‘Bloomberg Surveillance: Early Edition’ Full Show (08/24/2021)

‘Bloomberg Surveillance: Early Edition’ Full Show (08/24/2021)

the question is are we on track to fulfill our objectives of this operation to bring out our people so many of those afghans who helped us and so many of those afghans at risk and we believe we are our engagement in southeast asia and the indo-pacific is not against any one country nor is it designed to make anyone choose between countries i think he’s articulated what the fed’s policy uh is in a very clear and consistent way so i don’t see any reason why he wouldn’t be reappointed this is bloomberg surveillance early edition with francine laqua [Music] well good morning everyone and welcome to bloomberg surveillance early edition on this tuesday the 24th of august i’m francine lachlan here in london and here’s what’s coming up on today’s program european stocks extend their rebound after the fda approves the pfizer biontech shot joe biden urges companies to impose vaccine mandates on staff u.s president is set to face calls from allies to extend the evacuation deadline in afghanistan g7 leaders meet virtually today and chinese tech stocks rebound from near record lows boosted by a buyback from tencent and cathy wood’s backing of jd.com now joining us to talk to everything markets and i mean everything markets is eddie van der valde from our m live team eddie for i know you want to talk about gold i know we have stuff on cryptocurrency to talk about but actually it’s crazy 24 hours you get an fda approval like a full approval and now suddenly everything’s on track and actually the economy is fine and the markets are up absolutely there’s nothing there’s nothing like price to change sentiment right um look i think there’s this there’s a lot to be optimistic about out there i think one of the big things actually is this idea that um we’re sort of in a reverse goldilocks at the moment if you see what i mean there’s just enough doubt about the delta variant that the economy that the the um central bankers will worry a little bit about tightening policy at this point in time yet growth is quite quick and and we’re seeing this this dip buying in china and i think that’s helping that’s helping sentiment a lot yeah i mean technology stocks were definitely up in china we had a morgan stanley know that was quite interesting actually with one of the analysts saying you know this is the the time to buy casino and and cruise ships it’s timing everything as we get into the winter months i i read that note tonight it’s really interesting that you know the talk that this is the moment to really get in on the reopening trade because i thought that’s what we’ve been doing since last march right but but but i get it uh you know there’s there’s a lot of liquidity in the system still the central banks are a little bit cautious about raising rates too soon and yet you know we’re seeing people getting vaccinated around the world and we’re seeing that happening faster and we’re seeing you know mortalities are not picking up as quickly as they had in in previous rounds of infections so i think there is a there there are reasons to be optimistic underneath all of this eddie jackson but are we expecting too much of jackson hall you know i think the central bankers will be like i said cautious particularly the fact that they have been forced into doing this virtually right that i think that since a powerful um message to central bank is that it this has not gone away there are going to be problems going forward so jackson hole is going to be pivotal one way or another but i think at this moment in time the the the pivot is slightly more towards a cautious central bank okay i need to ask about cryptocurrency because actually there’s an atm in el salvador i mean suddenly i know we’ve been talking about el salvador quite a lot but you can actually trade transactions yeah are we going to see that kind of move from other countries you know i mean the cryptocurrency space is really interesting at the moment because i think on the one hand yes there is this push towards bitcoin as a currency but i think there are more important things happening in ethereum and you know other cryptocurrencies and i think that’s really where the interesting uh developments in this place are happening eddie thanks so much eddie van der vaal there from our m live team now we’re also joined by francesco sandrini senior multi-asset strategist at amundi francesco thank you for joining us a lot of questions of course on the markets a lot of questions especially on the kind of markets that we’ve seen over the last five to six weeks which is one day you buy on dip but the other day there’s concern about the economy the next day you know markets forget about the economy are you worried about some of these moves some of the choppiness maybe in the next in the short term basically in the next couple of weeks yes of course it’s a very misty situation first of all because uh there are there is a macroeconomic backdrop first of all where we we tend to see some weakness developing if we have a look to the consumption patterns in the united states but also the manufacturing the empire index that has been released we see that we have already been peaking in terms of microeconomic activity and this is the direction we are going in europe as well despite of the good numbers in terms of pmi we saw yesterday so there is a macroeconomic situation which is uh slowing down then of course there is the entire discussion on jackson ola you discussed that before and this is going to be perhaps an event that is less important that originally thought and then last but not least what comes out out of china we have two situations developing in asia china a per se is a quite a decent socratic situation with a wave of regulation developing and mounting and this is uh the so-called common prosperity program that uh has still to be digested and understood by western investors the second one is uh in south asia with covet yeah so francesca overall are you expecting equities to actually continue rising so this is you know what we are trying to figure out and if you look at the difference between people who believe that the s p 500 falls and the ones that think that it actually rises that gap has hasn’t been wider in a decade so what’s your take on it are we going to see momentum continue into these markets or is it really time for a healthy correction it’s time for an ethical action we believe because of the reasons that i was outlining will not be a very deep correction because the fundamentals still still are quite quite resilient but that’s the time where we need to have some edges in place because of the mr situation i was describing in terms of macro and in terms of regulation coming so what kind of corrections are you expecting and does it actually impact most we are expecting we are we are expecting a correction on the equity markets between five and seven percent primarily because of the fact that uh margins are historically very high we are coming out from an earning season in q2 which has been extremely positive a lot of companies have been raising their prices to respond to increasing pressures on the cost so the situation is a situation with valuations that are quite stretched we deem this approach this environment very fragile and in this fragile environment monetary conditions macroeconomic slowdown affecting growth and slowing down in key regions like china including the covet situation in southern asia can be a problem for this kind of growth model so francesco do you believe that actually treasuries at the moment are probably the safest assets because they’re priced correctly yeah we don’t think that the treasuries uh in this phase will increase their yields meaningfully they will trade on a range for a quite a foreseeable future between the 120 and 130 and then of course a little by little they will increase but it can easily be the case that credit is a nice place to be at the moment at least awaiting a change of inflation regime that at the moment is difficult to foresee so yes we need to keep the portfolios