tv Bloomberg Markets Americas Bloomberg August 19, 2021 10:00am-11:00am EDT
guy: thursday the 19th. 3:00 p.m. in london, 10:00 a.m. in new york, 30 minutes into the trading day in the united states. welcome to "bloomberg markets." the asian equity session didn't really look that clever. commodities getting smoked. europe kicks off in pretty similar fashion. you add in the luxury stocks. i'm looking at my bloomberg screen right now. wall street, not so much. alix: it is amazing. it is really slamming the brakes on the global equity rally, yet the potential to buy the dip in u.s. equities is still there. the s&p is now down only 0.1%. we were down four times that earlier in the futures trading session. obviously, energy and the cyclicals getting hit hard yet again. rent off by over 2%.
the big mover i think in the catalyst for this is the dollar. the dollar index at its highest level in nine-month, up 0.3%, and that is reaching some havoc across the equity market, very much in the commodity market, which explains why european equities are getting hit so hard. it was a real -- if there was a real bid, i would expect yields to be down more in the u.s.. you are seeing very modest buying coming in. as we go through the session, we are going to see that by the dip reversal. guy: we've seen it time and time again. what is also interesting is that gold is not moving that much, and volume is not picking up that much here in europe. it is the middle of august. we are a bit above the 100 day average. but nevertheless, it doesn't feel like that huge cathartic moment we had been anticipating in stocks. nevertheless, if you aggregate it altogether, global stocks are
down. we are seeing that dollar rally. what is driving this? you've got the fed, the growth narrative around delta in this, what is happening in china in the mix as well. that is certainly hitting the cac 40 with luxury stocks. let's dig a little deeper. abigail doolittle is going to do just that. abigail: it does seem to be a buy the dip moment because earlier, we were looking at the worst three days for the s&p 500 in a month, for the nasdaq 100 since early may. right now, the s&p 500 trying to flip higher. the big story yesterday was the vix at 23. the vix is now lower. it is at a 21, so it is not complacent above 20, but it is a bit of a reversal from that weakness that both of you were outlining in europe, with the stoxx 600 now off its lows. at that point, the worst day of the year. the asian session was really starting the week.
the hang seng down 2.1%, a lot of that on the commodity selloff. something else i want to point out is the reason we know this is such a risk off tone, even though it seems that yesterday, some of it was set off by the idea that the fed might paper this year. even with that possibility, you have bond yields in over the last five days. the 10 year yield in at about 11 basis points. speaking to the fact that investors are uncertain, they are seeking safety, even with the s&p 500 now trying to be just about flat on the day. alix: still skeptical as to how much safety we are seeking here. it felt like it was already making a move before the fed minutes yesterday. thank you very much. that stronger dollar definitely having repercussions all over the place. you can make the argument that it is going to become more expensive abroad. input costs are going to rise if you have exposure to that dollar. you also have repercussions for commodities as well.
