tv Bloomberg Surveillance Bloomberg July 27, 2021 8:00am-9:00am EDT
>> under the surface, this has been a much more frustrating market. >> about half of the sectors or contribute into that right now. >> you have to do anything you can to try to get money out, and that is the point. >> we have to keep pushing on this recovery long enough to get back to where we should be. >> this kind of economic strength, while it bodes very well, doesn't necessarily mean that corrections don't happen. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. tom: good morning, everyone.
a simulcast, bloomberg radio, bloomberg television. new slow, extraordinary. earnings this afternoon, the fed tomorrow. jonathan: all-time highs in the equity market. five-day winning streak on the s&p 500 or get record high on the s&p, record high on the nasdaq. about 1/4 of the nasdaq reporting after the close in a grand total of three names, alphabet, apple, microsoft. tom: you and i don't harken back to what people said a long time ago. we don't play the he was right, he was wrong game. can we go back to the brave long ago that said 3700? jonathan: let's go to the first week of november. that's when the headlines around the efficacy of these vaccines first came out. the s&p 500 that morning at 3300. that was around the time you get the banks on wall street getting together, getting around the table and thinking about the
year ahead, the outlook, your year-end forecast. i remember when deutsche bank came out at 3950. we thought david kostin was a crazy man at 4400 on the s&p 500 . we are at 4400 now going into tuesday. tom: it does go back to the reaffirmation of earnings. when you suggested apple, microsoft, alphabet, google, the rest of them really matter to the empire s&p 500? -- would you suggest that apple, microsoft, alphabet, google, the rest of them really matter to the entire s&p 500? jonathan: i would. right now we are at 1.2954%. tom: washington almost with another stimulus in the infrastructure. mentioned that wonderful idea on labor participation. it is two americas.
lisa: it is eking its way through washington, but not fast enough or some people. tom, you said you were in cash. so was everybody else. numbers coming out showing $17 trillion of deposits. this perhaps supporting all asset prices. what indication are we actually getting at this point from markets? tom: overnight repose, but i call the trust market, that very short term paper up a little bit to go through $1 trillion would be a huge deal. let me do the real yields here. the 10 year real yield, -1.1 4%. that residual, that inflation-adjusted yield truly a record low. jonathan: i will get to the nominal. yields in three basis points on the 10-year this morning. your equity market off the lows, down just six on the s&p 500, -0.1 4%. euro-dollar unchanged, $1.18.
crude just south of $72 at about $71.90. tom: we talked to experts of a quantitative and who have incredibly detailed strategy. that would be bank of china -- that would be binky chadha of deutsche bank. thrilled we could have him this morning. how do you use the earnings from the big tech companies? what do they mean to you? binky: number one, they are a very large part of the market, and we have been living in a world since the fifth quarter where the bottom up consensus has gotten beat by actual delivered earnings to the tune of 15% to 20% per quarter. so far this quarter is not looking that different. the headline beat is close to 20%. a big chunk of that is the loan loss provision, so we are still
talking about round numbers of around a 10% beat. so beats are slowing. the bottom of consensus has moved up, but as far as tech earnings go, i think the main issue here is, as were well aware, the mega cap growth and tech companies have very strong secular growth in their earnings. there was clearly some frontloading, especially what you saw in the first quarter. a big move up above about 20% above their prior trend that has been in place for seven or eight years. so the big question really is whether that was a pull forward and we are now going to go slower and revert to trend, and i would argue that if you aggregate the bottom of consensus, that is really the picture that they have. so we shall see. she looked at the -- so we look
at the broader equity market and multiples, and this also applies to be cap tech. i would argue the market is pricing that come of the huge upgrades in earnings we have had , are going to continue forever. tom: let me get out of triple leveraged all-cash. jonathan: stay where you are, tom. we started this hour talking about where we started last year. for these calls going into this year, it was the first week of november. when you came out with 3950, and i understand it is now 4100 year-end, i also understand that a forecast by definition cannot be wrong because it is a forecast, and we still have for months on the calendar. what has surprised you? you were bullish. many people were not bullish enough. what surprised you to the upside? binky: number one, it is earnings and how strong they have been.