extremely balanced in this phase keeping committed to risky assets but with hedges in place because why whilst at the same time the macroeconomic conditions are still resilient there are issues that could emper and have a negative effect on very high valuations that have been developing during the summer francesco thanks so much francesco sandrini from amundi stays with us and we’ll talk a lot more about some of these lofty evaluations that francesco were just alluding to now you can catch all of our special special coverage of the jackson hall meeting right here on bloomberg tv that’s on friday at 3 p.m uk time coming up oil’s steady after its biggest surge in months iron ore jumps as investors hope for more infrastructure stimulus in china we’ll dig into all the latest commodity moves next this is bloomberg [Music] economics finance politics this is bloomberg surveillance early edition i’m francine like right here in london now let’s get straight to the bloomberg first world news here’s leanne garen hilian francine uk defense secretary ben wallace has acknowledged it’s unlikely the u.s will extend an august 31st deadline for leaving afghanistan the evacuation from kabul is set to dominate a virtual g7 summit convened by prime minister boris johnson later today the taliban has warned the august 31st date as a red line and that it will take action if soldiers aren’t gone by then now the u.s vice president says beijing poses a threat to countries in asia and is using coercion and intimidation in its territorial claims in the south china sea speaking in singapore kamala harris laid out america’s vision for a region built on human rights freedom of the seas and unimpeded commerce our engagement in southeast asia and the indo-pacific is not against any one country nor is it designed to make anyone choose between countries instead our engagement is about advancing an optimistic vision that we have for our participation and partnership in this region [Music] and campaigners have singled out big accounting firms for failing to highlight green issues as protesters gather in central london hundreds of extinction rebellion supporters assembled in trafalgar square on monday as they started two weeks of protests over climate change the group says accountants are complicit in greenwashing global news 24 hours a day on air and on bloomberg quick take powered by more than 2 700 journalists and analysts in more than 120 countries i’m leanne garrens and this is bloomberg a francine leanne thank you so much now commodities are in focus again today as expectations of a recovery and economic growth are buying assets iron ore futures in singapore have surged as much as eight point seven percent following the approval of the pfizer biontech vaccine in the us after jumping more than five percent yesterday snapping its worst losing streak since october 2019 oil holding on to gains this morning bloomberg intelligence though says this optimism could be short-lived at least for oil our analysts say that fed taper talk could see oil slump back below 50 in the next two months well we’re back with francesco sandrini from amundi francesco if you look at some of the benchmark and some of the assets it’s very clear that commodity-rich currencies and commodity reach industries have also swung around quite a lot i mean what’s your take on commodities overall that there are no these situations to see a commodity super cycle developing for a lot of reasons are related to the to the leverage cycle as well so we think that commodities are approaching a level which is their equilibrium level so it’s difficult to see discontinuing because of this reason we see that all the sectors that are related to commodities like the cyclical sector some of the value sectors i’m referring to materials i’m referring to to energy are perhaps still a little cheap but not very far from their fair value so that’s exactly also what the market seems to discount the market pays a lot of attention to a lot of quality sectors uh trying at the same time not to be too committed to all those value sectors related to commodities that seems to be to some extent arrive at the to the level in this business cycle so we do not think that there is still a big upside yeah so there’s not a big upside in your i mean we’re talking about some of the aloft evaluations as well francesco i don’t know how much you look at china i know we talked about it a little bit but how much do you look at some of the exposure of stocks to china right now yeah china at the moment is a big question mark for everyone because there is a huge uh wave of regulation coming we have already seen 32 regulation act only in the last 12 months in a lot of sectors starting for technology so talking about valuation in this environment in china is extremely difficult said that having this transition in motion from an historical point of view china and the world conglomerate of the merged markets look cheap but it’s a cheapness that in our opinion that is still a little problematic to create a catalyst to enter into emerging markets because it’s a little like catching the falling knife so we need to have more visibility on how the regulation will affect the profitability of companies especially in china and this is an important driver so because of this reason we try to be quite cautious in emerging markets despite of valuation of course in emerging markets every metric is better than the one that we are seeing in the developed markets where from every point of view price earnings prior to book value price to sales companies are getting a little expensive with very high margins historically francesca is there anything actually in the emerging markets that you would look at right now though i think that is very important to try to be on board on uh some of the themes that will shape the future in china so we need little by little to consider to enter in sectors that will benefit from this huge wave of reforms undergoing uh consumers uh healthcare those are typically the sectors that are catching our attention in this phase right because we are in the middle of a big transition that will try to reduce the profits of large corporations in order to improve this common prosperity program the excision being seems to be quite keen to discuss during this program these are the sectors we are looking at francesca what do you do with gold right now i don’t know whether you look at gold or cryptocurrency i know it’s a loaded question no we we cannot look at cryptocurrency as a company we made the desire these decisions so we’re looking a lot about gold uh gold is an asset class that normally uh benefits from real interest rates going down so this is a good situation and this is the reason why you are seeing some rebounds in the gold valuation approaching the 1800 uh gold will benefit a lot from what will be discussed in jacksonville especially on friday with the testimony of jay powell and uh until when interest rates will continue to stay extremely low and rear rates in a negative territory below one percent gold will be a good asset class to be invested i think that uh after the cyclica rally we saw in november last year uh this is a good environment to stay exposed in gold as an edge also francesco thank you so much as always francesco sandrini their senior multi-asset strategist at amundi joining us this morning now coming up chinese tech stocks rebound on buying from kathy wood and tencent we’ll look at that story next this is bloomberg [Music] economics finance politics this is bloomberg surveillance early edition i’m francine lacquer here in london now chinese technology stocks rallied for a second day a sentiment was boosted by 10 cents buyback and as kathy wood also bought back into jd.com after a strong set of results beijing’s crackdown on tech firms though persists as a right-handing giant deity shelves its european expansion plans amid ongoing drama with authorities while bloomberg’s tom mckenzie joins us now the expert on china tom first of all good morning and it’s so nice to have you in the studio i mean what’s crazy with some of these chinese technology stocks