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tv   Bloomberg Markets Americas  Bloomberg  October 19, 2021 10:00am-11:00am EDT

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markets," with alix steel and guy johnson. ♪ guy: tuesday the 19th of october. 30 minutes into the trading day in the united states. so far, so good. from london, and guy johnson. alix steel in new york. welcome to "bloomberg markets." it looks like earnings is trumping inflation, but it is a close battle. alix: it is. how strong is it going to be, and does that outweigh the price increases that businesses are seeing? procter & gamble, really interesting. amanda strong, organic sales very strong, but price input very strong as well. abigail doolittle will take us through some of the results in just a second. the s&p managing to eke out again, but safeties like utility and health care leading the way. you are still getting a move higher on the 10 year.
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you have a little but i incoming on the front end after the hugely rating we have seen in the last couple of days. what is interesting to me, the bloomberg dollar index rolling over 0.4%. that was really hoping the overall commodity complex. also something a little idiosyncratic, coal futures price in china down by about eight sent. china is apparently taking intervention during measures when it comes to the coal price. they can't seem to get a handle on commodity prices, as well as energy prices. at the milken institute in l.a., we will be speaking to scott minerd of guggenheim, mark jenkins of carlyle. guy: the story around inflation
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absolutely front and center. we've got it all covered here yet bloomberg's abigail doolittle is talking about the earnings story today. we also need to focus on this proshares bitcoin etf or get is it really a bitcoin etf, or a futures etf focused on the price action? it is a big day. and joe mathieu is looking ahead to where we are with the president's economic agenda ahead of his meeting with house progressives, which is going to take place a little bit later on today. let's kick it all off. let's talk about where we are. how this earnings story is translating into markets. abigail doolittle, over to you. abigail: we have the s&p 500 up slightly, but lots of laggard stocks are down on earnings reports, in contrast with the banks last week. we see philip morris sinking ever so slightly.
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-- sinking, ever so slightly higher. material costs and shipping costs way nonprofits, and they had to raise their forecast for materials and shipping costs to $2.3 billion, clearly weighing on shares. the worst day of the month of october. philip morris had been down earlier sharply. they beat both top and bottom line estimates, but the supply chain weighing on philip morris as well in the form of semiconductors for their heated cigarette smoking devices. they are going to have a bit of a shortage, and they had to bring in the profit forecast. investors looking past that to some degree. halliburton beat top and bottom line estimates, but that stock is down just a bit. the ceo saying the company is well poised to benefit from the energy crisis. investors not seeing that today. finally, bny mellon beat, but the stock is also lower. let's take one look at the stock that the last time i looked, was up nicely.
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johnson & johnson up 2.2% after they put up a very good quarter relative to earnings. he missed sales a little bit, but adjusted earnings very strong. the vaccine forecast held the same, but they did raise the full year profit view, so it seems as though johnson & johnson, based on what i last saw, this affect it by supply chain issues affecting some other companies out there. guy: the pharma division absolutely knocking it out of the park. we are going to talk a little bit later to the cfo. i am really looking forward to this conversation. such a lot going on with this business, both in terms of its medical devices division, plus the pharma division. joseph wolk is going to be joining us, the cfo. very much looking forward to that conversation. let's talk about what is happening in bitcoin. the first bitcoin futures etf has not started trading on the new york stock exchange. here to talk about what the details are, justina lee, bloomberg markets and quant reporter.
