bond etf's. those are three of the four biggest in terms of inflows, the other being an ishares fund run by black that tracks the s&p 500. but when you put those two firms together with state street, you are talking about 80% of the assets in etf's, and at invesco and schwab, you are up to 90%. it is an area where money managers are getting in if they aren't in already. guy: you've got to hope that market stuff works when at some point the correction comes. let's talk a bit about cathie wood. last year, the flagship fund getting a massive surge. in terms of whatever looking at their now, this is a kind of yen and yang.
you are getting positive news over there, but negative news over here. dave: that may be true, but they've had more than $15 billion of inflows this year, and there's been a real shift to the kind of active etf's that cathie wood runs. you look at the debuts this year , for the first time in 2021, you are going to have more active listed etf's introduced than the passive funds that track indexes. guy: fascinating what she had to say about china. thank you very much, indeed. what have we got coming up for you? quite a conversation. e-commerce entrepreneur marc lo re and in ob all-star >> rodriguez -- and mlb all-star alex rodriguez. that conversation is next. this is bloomberg. ♪
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i think we will continue to see articles of too much money chasing too few deals, and it will continue the 35 year unbroken trend of people being brought about that. alix: that is mark rowen, apollo global ceo, talking about opportunities in private equity. former mlb star alex rodriguez and investor marc lore are joining forces, and they join us now for their first broadcast interview together. guys, welcome. i appreciate it. i never have people in the studio. i feel fancy. >> much better than zoom. alix: so much better. this is a great time to say where are the opportunities. how do you find them? marc: i think it is a great time to be an entrepreneur. i think one of the gaps we realized in the market is that two of the biggest risks you face are raising money and hiring great people. so bcp -- so vcp stands for
vision capital people. we said, let's take the risk off the table. let's give entrepreneurs the able to -- the ability to hire the best people right out of the gate. the idea is that a founder with an idea would get $10 million of seed capital and we would help follow along with another 20 million and virtually guarantee a founder $60 million in capital to go after the very best team out of the gate. alex: and these young founders, usually get the best people in the fourth or fifth or sixth inning. we are trying to make a big bet early, but making them with founders that have had one or two exits. a lot of these founders are from marc's ecosystem or my ecosystem, and making bets with the right people early we think is a good formula. guy: how does it work between you guys? alex just talked about the fact
this is your first broadcast interview as business partners. i assume that is because you are super busy as well. you've got a lot of things going on. so how does it work between you two? how does the relation ship work? how often do you get together? how does the decision-making work? alex: we talk a lot. we are also social friends. we are both from new york, both have two daughters. we are both mission driven, not mercenary driven. [laughter] but really, if you get vcp right, i think two things. a lot of companies fail because they don't have the right people and they don't have enough capital early on. if you get the vcp right, it allows marc and i to elevate and really trust our partners to go out and execute. alix: how did you guys wind up meeting in the first place? being friends is different than
being partners. marc: we were introduced by a mutual friend. alix: you like each other, obviously. [laughter] marc: i think from the very first, it was zoom at the time, and i think we just realize very quickly that we shared a common set of values which is really important to me, and i know it is important to alex as well. we just hit it off and became fast friends, and started getting involved in lots of different business opportunities, including the timberwolves. alex: mark and i often get asked how are you guys partners, you guys are so different. we are different come up we have a lot of come to metairie skills. i've never met anyone like marc that is so mission driven, transparent. we both empower women, we both come from strong mothers, we both have two daughters. anything about our company three skills, he's very smart, i hit baseball a lot. [laughter] alix: you are selling yourself.
guy: marc, just picking up on that, in terms of where you are going to focus, you have a retail background, he has a sports background. where are you going to focus the business? is that those two areas, or are you going to be looking outside that? marc: i think we are looking at all industries, finding entrepreneurs that have all of the traits that we look for in great entrepreneurs. smart, adaptable, kind, empathetic. they example if i those traits and have a big vision where we think that capital could create some mode around the business, and were execution is key and people really make the difference. so we help the founder with the vision, raise the capital, and then help them hire the very best people, and nobody is better than alex at getting people to come join these
startups. alex has done amazing job of recruiting. alex: the fact is, this is the first time probably in decades that marc and i can actually convince or beat out a big institution because we've found that founders want the personal relationship forget they want the experience. they see what mark has done, they see what i have done in my baseball career, and now in business. they know they can pick up the phone and mark and i are going to make decisions really quickly , and giving founders the ability to move very fast is vital. alix: there has been a lot of money coming into the space. we kicked off the segment talking about apollo. do you feel like there's a lot of competition, or have you moved down enough in the scale to where you have the small companies to where you can find better opportunities? alex: it's great for us because we are coming in really early, precede, when there nothing but -- pre-seed, when there's
nothing but an idea. none of those funds are playing that early. so we come in with $10 million, $15 million, and now we are ready for a big b round with hundreds of millions. i think a good example is the flying car company we did, where we came in with $5 million, $50 million, and then they went out and raised a $100 billion back -- billion spac. alex: it is almost impossible to underwrite an idea, so these institutions, they can't play in the first inning, but they will meet us in the fourth or fifth and say as soon as your big enough, come to us. so it creates in a crib opportunity to deploy capital early with the right team in place with a really wide vision, and we go from there. guy: just picking up on that, picking up on the point you made earlier about these companies, they want to work with you, they see the relationship, they don't
want to necessarily go to the big institutions, but you also talked about the fact that these founders have been through a few exits already. they know their way around the block. i wonder how that makes the relationship a little bit different. you are making a big investment here. what happened when they push back and go, i don't want to go that way? i want to go this way? alex: it reminds me of when i became a free agent, and i knew i was playing for a big prize. i knew i was playing well, but getting paid underneath my performance. a lot of these founders have made a few million bucks, but they have exited for hundreds of millions of dollars, and we find that a combination of great experience, but incredible hunger and grit, and they are just dying to go out there and kill it. with marc and i, we back them. we are more like layer-coach, but more on the coach side, so there's an incredible gap that i think we have identified that we are really excited about area -- excited about.