you can also make the argument that maybe that is not so bad. china in particular has also been trying to lower those commodity prices. let's get a little deeper into that. chinese steel producers not working as hard. iron ore getting crushed, oil getting hurt. mike mcglone, commodity strategist for bloomberg intelligence, joins us now with more. mike: i think the key thing to think about here is commodities are returning to enduring trends. that is bearish crude oil, bearish copper, and bullish dollar. guy: what next? where do with from here? there has been this -- where do we from here? there has been this weakness that has never quite materialized. you run basically when things go bad. what comes next? the china story, i am trying to work out whether it is the dominant factor here, or is it the global slowdown feared,
driven by delta? mike: about a month ago, china cut the rrr rate. that has never been a good sign for commodities. so there's a lot of indications commodities should go lower. crude oil got near the highest price it has been since the 2018 peak. $50 a barrel really means nothing now that the u.s. average cost of production from shale is $35 on the terminal. then you just see this elasticity of supply kicking in, so higher commodity prices is really kicking in, and to me it is the macro. the stock market has to rise here. lower crude oil and copper still around $10,000 is still expensive. it could get to 8000. it is still above the price it was at the year before and the year before that. alix: thank you very much. we will be talking much more about commodities, taking a deeper dive into that on
"commodities edge" this afternoon. maybe opec-plus isn't going to release all that oil from the market. that would definitely be a different set up. guy: it does feel like the perfect day for "commodities edge." i'm sure you would say every day is the perfect day for commodities edge. but i think today for everybody, not just those that are into the commodities space. it is a useful barometer, and the alarm bells are ringing the commodities space, and you wonder whether other asset classes should be paying martin. mike mentioned the dollar, the dollar spot index rising to the highest level in nine months on the concern we have been talking about. delta, what is happening with the fed, all of this in the mix. let's deal with the details of where it is going and whether or not this trend continues. it hurts for emerging markets, for a lot of people out there. bloomberg market reporter -- bloomberg market reported
kriti gupta is here. kriti: when you have those growth concerns, people dive into the dollar. then there is this reverse correlation where of course, we know commodities are very sensitive to the dollar, given that those contracts are priced in dollars. now we see that correlation really increased. there is an inverse relationship , but that got even stronger just in the last month. let's get to what is going on today in particular. i want to talk about the dollar strength, now the highest not only in 2021, but go the -- but going all the way back a year. where the recovery trait has really taken precedence, you haven't really taken that dollar performance until the last month or so, when the delta variant concerns came to the forefront. in today's action, what are the largest contributors? what other currencies aren't doing well? which brings me back to the commodity story. those commodity currencies that are driving the dollar, the canadian dollar, the mexican
peso as well really involved in that commodities picture. even the aussie dollar down right now, down 0.8%, but it is still can to beating to that dollar bid. then you have the u.k. bid as well, really tied to that recovery trade, to that travel trade. today not doing so well on those growth concerns. alix: thanks so much. really appreciate it. coming up, you've got stocks, yields falling. taper concerns, covid concerns. what do you do? yana barton, eaton vance equity portfolio manager, will be joining us next. this is bloomberg. ♪
♪ alix: live from new york, i'm alix steel, with guy in london. this is "bloomberg markets." the minutes from the federal reserve indicated members are getting ready to start tapering bond purchases. the big question is when. we want to bring in michael mckee. the fed was blamed earlier for the selloff in asia. what did the fed actually say? michael: the fed said dog bites man. there's nothing i am going to tell you that the markets didn't know, which is why it seems very unusual that people are brimming the fed for the market selloff. this is a key phrase that came out of the minutes yesterday. most dissidents noted that, provided the economy were to evolve as the anticipated, they judged it could be appropriate to start reducing the pace of asset purchases this year. what we will see is continued drops is in the unemployment rate and inflation start to roll
over. none of that is really happened yet. this is when last year, the pandemic began in february, so all of this data is what we saw beforehand. and as you can see here, inflation is the only one that is above where it was at the time it began. the unemployment rate is still above where it was, and they want it to be closer than that. the black on implement rate still way above it was. they are looking for those employment numbers to come down. they do think they have reached where they want to be in terms of inflation at this point. so the only other question is how and how fast do they taper. many of them said taper fast enough to finish before they have to raise rates because they want the public to distinguish between the two things. several said if you start sooner, you could taper more slowly, but most of them said also let's taper proportionately
with the mortgages and treasuries going off at the same time. so where were looking for going forward? is it going to really change much? next friday, we have jay powell in jackson hole, and he speaks just after we get the pce inflation numbers, which will matter to the fed, and of course, the august jobs report on september 3, and then the september 22 fed meeting. is that where they announced tapering? if they announce it then, do they start in november? do they start in december? those are questions that may not matter as much as long as we know they are ready to start. guy: i guess the first step of a long journey. you very much, indeed. mike mckee on what we got from the fed, looking for do jackson hole next week. the s&p is not positive. the asian session was horrible. the european session was horrible. still is. the cac is down by over 2%. but the s&p has just turned
positive. 4401 is where we are now trading. joining us to give us a take is yana barton, eaton vance equity portfolio manager. great to see you. perfect day to talk to you in so many ways. the price action around the world really negative over the last 24 hours, but today we are starting to see evidence that maybe the u.s. markets, the s&p is finding a floor. what you make of the price action? yana: i think it is reiterating the fact that we are all looking for direction, but bottom line is the investors in the market have been very dismissive of all of the known unknowns we have been talking about for weeks, if not months. you guys talked about the delta variant and the implication for normalization of economic activity, geopolitical uncertainty, fiscal policy, and changes in monetary policy. it really doesn't make sense that the s&p is just down 2% off
of its all-time highs. it doesn't make any sense that the valuations in the next 12 month basis when you look at the pe multiple at 30% above its ten-year average. i personally think we are due for a bit of a breather, and the fact that we have sort of reversed course may be a seasonal or august phenomenon more than anything else. alix: on a fundamental basis, when you take into account the delta variant, goldman also cut its u.s. growth forecast overnight. i just want to read to you but they said. they said, "the impact of the cup variant is proving to be asked the delta variant is proving to be somewhat larger -- of the delta variant is proving to be somewhat larger than we expected." you heard the fed saying the inflation risks were to the upside. the grades risks were to the downside. why do you buy the dip? and if you have to, where do you do that?
