tv Bloomberg Markets Americas Bloomberg December 21, 2021 10:00am-11:00am EST
alix: 30 minutes into the u.s. trading day. here are the top stories. no lockdowns. president biden addressing the nation on the plans promising 500 million free tests. we speak about where the novavax fits in. what would single and unviable dip. and turkey's de facto rate hike. president erdogan promising to do more. from new york, i'm alix steel. welcome to "bloomberg markets." if we can't take yesterday's price action seriously, do we have to take today's seriously? when do we get a read?
guy: today is less useful than yesterday. the volume is down. i don't think you are getting a particularly high --. it does not feel convincing. yesterday was interesting inasmuch as what we saw there was actually reaching into different places into the market. that was fascinating, because that wasn't just we are going to sell big tech, we are going to sell everything. that may be an interesting narrative. alix: the rotation in the market, it is hard to know if there is a story we can take out period pfizer down 6%. the biggest drop we have seen since june 2020. magan micron performing. how they fit together -- microsoft and gas performing.
how they fit together? guy: we need to get people back or maybe they don't. maybe omicron figures in. there are a lot of things hard to judge at the moment. the market is struggling with it. the clear take away and it was pointed out earlier on was take a look at the nasdaq moving, the market bounces off and that is just repeating time and time again. that comes to the question of the day -- what signals and unviable dip? the market is absolutely conditioned to continue to buy the dip. let's kick this around with our guest, kathryn rooney very, and vincent. what do you make of the price action over the last couple of
days? today does not feel convincing. we are bouncing off the hundred day moving average. the trend largely feels intact. vincent: we are bouncing off the 100 day of the s&p. it has been the same pillow that captured and held the markets pretty much into 2021. you also made a good point about volume. a lot of traders are selling back more trimming positions than aggressively trading. longer-term positions are taken off a bit. no one gets paid a bonus on what they get paid in december. can you can only get bonuses taken away. a lot of folks are stepping back and watching. i don't think you will get a good read into we get our teeth into 2022. alix: looking up the market,
casado sciences was up 50%, now up 30%. that means day traders clearly in the market. it is great to see you, what signals and unviable dip? kathryn: the definition of something that will bounce back. a major correction would have to be precipitated by the market realizing or knowing for sure the fed is not going to be there to support it. a loss of credibility by the federal reserve or not just a change in tune but a complete 180 degrees shift in how the fed engages monetary policy i think would be what was startled markets and cause a major downside reaction. that is if the fed doesn't just taper altogether and hike rates are just something like that.
that would cause the market to lose faith and the upside moves we have seen for the past decade. guy: it has been about a decade. have you been surprised how well equity investors have taken in their stride with the fed has done? we had an accelerated taper of the market yet still good to go. we have three rate hikes raised in for next year, we are good to go. what fed policy would actually change the narrative that the market is comfortable with? what would it take to get over that hump? how should we think about the fed and the way the market is reacting to it? kathryn: the fed. -- the market sees the fed as infallible. it is astounding to see this little reaction. instead of two we have three
rate hikes and a doubling of the taper, certainly more hawkish on the central banks saying inflation is enemy number one to the economic recovery. the market is unscathed. that tells me the market is already discounting and economic deceleration, which is inevitable, but also that the fed is able to tackle inflation so that there is inflation and we realize it and the fed has it. so what could really deconstruct that pillar of the market mentality would have to be that instead of hiking rate inflation doesn't come back and that won't happen until the second half of next year. we say the risk is still on, stay long, it is a buying opportunity. continue risk on positions but hedge those.