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this is a futures etf. grayscale is looking to convert their trust into an etf that is based on the underlying. let's talk about what we are getting here. how big a step forward is this? how big a day is this for bitcoin land? justina: it really is the day all the bitcoin bulls have been waiting for. it is bitcoins moment going mainstream. that is because it is expected to lure a lot of interest from may be people who were not that comfortable buying crypto directly on the exchanges. so it is expected to bring in more money, and we are seeing that today with bitcoin rallying back to record highs close to the $64,000 mark. alix: it is going to be interesting to see how it winds up trading. i love bitcoin land. it makes it sounds like the latest disneyland attraction. or more on that debut, we will be joined by simeon hyman, profund advisers had of
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investment strategy. senator joe manchin refuses to support this into beat if the president upon climate agenda, putting the entire infrastructure spending bill at risk. here with the latest is bloomberg's joe mathieu in washington. what is the goal of this meeting? joe: there are going to be two separate sessions, one with moderate members of the house, one with progressive members of the house. they will happen at 2:00 and 4:00 p.m. wall street time today. the parents will be in the room, the president, vice president, and the treasury secretary, as we have a family meeting to try to figure out what can be done in less than two weeks. the october 30 first deadline self imposed by democratic leadership on capitol hill, but that is when surface transportation funding runs out, so something needs to be figured out here. we have learned in the last 24 hours, as bloomberg news has reported, that senator joe
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manchin, the moderate democrat in the senate who is a big reason why none of this has passed yet, is concerned about one of the climate provisions, the clean energy provision inside the proposed reconciliation bill. he says it is a nonstarter, so democrats today are going to be talking about alternatives. if this effort to clean up the power grid doesn't work, is there another way to do it, maybe a carbon tax? or is the potential for a deal here for joe manchin? could coal plants in west virginia may be get some of the incentives were laid out for utilities, pursuing between energy as part of that deal? all of that remains uncertain today. the reason why we are really focused on the climate as well is because on that same day, october 31, that is when joe biden heads to pop 26 -- heads to cop-26, having already called out other member nations for not doing enough. the white house says they are
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feeling a sense of urgency. there has been an increase in the number of meetings happening , and calling everyone on the carpet today, they hope will generate some type of deal on infrastructure and reconciliation. guy: the british prime minister is hoping president biden shows up with something in his pocket as well to that meeting. we will look forward to maybe get in some progress a little later on today. bloomberg's joe mathieu, thank you very much, indeed. joe will be following the story for bloomberg's "sound on," today at 5:00 p.m. new york time. talking of the british prime mr. , our editor-in-chief john micklethwait had an exclusive interview with boris johnson. the prime minister acknowledging the challenges that lie ahead in terms of the negotiations surrounding those climate talks. pm johnson: we need to keep 1.5% alive. we need to restrict the growth
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in temperatures to 1.5 degrees by the end of the century. we think that with the commitments we are seeing, we could do it, but we are going to need to see some real action from the participants in glasgow. guy: they are managing expectations, and they are managing expectations down. bolsonaro is not going, xi is not going. we don't yet know about india and whether there and remote he is going to be showing up. if the president of the united states shows up with nothing in his pocket, this may amount to nothing, or something that really doesn't look like it is going to have any meaningful impacts. alix: i'm really interested to see how the energy crisis we are all dealing with right now plays out at cop-26. there will be two very stern schools there.
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like, we can't let go of coal, for example. we need more natural gas. i feel like there is a potential for it to be much more contentious because of that. guy: you've got two constituencies. you've got the global leadership , which probably are on board with the idea that things need to move forward here. then, as you say, with rising energy costs around the world, you've got another constituency that votes for that leadership, which may be souring on this whole idea really quickly. i think that is going to be something, that dual challenge of convincing leadership, but also convincing be populations of these countries that they should be going along with that as well. it is a massive challenge that is getting harder. alix: especially here in the u.s. bloomberg opinion had a piece looking at how bifurcated and opposed the climate change fight has become in the u.s., and how it has become another party issue, not a global health issue. it will be hard, especially if president biden can't deliver anything cop-26 at the same time. guy: basically, joe manchin is
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in charge of this whole process. alix: i can't believe he waited this long to drop the coal bomb because anyone could have seen that one coming, because he's from west virginia. for some reason, he waits until now. anyway, that is the layout, the drumbeat into that. coming up on this program, fund managers are souring on their global growth perspectives, according to bank of america. we love the fund managers survey. we will get more on that with kate fattah's -- with cate faddis, grace capital president and cio. this is bloomberg. ♪
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>> central banks are at a place
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where, for the first time in a very long time, they are facing constraints. >> the fed needs to redefine what they think of as an acceptable employment level or they are going to stay too loose, too long. >> anytime the fed whispers they are going to tighten, we see the wall of worry increase and markets trade-off. >> the central banks are now running the markets. >> the question is whether the economy and the west can function with the central bank being ever present, and the answer is we don't know. >> they may make a policy mistake by waiting too long. guy: some of our guests at the milken institute global conference, speaking to bloomberg television over the last 24 hours. it is interesting to see what is happening with investor behavior on the of this. some are convinced it is still transitory.
