'Bloomberg Surveillance: Early Edition' Full (07/03/23)
>> THIS IS "BLOOMBERG SURVEILLANCE: EARLY EDITION" WITH DANI BURGER AND KRITI GUPTA. DANI: IT'S 10:00 A.M. IN LONDON, 5:00 A.M. IN NEW YORK, AND 5:00 P.M. IN HONG KONG.
GLOBAL STOCKS KICKED OFF THE SECOND HALF OF THE YEAR WITH GAIN, AS INVESTORS WARNED THAT CHASING THE RALLY FROM HERE IS A RISKY MOVE. U.S. TREASURY SECRETARY WILL TRAVEL TO BEIJING THIS WEEK. CHARGING AHEAD. TESLA AND CHINA'S BYD SET FRESH QUARTERLY SALES RECORD ON THE SURGING DEMAND FOR ELECTRIC VEHICLES. I'M DANI BURGER IN LONDON. KRITI GUPTA IS IN NEW YORK.
IT IS A START OF A NEW QUARTER WITH U.S. EQUITIES AT A HIGH, THERE SEEMS TO BE UNEASE WITH THAT FACT. KRITI: JUST 5:00 A.M., YOU ARE SEEING THE VIRGINS ON THE EQUITY FRONT. -- DIVERGENCE ON THE EQUITY FRONT. FUTURES POINTING TO CAUTION, BUT THEN HEAVY TECH STOCKS SHOWING UP ON THE NASDAQ WHERE YOU SEE OUTPERFORMANCE. WHICH TELLS YOU RIGHT OFF THE
BAT THERE ARE FUNDAMENTALS DRIVING IT BECAUSE A GOOD CHUNK OF GAINS ARE LIKELY COMING FROM THE TESLA OVERNIGHT TRADE. ON THE MACRO FRONT, NASDAQ FUTURES ARE HIGHER BY 0.3 PERCENT. WHAT'S INTERESTING IS THAT YIELDS ARE HIGHER AS WELL, SO YOU ARE SEEING REPRICING IN THE BOND MARKET. THE TWO-YEAR YIELD GETTING CLOSER AND CLOSER TO 5%. WHAT DOES THAT SAY ABOUT THE
TERMINAL RATE FOR THE FEDERAL RESERVE ON THE SIDE OF THE ATLANTIC? HIGHER BY ABOUT FOUR BASIS POINTS, 4.93 ON THE FRONT END OF THE CURVE. FARTHER OUT YOU ARE SEEING THE SAME AMOUNT OF VOLATILITY. INTERESTING SEEING THAT BOND MARKET DYNAMIC A DAY BEFORE A U.S. HOLIDAY. WHAT'S INTERESTING IS THE CURRENCY STORY, IT IS THE BOJ.
EVEN THOUGH THE BOJ HAS TIME AND TIME AGAIN SAID WE WILL STICK TO YIELD CURVE CONTROL, NOT GREAT NEWS FOR THE YEN, WHICH IS WHY YOU SEE WEAKNESS ON THE INSIDE. BUT WHAT'S INTERESTING IS THERE IS AN INCENTIVE NOW FOR A COP INTO JAPANESE BONDS, SPURRED BY THE WEEK AS YOU ARE SEEING IN THE AGAIN. STICKING WITH THAT AGE'S STORY, I WANT TO TALK ABOUT CHINA BECAUSE COPPER WHICH IS OUR BELLWETHER FOR CHINA IS HIGHER BY ABOUT 0.3%, WHAT DOES THAT TELL YOU ABOUT RISK SENTIMENT
GOING INTO THE U.S. SECTION? DANI: CHINESE CONSUMERS ARE CERTAINLY BUYING DVDS. IN EUROPE-- EV'S. THE BEST PERFORMING SECTORS ARE ENERGY, AND BASIC RESOURCES. LOOKING ACROSS THE MAP, OUTPERFORMER IS THE FTSE MIB, THAT IS CYCLICAL, YOU HAVE A LOT OF ITALIAN BANKS THAT MAKE UP THAT INDEX. TO START THE SECOND HALF OF THE YEAR, EUROPEAN EQUITIES, THE CASH TRADE ABOUT TWO HOURS UNDERWAY AT THIS MOMENT. WE'RE INDEED HEADING HIGHER. CURRENCIES PERHAPS REFLECTING
SOME OF THE WEAKER PMI READINGS WE HAVE GOTTEN IN. WE HAVE HAD MANUFACTURING READINGS, A LOT OF THEM ARE CONTRACT TIONARY. IT IS ABOUT WHAT IS THE STRONGEST ECONOMY? WHAT IS THE LEAST DIRTY SHIRT? PERHAPS THAT IS THE DOLLAR TODAY, IT IS STRONGER AGAINST THE YEN, EURO AND POUND. CABLE IS DOWN 0.2 PERCENT, WE CONTINUE TO WEAKEN DESPITE THE FACT THAT THE FIRST HALF OF THE YEAR, THE BEST-PERFORMING G10 CURRENCIES VERSUS THE DOLLAR WAS STERLING. WILL THAT HOLD UP HIS HAVE AS WE HAVE GROWTH CONCERNS RIPPLING ACROSS THE U.K.?