by those sectors, and we have set it, by asset classes and those that can protect the other portion of your more risky portfolio. alix: by the dips dot, dot, dot until it changes. vincent: it wasn't a risk off day as it appeared. people seem to be wanting to say it was a reaction to the build back at her plan -- build back better plan. i think going into next year we see two sides. as long as the market feels the fed still has their back to manatt that they are going to raise rates but that they have a handle on inflation -- the fed
still has their back and that they are going to raise rates but that they have a handle on inflation. guy: we have any really strong run what does the street tell us about what next year could bring? what are the chances of repeating another year like this year? vincent: history tells us there is always an opportunity for a pullback and you get that by the dip scenario. there is a very good chance we could see a 20% correction next year. it are two things going on in the market i am not crazy about. a dip in personal spending and personal income. if that wages -- if that
continues and we don't see an increase in wages, the opportunity to spend is lower and earnings are lower and stock prices have to come down. unless we see a push from the consumer to have wage control and to get an increase in wages, we may very well see three to six months from now a major correction and equities. alix: 20% correction in three-month is a serious prediction. let's play the what if game, what goes on sale if we see something that dramatic? kathryn: what goes on sale, yeah , if we get a 20% correction and it depends on what the correction is, but real wages are what you need to be looking
at, especially if we are talking about inflation and how persistent or how the fed must've been jumping when they said persistently transient, if you get real wages that are continually and persistently increasing as we have seen, is that is not counter weighted by productivity gains which jay powell has considered loosely -- has consistently said that is the case. if we get a drop in productivity, then we get serious inflation is -- inflation pressures from the wages. if omicron ends up exacerbating the issues we have seen with the global supply chain, then the question becomes a bigger issue. my biggest concern remains the risk of policy error, either the fed has to? up rates -- has to jack up rates
or a more dovish stand and let it on flowed because they are concerned about growth. the fed is comfortable at this time. i do think the fed is going to give inflation a path for the next six months. i'm in the more bullish camp for the next six months. we have heard q3 fed powell expects it to decelerate, and i expect we will see more movement throughout the monetary policy front. we will break this down. kathryn rooney very will be sticking with us. if this -- eight position for
>> i have been optimistic from the lows because it is altar accommodative. as the central banks move offset to accommodative pivot, it means returns are still going to be positive but lower. in that environment, i simply think it required a little more of a balance between risk on stock and risk off stock. guy: andrew simmon of morgan
stanley talking about how the fed will affect the market. kathryn rooney vera is still with us. morgan stanley cautious on their position. they make some interesting points about what is going to happen. we have gotten conditioned to the idea we are delivering and able to manage outside returns. it has been a fantastic year this year. maybe we go into low single-digit or high single digit, but it will be single-digit. in that kind of environment, do i want to position for the dip? do i need to keep capital back to take advantage of those opportunities or do i just want to be fully invested throughout this entire process? kathryn: it is a fantastic idea to have some dry powder on the sidelines for any potential dips. there are questions still in the
air, not only from the covid perspective but the monetary and fiscal policy perspective, as well as with economic growth. is it going to be a steeper slowdown than people expect? we have also heard from goldman sachs and they reduced their economic outlooks for 2022 for the u.s. economy a couple times in the past week already. it is a fantastic idea, but i agree we have to be defensive. we will find sectors and regions that dried the u.s. performance a little bit. health care in the u.s., valuations are still attractive. we expect some sort of the steepening of the curve for next year. rate hikes a beneficiary of that. europe and japan still have dragged u.s. performance and additional upside there.
within the emerging market space, there are opportunities. the market always presents opportunities. we still see some now, while we are seeing upside in equities over the course of the next six to 10 months. we are actively advising clients to engage in those has some cash but hold a position in gold and alternatives, names that have lower correlation with equity markets. alix: does that imply a weaker dollar relatively? kathryn: the dollar has countervailing wind. we expect the fed to rake hearts with the counterparts in europe are not owing to be doing so -- to rate hikes while the counterparts in europe are not doing so. i think structurally the dollar is weaker and going weaker, but
over the course of the next year, there are some countervailing wins to that -- winds to that theory and that is what the fed is doing it with the central banks are doing. guy: where specifically are you looking? you talk about emerging markets as if they are in one bucket. how do i separate them? kathryn: latin america presents interesting opportunities. we had a shock election in chile and peru and some surprises. next year will be a tumultuous year because we have additional elections that could jolt the markets. there are opportunities in brazil and mexico in fixed income and equity spaces. there are energy based names we find attractive in the fixed income space because they have a
juicy yield and in the equity space. within china, we like chinese consumer discretionary. china has been beaten up over the past couple of months, so we see some opportunities there. all e.m. are not created equal, but we see opportunities, especially in china and brazil into somewhat in mexico. alix: what kind of policy support do you think we will get on the monetary and fiscal front in china that would support your view? in theory they have to do that in order to help people buy stuff. kathryn: what does it support my view, my biggest fear is that the chinese authorities decide to devalue. i think that is a possibility, because if they are excepting full economic growth, 5.5%, are
they willing to see their market share appreciate in terms of exports? this is for me one of the biggest risks is the potential devalue of the yuan to support the markets. that goes against what the 37 trying to do we just make -- what the authorities are trying to do which is make china a superpower. that means they need to support the domestic demand. to be supportive of my view, the authorities would have to continue their structural objective of getting china from an export powerhouse and roads to nowhere economy by government spending towards one big private investment and private consumption. that is the direction this economy is going. that is why we recommend this in this area. guy: do i buy direct or proxies?