is that they’re down they’re down they’re down oh no today they’re up and this kind of has to do also with some of the support maybe from pboc uh possibly yeah and not just up a little bit a lot a lot right i mean it’s a jd.com up more than 15 the last time i looked of course the session in hong kong has just closed out but you’re seeing gains double digit gains for likes 10 cent mae twan uh jd as i say alibaba posting some strong gains in the session today as well so part of it you did have the pboc coming out and saying we are going to support and ensure there’s enough credit in the system after that drop-off in july particularly focused on smes and the real economy that was the quote from the pboc governor egon this seems to be more about evaluation so the hong sung tech index it’s down close to 40 percent year to date the rsi was suggesting that it has it is oversold so you had a dip buying very aggressive dip buying it seems over the last two days that index now it is close to up to close to nine percent gains just over the last over the last two days and it’s the lack of new initiatives on the regulatory fund it hasn’t gone away but we haven’t had new initiatives spelled out so who’s dip buying like i keep on reading kathy wood the great believer in chinese tech in tesla and cryptocurrency has basically been buying some of these stocks out yeah and this was just a few weeks after she essentially said she was zero on exposure to chinese equities but this is the debate that’s been going on you’ve been having this with your guests so i know it’s to whether or not china is investible or not and it’s still mixed in terms of what we’re hearing but clearly there are enough investors on the sidelines with cash ready to get in at the right price and that’s what we’ve been seeing over the last few days and particularly when it comes to some of these blue chips as alice you’ve been telling us where the fundamentals longer term if you’re prepared to hold for six months plus according to to one of the uh people quoting bn story today then you’re looking good because the fundamentals of these companies despite that regulation pressure remains for the long term at least solid okay dd so i i’m imagining that actually uber you know uber drivers across all of europe are saying okay they’re not they’re not coming into europe right now this is because of concerns over what they do with their data yes so they of course have faced scrutiny in beijing over how they handle the data there now there’s a concern about the scrutiny they might face in other jurisdictions in europe uk germany france those are all countries they had planned to expand into this year the daily telegraph reporting they’re going to shelve those plans for at least a year our own reporting suggesting that some of the head count that they’ve been adding in places like london but also germany france that’s going to be scaled back part of that again is scrutiny from lawmakers in the uk those other jurisdictions that’s a concern uber has a more than 10 stake in dd but also going toe to toe in europe would have been a challenge for that company certainly so some relief as you say for uber in europe at least now underpinning all of this and i really want to ask you about you know regulation we kind of sometimes forget you know there was a national people congress last week and they kept on reminding us that this is about a healthier and also more equitable society so crackdown could continue absolutely and what we’re looking for is how that crackdown is implemented so fleshing out the framework in terms of that regulatory push in areas from healthcare to real estate to technology to education we have the framework we saw that with the five-year plan what we’re looking for are the details as to how the changes in rules affect those individual sectors and how they are applied as well because it’s implementation that’s also always always key tom thank you so much our tom mckenzie they’re experts on china now later on we’ll also be speaking to ark invest chief executive kathy wood on the company’s outlook including its recent buyback of jd.com shares that’s at 4pm new york time 9pm in london don’t miss that interview coming up we talk about the g7 we talk afghanistan and of course kabul airport this is bloomberg [Music] european stocks extend their rebound after the fda approves the pfizer biontech shot to joe biden urges companies to impose vaccine mandates on staff the u.s president is also set to face calls from allies to extend the evacuation deadline in afghanistan g7 leaders meet virtually today and chinese tech stocks rebound from near record lows boosted by a buyback from tencent and kathy wood’s backing of jd.com well good morning everyone i’m francine lackey here in london welcome to bloomberg surveillance early edition on this tuesday the 24th of august so joe biden is set to face another grilling over his withdrawal from afghanistan today the president’s closest allies including the uk’s boris johnson are set to ask for an extension to the window for evacuating civilians from kabul airport at the g7 meeting of this even as the u.s says it’s on track to get all americans out of the country by august 31st the taliban have warned of consequences if there is a delay here’s u.s national security adviser jake sullivan the question is are we on track to fulfill our objectives of this operation to bring out our people so many of those afghans who helped us and so many of those afghans at risk and we believe we are but for some it is the manner of the withdrawal that is the greatest cause of concern leslie vince marie head of the u.s america’s program at chatham house says that america’s decisions have set the stage for a crisis of confidence amongst its closest partners well we’re joined by leslie vince murray now we’re also joined by our opinion columnist bobby goshu today has been writing about joe biden’s belief that the taliban is suffering from an existential crisis so thank you both for joining us leslie if we start with you who is having the most existential crisis i mean is this one of the trickiest situations for joe biden maybe more than the withdrawal the way in in the way you know has been done we see pictures every day harrowing from afghanistan and kabul airport well francine as we all know though this is the situation is by far the worst for those people in afghanistan and especially those people who have no hope of leaving and and won’t be favored by the taliban so i think that is as we all know the first and most uh most important priority is that humanitarian situation obviously uh joe biden has felt very strongly about pulling the united states out of afghanistan this goes back to around 2009 possibly earlier so for him it’s painful to see it uh unfold in this way his decision has been deeply challenged by the uk by by nato by europe uh by many in the u.s but again many americans have wanted to get out of you know the so-called forever wars for a very long time nonetheless dealing with this level of crisis at the same time bear in mind that kovid is spreading across the united states at higher rates than we’ve seen for several months and their question marks about his domestic agenda so this is not a not not a nice time for the president but he is seeing through something that’s absolutely critical to his foreign policy agenda bobby us president joe biden basically says you know the taliban are going through an existential crisis you um very you know well thought in a very well thought out article you explained also that you know the taliban have to govern a country which is much bigger which is much younger than 20 years ago it doesn’t seem they have an existential crisis because the funding keeps on coming well yes they they they’re not well known for self-analysis and self-doubt the taliban they are they are a very good fighting force they’re capable of of raising funds to keep an insurgency going it seems like the president president biden needs the taliban to have changed so what he’s saying when he says that he thinks that they’re going through an existential crisis when he says that