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nevertheless, you look at what is happening in the bond market and the selloff we are seeing, and that is being backed up with this bank of america survey. alix: it is such a good snapshot of where we are. about 69% of investors still see inflation as transitory, but you have the author highlighting that disconnect between the growth optimism and the allocation for stocks. so investors feeling much more pessimistic, like global profit expectations are now negative, the lowest since may of 2020. but you are looking at stocks trading right around there's record highs. guy: joining us now to discuss all of this, cate faddis, grace capital president and cio. let's talk about where we are. last time i spoke to you, you said you've got to stay invested. you can't bailout of this market. that was the conversation about equity markets. you have in some ways been
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vindicated the price action since then. we have bounced off the recent lows. are you still as comfortable with where we are? the fund managers survey still showing clear direction towards equities, but people are getting nervous. cate: no change. you have to look at the fundamentals. you can't look at the tape and get scared or excited. what has really changed? interest rates are still zero. where are you going to put your money? we have baby boomers that are retiring. we have 401(k)s that need a place to go. they are going into equities. i don't see anything changing. alix: what about on an eddie is in credit basis -- an idiosyncratic basis? we did the semi thing, but now with procter & gamble, organic sales were good, but they are getting hit on so many input fronts. cate: no question.
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the supply chain is a huge issue. i think it is going to prove to be a multiyear issue. you've got things held at the port, and then you have people moving from china to vietnam, from china to mexico, staying domestic. i thing this is a big secular shift, but i still don't think there is anywhere to go with this wall of cash. increasingly, the wall of cash is also being invested passively, so it is just unstoppable. guy: if you are selling bonds, what would you do with that money? with that money go into cash, or go into equities? would you be upping your allocation towards equities at this point? cate: i would be upping my allocation to equities. to stay in cash, waiting for what? who's to say when this is going to change? let's say it does change. bear markets don't last very
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long. bull markets are enduring. i would stick with equities. alix: where? cate: great question. [laughter] energy looks interesting here. energy looks very attractive here. absolutely tech. i keep talking about the silicon valley tax we all have to pay. you have to stay in tech. i would still stay away from staples. i think staples are tough. i think materials are tough. i would stick with reeds. industrials for me are also tough. they face all the headwinds. the problems with the supply chain, all of those problems. i would stay away from industrials. guy: talk to me about rate sensitivity because it does look as if, back to the bond conversation, the yields might be continuing to climb higher. walk me through the arguments about all of those areas you just laid out and overly 50 basis points of additional yield
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on top of the 10 year, and how that would impact those areas. cate:cate: the rate conversation is very different than it was 10 or 15 years ago. in or 15 years ago, rates meant something. today, the marginal buyer and seller controlling the rates is the bank of japan, european central bank, the fed. for me, i don't read any information from what is going on in rates. the fed could simply decide to buy more, and you see the opposite thing happening. so i think a lot of the rate talk is lost. alix: it is such a great point because it has made treasuries a really ineffective way to hedge. sometimes 60-40 portfolios work, and sometimes it does not. we are seeing increased volatility, though. where do you go to hide out in that? cate: i would hide out in equities. i just don't think there is any alternative.