yana: i think you go with the laggards, the areas of the market have already experienced a price reset, and fortunately for investors, particularly those focused on the long-term, you have plenty of opportunities. you look at the worst performing sectors like consumer discretionary that i believe is poised to reverse the trend. and we are not just talking about retailers. we are talking about secular growth opportunities, as well as the internet retailers that have been down your to date. it has been an underperformer with free cash flow yields and valuation at a huge discount to the markets. lastly, i think you look at tech. if you are looking for cyclical and secular exposure, i don't think you need to look any further than technology space. guy: ok, how do i factor inflation into all of that?
we talked to ceo's every day, and what they tell us is that they are certainly facing cost pressure when it comes to labor and input costs, commodities, etc. going into their businesses. we are also seeing obviously what is happening with the dollar, what is happening with china. they are shutting down ports. that is going to make this a lot worse. do i need to put a bigger discount into the equity market? do i need to change the way i look at pes to factor that inflation? do you think market has done that already? yana: the short answer is yes, and the second part of your question is no. as i mentioned, the pe on a 12 month basis on the s&p is nearly 21 times relative to the historic average, but i think the question you are asking is it really important, which is the cost of doing business is heading higher, whether it is inflationary pressures, wage pressures, input costs, supply
chain issues. all of the things you guys have talked about his spot on, and the fact that the cost of doing business is going higher, you need to have pricing power. that is the key word. innovation is the ultimate solution, but ultimately you need to have the agility in your revenue model in your cost model to pass that through so it doesn't impact your margin profile. i go back to the sectors i mentioned to you. there is that elasticity and flexibility in the model because you are starting at such a high spread relative to the market, particularly within the information technology space. alix: to that point, what are multiples like in that area since they sold off recently? i take a look at amazon below its 200 day moving average. have there been some opportunities that have opened up in the last couple of weeks? yana: amazon, to your point,
sexually seen its multiple correct nearly 30% year to date. again, i would just highlight that this is a company growing its top line nearly 40 percentage points, so while the multiple on an absolute basis still is expensive, i think relative to its growth rate, there are multiple ways to make the numbers work because of the multiple sort of conglomerate businesses this company is in. within the information technology space, i think hardware equipment, apple in particular because it is such a disparate portion it wait of the index and industry, has also seen its valuation retreat, and it has been a laggard. i think one of the biggest sort of anchoring to the overall market. if you believe in all of the secular trends, all of the things we have talked about in the enablement of digital economy, they are in it. as another area -- that is another area. the software space has also
lagged. we talk about the semis in our everyday life, and yet that area of the market is an underperformer your to date, and it is trading at a discount to the market. if you look hard enough, i think there are plenty of opportunities to find yourself some value or growth. alix: really appreciate it. thank you very much. coming up, robinhood dropping like a stone. a big gap down after warning of a slowdown overshadowing a boom in crypto trading. more coming up on that next. this is bloomberg. ♪
reinstated its quarterly dividend and authorized a $500 million stock buyback. same-store sales soared 61% in the most recent quarter, well above expectation. amazon reported they will expanded to an area where it has been a disrupter traditionally, brick-and-mortar retail. according to dow jones, amazon plans to open several large physical retail stores in the u.s., designed to extend the company's reach in clothing, household electronics, and other products. shares of doordash are lower. doordash stock has climbed about 4% in the last month. that is the bloomberg business flash. i've heard guy is a big fan of takeaway. alix: are you? guy: that couldn't be further from the truth. laura is having a little fun with me. alix: i wouldn't think so because you live in the middle of nowhere, right?