THERE IS NO CATALYST FOR HIGHER FRONT END YIELDS IN THE GILT MARKET, MAYBE A LACK OF NEWS MEANS WE CONTINUE THE TRADE, WHICH MEANS FRONT END SELLING, WE'RE UP FOUR BASIS POINTS, 5.3% IS WHERE WE STAND ON THE FRONT END OF THE U.K. YIELD CURVE. KRITI: AT WHAT EXTENT DOES THAT TRANSITION TO SOME OF THE GEOPOLITICS? WHICH BRINGS US TO ONE OF THE MAJOR STORIES THIS WEEK. U.S. TREASURY SECRETARY JANET YELLEN TRAVELING TO CHINA THIS WEEK, AS THE TWO LARGEST ECONOMIES MEND TIES AFTER BILATERAL TENSIONS. >> WE REALLY WELCOME AND WANT TO HAVE A HEALTHY ECONOMIC RELATIONSHIP. WE THINK IT IS GENERALLY BENEFICIAL. WE HAVE DISAGREEMENTS.
MY HOPE IN TRAVELING TO CHINA IS TO REESTABLISH CONTACT. THERE ARE A NEW GROUP OF LEADERS. WE NEED TO GET TO KNOW ONE ANOTHER. KRITI: RUNNING AS IS BLOOMBERG CHINA AND GOVERNMENT ECONOMY EDITOR.
WE KNOW IT HAS BEEN ON THE AGENDA FOR A LITTLE BIT, THAT IS FOLLOWING ON THE HEELS OF SECRETARY ANTONY BLINKEN. WHAT CAN WE GET PERHAPS FROM THIS THREE-DAY VISIT? >> AT THIS POINT, YELLEN HAS BEEN TALKING ABOUT WANTING TO VISIT CHINA FOR QUITE A WHILE. THIS IS FINALLY HER CHANCES TO DO SO. AT THIS POINT IT IS ABOUT AMENDING TIES BETWEEN THE U.S. AND CHINA, OR AT LEAST KEEPING OPEN METHODS OF COOPERATION AND COORDINATION. THIS IS A VERY TENSE
RELATIONSHIP AS WE ALL KNOW. IT HAS SOMETIMES FELT LIKE IT IS JUST BECOMING MORE TENSE IN RECENT MONTHS. WE HAVE SEEN SANCTIONS BEING INVOLVED. MEASURES BY WASHINGTON TO CUT OFF CHINA FROM CRITICAL FORMS OF TECHNOLOGY. ALL OF THAT WILL FACTOR INTO
THIS VISIT. AT THIS POINT, BEIJING WILL WANT TO PUSH BACK SOME OF THOSE MEASURES THE U.S. IS TAKING AGAINST CHINA. FROM THE TREASURY DEPARTMENT SIDE, THEY ARE GOING TO WANT TO PUSH CHINA MORE ON PROVIDING DEBT RELIEF FOR DISTRESSED DEVELOPING NATIONS. THAT'S BEEN A KEY FOCUS OF THE TREASURY DEPARTMENT IN RECENT MONTHS. AS YOU MENTIONED, THIS IS COMING OFF THE BACK OF ANTONY BLINKEN VISIT, THAT SEEMED LIKE IT WAS MODERATELY SUCCESSFUL IN TERMS OF KEEPING LINES OF COMMUNICATION OPEN. WHAT WE'RE LOOKING TO SEE IS
SOMETHING THAT PAVES THE WAY FOR AN EVENTUAL XI-BIDEN MEETING. THAT IS SOMETHING JOE BIDEN HAS TALKED ABOUT WANTING TO ACCOMPLISH. THIS VISIT BY YELLEN HELPS PAVE THE WAY FOR THAT POTENTIAL MEETING THIS YEAR. DANI:
ALSO IN CHINA, WE HAD A NEW PBOC PARTY CHIEF, WHAT CAN WE READ INTO THIS APPOINTMENT? >> THIS PARTY CHIEF, PAN, THIS POSSIBLY PUTS HIM IN LINE TO BECOME THE NEXT PBOC GOVERNOR. THAT'S NOT A HUGE SURPRISE SEEING AS THE GCURRENT GOVERNOR WAS REAPPOINTED BUT HE HAS PASSED THE RETIREMENT AGE. SO WE'RE WAITING TO SEE WHAT THE NEXT LEVEL OF SHAKEUP WOULD BE. THIS DOESN'T SEEM TO BE SIGNALING ANY BIG GIANT CHANGE FOR THE PBOC, IT IS MORE ABOUT CONTINUITY. PAN IS A LONG TIME TECHNOCRAT WITHIN CHINA. HE IS WELL-KNOWN BY THE