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you can go into bonds and wait for what? what tells you now is the time to go back into equities? it is very hard to do. i think strategically, you have your asset allocation and you stick with it. it is not easy to do, but i see you stick with it, and until i see something that tells me there is a fundamental shift, this is what i am doing. alix: and that is the point. we are seeing sentiment versus the actual underlying equity market, that is a great case for why. good to catch up. cate faddis, grace capital president and cio, thank you very much. coming back, we will go back to the milken institute global conference and hear from scott minerd, guggenheim cio, next. this is bloomberg. ♪
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alix: live from new york, this is "bloomberg markets." it is day two of the milken institute global conference, this year answering oak us on disruptions and innovations brought on by the amendment. bloomberg's caroline hyde is there with scott minerd, guggenheim cio. caroline: thank you so much. 250 billion dollars of assets under management, one of the main focus is an asset management right now. what they might not know is he is recovering from covid right now come along covid. it is good to have you here. this is tough on your immune system. scott: it is very hard. i've now inherited the gene zero jones voice, so i will be doing voiceovers. [laughter] but it is really interesting. i didn't know this, but if you have had the vaccination, covid symptoms are not the same as if you didn't. so i had virtually no symptoms,
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but i just started getting very tired, so i finally decided to have a covid test. i found out i had it. from that time on, i have been suffering with almost a chronic fatigue syndrome. it is getting better slowly, but all most everybody i have discovered that gets this in a vaccinated state ends up with this long period of fatigue. in the worst case, it can last for a year. i think i can do it better than that, but thank you for asking. caroline: thank you for bringing your resources, your energy, when i'm sure it is particularly hard at the moment. we are at a time when covid is still overreaching our economy. people are still suffering such as yourself, and we are living in this remarkable situation where valuations are extraordinarily high and we are in a perfect storm having to do with the supply chain. it is a -- is anything out there of good value right now? scott: i don't think there is value to be found anywhere that i can identify. the shiba coin is now, if you
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put $1000 in then, is worth $2.1 million today. it is pretty impressive. but i am not even try with holiday value -- would even call it a value. this is a case of able market. the thing that is different about this one is in other bull markets, you can always find isolated pockets or other sectors to go to that were cheap, so you could diversify and get rid of risk. everything here is so highly correlated based on all of the global liquidity from the central banks. i'm not going to say that we are in imminent danger of a collapse in prices, but it is a case where they say bull markets are when things are expensive and they get more expensive, and i think that is the world we are in. not a world i am terribly comfortable in. i am more value-oriented. but you just sort of have to go
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with it and try to be as prudent as possible. alix: be comfortable --caroline: be comfortable with being uncomfortable. even as we see stimulus, we are not withdrawing stimulus. we are to slowing it down. we could see volatility, we could see a sick and selloff. do you think that is a risk? scott: i don't think right now it is. i had written a piece about two months ago, three month ago, how i was concerned about the resurgence of covid and the delta variant. we could get a pullback in risk assets. i think we have had it. i think last week, the surge we got in equities marked the bottom. seasonally, stocks do very well between here and there. it is spilling over into other asset classes like crypto, so you see bitcoin and what has done over the last few weeks, i can't tell you it is a value,
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but i won't tell you that you should short it because it is likely to be higher in the coming months. alix: would you --caroline: would you go into the bitcoin futures etf, or would you go long bitcoin itself? scott: bitcoin in end of itself very difficult. you end up, you have to be in something that is a tradable vehicle like an etf, so i think etf is a very interesting development, especially for institutional and individual investors who don't know how you buy bitcoin, how you set up a while it, how you safed keep your bitcoin. because if you just leave your bitcoin in your wallet, it can be stolen, so you have to go safed keep it somewhere. so there are companies that do that, but that is really complicated. our biggest issue is how would we clear it. state street didn't clear it.