guy: there is that. though deliveroo is apparently coming to the little area i live in, so you never know. alix: thanks, laura. robinhood's first earning report as a public company can complete with the warning that the product may be on the way down. bloomberg's dave wilson is looking into the details. dave: you're talking about a company whose revenue more than doubled in the second quarter from a year ago. they had a bigger loss than they expected. that was largely the result of changes in the value of convertible debt and in response to robinhood's debut as a public company. what is interesting is if you dig into the results, you see that transactions accounted for about 80% of robinhood's revenue in the quarter, and from there, we tend to associate robinhood with trading in meme stocks. well, stocks are the smallest piece of its revenue. it is much more involved with options, and in the last
quarter, what changed is they got more than half of their transaction revenue from cryptocurrencies. in fact, the ceo set on the conference call yesterday that they had a larger share of first trades i new customers in crypto as opposed to shares, and that had not happened before. clearly, things are swinging, and as a result, robinhood is more susceptible to what is happening in the cryptocurrency markets in terms of accounts -- capped a currency markets. in terms of accounts, more than double from a year ago. however, considerably fewer funded accounts in terms of growth this quarter and a potential drop in revenue, and they are citing seasonal headwinds and lower trading activity across the industry. guy: a few months ago, the risks we were focusing on when it comes to this business or payment for order flow and regulatory risk around that. those kinds of issues. the pendulum has completely
swung away from equities, so where does the risk line out? is that payment for order flow risk now fading into the background? dave: the risks are what happens to the crypto markets from here. we have seen trades slow down that peak in may. in the latest quarter, 62% of robinhood's crypto revenue came from that joke currency dogecoin. so if people decide they are not in on the joke anymore, that becomes a concern for the business down the line as well. guy: dave wilson, always a pleasure. thanks very much, indeed. up next, we are going to get to what is happening with the retail story. pretty strong seems to be the narrative at the moment. it is interesting what is happening with clothing. a different picture for green groceries. we are going to get the latest in a moment.
(announcer) back pain hurts, and it's frustrating. you can spend thousands on drugs, doctors, devices, and mattresses, and still not get relief. now there's aerotrainer by golo, the ergonomically correct exercise breakthrough that cradles your body so you can stretch and strengthen your core, relieve back pain, and tone your entire body. since i've been using the aerotrainer, my back pain is gone. when you're stretching your lower back on there, there is no better feeling. (announcer) do pelvic tilts for perfect abs
and to strengthen your back. do planks for maximum core and total body conditioning. (woman) aerotrainer makes me want to work out. look at me, it works 100%. (announcer) think it'll break on you? think again! even a jeep can't burst it. give the aerotrainer a shot. pain and stress is the only thing you have to lose. get it and get it now. your body will thank you. (announcer) find out more at aerotrainer.com. that's aerotrainer.com.
this is "bloomberg markets." let's talk about what is happening in the retail space. i know commodities are your favorite area. alix: i'm a shopper. guy: but i do feel that retail comes a very close second in where they lie. abigail doolittle is here to tell us what is going on. i've been listening to some of the comments, and they are incredibly strong. the ceos are talking about the environment. the equity market, not so much. abigail: maybe not overall, but macy's, up 14%, its best day since may of last year. so investors is bonding well to a strong quarter. they beat adjusted earnings estimates by 559%. they also beat sales estimates by about 12%. so the turnaround plan clearly taking hold. estee lauder also beat, but that gain pales in comparison. if they beat adjusted earnings,
you won't be surprised to see that comp sales absolutely soaring for a second quarter in a row, up 61%. that is just extraordinary. that is the reopening trade right there, after pandemic same-store sales were down for a few quarters. if we break down the earnings just a little bit more, it wasn't just about the results. they also reinstated their quarterly dividend of $.15 per share. so on top of comps, same-store sales rising, on top of saying that sales could be $24 billion this year, dividend back in place, the question is how will the company deal with delta? not only is that the best day of the year, it is the best year right now ever, going back to 1990 three. macy's up about 85% on the year, beating the retail index, also beating estee lauder, so macy's clearly firing on all cylinders. stellar performance. but will delta crimson at?