he thinks they want to be part of the international community they want to be part of the global economy he needs that to be true because he’s made a huge gamble in afghanistan that depends on the taliban having changed that depends on the taliban behaving in a responsible recognizable fashion but the taliban are not saying or not signaling the same things never mind what their spokesman say in press conferences in parts of the country that they have been running for now several years they’ve not been behaving in any new way they’ve not been showing anything to suggest that they’re interested in change leslie this also points to i guess massive intelligence failures right it’s unfathomable to think that just two weeks ago we were talking about kabul falling within you know three to four to six weeks and actually took three days for the taliban to come over how does america today understand taliban and afghanistan well you know on the question of intelligence there are certainly reports coming out that there were cables from the state department us expressing the urgency and the rapid strength of the taliban that the cia had issued warnings nobody knew how quickly this would happen but there were certain plenty parts plenty parts of the u.s government of the intelligence agencies that had expressed this concern but intelligence is a tricky business ultimately this was a policy decision it was a decision taken by the president uh but we are going to be hearing the analysis of this for a very long time i think francine that one of the things that will be critical now is uh people will evaluate president biden they will look to afghanistan in the course of these next few days and next few weeks certainly the days approaching the august 31st to deadline then how this is handled over the next couple of weeks is absolutely critical but then remember and this is you know getting to the g7 those broader questions about how to manage stabilize uh invest from a humanitarian perspective in afghanistan prevent a terrorist threat re-emerging these are all very difficult very challenging very important questions um that are going to be difficult to manage when they’re really there’s no international presence within the country and bobby we also hear of door-to-door manhunts right happening in certain parts of afghanistan are they are the taliban united well yes they’re united that doesn’t mean that they are a monolith they’re different factions within the taliban as is often the case with insurgencies there are parts of the group that are more extreme than the other parts but to the point that leslie was making just now these questions that that the western world has to ask themselves these are questions that should have been asked and discussed uh by the people who will be meeting in the g7 uh meeting today they should have been discussing these things before biden made the announcement and that’s the big frustration for america’s allies in the g7 that they were not properly consulted that biden did a did a trump essentially and pulled the rug from under their feet and they’re now struggling they’re scrambling to try and deal with the consequences but leslie do you think that they weren’t consulted or it was just a massive failure of analyzing the situation on the ground you know it’s it’s it’s clearly very complicated anybody who was listening to president biden throughout frankly his time as vice president on through the campaign trail through his inauguration knew that it was a question of when rather than whether a question of how uh obviously um it’s a decision that was seen to be and seems to have been unilateral in the short in the moment that it was made uh consultation wasn’t um what it should have been and and i think the g7 is going to be working very hard today to demonstrate to the world that they are aligned at a time when clearly there’s a lot of fracturing but the need to come together on these big questions of will there be sanctions what how will the question of recognition be dealt with how will the grave problem of immigration of refugees of investment in those processes all of these are critical it’s a time to pull together but very difficult when the united kingdom we saw that fierce debate in parliament and so many others feel like they weren’t consulted but this is a president who feels passionately that america has overspent and is it has taken a toll on boys and girls men and women american citizens and others who really shouldn’t be there when there’s a mission that hasn’t been focused and hasn’t frankly had the chance of succeeding beyond that very narrow and very immediate goal which emerged right after 9 11 which was getting rid of al qaeda the threat to the u.s homeland and to really manage that terrorist threat the president feels like that goal was achieved frankly quite a long time ago and that the u.s simply shouldn’t be in this will radicalize other countries well it’ll certainly send a signal to to radical groups and and insurgencies around the world um they will feel uh heartened by what they regard as the taliban success we’re already seeing congratulatory messages to the taliban pouring in from other islamist groups around the world and it will make america’s allies around the world wonder whether the united states has their back all right thank you both for joining us bobby and leslie there leslie vinder murray head of the u.s america’s program at chatham house on our bloomberg opinion columnist bobby joining us this morning now coming up kamala harris kicks off her trip around southeast asia by warning countries about the influence of china we’ll talk more with leslie benjamin about america’s role in the region this is bloomberg so [Music] economics finance politics this is bloomberg surveillance early edition i’m francine lacquer here in london now let’s get straight to the bloomberg business flash here’s the end gareth hilian hi francine the boss of the world’s biggest index provider has shaken off concerns about the investability of chinese stocks following beijing’s recent crackdown in an exclusive interview msci chief executive henry fernandez told bloomberg tv that china’s markets have quickly rebounded in the past [Music] to see how it all shakes out but i think it’s important to keep in mind that you know countries go through periods like this there is no country that is exempt about this including western countries and richard branson’s virgin orbit is going public in a spat deal that values the satellite launching company at 3.2 billion dollars the merger with next-gen acquisition is expected to provide the new company with 480 million dollars in cash bolstering its capital until regular launch operations are expected in 2023 boeing is among investors putting 100 million dollars into the company and that’s your bloomberg business flash francine liam thank you so much now vice president kamala harris has warned that china poses a threat to countries in asia whilst reassuring nations in the region that the us won’t force them to choose between the world’s biggest economies she made the comments in singapore during the first leg of her trip to southeast asia where she reiterated washington’s commitment to the international rules-based order in this region we have long put forward a vision of peace and stability freedom on the seas unimpeded commerce advancing human rights a commitment to the international rules based order now as we face threats to that order i am here to reaffirm our commitment to that vision while still with us is leslie vinja murray head of the u.s and america’s program at chatham house leslie if you look at the u.s china relationship i mean it seems a lot more complicated than face value absolutely and you know what’s very interesting about the vice president’s trip is it’s you know signaling on many dimensions that despite you know to our earlier conversation the uh the crisis in afghanistan that the united states is going to remain very focused on that strategic relationship on the so-called china challenge and you know kamala was saying very clearly that china is a threat in the south china seas to