number two is how the market is treating those earnings and where we are basically in the cycle. i think it is important to keep in mind that the cycle has been proceeding very fast, especially if you look at corporate america and where earnings are. if you look at things like gdp, you would say the cycle has a long ways to go. we are still waiting for q2 numbers, and that might us above recoded levels relative to the trend in gdp, and that suggests there's a lot of upside for recovery. you do this for the s&p 500 at the industry group level. we have done it for 53 industries that cover the s&p 500, and i think there's a very start conclusion that if you look at activity variables and revenue for about 2/3 of the s&p 500, we are well above trend level already. so i think this sort of
characterization does a very good job of explaining why the equity markets have done as well as they have done, so the big question is where do we go from here. do we slow? do we start to see negative growth? tom: what is important here is i should stay in triple leveraged all-cash. lisa: thank you, tom. that's actually where i wanted to go, this idea that there is so much, and i hate this phrase, but cash on the sidelines here, as people aren't fully invested yet. how much will that spur evaluations to even higher heights, despite the fact that all of this is already priced in? binky: i think it is more about where our multiples and earnings as far as the cash argument is concerned. i think it was a very valuable argument at the middle of last year, and we made the argument at the time, but now if you look at cash levels relative to the
market cap of the s&p 500, it is a lot lower as opposed to being on the high side. there's plenty of cash, but what is the buying part -- the buying power relative to the s&p 500, it is actually very low, i would say. jonathan: do you go through these big three names and work out what is next after the close today? binky: i think this recovery has been like no other. i think the principal has been to remain flexible. if you told me 15 months ago that we were going to have four quarters of 20 percentage point beats in s&p 500 earnings, i would have disbelieved you, but that is exactly where we are today. jonathan: binky, thank you. binky chadha on a big afternoon stateside, with
microsoft, apple, alphabet on deck. cnn citing a source, a federal decision on a mask mandate is imminent. this is coming from cnn, citing a source. a federal decision on a mask mandate is imminent. expecting news imminently, according to cnn. tom: you really wonder what that could be after what we saw from new york city and california yesterday. jonathan: we were told there was an active conversation happening. we already knew that. now we are waiting for an actual decision. to tom's point, there seems to be an effort to just believe this -- an effort to just leave this to local leadership. maybe that is not the case. lisa: pretty much all of these policies have been left to localities. my question is if they do come up with some sort of mandate, does that set them back from popular opinion standpoints? tom: massively. lisa: because we have seen protests around the country about further restrictions. you wonder at this point whether
people will just get more angry about this and protest. jonathan: before jumping to judgment, we got to be clear we don't know what the decision is. according to a source, there will be a decision. tom: you alluded to it earlier, the political heat if they institute a federal mandate, to me that is unimaginable. jonathan: especiallyjonathan: for the vaccinated. an extr layer of restrictions for the vaccinated, that could be complicated. we don't have the news yet. just a report from cnn. tom: we like to get out in front of the news. jonathan: a federal decision on a mask mandate is imminent, according to cnn. maybe we will have some actual news later. just want to bring you the news before we get to conclusions. your 10 year yield, 1.2528%. this is bloomberg. ♪
laura: with the first word news, i'm laura wright. the two koreas have improved the prospects for a breakthrough in a stalemate and nuclear talks. north korea's kim jong-un and south korea's moon jae-in have agreed to restored relations. they released what appeared to be coordinated statements calling for reconciliation on the peninsula on the 68 denver three of the armistice this hold the fighting in the korean war. in tokyo, a grim new record. the number of coronavirus cases in the japanese capital hit the record today. more than 2800 get the surge comes as tens of thousands of visitors are in tokyo for the summer olympics. on the about 1/4 of japan's population are vaccinated. raining gymnastics champion simone biles is out of the team finals after apparently hurting herself. the u.s. star is widely considered to be the greatest gymnast of all time. her absence will make it
difficult for the american team to take a third straight olympic title. china's tencent holdings is suspending new user registration for its wechat services after adds to uncertainty for the tech sector. china announced its toughest ever curbs on the online education industry. beijing also issued a series of other edicts governing illegal online activity. 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 laura wright. this is bloomberg. ♪
in the political process that they are ungovernable. china has realized this poses an existential threat to governance and law, and they have decided they have to stop it. we haven't gotten there yet in the united states, and i hope we get there soon. jonathan: wonderful to catch up with paul romer, the nobel laureate and and why you economic professor -- and nyu economics professor. alongside tom keene and lisa abramowicz, i'm jonathan ferro. here's your equity market this tuesday morning. your s&p down nine points, negative zero point 2%. yields in four basis points on tens. your 10 year yield, 1.2511%. zero firmer. briefly, some euro strength. $1.1011, positive 0.1% on that currency pair. $71.91 on wti after a huge amount of earnings.