-- delta crimp that? alix: literally a sentence i never thought i would hear. let's break it down more with paula rosenblum, retail systems research managing partner. is this as good as it gets when it comes to the retail guys who have been operating on all cylinders when it comes to the reopening? paula: for sure. i think delta has created problems that none of us expected. there's all kinds of memes going around about my plans for the fall, and then a long time -- and then along came delta and it changed. think it bodes well. i don't know if it is a rebound due to pent-up demand, but certainly for now, shoppers are really eager to get back in the streets. guy: it kinda feels like people are shopping for fun. i can understand that, i guess, a little bit. it genuinely feels like this is lay leisure activity at the
moment. going shopping feels like a complete relief after we've been all stuck in for so long. i was really curious earlier in the week, the ceos were coming out, call after call, sounding super positive. and yet we got quite negative market reactions. i'm a bit perplexed. paula: me too. quite honestly, it doesn't make a lot of sense. i know there's fear about delta. i know there is fear about sustainability, not in the sense of product sustainability, but the ability to sustain those sales. and there is definitely a sense that delta is going to drive everyone back into their homes. but i am perplexed, and i don't think it is right, quite frankly. because it tells us that the basics are there, particularly in the companies that did really well. take macy's out of the picture, look at target. they only have upside to go. walmart continues to have upside to go.
lowe's has made some strategic shifts that are really helping it. and home depot is doing well. tjx is doing better in its home goods area then it is in its apparel area, but that will rise as well. alix: first of all, retail shopping is leisure. that is a thing. that has always been a thing. [laughter] that has never not been nothing. guy: it strikes me as a bit peculiar, but after being stuck in for so long, even i occasionally now will shop. alix: couple of main events have and for retail, back to school and the holiday shopping season. what is your expectation for back-to-school plus delta, and what about the more foreclosures in china in terms of inventory and the availability of i for christmas? -- of supply for christmas? paula: i've been obsessing and
worrying about the supply chain for a long time, and i don't necessarily blame it on what is going on in china. the carriers do not strike me as having the sense of urgency they need to have to get products unloaded quickly and get containers of products from the u.s. back out to china, so there are some issues there for sure. overall, i think the holidays should be good, unless delta just keeps getting worse and worse. the booster shots are going to help everyone feel safer. and i expect there to be a good holiday season. i can't say i am as bullish as i was a month and a half ago, but i remain pretty bullish. i am baffled by the market, quite honestly. guy: i often am baffled as well. today seems like an interesting kind of point in time to maybe judge all of that. one of the stories we have been talking about that i think has
confounded a lot of people is amazon's share price performance. it has gone nowhere for a very long time. i appreciate that we are all going out and shopping in physical retail stores now, and potential he -- and potentially enjoying the experience. amazon wants to get more into brick-and-mortar. if it does opened apartment stores focus on its own stuff, who does that take business away from? paula: it depends on what they put in them because they are actually not going to be full-sized department stores. theoretically, they would take away from everyone, but if it is all apparel, they are going to have one set of competitors. if they try to be like the next sears, which frankly, i always thought they should do, was buy sears at a discount so they would have ready built locations , it also gives them the option to not ship everything by air because they can take a piece of that store and use it to get
product to customers for less money. alix: sorry, keep going. i didn't mean to cut you off. paula: it is important to understand that most online pure play retailers don't make a lot of profits. we always underestimate shipping costs. just because you have your own plane doesn't mean it is going to save you any money over the long or short term. you are still shipping, still paying gas, still dealing with pilots, still dealing with all of the expense that there is an entire industry built around. there's an old joke about somebody needing a tank of gas in his volkswagen, so he went out and bought an oil well. i kinda feel that way about amazon. somehow, walmart has managed to do fine without its own commuter planes. so i think their goal is to get a bit better to the customer so they are only dealing with the
other miles in bulk. alix: one more before i let you go. luxury retail getting really slammed over in europe. the exposure to the chinese consumer, which could come under pressure as the chinese government really cracks down on billionaires, raining true there. what is your call on it? paula: i thought luxury was going to have issues anyway because i don't think millennials have the same feeling about luxury products as gen x and boomers, and gen x and boomers are starting to age out of that mix. i always expected luxury was going to run into headwinds, and in some ways ironically, part of what will sated -- will save it is the secondhand or consignment market. so i think there's going to be some trouble ahead. i know that fashion in particular and stella mccartney is leading this charge am i really starting to focus on sustainability so that it doesn't feel completely like conspicuous consumption.