alix: literally how do you find the company, or the person? how do you do it? marc: either we are looking at what industries are currently hot with momentum and thinking about a little bit of a hook in that industry, and then coming and finding a great founder, or sometimes a great founder comes to us with the same idea. in another case, it is really just an idea at the point that we get involved. that is really the vcp framework. alex: i think what marc and i have found is that over time, institutions will pay for not necessarily positive ebit companies. they will pay for a space and an incredible team. if you have those two things, they will come in and put the capital to work. but the team, getting that team together, that is what we like to do. we are almost like recruiting coordinators from universities. they go out and recruit great players. we are doing the same thing. marc: there's a lot of founders
out there with great visions that fail because they are not getting access to capital and they haven't hired the best team. it is a little bit of a chicken and egg problem. we solve that for them. the probability of success in a vcp company, getting the capital and being able to hire the very best team dramatically increases your probability of success. alex: marc told me many time as an underpin nor, starting from the many times as an entrepreneur, starting with -- many times as an entrepreneur, starting with nothing, he said many times i was just trying to raise capital. if you take that all away and put 100% of your focus in moving forward, it is good for the founders. guy: can i just take a little bit they turn here? i'm a father of two boys. they spend an awful lot of their money on these little sports cards which they stick into books. i'm sure you know something about that. they've invested pretty heavily.
i was wondering what your degree of interest is. there's obviously a story we ran last week about what you guys are doing in slam. when do we get some news? alex: i sort of can't talk about slam specifically or any card company. what i would tell you is that marc and i grew up collecting cards, and we are big fans of the space. one thing i know about marc is what anna norma's sports fan he was. he is like a sports junkie. but i do think the collectible business is at an all-time high, but i do think there is room for growth because people are looking for alternative investments, whether it is art, cards, watches. people are collecting a lot of things, and sports cards sit right in the middle of that. that way you can go direct to consumer, where you may not have to go to target or walmart, you can go straight to the consumer and there's massive upside there as well. marc: i had a huge collection that i held for 30 years, and i
sold it right before this market took off. [laughter] alix: ooh, that hurts a little bit. let's talk about some thing similar in terms of sports. you mentioned it earlier, the timberwolves. what do you guys notice in terms of the nba? what is appealing about it? what you notice in the season that could inform how you might invest? alex: what i love about the nba and the wnba is number one, you have a global sport. you have a growing young demographic. they understand that it is entertainment, not just sports. with adam silver, they have trim in this leadership. i do think art and i think the wnba -- think marc and i think the wnba has true medicine upside -- has tremendous upside. we want to elevate the wnba to a level where it should be. marc: i couldn't agree more. guy: in europe, write it money is pouring into sports. how does sports change as a
result of that? alix: in terms of private money coming in. doesn't change what it is supposed to be? alex: i think sports, i remove are the days when guys like george steinbrenner were buying these teams for $17 million, $18 million. the yankees were traded for $3.8 million. in the last five to 10 years, they are not expanding these teams. we took a run at the mets. we came up short to a guy who's very wealthy he was going to do a great job. but i think you are going to have institutional capital coming into these ownerships, and as a result, over the next 10 or 15 years, it will be a franchise that has tripled in value the last seven years. i think you're going to have a similar run in the next 10 to 15 years. marc: i echo what alex said. i think the nba is an encoded
league. alex has done a great job. huge upside, and it is very exciting. the young audience is very exciting. alix: real quick on that, the younger audience, how we watch sports is completely different. the different streaming services , where the probability is going to be. i am interested in how you are thinking about india and sports, and how you get ahead of it to make some money. alex: i think commissioners are thinking the same thing. they have to figure out the way to get direct to the consumer, and no one is going to do it for them. number two, particularly in baseball, which i cover with fox and espn, is access. we covered the all-star game and we had were markable viewership, but what was really special about it, you had players talking in real time at the batter's box when they were playing shortstop. the pictures on the mound. baseball specifically has such an opportunity to uncover and unveil what great personalities people just want to hear.