three names make up 1/4 of the nasdaq 100. it is apple, alphabet, and microsoft. tom: we will stop now and look at apple. willpower with us with baird -- will power with us with baird. he shows you his belief in his track record from another time. this is a guy who, just before covid, was outperform on 90. you sustain your outperform today. simply, can beijing upset the apple cart? can beijing, all of this in china, derail your outperform? will: that is a good question. good morning. thanks as always for having me. china is always a big wildcard. at least at this point, it has still been a big driver of apple's results, and we are not
expecting that to change near-term, but it is something we keep an eye on with respect to other companies. but apple has been able to navigate that market. that is just one piece of the puzzle for apple as you think about the strength we expect this quarter. jonathan: the guide to apple over the last decade is just to keep buying it. it is complex on one friend, and i have always struggled with it. -- on one front, and i have always struggled with it. what kind of multiple do you put on something like apple? william: it is a great question. it has been one of the central questions. it is probably on the valuation accretion and multiples expansion that has occurred over time. we play the long game with apple. an hour view, over a long public time, it is going to continue to grow in valuation, and you are betting on their ability to continue to add new value added
services and solutions for customers, and that in turn can be used to drive more shareholder value. our view is that increasingly, it falls in the consumer staples camp. if you start to look at consumer staples names, we think you can justify multiples that get you closer to 30 times, which is what we are currently using to get to our target price. lisa: does that mean at this point, people are not looking for apple to necessarily innovate with the apple watch or some other product, that really it has to do with ongoing revenues from either iphone sales or from the services you can get on the iphone that will determine the future revenues? william: i think that is a great point. these services now, 20% of revenue, growing north of 20%. it has a much higher than average post margin, and that is
a big part of the story in terms of driving higher multiples than what it has traded at historically. our expectation is that could continue. last quarter we reported close to 660 billion paid subscriptions on the platform. that is a number that continues to rise every quarter. that is why it is critical that services like apple tv plus and things down the road continue to take off because that helps drive that line of business for them. the key to this story has been persistent diversification beyond iphone which is now a little under 50% of revenue, but still a big driver near and medium term still. lisa: would you like to see apple become a media company? there's been speculation about them buying netflix or some other big service provider that way to enhance their apple tv. is that still on the table? william: i think apple tv+ is very much on the table, as you know. "ted lasso" has been a great
show, but they need a few more hits like that. at this point it doesn't appear that they plan to buy a major media company to jumpstart that ever. hindsight is always 20/20. perhaps they should have done that, perhaps they should have looked at something in the autonomous vehicle market. at the end of the day, part of the bet on this and on the valuation is that this is a platform they can build off of. services and media are key elements of that. tom: and now, for william power, we get out the hp 12c. you don't do a sum of the parts on apple, but you do extrapolate out to some form of estimate off of $5.10. if i am the gloomiest lisa abramowicz on apple that i could possibly be, i would do 15% growth up on this. if i do that 24 months out, i am at $202 a share with a $3.4
trillion market cap. is that feasible? william: i think that is possible. at the end of the day, i think part of what is going to happen here, they are going to continue to grow, and my expectation is why we may not have the level of beats we had this past quarter, i think there is still nice upside to current estimates, this quarter and in fiscal q4. one of the key things to keep in mind, this 5g cycle is still super early. it may not be a super cycle in year one, but if they just sold over 100 million iphones that are 5g capable against a global base that is close to one billion iphones, that is a big upgrade opportunity. jonathan: that pause that will power gave you -- tom: that pause that will power gave you is called the general counsel pause. that's because he's not really supposed to speculate out more
than a year. jonathan: will, great to catch up. appreciate you, sir. william power of baird looking for $160 on apple. eight holds, three c -- three sells on the street. tom: i will get it out. jonathan: 3, 2, 1. tom: and articulate bear is what he is. he's very good. with great respect, i listen to him. jonathan: i'm pleased we reset the chauffeur that. news coming from the gymnastics -- the show for that. news coming from the gymnastics team, that simone biles has withdrawn from the team competition due to a medical issue. i think it is fair to say we are
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jonathan: live from new york city for our audience worldwide on tv and radio alongside tom unit lisa abramowicz, your equity market down. waiting for economic data in the united states. here are some of the numbers. with the data, here is michael mckee. michael: we have a .8% increase in durable goods orders which tells us we are not adding to stocks as quickly as they thought possible because the estimate was for 2.2%. last month was 2.3%. the standard caution is durable goods orders are very lumpy. durables ex transportation up only .3%. i am guessing transportation equipment was the big push for what we did get.