the data around the amount of cotton that gets wasted as part of the production process is huge. so she in particular is working very hard to find a way to reuse that cotton in interesting ways. that may help the luxury market, assuming that china comes back to what it was. guy: paula, always a pleasure. great to see you. come back again soon. paula rosenblum, rsr research managing partner. i'm sure shopping is fun. i want to take you to the pentagon. we are getting our daily briefing, an update on what is happening in kabul. army major general alongside john kirby right now. the u.s. now has more than 5200 troops in kabul. it has evacuated more than 2000 people over the last day, more than 7000 since august 14.
industry again. guy: that was the nissan coo talking to bloomberg yesterday. the news overnight out of the auto sector is that toyota has seen shares fall quite significantly after the company cut its september output due to chip shortages. it is projecting a reduction of approximate we 60,000 to 90,000 vehicles in august in north american plants. joining us as bloomberg's craig trudell. my understanding was that toyota was managing this chip crisis really well. in fact, it was outpacing its rivals. is there a connection between we just heard from nissan, now talking about toyota? is this a problem that we are seeing between these two companies, and is there a kind of connection between what they are saying? craig: there absolutely is, and it was incredible, the news out of nissan earlier this week that they would have some downtime at their plants in tennessee
related to issues in malaysia. so this is i think a perfect example of just how far the supply chain reaches for the car industry. so there is a covid outbreak in malaysia, and you feel ripple effects in tennessee. with toyota, you are hearing a similar message where they are talking about the idea that southeast asia is a real lynch .4 them at the moment. -- a real pinpoint for them at the moment. we talked about a plant in japan having a fire, and the industry really having a serious impact from that because this was such a big supplier. toyota really learn from the experience of the 2011 earthquake and tsunami that did such a number on its production back in 2011 and put in place efforts to really try to make sure that that level of disruption didn't happen again. the company really had a heck of a time with managing to limit
the damage earlier this year from the chip shortage, but we are starting to see that combined with just the effects of lockdowns in southeast asia really starting to hit their operations this month and in september. alix: most car companies are getting hit with the chip shortage, so why did this catch the markets so by surprise? craig: i think the combination of the extent to which toyota was able to manage through this up to this point, i think the market was kind of anticipating actually toyota to increase their forecast recently. i think there was maybe a little bit of a shock of oh my gosh, 40% is quite a significant drop for september because it is also a matter of beyond september, toyota warning that there may be continuing pressure. i think we are getting to a point where the industry is really depleted on inventory.