i remember when i used to talk to derek jeter or ari rivera, people would always ask -- or mario rivera, people would always ask, what do you talk about? it is going to be a massive opportunity. alix: what did you talk about? [laughter] alex: it depends. [laughter] marc: i think there's also an opportunity for technology in the sports, augmented reality. the ability to view the game in a different way. i think that is something we will definitely see in the future. alex: anything about what has happened outside of these buildings in the stadiums, uber, airbnb, marc and i had ideas about what can happen inside to make it more efficient and fan friendly. guy: i have to therefore ask what. how do you see that developing? alex: was that for marc or for me? i think there's opportunities.
marc talked about it as well. ticketing, you can make it really dynamic as well. right now you have dynamic ticketing for the season tickets. i think there's an opportunity in game to be able to do some dynamic stuff to bring not only great revenue to the teams, but even a customer experience can be improved by a lot. marc: exactly. i think we can really personalize the experience. i think the idea that you are a little kid, maybe spongebob is announcing the game, that sort of thing. how do you personalize the expanse? -- the experience? guy: let me just wrap this conversation up from my point of view. over here, we are having all kinds of problems with covid and sport, and it seems to be ripping through sports teams at a ferocious rate. the yankees are having the same problem right now. how do we deal with this? do you think the league should mandate that everybody on the team, everybody on the coaching
staff, everybody around them should get a vaccine? using that as the point we are getting to? at the moment, there are games getting canceled. it is really frustrating. do you think that is what the league should be doing? alex: yesterday, i was doing the yankees-red sox game, to lead off the second half of the season, and they canceled the game an hour and a half before the game. it was really frustrating. i think it is a very fluid time. i think when in doubt, you lean on the science. that is obviously out of my pay grade. but i think we have to figure out ways to move forward and yet keep everybody safe. but it is a very unfortunate situation that is happening not only where you are at, but here in the states and everywhere around the world. guy: i think we are all looking for to seeing as much live as we possibly can to get these guys out there. thank you so much for your time, marc lore and alex rodriguez.
ritika: this is "bloomberg markets." coming up, wells fargo senior economist. this is bloomberg. ♪ let's check in on the bloomberg first word news. the biden administration today warned u.s. companies about the risks of doing business in hong kong. an advisory said that china is primed to exert more control and endangers employees and data, the move underscoring how quickly china's one country, two systems approach to dealing with hong kong has come to an end. builders, labor unions, lumber
companies, and loggers will be amongst those attending. builders have set high prices for materials, suppliers, and a shortage of skilled workers are among their problems. 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 think it is worth dwelling on that meeting because it is important for a number of different reasons. . housing prices are going up. it affects labor mobility. it affects wages potentially. this could be super inflationary as it ripples out. i also wonder as well but we will see as a result of this is more automation on building sites. alix: that is a good point. i also feel it is different from the great financial crisis, that the consumer is not as levered as they used to be, so the bubble kind of bursting. there's a little less risk in that perspective. also talking about private
investing in real assets, private equity is buying up this stuff like crazy and then renting it out. that is also a bit of a different dynamic. it is interesting to see how that kind of combination will filter through to prices. guy: you think about what happened in the kind of 1950's and early 1960's, the postwar period, you saw a lot of prefabrication. certainly you did over here, the company basically trying to scale housing. i wonder whether ultimately, we might see some of that this time around as well. anyway, food for thought. this is bloomberg. ♪
you see the big divergence? people aren't making enough to keep up with inflation. that can be housing, clothes, anything. windows that become a real problem and him down growth -- when does that become a real problem and tamp down growth? guy: as wages go up, maybe to meet that line, that is something should be focusing on as well. i am focusing on 40 foot containers. why not? alix: shocker. [laughter] guy: favorite subject. this is really where i think you are seeing the system grinding to a halt, basically. what you've got here is shanghai to los angeles, that is the orange line. shanghai to rotterdam, the spot rates for a 40 foot container just shy of $40,000. that is a 340% year on year increase. the reason this is happening comes back to stuff, alix. you're seeing five times as much
stuff coming in as is going out, i.e. all of the containers are in the wrong place. this is going to get worse potentially. people are talking about it not being alleviated until well into next year. if you are looking for the transitory inflation debate on what is happening around all of this, how long is transitory? because this looks at the moment like it could continue for quite a long time. that is something the fed and other central-bank bikes are going to be struggling with. alix: i think our charts dovetail together because they are both going to wind up increasing costs at the end of the day. this was like teamwork, man. this is a teamwork effort. guy: no competition. alix: #oneteam. guy: judy dempsey is coming up, talking to us about what is happening in europe. this is bloomberg. ♪
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and alix steel. ♪ alix: fright -- guy: friday the 16th, 30 minutes to the end of the week. what you need to know out of europe? the death toll in germany is rising to north of 100 after the worst floods and death dates -- worst floods in decades. and the political policy and the occasions what's happening. u.k. cases continue to search, one in 95 have the virus. pressure is mounting on the government ahead of monday. european travel stocks are surging. president biden hinting that transatlantic travel could be restarting. equity markets are down on the session with