capital goods -- that is the compilation of business orders that going to gdp. that is much better than the prior month. we just got the revision, it was .5%. basically no change. two months in a row of half a percent in capital goods. shipments up when 8%. -- shipments up .8%. overall capital goods up at a reasonable pace. the problem is we expected more. tom: durable goods durably followed my foot and hurt. does this data signal to you the shift from a goods sector to the service sector? michael: it could. it is hard without looking at the entire breakdown to know, but we do expect that in terms
of consumer spending, that is happening. it is the business spending people are concerned about, what is happening with inventories. inventories did increase almost 1%. tom: jon ferro broke the goldman sachs story, the idea of a delay in service sector buildout. interpret their delay to the goods boom in america. michael: american spent so much money on goods during the pandemic that now they can go out and spend money on services like going to restaurants or going on vacations so that pulls the money there. the question is how quickly can the service industry ramp-up. i will give you a personal anecdote. dealing with the airline that will be unnamed, had a problem they caused with a ticket for an upcoming trip, it took me seven hours to get through the
customer service. tom: you are on hold because jon ferro was in front of you on the call. you have the same problem. jonathan: does it have the same name as a covid variant? [laughter] michael: it just might. tom: trouble -- jonathan: trouble with traveling in the united states of america. 1.2428 on 10 year. tom: housing data coming up and then consumer confidence. neil shearing with us, capital economics chief economist. what is your mystery of q4 and into q1 of next year? you have any sense of it were you just have to wait? neil: the situation with the virus is changing very quickly. we will get you to gdp data -- you will get q2 gdp data. it is already old news.
in many respects it is very difficult to know where we will be at the end of this year into next. with all of that being said, and we have seen evidence in the june durable goods orders that have been soft, that is a bit inevitable. we've already had the v-shaped recovery. i think the growth will come off the boiler. jonathan: we have a case study for how things play out with a covid variant and what that means for the economy. what are we learning about how this is playing out in the u.k.? neil: we have the u.k., we have israel, few places we can look to. the key thing is the extent to which vaccines are playing a role in weakening the links between the infection rate and the hospitalization rate and deaths. in the u.k. there has been encouraging news.
normally we saw two week delay between infections rising and hospitalizations go up and deaths go up. this time we have seen a huge spike in infections. they have been falling. for that they had been really rising. the hospitalizations did not rise. the nhs has not buckled under pressure yet as the government has pressed ahead with lifting restrictions on economic activity. those restrictions are important for the economy. the case study so far is vaccine seem to be working. intolerable is the huge disparity between vaccine rollout rates in different economies. jonathan: is there a reason based on what you are seeing? a lot of this will come down to the tolerance of officials. any reason that would lead you to downgrade your economic forecast? neil: not on the back of the delta variant and not for
developed markets. emerging economies are in a different position because they've been slow drop vaccines. the actual rollout, the supply has been slow. emerging economies have been much more vulnerable to not just the delta variant but other mutations of the variant. in developed markets it is a downside risk and pushed back the u.k. by four to five weeks. not enough. not enough to fundamentally change our forecast. lisa: ahead of the gdp reading there's a question about the distinction between inflation and growth and how these are not synonymous. people expecting growth to return to the trendline pre-pandemic by the end of next year. inflation remains the wildcard. what is your sense and why are you worried about stagflation? i know i will get slammed for bringing up the s word?