the rules-based order uh but she was also then subsequently signaling that positive agenda of cooperation a you don’t have to choose if you’re a neighboring country in asia between the united states and china which of course is what they all fear for very good reason and also setting forth a a series of measures on which the united states and singapore will begin to cooperate and drive forward a positive agenda in which the united states has it has an influence over the region i think people have been waiting to see whether the united states will have a more developed strategy not only towards china but importantly across the region on the economic front part of the measures that have been announced are about climate which of course is right at the top of the agenda for cooperation globally but especially in asia uh one of the u.s semiconductor firms announced on the back of the vice president’s speech that they would be increasing their investment in singapore and semiconductors so all of these measures again very important signaling given the timing that the united states will take those challenges very important and move forward on that agenda leslie so on timing because we don’t have a trade war or at least not as explicit as under trump is that why we’re seeing this regulation from china do they feel emboldened by this administration i think that china understands the stakes are very high um that this is an administration that as you indicate is moving far beyond intends to move more comprehensively towards thinking about the the threat that china poses economically across a number of dimensions it’s a much more serious game there’s a pause right now because of afghanistan i think there’s a question mark about whether the united states will lose its way and lose its strategic focus and whether the the us and its european partners will um disintegrate in terms of their ability to cooperate with with respect to china so china’s watching this carefully they’re watching the g7 um and um of course they’re very deeply concerned about what will be coming out of the united states and and this is the sort of first signal of that leslie on the domestic front in the us nancy pelosi is also trying to resolve uh this showdown this very important showdown that we’ve seen for example in the house on the economic plan of joe biden so she’s trying to resolve the showdown between a group of moderates on um you know the economic agenda if she fails to do so it could put the three and a half trillion dollar budget blueprint at risk some more moderate democrats while backing the 550 billion dollar infrastructure bill also nervous about the price tag of the full budget so can nancy pelosi keep it together well this this is really a challenging moment for her it’s it is exactly what we expected to see at one level trying to balance the progressives in her party the moderates and to deliver she’s very committed to delivering on by these economic agenda of course um it seems unlikely that she’ll get that full budget through the question i think is not so much whether it gets through or not but in what form at what level what measures are taken off what are those negotiations look like but the sequencing here is really the interesting question and the fact that so far nancy pelosi seems to be making the decision to put forward the budget uh the budget first and infrastructure second of course um not something that’s making the moderates happy at all they like to see that infrastructure which has bipartisan support delivered delivered quickly in timely fashion so that they can benefit it’s it’s desired by the american people but it’s also politically popular um but but i think that nancy pelosi doesn’t want to give that until she’s gotten that broader agenda through so it’s going to be a very tough negotiation she certainly got a lot of history and a lot of experience doing this kind of work but it comes at a very difficult moment where a number of people are worried about inflation they’re worried about spending um and now they’re they’re in again is this distraction of afghanistan distracting from the perspective of the u.s that’s raising questions about biden’s ability to govern leslie thank you so much leslie murray that our head of the us and america’s program at chatham house joining us this morning now coming up hedge funds are hot again the industry is off to the best start since 1999 investors risk missing out though more on today’s big take story next this is bloomberg [Music] economics finance politics this is bloomberg surveillance early edition of francine lacquer here in london now week returns dizzying out floats and poor prospects that’s been the story for hedge funds in recent years with central bank intervention draining volatility out of markets active managers have actually struggled to beat cheaper index trackers but the tide is also turning as a group of hedge funds are off to their best start since 1999. now for more on all of this let’s get straight to our hedge fund reporter nishant kumar nishan first of all congratulations on a wonderful big take i know it’s out today and i urge everyone to read it on our website or on our bloomberg terminal so what’s behind the hedge fund come back it really has to be performance and performance in a tough market like last year one of the key factor that led the decline in the hedge fund industry is some of its big blue chip names were struggling for much of the lost decade that all changed in a big way last year so you had likes of breven howard caxton millennium of course citadel all the blue chip names doing really really well when the market conditions were challenging and that kind of has infused new confidence in the industry and with stocks at record levels bond deals are so low uh maybe investors are thinking that to protect the downside maybe they can go to hedge funds and that’s why inflows are also returning to the industry yes how big of a turnaround are we actually talking about there are different ways to look at it but i think one of the most important yardstick uh is is to look at how many funds are basically close to investments so that number has hit a record level you who is who of the industry the blue chip names most of them are closed that kind of shows that the industry is reaching uh its capacity so there is no longer uh you know billions of dollars that these funds can manage uh so that’s one very important factor another one is that if you really look at lost ticket aom of the industry doubled to three trillion dollars but not a single dollar came through net inflows now that is changing tens of billions of dollars is flowing into the industry especially to the larger players and aum has 4 trillion dollars and that’s a very significant uh uh milestone for the industry but the factor that enthused most of the investors the most is the fertile trading hunting ground for for uh for traders so there is that inflation risk there is volatility coming back and all that is creating very good environment for hedge funds to maintain their uh truck record and make money nishant why are hedge funds actually closing you know trying to close off actually to new money well like unlike uh etf industry which can quickly raise a trillion dollar and deploy in a month say capacity is really a problem for hedge funds there is so much alpha available in the market so it’s a very wise move for hedge funds to close funds at a level which they are comfortable at one of the problems why nursery suffered the most last ticket is because too many funds raised too much money very quickly and they could not take advantage of swift market moves so that’s why uh it’s very important that this time around hedge funds uh are being cautious and closing at the right level so that they can take advantage of these big moves nishan thank you so much bloomberg’s hedge fund reporter nishant kumar with our big take now you can catch all also of our special coverage of the jackson hall meeting right here all week coming up more bloomberg surveillance early edition matt miller and kaylee lyons join me this is bloomberg we fundamentally disagree