alix: nike, nike. guy: do i buy nike? they are struggling in china. does that stock turn around and do we see consumer stocks focus on in the past come back? can i buy u.s. multinationals and your multinationals to take advantage of that? kathryn: i would buy actively managed funds focusing china. there are some excellent ones out there and we will not pretend to be experts on the subsectors and specific names, but what we are recommending is managed funds focused exclusively on china. that is where we think value is and where we put more faith in the ability for active managers to do that. that is probably in of our most
important emerging market recommendations. there is the devaluation risk and additional variance and cultures and the potential for -- to happen. with the fed hiking and global economic recovery and the vaccines at least improving the fatality rate of covid victims, i think there are opportunities in those undervalued areas, such as china and some emerging markets such as europe and japan. alix: thank you very much. coming up, we will talk about nike. shares up. consumers will not have to worry about the air jordans making it under the tree. that is next. this is bloomberg. ♪
guy: shares of nike up. ritika: nike beating earnings estimates, not the first time. they have beating -- been beating them since the 2020 pandemic halted global spending. a little diversions when it comes to who is driving the sales. compare the north america sales and almost equal to the amount north america is. in nike's earnings, the united states driving those and helping offset cost and loss of sales you are seeing on the other side
of the world. a lot of that driven by delays. you see it and broader retail sales data when it comes to the zero covid testing policy that has created tight instructions. nike's note exception to margin pressures. this is the fiscal quarter. you start to see margins down 15% to 12% in the latest quarter and that will be a major issue going into 2022 as we talk about the supply chain issues. alix: thank you so much. coming up, new york city mayor bill de blasio talks about $100 to get your booster. this is bloomberg. ♪
abigail doolittle has details. abigail: a little rebound of stocks after the three-day selloff. a gain of a half percent for the s&p 500. nasdaq up .3%. bigger gains for the russell 2000. you can make the case for a catch-up trade. the bank index up more than 2%. that has everything to do with the backup in yields. we have 10 year yields up eight basis points. this was after the fed went more hawkish with yield flat, but looking at a five day chart of the 10 year yield, this is the fed meeting, basically at the same level. around trip, one year yields, up, up and away, suggesting we
may see yields go higher from here. as for the s&p 500 and the rebound rally, we can see that earlier this year in september suggesting that investors didn't know. now the 50 day moving average, above slightly. let's see where we go towards the highs there. there is some reason that we could see that case where they go towards the highs of the range. what way will it break? hard to know, but probably a 2022 event. guy: do you buy the first one and sell the second one? we will find out. president biden's economic agenda might not be dead in the water after all. bloomberg has learned there may be a path open for more talks with senator joe manchin.