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so we ended up having to buy it through a closed-end fund. but now an etf would be an even better form. caroline: 400,000, i remember that number. do you still see that this wall of money, the fundamentals which were in place at the moment, will drive assets such as crypto to that sort of level? scott: i think so. people say to me, why are you so bullish on crypto? i got to tell you, i think 70% of the coins out there are garbage and will go away. question is, just like the internet bubble, which of the companies survive. will amazon be the big winner? of course, if you are old enough like me, you were member failed and amazon was a bookseller that changed the world. alix: what price did you by amazon at originally? scott: around nine dollars, and i was a genius.
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it went to $14 and i sold it six months later. i'm an investment genius. [laughter] so how do you know which of these coins is it? but one of the things people forget about money is money as a social good. i think money is something that governments create. no, money is something that society creates. for instance, if you were in a prisoner of war camp in the second world war, the common currency of money in the prison camps was cigarettes. so people create this. when i saw bitcoin back when it was $100 and i didn't buy it, i was fascinated because to me, this virtual currency is the future, and now the question in my mind is the central banks obviously see it as a threat, so what are they going to do around regulation? what competitive currency are they going to develop, like the chinese with the virtual rnb?
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the central banks can't just sit by and watch this go on and play out without their involvement. so i think we are in a period here where we are going to have a shakeout, but will be shakeout come before we get to 400,000? i will tell you right now, if you want to be long cryptocurrency, probably now is not a bad time to get long, but we bought in around $20,000, and with $50,000, i thought we could do a 50% correction. we sold. as i tell people, the line from baron von rothschild, when asked what was the secret of his great wealth, he said i sold early. we made money. the pullback came. we didn't reinvest because i thought we could potentially get much lower, and we still might come about i don't see it happening right now. caroline: is there anywhere that is cheap?
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scott: no. caroline: is there anything that is on investable? for example, is china on investable? scott: i think china is un investable. china is doing a bond issue. 30 years at two point percent, no. if you want to tire money up with china for 216%, that i encourage you to get out there and do it and lock it in while you can. but there might be some bumps along the way within the next 30 years. caroline: i could talk to you for so much longer. we wish you well. we wish your immune system well. thank you for giving us always such insights. scott minerd, guggenheim ceo. $250 billion of management under assets -- of assets under management, guy. guy: it is interesting what he has to say about the here and now. scott minerd, the guggenheim seat i/o -- the guggenheim cio.
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he talked about the recent low. he says he thinks at the moment, we don't look at risk of a significant selloff. alix: really great stuff when it comes to crypto, particularly the bitcoin futures etf that just started trading and how, for institutional players, it is a pretty good idea because it is hard to trade the physical asset . i thought that was really interesting as well. he also said 70% of crypto coins are garbage they're going to go away. that is kind of fun. guy: which 70% is what i want to know. alix: exactly. guy: what they are creating here is effectively a bet on price action. this is about price action rather than owning the underlying. that i thing is going to be the interesting difference between proshares is doing and what grayscale is doing. alix: 100%. you can see gold doing something
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similar and different types of investors and that and how you hedge it. let's get back to the market here. you've got j&j really popping now, up about 2.5 percent, reporting a really solid quarter, boosting its 2020 one profit forecast. going to for more is joe wolk -- joining us for more is joe wo lk, j&j cfo. it was a really great quarter. up 11% so far your to date. it is hard for other peers to really match that. how long cannot go on for, and what products are going to be the next catalyst to keep that kind of growth rate? scott: -- joseph: we think a kid no one -- we think it can get one for a long time. we are very impressed with our partners in immunology and oncology. we will have the opportunity to speak with investors on november 18 and showcase some of our part
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acquisitive -- some of our pharmaceutical leadership. but part of our pipeline we have been investing in for autoimmune diseases, we are very excited about the future. with ink it can go on for quite some time, and that above market performance is also despite price decreases of about 5%, so the team is doing a fantastic job. we continue to elevate the level of investment in r&d. through nine months, we are 23% ahead of last year's record setting year in terms of r&d investment, so we are meeting short-term expectations, positioning ourselves very well for the remainder of this decade. guy: good morning. it is guy in london. to carry on with what alix has been talking about, get a gold star for the amount of tax this company has paid this quarter. any cfo would be proud of the