neil: we have said it with stagflation. we are not jumping on the stagflation bandwagon yet. it is important to distinguish between what still looks like temporary frictions in the system in terms of getting the economy back to work. the u.s. economy shut down for a couple quarters last year it was trying to get all these people back to work. it is ineffable there will be restrictions. there has been a huge rotation in people's consumer spending habits from services to durable goods. it is inevitable there will be restrictions and the restrictions are more clearly holding back output growth. one way they might -- that is the essence. this is not the 1970's
stagflation. this is a different type of stagflation. lisa: this is an important point especially with the deglobalization we are seeing with trade in the forefront of talks between the u.s. and china. how much is it still in unappreciated fact when people look at inflation expectations over the next few years? neil: deglobalization, three or four years ago we were talking about deglobalization, trade measures as a share of global gdp was topping out. i think the base has started to shift away from deglobalization towards u.s. china decoupling. this is not necessarily about the world d globalizing. it is about the largest economies decoupling in trade, finance, investment, security, defense, technology. in all of these areas the u.s. and china is decoupling.
i do not think there is a huge loss in inflation. the biggest risk to inflation in my view is what is happening in the fed and others. it is not helpful if we do not see less globalization, too. tom: with a meeting tomorrow, has the story changed, does the news flow change what we will hear from chairman powell? neil: i do not think it has fundamentally changed at this stage. it is pretty clear now the best of the recovery is behind us in terms of the bake month on month gains. i think some of the concern over inflation has eased a bit too. what is happening in markets has changed. real yields now at record lows. the nominal yield down, too. i think the fed is probably looking at the situation thinking we are sitting pretty.
the bond market seems to believe them. inflation expectations -- the stock market is holding up come and the economy, although it is lost a bit of momentum, it is still going. it is steady as you go. jonathan: neil shearing, capital economist chief economist. here is the price action on the s&p 500. a slight decline. negative into tuesday morning on a five-day winning street and a record high on the s&p. yields at four basis points. 1.2444. euro-dollar positive .1%. that is a strictly stronger euro. crude -.2%. the conversation on an equity market at record highs continues at the top of the hour. i'll be catching up with jonathan golub of credit suisse, the chief u.s. equity strategist
and one of the biggest bulls on the street. looking for 4600. at 4422 we are not far away. tom: people want to stay to see that conversation. it is not just about coming out with a number like 4400. it is about the nuance of it. jonathan golub writes a sector based acute note about the nuances of what to do. at the same time, what not to do. jonathan: where do you want to be beneath the index level. alongside tom keene and lisa abramowicz, i'm jon ferro. your equity market a little bit softer this tuesday morning. pulling back from all-time highs . equity futures lightly negative. this is bloomberg. laura: with the first word news, i am laura wright.
federal health officials are close to announcing whether there will be new guidance on wearing masks. a decision could come today. does give months ago the cdc said most people who are vaccinated could go without masks indoors. that could change because of the delta variant. on capitol hill, those trying to come up with a bipartisan infrastructure spending bill have run into a number of obstacles. ended the day trying to resolve differences on funds, water projects, and how much covid funds to use. second-quarter earnings that united parcel service beat expectations. give the credit to a jump in e-commerce deliveries. ups and fedex increasing the profit from a rise in during the pandemic. the challenge is carrying packages to homes is usually less profitable. shares of general electric are rising. growth in ge's jet engine
division promoted the company to raise its cash outlook. that has that too optimism improving your travel will give a boost to larry culp's effort. the petrol chemical division at exxon will probably post record high earnings this week because of the surging prices for plastic. demand for products such as packaging and materials held up during the pandemic. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i am laura wright. this is bloomberg. ♪
every single city employee will be expected to be vaccinated or be tested weekly. this means everybody. tom: we welcome all of you on radio and television worldwide. the mayor of new york city, his term migrating to an end in early 2022. the story of the moment on a widely vaccinated, widely healthy new york city. the rest of the nation a different story. joining us is annmarie hordern out of washington, lisa abramowicz with us as well. jonathan ferro mentioned the cnn headline of what could happen today. who is driving the bus on the biden administration. who are you focused on? annmarie: definitely the covid task force. the biden administration has continually said they would look to the scientists and the cdc and dr. fauci on whether or not to move some of these mandates.