amadou harder -- annmarie hordern joins us to talk about what he might talk about. senator manchin with a phone call, what came out of it and do we know where the areas of progress would be. annmarie: the fact that the door is not completely shut does seem like the phone call went well between the president and the senator and this evening summit -- this evening, senate democrats will be speaking, a telltale sign and whether or not it goes forward will determine if senator manchin joins. he wants to make sure they tackle taxes and paying for universal pre-k for 10 years. one issue that will be a sticking point is the child tax credits. what the progressives want and
what the president wants and they run out at the end of the year. that is something senator manchin wanted to have more about if they go forward. these will be the questions the president will face if he takes questions this afternoon, when he gives his speech on covid and hospitalizations and if there are need for service members to help and also testing. they will have more pop up testing locations, the first in new york city where you see lines wrap around city streets. they will send home 500 million testing kits that want them for free, something europe has been doing for quite some time. alix: too little too late, or will that be enough? thank you to annmarie hordern for joining us. we will bring you president biden's speech. the policy response, we are
joined by katherine baicker. thank. the idea -- thank you for joining us. the idea that we are going to have more testing, will it be enough to stop the surge? katherine: having as possible while keeping economic activity. no one wants to go to a world of lockdowns. having tools to keep us healthy while socializing or working and being out in public seems a vital. guy: is testing a smarter way to change behavior than say it mandates? we are trying to force people and pay people to get vaccines, however some people are resistant to that. handing out free tests i wonder
is that away to get more people to alter their behavior, to recognize the risk rather than forcing them down one particular avenue. katherine: i think we want to incentivize lots of behaviors at the same time. having free and readily available testing will be helped but we want to continue to intense -- incentivize vaccinations. they are much better than transmission alone through masking, handwashing, and testing. all of them are important but they are complements to vaccinations. i would like to see positive incentives on all of those behaviors. alix: we expect to hear that there will be no restrictions on -- lockdown restrictions from president biden. do we need downs when it comes to schools? katherine: if we can properly incentivize people to get vaccinated, get boosted, test
regularly, and pcr testing suggested with exposure, but home testing before the small gatherings, if we could incentivize those, we wouldn't need to have a lockdowns. it is important that people use those slayers. the negative -- use those layers. there has been evidence that the negative incentives on mandates ve had limited effectiveness on people's havey are. -- people's behavior. guy: is what we are seeing with omicron which is becoming the dominant force across europe and increasingly in the united states, is this playing out in the same way the previous waves have? are there critical differences we need to adapt? i am wondering if the playbook
from delta is the same playbook we should be having for omicron. katherine: what we are hearing from epidemiologists and medical professionals is that the waiting period may be shorter for omicron, meaning it is important have readily available testing, because you may not have as long a window to catch people before they start infecting their neighbors, colleagues, classmates. that will change the playbook a little and up the importance of the toolkit we have been talking about. alix: we are not going to get the free tests until january. what would have to happen for us to walk into a cbs and -- cvs and get a free test? is that something we can implement here? katherine: there are a couple that have to fall in place.
we need the supply of the tests and i understand that is gearing up but we are still short with the supply chain problems we have seen. there is also the free part. we need to make sure the funds are in latest, whether it is through private insurers or the government, so people don't take any -- have any financial barriers to getting the test. and we have to make sure that tests and vaccines are available to people that work around their school and work schedules. we need supply, money in place to do it, and the convenience to make sure it is readily available in people's realize. guy: in an ideal word, let's say there are no shortages on tests, how often with omicron do you think i would need to test?
you said the gap between getting it and becoming infectious is incredibly short right now. we are seeing -- i have seen examples of that anecdotally in my own life. you can see the impact of the spread of that person gabbing at -- person giving it to other people. how often do you think we need to test? katherine: i am not a medical doctor or an epidemiologist, but i understand the importance of incentives and externality and how your havey are affects others around you. thinking about the times you are at risk of transmitting the disease. that will vary person-to-person whether you can work at home or work outside, whether you are in conjugate settings or more on your own.
whenever you are at risk of spreading the disease to other people, that seems like a good moment to test and make sure there are both the economic incentives and the social and behavioral norms. we know people respond well to monetary incentives and behavioral nudges and we want to get both in place. guy: it is the modeling, i am curious as to how it affects the models and how quickly transition works off of that. and as you say, how people are incentivized. at the moment, even rapid testing is causing gaps in the system. we appreciate your time. next, we are going to speak to the novavax ceo who had his vaccine approved in the eu. we are getting news from the fda
with the fda expected to authorize the pfizer and merck covid pills this week. further tools in the toolbox for dealing with the omicron wave. alix: that would be the first at home treatment for covid-19. nike is saying the supply chain issues may be over. what about retailers? we will talk to a ceo of a sportswear. this is bloomberg. ♪
reinforcing the need for coronavirus vaccine booster shot. two shots of the astrazeneca vaccine protects for only three months after the second dose. the u.k. relied on it for primary inoculations. the turkish lira swung wildly after gaining 50% this week. though there i fell by a 7% against the dollar. that is your first word news. guy: let's talk about what is happening with covid-19. when it verged -- emerged nearly two years ago, it upended retailers around the world but brought long overdue changes. romaine bostick takes a look.