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amount of reduction you have been able to generate. that is that may or may not be sustainable. how sustainable do you think it is? joe: that was heavily influenced by one favorable adjustment. there's some legislation that was may be clarified from regulation across the globe. all those kind of seem to fall in our favor. i would never get too caught up in one quarterly tax rate. i appreciate the gold star, but i would look more towards the full year outlook around 16%. alix: are you expect thing at some point higher taxes may be coming from d.c.? joe: we continue to monitor that. i think it was very interesting and some of the data that came out in the last few days, where despite lower rates, the government actually took in its highest level of tax receipts. so anything about tax policy, you certainly want to create
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jobs. you want to create growth. you want to make your companies based in the u.s. competitive yet i would say the lower tax rates have certainly served us in that capacity. i mentioned the r&d investment we are able to make to fortify the long term. at the time the tcja 2017 was passed, we committed more to the u.s.. that was better than $30 billion, and i am happy to report we are well ahead of that number. that is translated into certainly a healthy business, but also about 3000 to 4000 more jobs at johnson & johnson, so we think the current tax policy works extremely well, and when you balance that with some of the government out of it just came out in terms of the record receipts being received, we would see no reason to change at this point. guy: as you mentioned a moment ago, knocking it out of the park when it comes to the pharma business. you ran through how you think
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this is going to be sustainable, but you've got circa $31 billion sitting in cash in markable securities right now. my question to you is how are you going to use that money, and you think that pipeline needs augmenting? joe: we are always looking to augment our pipeline. what we do is we look for a strategic fit and find that by either having scientific expertise or commercial paper ability that complements or logically expands the platforms that we know so well, and then we have another test, and that is the financial component. are we not only covering the cost of capital, but also a risk-adjusted factor with the risk that we are bearing on behalf of shareholders, making sure that we cover that? our executive committee meets with the segment heads just about every month on opportunities, really on a need to basis with was back to looking at external opportunities, and about 50% of
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our growth over the last two decades has come through in a granite means. we've got a great ecosystem of innovation with our facilities, as well as our development core. alix: we can't let you go without talking about the covid vaccine, obviously. how soon do using drew's can be available in the u.s.? with this potential to mix and match vaccines, you think you can really have the same kind of take as we saw in the beginning? joe: we will let the science play out here. the fda approval is likely in short order based on some of the comments out there, but we will respect the scientific obsessed. in terms of supply, we should be able to meet with our nine manufacturing facilities producing covid-19 vaccines across the globe. we should be able to meet whatever demand is out there. we will continue to watch the situation. i do encourage investors, and i
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did this on the analyst call this morning, that the vaccine for johnson & johnson really presents only upside. the strength of our business, the growth you have seen across all three units, is really the story of not just last year, but this year as well, and i think it is the story of the future. we are certainly proud of the contributions we have made to end the pandemic, but investors shouldn't get overly giddy or pessimistic with respect to vaccine news. guy: stock is up 2.5%. you are obviously doing something right this money. joe wolk, johnson & johnson executive vice president and cfo, think you very much, indeed. guy: coming up, mark jenkins, carlyle's head of global credit, coming up from the milken institute global conference. this is glenn burke -- this is bloomberg. ♪
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>> this is "bloomberg markets." i'm john hyland. you are looking at the principal room. coming up, and interview with ed
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bastian, delta airlines ceo. this is bloomberg. ♪ guy: 42 minutes past the hour. covid reshaping the way investors do business. caroline hyde is at the milken institute global conference with one of the top voices in the field, mark jenkins, carlyle's head of global credit. caroline: he is indeed one of the top voices. it is great to have your voice on the show. we were just saying how covid has reshaped the world of credit investing. how has it? we keep hearing this wall of cash, desperate to find a home. is every thing overvalued? mark: one, there is a wall of cash. generally in alternatives, there has been an increase in that area over the past 10, 15 years. the market has moved from roughly $300 billion in 2008-2009 to over $1 trillion
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today. but when you put that in the backdrop of what overall equity and bonds are in the public market, which is like $200 trillion, it pales in comparison. i think there's been a number of things that have driven that over the past several years. one, we are a lower rate environment and have been in a lower rate environment for quite some time, and people are rotating out of fixed income into private credit to pick up that yield in their portfolios. we have also seen more public companies go private and stay private longer, so there's twice as many private companies owned by private equity today then there are public companies. finally, the banks over the past decade have been retrenching from the leverage lending aspect of the market. so private capital has come in to fill that void. alix: --caroline: but has it driven valuations to lofty? are things too risky when you have more private opportunities