with the thesis that china is now uninvestible and that is not what we’re speaking to our clients about or hearing from our institutional clients there’s been a lot of criticism of china in terms of lack of compliance of lack of regulatory oversight so they’re now accepting their regulatory oversight so we criticize them on the other on the other side as well when others have worried about things the chinese are doing the past 30 years they’ve always been wrong the chinese seemingly get it right but this this is a more tricky time for them to do these things than in my view than it’s been in any of the past uh certainly 20 years of bricks and probably earlier this is bloomberg surveillance early edition with francine laqua matt miller and keeley lines [Music] it’s 10 a.m here in london 11 a.m berlin 5 a.m in new york and 5 p.m in hong kong on this tuesday august 24th our top stories today it’s a risk-on mood in global markets chinese stack stocks bounce back thanks to a couple of prominent buyers waiting to see if the economy will really reopen well one morgan stanley money manager says by now before it’s too late and joe biden’s foreign policy fronts while his vice president blasts china while allies want him to delay a u.s troops withdrawal from afghanistan well good morning everyone frankie likely here in london kaylee of course in new york and our matt miller in berlin and kaylee if you look at the market so we’re seeing a nice bounce back after i think the worst week in about six months last week and they seem to be focusing now on the fact that actually even if we have kova 19 we’re not going to see a derailing of the economy and of course chinese tech stocks on a tear yeah absolutely francine the rebound in asia continuing for a second day actually the best two days for the msci asia pacific index since all the way back in february it was really green across the screen we were up nine tenths of a percent in japan 1.6 percent in south korea higher by about a percent in china and then hong kong really the out performer up about two and a half percent on the one hand you have the pboc pledging support for credit and on the other you do have the bounce led by chinese technology companies the hang seng tech index actually up seven percent today one of the big outperformers within that was jd.com which of course reported results yesterday pretty strong even in the face of regulatory scrutiny from beijing that stock popped seven or 15 percent i should say in the asian session in other asset classes i did want to point to the thai bot that is your big out performer in asian fx amid speculation now that covet is indeed peaking in thailand it’s stronger against the us dollar by about three quarters of one percent and then in the commodity complex a big bounce for iron ore futures up eight point seven percent in singapore because that pboc policy support is lending the idea uh lending to the idea that economic growth will indeed be better as for what the picture looks like here in the u.s we closed just shy of a record high yesterday and once again futures are in positive territory this morning we’re up about two tenths of a percent on s p e minis some selling in the bond market yields sticking up a basis point on the tenure to 126. the dollar was weaker earlier now slightly stronger but that isn’t dragging on crew wti of course rallied five percent yesterday it’s up another seven tenths of a percent this morning to 66-12 a barrel mat all right i’ll be looking at crude as well from the brent standpoint point but first off take a look at what’s going on in markets with this map if you want it on your bloomberg there’s a really efficient way to get it just type wmgo and you can see we’ve got a little bit of a loss here in spain and portugal the iberian peninsula at least not doing well today france also down a little bit italy not making a lot of forward movement we are seeing gains in germany and um that’s enough to hold the stock 600 higher right now by about one tenth of one percent the euro is down at 117 28. uh you were just hearing from kaley about the gains in the dollar gold is off a little bit but still holding over 1800 a troy ounce so gold at 1801 right now and then brent crude which is really the global benchmark getting back closer to 70 a barrel at 69.36 the interesting thing i think francine i know we’re going to talk about andrew slimming’s comments from morgan stanley about buy the reopening trade before it’s too late the leaders here in europe in terms of groups are travel and leisure or as you would say they’re in great britain travel and leisure as well as automakers and auto parts so it looks like the market really is taking slimming’s advice when it comes to buying either they’re buying the reopening trade or they’re buying the dip and tending towards those stocks yeah i quite like it they’re kind of like you know risk on mood let’s go let’s go and even buying cruise ships so we’ll get back onto some of the trades matt this is what else we’re watching today so it is august but actually we’re quite busy kamala harris arrives in vietnam becoming the first u.s vice president to visit since the war ended in 1975. the paralympic games also begin with the opening ceremony in tokyo it’s kathy hussell’s first day as new york governor after replacing andrew cuomo will get u.s new home sales date at 10 a.m new york time and then a little bit later of course we also have that key g7 meeting to discuss afghanistan now on to our market story and chinese tech shires rallying for a second day sentiment was boosted by 10 cents stock buyback as kathy wood bought back into jd.com after a pretty strong set of results so let’s get more on this with our china expert tom mckenzie tom great to have you i mean if you look at some of these share prices they’re up five six percent is it only dip buying or is it something more fundamental uh so it’s valuation certainly so we look at the hong sung tech index which is up just over the last two days nine percent caylee made a nod to that of course in terms of valuations it’s looking attractive the rsi suggesting that that index is heavily oversold it’s down about 40 year-to-date so that is one catalyst certainly and we’ve seen that in fact mainland buyers have been buying up through the stock connect in hong kong so the fact that the mainland buyers are enticed by this prospect as well uh is interesting but you did say there’s other catholics as well that which were touched on 10 cent with that share buyback 230 000 shares by the way bloomberg intelligence suggesting that that could go on until october which will provide further support uh for tencent as well and then kathy wood dipping her toe back into jd.com after those solid earnings yeah of course she’s buying into those adrs and we’re seeing a broad rebound in 80 yards in pre-market trading here in the us and that includes deedy even though reportedly it’s putting its expansion plans in europe on hold what can you tell us about that that’s that’s right so did he had plans to expand into france the uk and germany those have been put on hold now over concerns about regulators lawmakers in europe predominantly uk in fact where lawmakers have said they wanted to scrutinize dd’s expansion here they are concerned that there’s going to be further oversight of their collection of data of customers in this market the daily telegraph saying that they’re going to put this on hold until at least over at least one year there may be some head count trimming as well in those markets france germany and the uk but of course this is a company that’s facing that regulatory squeeze back home as well data in front and center for chinese regulators still trying to get their hands around how secure dd’s data set as well so for the moment for dd that expansion plan has been detailed probably some upside for uber which would be facing that competition from that chinese car hailing service here all right tmac thanks very much for that tom mckenzie filling us in on the latest out of china now vice president kamala harris warned that china poses a threat to countries in asia but she reassured