even companies that have managed to keep production going are really low on supply, particularly in the u.s., down to just a couple of weeks across their dealerships. alix: frank, thinks a lot -- craig, things a lot. really appreciate it. joining us for more is robert carter, toyota executive vice president of sales. we learned that we will see a production shut down in some parts of the u.s. because of a shortage. when can the new plants get up and running? robert: good morning, and thank you for having me this morning. as craig just said, we are very proud that we have been managing the supply chain disruptions very well over the last four to six months, but quite frankly, due to the disruptions we are seeing in southeast asia, as well as in europe, we had to announce overnight that we are going to be reducing production in the month of august between
that 60 to 90,000 units. again, we are evaluating the impact on september, but it appears to be 70,000 to 90,000. i will say that this is far beyond just microchips, so the microchips are the center of most of this activity, but we are seeing a wide range of supplier disruptions largely to continued -- largely due to continued outbreaks of covid. guy: you have done a really good job managing your dealership network. you have been really flexible, really coordinated. you actually had a really good communications strategy, and this has been reported pretty widely. what are the dealers saying right now? how under strain is the program? how flexible is it in terms of being able to get vehicles from one place to another, where they
could potentially be sold, to manage that inventory that you do have as nimbly as you can? robert: thank you for that. we communicate extremely well with our dealer and retail partners. where a little bit of frustration is is that natural demand for the industry remains very high. if we are projecting demand without supply chain disruptions , it is in excess of 17 million units on an annualized basis. but as we have been seeing over the last 60 days, the industry sales are coming down to around 14.5 as inventories are totally depleted. last month, we started the month with about 40,000 units in inventory, but yet we are able to sell 225,000 units, and that is because are 15 plants in
north america were continuing to produce, and i are dealers do an excellent job with serving the customer. but now, as we just previously said, the supply chains in southeast asia and in europe are so critical that we are just not able to continue that production for the month of august and it will bleed into september. alix: i wonder what the long-term fix is. obviously we can make chips at home in the u.s. that makes sense. but we are also having partial closures of ports in china, for example. it feels like herd immunity for covid is getting pushed out, and may not be there at all, so this may become a full reality of life. how do you fix it to still run your business? robert: that is a complex question right now. what we really need to do as an industry is solve this pandemic
and bring a safe work environment to our team members. i'm really proud of our 15 plants in north america. we are up and producing, social distancing. we have returned to 100% mask wearing. we do have a very solid plan in north america, but yet we are dependent upon second and third tier suppliers that are coming out of asia and europe. that is really the issue of this problem. so the main moving parts, there are many challenges to solve, but as was pointed out a little earlier, i am confident we can get through this period. but it is going to be a situation where consumer demand is going to far exceed supply for the auto industry over the next 60 to 90 days.
guy: what does this mean for used vehicles and the residual values that they carry? how much longer do you think we are going to see these incredibly elevated prices? we are starting to see some evidence that used prices are coming down. what is your expectation for how steep that curve is? are we going to see reduced prices going forward? robert: it is simple supply and demand, as new cars are not able to meet the current supply level of demand that is in the market, used cars, particularly one to three year used cars, have accelerated price. over the past week, maybe 10 days, we have seen a little but of softening of used-car pricing, but i think that is normal because as we move into late summer and into fall, natural demand tends to subside. i do expect used-car prices to
remain elevated until we see some normalization of new-car inventories. alix: i would love to get your take on the new ev mandates from the biden administration, pushing for 40% of car sales to bev's by 2030 -- to be ev's by 2030. can you meet that? what do you thing of that 40%? robert: we are all in. i will remind your listeners that globally, t oda -- toyota has sold more allete your five vehicles than all other manufacturers combined -- more electrified vehicles than all other manufacturers combined. hybrid is up to 26% of our business. we look to grow our electrified up to nearly 70%.
guy: asian, european stocks getting hit hard overnight. europe is still down, but american equity markets are flat. the dollar taking a leg higher. what does this mean from a technical point of view? we will answer that question next. david sneddon, credit suisse technical analyst, joining us in the next hour. this is bloomberg. ♪
johnson and alix steel. ♪ guy: thursday the 19th. 30 minutes of the close. what do you need to know out of your this hour? european stocks fell sharply earlier on. u.s. markets absolutely flat. luxury, retail and commodity stocks all being hit hard. growth concerns, delta, chinese wealth read is to be in, all of that heading investor sentiment -- wealth redistribution, all of that hitting investor sentiment. david solomon's biggest deal since taking over as ceo. it gives them a big footprint in europe, a bigger footprint in europe. and a large u.k. study shows vaccinated people can carry as