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and more and more money going into it? mark: one, all you asians across all asset classes today are high. we are seeing that in the equity market in particular. that is a good thing for us from a credit perspective because it gives us a bigger margin of safety, a bigger cushion for the lending we are doing. if you actually look at pre-and post-pandemic equity cushions, it has actually increased materially since 2019, so that is a good thing. secondly, cash flows are up for corporate's. leverage is up on ebita basis because of the growth you have seen on the top line in the bottom line over the past 12 months or so. so i think from that perspective, we feel pretty good. if you look at, but i really look at and what investors are looking at, what is that spread between the public merkin alternative and the private? that has stayed relatively stable over the last 12 to 18 months. to been in on what asset class you look at, it has been roughly
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120 to 130 basis points of pickup, going from a public alternative to a private alternative. so i think the value is still there for investors. caroline: do you look through cycles? does it matter to you whether everyone is now thinking the federal reserve is going to tap on the brakes? mark: interest rates are relevant in terms of what is that going to do to valuation most importantly, so we look at that, but there's two things to consider. one is the majority of our product are floating rates must they are basically short duration. as long as you are in good companies and good credit, you are benefiting from that. number two is people, our investors are looking for us to invest in cycles. they are not buying to get. we do have some strategies that do that and we are able to pivot on our platform to do that, but by and large, people are looking for steady, persistent returns
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through cycles. that is what we are supposed to deliver. it is the expectation of what you have in your policy portfolio as an overall investor because we are just one component of a very large portfolio for many of our investors. caroline: most portfolios are now becoming more tuned to where they want to put on a moral perspective, aligning with their values. yes g, environmental and social governance. is there enough transparency in this space? are you able to measure the impact? mark: it is like i say with the hybrid work environment. what does that mean? for me, it means three days a week in the office, two days of working somewhere else, and we have stuck to that. but generally, it also comes down to measurement and standardization. as you noted i think in some of your prior sessions, we have basically teamed up with calpers to have a convergence of data on esg and how that measured across
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private asset portfolios. that is just one way we has a firm are trying to drive that forward. but from a firm perspective, what we have said it yes g has to meet all of our investments, all of our credit investments, and in credit in particular, we can up with an esg risk framework using the sustainability framework to help us identify and measure risk in our portfolio and put a rating on it so that we have portfolio managers can identify the risks going in and what we hold in our portfolio, and importantly, we have just recently raised a $2 billion credit facility for global tied to those metrics, so if we are performing well, that will lower the cost of delivered line we are using on behalf of our investors. two it is a real way to demonstrate the power of esg. caroline: and incentivizing it. mark, good to speak to you. mark jenkins, carlyle head of global it. alix: thank you so much,
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caroline. really appreciate it. that was a good conversation. coming up, after years of delays and setbacks, the first bitcoin linked etf in the u.s. is finally trading. we have the proshares bitcoin strategy etf that started trading about an hour ago. we will talk to simeon hyman, the company's global investment strategist. this is bloomberg. ♪
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>> bitcoin in enough itself is very difficult. you end up, you have to be in some thing that is tradable like an etf. so i think the etf is a very interesting develop meant. alix: that was guggenheim's scott minerd speaking to us moments ago, talking about the fact that proshares bitcoin strategy etf, the first bitcoin linked exchange traded fund, started trading in the u.s. here
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with us now is simeon hyman, proshares global investment strategist. this is a big day. it has been long in coming. what kind of take up do you expect? simeon: we are really excited to bring the first bitcoin linked etf to investors as an important opportunity for them to conveniently invest in bitcoin in the regular brokerage account , any regulated futures market and in a plain old etf wrapper. we think this will allow many people have been waiting for an easy way to do this to now be involved and have it in their portfolios. guy: do you think the average investor is going to understand the difference between a cash settled futures etf and an etf based on the underlying? do you think the average investor, the investor you are talking about, is this the right product for them?