nations in the region the u.s won’t force countries to choose between the world’s biggest economies our engagement in southeast asia and the indo-pacific is not against any one country nor is it designed to make anyone choose between countries instead our engagement is about advancing an optimistic vision that we have for our participation and partnership in this region joining us now is bloomberg’s bruce einhorn from hong kong so bruce um do people just take her word for it i mean when you look at us actions our credibility isn’t currently that strong is it well i think the the point that they’re trying to make is that there’s um you know the us is focusing on this part of the world um we have seen that uh defense secretary lloyd austin was in philippines a month ago renewed and agree extended an agreement regarding military forces in the philippines something that president duterte had threatened to end tony blinken’s been doing a lot of talking with southeast asian leaders so this is part of a broader effort on the part of the administration to show that the dubai administration is focused on southeast asia bruce how much does china actually think that’ll get a free pass because of what’s happening elsewhere in the world it feels like they’re much more aggressive in terms of going after the u.s going after regulation since president trump left well um i i think there was an expectation among many people that president biden would take a softer line toward china uh as opposed to his predecessor um that hasn’t happened in fact president biden seems to have really ramped things up and in vice president harris’s speech today she did make a point of talking about the threat that beijing poses to the region thanks in large part to its actions in the south china sea so um i think that uh what we’re seeing from the vice president now in southeast asia is part of this effort to rally countries uh as part of a broader effort to to address what the binding administration thinks of as the china threat thank you so much for joining us bruce einhorn there in hong kong now uk’s defense secretary ben wallace has also acknowledged it’s unlikely that the u.s will extend an august 31st deadline for leaving afghanistan this comes as a situation on the ground grows more dangerous jake sullivan u.s national security adviser said in a briefing that the u.s is on track with its evacuation efforts the question is are we on track to fulfill our objectives of this operation to bring out our people so many of those afghans who helped us and so many of those afghans at risk and we believe we are joe matthew bloomberg washington correspondent now joins us from our d.c bureau joe how likely is it that actually this gets extended given the taliban have said no way you’re sticking to that august 31st or it will get ugly some would suggest that it’s a lot less likely this morning as we hear from the defense minister in the uk as we hear as well from the chair of the intelligence committee in the house adam schiff but look this is a minute-by-minute hour-by-hour situation here in afghanistan that’s one week from today are they going to be able to get that many people out because obviously this is an administration that has promised to get every american who wants to get out of the country out of the country some think that can be done in the next week but what about the afghan allies who are still in the country that remains a big question jake sullivan yesterday if you listen to his words started to to change a little bit the way he was referring to that making clear to reporters in the briefing room that the united states will go back even after the military leaves to continue evacuating our afghan allies that’s the situation evolving abroad joe as for the situation evolving on capitol hill nancy pelosi is trying her best to wrangle her caucus the moderates giving her some pushback what is her next move on biden’s economic agenda we’re going to find out i guess about noontime today this is not the first time that things went into the wee hours lawmakers were arguing about this democratic lawmakers to be clear arguing about the process and whether they should vote on reconciliation the big three and a half trillion dollar deal or the bipartisan infrastructure deal that has already passed uh they’re deadlocked here it’s not clear that nancy pelosi has the votes they did not take a procedural vote that was first scheduled for last night they’re going to come back together at noon today to start again but keep in mind lawmakers are supposed to go home tonight so this could be a pivotal day in the effort to get infrastructure in the u.s i’m sure the lawmakers are eager to get back to their summer recess thank you so much to bloomberg’s joe matthew in washington and of course you can listen to joe every weekday on his radio program sound on that’s at 5 pm eastern time on bloomberg radio now let’s get back to the markets and take a look at some stocks moving in pre-market trading here in the u.s a big one to the upside is palo alto networks of course the cyber security company it reported after the bell last night gave a revenue forecast that topped expectations analysts really said it was strong across the board and as a result that stock up 11 in early hours and it’s giving a lift to other cyber related stocks as well one of them being crowdstrike although crowdstrike is getting an added boost because we got news overnight that it is going to replace maxim integrated in the nasdaq 100 index that change will be effective as of thursday august 26th that stock up about 5.3 in anticipation of that and i was mentioning as tom mckenzie was mentioning the boost we saw in chinese technology shares and that is true for the adrs here in the us in free market trading one of them being alibaba up 5.2 percent before the belfry i like alibaba will spend a lot more time looking at alibaba there you go five percent higher coming up jeff you being y melon senior strategist for emi markets and i will talk about tech in china and elsewhere and then a little bit later today bloomberg also holds a webinar with the bavarian premier and leader of the cdu’s sister party with csu marcus soder that’s at 8 30 a.m in new york 1 30 pm in london and this is bloomberg [Music] [Music] this is bloomberg surveillance early edition i’m matt miller in berlin with francine laqua in london and kaylee lines in new york now our star producer in new york city daniel curtis put together a chart showing a couple of things that we might want to really be paying some close attention to the baltic dry index on the one hand rising to a decade high in white here i’ll welcome our bloomberg radio listeners by the way on london dab digital you can’t see this but you know shipping costs have absolutely soared and that’s why the baltic dry is so high on the other hand i’ve got a blue line that was up there for for a while but has turned over and this is pmis globally we’re seeing a little bit of a dip led by the us and the uk so our things turning around joining us to discuss is mark hudmore bloomberg macro strategist and co-anchor of bloomberg markets the european open uh mark think about this what does the uh rollover and the pmis tell us well i think that we’ve got several things that are there that are interesting first of all us was kind of leading the the pmis exuberance that we’re seeing on growth over the last couple of months and us is now leading the downturn and this is really a kind of a facet or a reflection of the changing dynamics around vaccination rates u.s had led could of vaccination rates the first part of this year they’ve really stagnated around 50 of the country is fully vaccinated just over and they’ve stagnated around those levels and europe and uk have surpassed them and that’s why the european pmis are holding up a little bit better than u.s and i think this reflects the narrative that we’re going to see in the second half this year we’re changing from a world where global growth a wonderful global economic recovery which is being led by the us is now going to go to a world where maybe it’s time for the rest of the