we have known for a while they were discussing to bring back mask mandates. this is likely to be in the federal government system and encourage across the nation. this is because of the delta variant. but i think is more interesting is the memorandum that came out of the department of justice. they made it public now. they want to let people know. private employers note and states know it could be legal. there is also a debate about whether they will make vaccinations mandatory. tom: we believe that there. coming to us is kevin brady of texas. far more than that, one of the clearest thinkers on the republican side on what is correct away from the federalism of this nation. kevin brady, i want to take you down to houston methodist
hospital and the head of medicine at that wonderful institution. i want you to explain how you dovetail dr. baker's science with the tone, not of anti-science, but the tone of doubt we see nationwide among the unvaccinated. >> this is frustrated. i am vaccinated and have been urging my constituents to do the same. it is a difficult argument to win. i think at the end of the day it comes down to genuinely, most do not know this is safe yet. many of them are telling me get out of the emergency authorization and make that a permanent safety decision. i think that will help some, if not all. tom: you had great support for donald trump. he got vaccinated quietly without fanfare. what you need from your guy to
change the trend of the unvaccinated? rep. baker: obviously, reward people for being vaccinated. we are seeing in places like vaccinated -- like houston where they're asking the vaccinated to mask up. i think that is probably the wrong incentive. secondly we need a permanent authorization for the vaccines and a lot more consumer education, certainly in our area. that would be keep. we are seeing -- that would be key. we are seeing more delta variant. we are also seen that coming across the southern border which is troubling people. i am hopeful we can keep making progress, but i will tell you i think president biden and vice president harris did the country a disservice during the campaign , essentially planting the seeds of doubt on the vaccines developed under president trump. tom: i will give you that idea
that they planted the seeds of doubt and it was part of the campaign. he did not answer my question. what does this nation need from the former president right now to explain to the jacksonian unvaccinated they need to be vaccinated? rep. baker: president trump has been clear about this. he has talked about the need to be vaccinated. he has talked about the remarkable success in bringing vaccines to market in record time. i will tell you, i think it is this president and vice president who bear the burden. i am willing to help and eager to help. i've been preaching this back home in a big way, especially as we see these new variants. lisa: there is a huge delta between republicans and democrats when it comes to the vaccination rates. in more heavily democratic areas the vaccination rates tend to be higher and people tend to be
more open to getting vaccinated. how is it easy president biden playing a big role in shoring up confidence in vaccines if it is largely the republican regions that still show doubt. rep. baker: early on it was the democratic regions where the problems wrap. -- where the problems were at. this president now come in the administration, bears a responsibility, perhaps for the first time bring both parties together on this mission. it is so important. right now it is frustrating. those of us who think we should find common ground to have this go it alone mentality. we have to keep making progress. i think we can do more. i think we can do better. lisa: 45 seconds left. you talk about bipartisanship and bringing people together in
washington. what is your opinion of having a bipartisan agreement in the very near term on this $1 trillion infrastructure spending package that semi people seem to support, whatever side of the aisle they are on? rep. baker: we are all hopeful they can find common ground. we do not see details but we are encouraging people to find common ground. i am less optimistic about the votes because clearly speaker pelosi and chuck schumer want this to be the pilot shoot that pulls around the massive expansion of the welfare state. there will not be support for that. if they were truly separated, i think there would be strong support for infrastructure. we ought to get it done. tom: thank you so much. kevin brady of texas. the congressman from woodlands. i want to go back to the markets with the fed meeting tomorrow, earnings this afternoon. i look at the market and there
is resilience, there is a bid under these stocks. jonathan: the issue -- lisa: the issue to me is we are seeing strong earnings. i will not mask what we are seeing in the bottom line with a lot of these companies. the question is where are we in the cycle? how much room do we have to continue accelerating? what is currently being priced in? what could make the bid into stocks change. look at the negative real yield? tom: is an important point. when does the bid change? when it changes, it changes suddenly. it goes back to what the fed does. do not fight the fed. are we going to have a fed that fights? i don't think so. lisa: are you going to be buying the next iphone in the near future? tom: exactly. you know the answer to that. lisa: how many? tom: i am mandated by school to
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>> everything you need to get set for the start of u.s. trading. this is "bloomberg: the open" with jonathan ferro. ♪ jonathan: from new york city we begin with the big issue. china fears souring risk sentiment. >> we have a cloud of uncertainty. >> more uncertainty. >> investors are surprised. >> companies have been targeted. >> this is beyond the purest tech companies. >> the chinese want to have this regulatory crackdown across a number of sectors. >> a classic battle between earnings delivery. >> authoritarian systems