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simeon: we want them to understand because we think there are some key advantages. there have been a growing group of experts who have been writing that the futures market is one of the best places for price discovery in bitcoin. you see this in other asset classes. in credit default swaps, they reflect price more quickly than cash bonds. so to some extent it is a feature, not a bug. there is trim in this volume here as well. the futures market trades 40% more volume than the largest u.s. bitcoin exchange. so it is not a second-order choice. we think it is quite a robust one. alix: some etf tracking futures have gotten into trouble, particularly when you have to roll over some of the futures contracts because there's a lot of selling on the front months. did you guys structure it in any way to help that issue? simeon: we are focused on the front months because that has historically had very good
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tracking to spot bitcoin, high beta, high correlation. in the month of september, the average difference between the near month and the next month contracts on any given day was about 20 basis points. that would annualize to about 2.5% which we think compares really favorably to lots of other ways he would get exposure. we run a mutual fund running the futures-based approach to bitcoin that we launched in july, and through last friday, the bitcoin reference rate that amalgamate a few exchange prices was up 51%. our mutual fund running the futures strategy was up 52%. the gray sales trust was up 37% in that period. so we really do think this is a first-class way to have exposure to bitcoin in addition to being a convenient way. guy: do you think most people that use it are going to be using it for price action?
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i.e., they are traders rather than investors? because a lot of people are certainly buying bitcoin for trading purposes. they like the volatility. they like the price action. you are building here a perfect vehicle for them. why do they need bitcoin when they've got you? and if they got you, is there a danger that the underlying actually becomes affected negatively as a result of that? simeon: a couple of key points here to make. this will absolutely be a vehicle that will be attractive to both folks who will use it longer-term in their portfolio, but also to the trading community. but this again is a really important and valuable feature of the etf market. think about this. you buy and hold this for whatever it may be, 3, 6, 9, 12, 36 months. one day you need to monetize it. you are going to be really happy that there are traders involved in the space to make sure that they trading is really
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efficient. we think this is a landmark in the broader bitcoin ecosystem that is going to bring even more liquidity to the marketplace in the evolution and maturation of it. guy: it has been a long time coming. it is a huge day. thank you for taking the time to speak with us today. we really appreciate it. simeon hyman, proshares global investment strategist. we are just about wrapped up for this hour. up next, an exclusive interview with the u.k. prime minister boris johnson. he sat down with our editor-in-chief john micklethwait. really looking for to digging into the details of that. alix: i really want to hear what he said about the energy crisis and what that means heading into cop26. a lot of diverging views. this is bloomberg. ♪
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>> the countdown is on in europe. this is "bloomberg markets:
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european close," with guy johnson and alix steel. guy: tuesday the 19th. 30 minutes to the close. boris johnson unveils his plan for green britain, but tells bloomberg that tough negotiations lie ahead. russia says europe won't get extra gas until it gives the green light to start supplies via nord stream 2. what does it tell us about the winter ahead? the warnings on supply chain shortages continue as the european it earnings season rolls on. let's talk about where we are right now. we are bouncing off section lows -- off session lows, up 0.3%. the recovery has been fairly


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