world to take the lead a little bit i think it’s not that a us growth story is turning negative it’s just less exuberant and i think there’s a chance that some other parts of the world might hold up a little bit better yeah i was going to ask mark actually if you look at you know the sea of green that we’re seeing could jackson hole put a dampener on these operations i mean definitely it could that look the narrative at the moment very short term in the market is this idea that hey wait a sec maybe if the us growth isn’t so strong well then the inflationary threats not as bad as we feared and maybe that you know if the fed stays super dovish it’s not necessarily a policy mistake maybe they’ll never need to hike rates again there’s always been a small cohort in the market that have thought that now that that’s still a tiny minority but it’s a growing minority i don’t think this narrative will last i don’t think it’s sticky i think that we will go back to this idea that wait a sec the u.s really does need to kind of move more hawkish in the months ahead but at the moment that is the narrative that people are getting excited about as we go into jackson hole which i think is interesting and there’s certainly a growing idea that look there’s no way powell can will announce tapering this week yes he’s going to open the door yes he’s going to provide optionality but he’s not going to pre-announce a certain date just yet mark you know i love extremists conspiracy theorists reactionaries what is this group of people who think the fed is never going to raise rates again because we’ve had a spate of this in the past posts great financial crisis well look you know it sounds like a real fringe and crazy theory but just look at japan look at europe like there’s lots of economies in the world that kind of once they go into this spiral switzerland’s another good example uh of this kind of once they kind of break the zero low bound and get down there and the u.s has not broken the zero lower bound but once we get down to these kind of extreme monetary policy it’s very hard to get out of it and another kind of factor of this is you know the central bank balance sheets yes the fed started managing the taper a little bit last time but i think people are pretty critical about how that was kind of handled and wonder whether to be able to do it again so look it is a minority but it’s not a completely fringe idea i think the fed will have to hike rates again but how much will they hike i can kind of sit with you with the idea they won’t be very going very far mark just quickly of course you’re over in asia the pboc has pledged its own policy support in china do you think the buying of the dip in asia can last look it’s a really tough question i think it depends what time span you’re on i think that shorter term um look the market’s become very very discounted and people are kind of going maybe there’s a little bit of a chance here but has the regulatory crackdowns have those policy moves ended it’s hard to have any clarity of this but i don’t see any reason to presume they’ve ended yet the issues they’re concerned about expensive property healthcare education these issues aren’t resolved so i’m going to assume that we’re going to get more crackdowns in the coming months and we might get lower prices longer term though i think china does provide some exciting opportunities given how discounted assets are there compared to us for example mark thank you so much smart conversations on the markets with our very own mark cudmore we’ll have plenty more on the markets we’ll also look of course at foreign affairs with afghanistan and the g7 call this is bloomberg [Music] this is bloomberg surveillance early edition i’m francine likely here in london matt miller and brilliant katie lines in new york matt and kaley we’ve had some pretty optimistic calls on the s p 500 we were talking about morgan stanley saying for example buy some of the travel and leisure stocks but then this really bold call by wells fargo actually saying the s p will touch four thousand eight hundred and fifty this would definitely be a record high yeah yeah just rolling across sorry i mean kaylee i you spotted this i just wanted to point out it’s just rolling across um the ticker so this is breaking right now and kayla you were saying there are a couple analysts out there who are still forecasting targets of less than 4 000 on the s p for the end of this year uh wells fargo had been one of them but they’ve now upped the ante yeah chris harvey over there had a 38.50 target on the s p 500 for a year and previously he’s now upped that by basically a thousand points but you still have others like sabita subiranian over at bank of america uh down at 3 800. but the index is already north of 4400 so i think a lot of strategists are having to play catch up here given how strong earnings have been it’s a lot more positive a story than i think many anticipated francine so wells fargo might not be the only one to up their target in the coming months yeah this is for the 2021 target no one cares kaylee because you’re getting married on saturday and there will be broken hearts across the newsroom and matt miller probably has advice for weddings guys look at that cake what a great picture congratulations kaley [Music] this is bloomberg surveillance early edition i’m francine lachlan london matt miller in berlin katy lions in new york matt we had that it’s a really pretty important call actually from wells fargo expecting the s p 500 to touch 400 well 4 850 in 2021 by far actually the most bullish call on some of these markets yeah i think it’s really fascinating and you know as kaylee pointed out i think we’re going to see a lot of other strategists have to follow suit we have have strategists from steeple nicholas from bank america with targets of less than 4 000 but everyone else is right around 4 500 some are a little bit higher and now this is the highest forecast i also wanted to point out we didn’t really explain why we were showing the fantastic picture there of jack and kaylee kaylee will be leaving obviously to get married she’s not going to do it on air so she’s going to this is her last day with us for a little while and you know kaylee francine asked if i had any advice for you but my advice obviously is not for you it’s for jack actually and it’s just so cliche but happy wife happy life he just needs to do whatever you tell him to do perfect and then everything is going to be fine i hope he’s awake and watching right now yeah if not we’ll send him the clip as we always do on social media kelly the reflation trade apart from happy wife happy life which i 100 agree with reflation trade back on yeah i’ll try to get back to the markets now francine really strong rebound strong handover from asia and we are seeing follow-through risk on sentiment in europe and the u.s though the games aren’t quite as large right now the stock 600 is just in positive territory by only around a tenth of a point we’re up about 0.3 percent on 0.03 on the stock 600 at the moment so that is well off session highs and we are off session highs and futures trading as well but still positive we’re up about two tenths of a percent on s p e minis a little bit of selling in the treasury market yields up just about a basis point we’re sitting at a 10-year treasury yield at 126 and then of course crude continuing its rebound wti up 5 yesterday up another 1 this morning right now trading at 66.30 a barrel as for some stocks moving in free market trading of course we’ve had a lot of conversation about the rebound in chinese technology shares in the asian session and that is following through to the adrs here in u.s pre-market trading you have the likes of jd.com up 8.3 of course it reported strong earnings yesterday kathy wood coming in to buy those shares once again you also have alibaba buy you up around five percent each and then dd global up six and a half percent yes it may be putting its expansion plans in europe on hold but it’s still taking part in the broader rally this morning and of course anothe
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