romain: disruption in every sector of the business but a severe blow to retailers now proving to have the most transformational industry effect. >> retailers like 9/11, it is a hurricane. romaine: physical stores closed doors and customers locked home. it turned into a year-long struggle. the struggle was insurmountable for some retail change in many of the mom and pop stores disappeared overnight. it spurred overdue change that has been increasingly seen as a net positive for global retail, which has seen at harlingen -- startling turn. >> you have the dollars to spend, retailers giving innovative products. romaine: the pandemic gave the incentives needed to commit to e-commerce. >> how they want to shop,
whether that is a box on their doorstep or a drive took to a parking lot or a classic in-store trip. romaine: in china, live video streams. in mexico and russia, more secure payment systems. in brazil, instant messaging platforms offered promotions and finalizing transactions. in the u.s. chains added video calls to allow for big purchases. brick and mortar is far from dead. physical shells are still where the overwhelming goods are brought. in the u.s., expected to add 4000 locations, marking the first increase since 2017. many of the biggest chains drawing more shoppers than before the pandemics, and the
combat is a big reason why the reta has surged, beati the s&p 500. the intervention -- the innovation, brick-and-mortar, and e-commerce have allowed us to recover and come out stronger than ever. now, will the changes stay resilient in the face of omicron. alix: you can hear more about how covid change retail and art special today. we are joined by tim boyle. it is always good to chat with you. we have had a journey how retail has evolved. what is your visibility for 2022? tim: we thank our lucky stars every day we are not in the clothing business making neckties and sport coats and tuxedos, because people have adopted a lifestyle that is
reflective of what they wear and it is in many ways an outdoor lifestyle. it has been great for our business. i think the expectations for 2022 and beyond will be the same , more outdoor activities for families and people interested in staying healthy and safe. guy: the real surprise to me was not actually on the front end. it was logical that retailers went to e-commerce and just accelerated a trend we were already on. the real surprise when it came to the retail sector was the supply chain story. it wasn't the demand side, it was the supply-side. in terms of how much progress has been made there, what is your perspective? we clearly see bottlenecks continuing. are they abating? what lessons have you been learning?
what can we take forward from here? guy: our company, like many others, had a heavy reliance on vietnam, or merely because vietnam had a terrific labor force, high-quality labor operators, and the government of vietnam had done a terrific job of negotiating with various vendor countries, including the u.s., russia, canada, etc., on favorable duty rates. it was a naturally good place to go to get merchandise made that is high-quality. i think what we have learned is you should have some sort of variation in your sourcing base, which we have, and that has been a learning for us. i would say that the constraints around the logistics area that we have all talked about have been much more pronounced in the u.s. than they have been in
other parts of the world. alix: i am assuming you are talking about things like labor and i am wondering, what is your biggest inflationary headache and how do you see that evolving? is it permanent or does it revert back? tim: the biggest impact for us has been the logistics issues, getting merchandise from asia to the u.s.. we ship merchandise all over the world from asia and by far the biggest impact has been in the u.s., where established processes for receiving merchandise are just not as forward or as advanced as they are in other parts of the world. i would expect over time there will be additional investments in automation in the supply chain, and that will ultimately end up moderating the impact of the labor cost increases we have
seen. guy: can i come back to the demand side of the equation? the u.s. consumer is now facing high gasoline prices, high heating bills, higher mortgage costs, it just goes on and on and on -- what impact do you think that will have on discretionary spending? what impact will that have on people wanted to spend money on your gear? tim: it is hard to know, but americans and consumers in general are going to be buying merchandise. our job will be to outcompete or for consumers discretionary spend. we think being in the outdoor business, the outdoors are available to everyone, and they can be inexpensive. people can go for a hike at a park, spend time outside with their kids, go play golf at a
municipal golf course or really anywhere, and those are not expensive activities, and people can be safe there. we have seen a tremendous uptick in activities in the outdoors. alix: can you give us a real-time indicator on what is happening with omicron and are you dealing with any staff outages, shutting down, seeing change in short-term spending patterns? tim: our operations in switzerland have been reduced significantly. they have reduced the amount of people allowed to go to the office. those are areas where we have seen impact real-time. guy: and has been great to chat. thank you very much for providing us with that. tim boyle, columbia sportswear chairman, president and ceo.
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♪>> the countdown is on in europe. this is bloomberg markets: european close with guy johnson and alix steel. ♪ guy: the countdown is on, stocks bouncing back, 473 up by around 1.3%. it is on light volume. i'm not sure how much signal there is here. the dollar going down a little bit of a fraction. the euro is up. gas futures absolutely surging here in europe. we have seen a reversal in the pipelines. gas out of germany and into poland. that has got the