INTERNATIONAL COMMUNITY, HE HAS HAD OVERSEAS APPOINTMENTS AT HARVARD AND CAMBRIDGE. HE HAS BEEN AT THE PBOC FOR QUITE A WHILE, SO WE CAN PROBABLY EXPECT POLICY TO CONTINUE AS IT HAS BEEN, WHICH IS IMPORTANT BECAUSE REMEMBER WE HAVE A LOT OF DOWNWARD PRESSURE ON THE YUAN, WHICH WILL PUT THE ROLE IN MAINTAINING THAT IN FOCUS. AND THIS IS SLOWING ECONOMIC RECOVERY MOMENTUM IN CHINA, WHAT IS MONETARY POLICY EASING LOOK LIKE GOING FORWARD? ALL OF THAT IS WHAT WE'RE LOOKING TO SEE HIM TERMS OF HOW THAT PBOC ADJUSTS IN TERMS OF CHALLENGES GOING FORWARD. DANI:
ON TO THE TESLA STORY. THEY DELIVERED A RECORD NUMBER OF CARS IN THE SECOND QUARTER, UP 83% FROM A YEAR AGO. THE EV MAKER HAS PUSHED FOR MORE VOLUME AT THE EXPENSE OF PROFIT MARGIN. JOINING US IS QUICKTAKE'S ALEX WEBB. IF THESE NUMBERS ARE COMING IN AT A RECORD DELIVERY, IS IT A SUCCESS WHEN IT COMES TO THE STRATEGY OF CUTTING COSTS IN VOLUME? >> THE THEME TO LOOK FURTHER BACK AT IS WHAT PROMPTED THIS STRATEGY? TESLA ADDED SOMETHING ON THE ORDER OF A MILLION CARS OF NEW CAPACITY IN SHANGHAI, BERLIN AND TEXAS JUST AT THE TIME WHEN DEMAND WAS STARTING TO SLACKEN. WHAT THEY'VE DONE IS INTRODUCED A WHOLE BUNCH OF DISCOUNTS AND PRICE CUTS. THAT HAS HELPED INCREASE
DEMAND, BUT IT HAS COME AT THE COST OF MARGIN. IF YOU LOOK AT TESLA'S NET MARGIN LAST YEAR, IT WAS ON THE ORDER OF 15 TO 18% DEPENDING ON THE QUARTER. FOR 2023, THE MARKET IS EXPECTING 12% NET MARGIN. KRITI: ALSO, THAT POSITIVE DELIVERY RECORD ANNOUNCEMENT ALSO FUELING SOME OF THE NASDAQ MOVE, AT LEAST IN THE FUTURES TRADING. A SIMILAR STORY WHEN IT COMES TO APPLE, PERHAPS THIS TIME GIVING INVESTORS PAUSE, WHAT DO WE KNOW ABOUT WHAT APPLE WILL DO WITH THEIR NEW VIRTUAL-REALITY HEADSET? >> THE FT HAS AN INTERESTING STORY OVERNIGHT SAYING THAT APPLE IS CUTTING ELECTION EXPECTATIONS, AND ORDERING FEWER ELEMENTS FROM SUPPLIERS. WE SHOULD TAKE THIS WITH A PINCH OF SALT, BECAUSE ALL THE NUMBERS WE HAVE HAD ON WHAT APPLE'S ELECTION EXPECTATIONS HAVE BEEN FROM SOURCES, EXPECTING ABOUT 300,000 UNITS IN THE FIRST YEAR.
IF IT DOESN'T HAVE THAT NUMBER, ACCORDING TO THE FT, IT IS BECAUSE OF SUPPLY ISSUES PERTAINING TO THE MICRO LED. THEY ARE NOT ABLE TO PRODUCE AS MANY COMING OFF OF THE PRODUCTION LINE AS THEY WOULD LIKE THAT MEET THEIR STANDARDS. APPLE HAS HAD THIS ISSUE BEFORE WITH FACE ID.
THE CAMERA SYSTEM DID NOT HAVE A YIELDS THEY WANTED, THAT PUSHED BACK TO SUPPLY A LITTLE BIT. NOTICE WITH THIS WHEN THEY WERE GOING FOR QUITE A LOW NUMBER THEY WERE EXPECTING TO SELL NEXT YEAR. THAT GIVES THEM WIGGLE ROOM TO FIX ANY SUPPLY ISSUES BEFORE THEY THINK ABOUT SCALING THIS, INTO THE MILLIONS OF UNITS,, AS MANY EXPECT THEM TO DO. DANI: BRINGING THIS BACK TO ELON MUSK, A LOT OF PEOPLE OVER THE WEEKEND GOT A MESSAGE ON THEIR TWITTER TIMELINE SAYING YOUR TWEET LIMIT WAS MAXIMIZED. ELON MUSK FOLLOW THIS UP WITH HE IS LIMITING THINGS. WE DON'T WANT TO SPECULATE TOO
MUCH, BUT WHAT DOES THIS MEAN FOR TWITTER AS WE CONTINUE TO ASSESS THE DIRECTION WITH MUSK AT THE HELM? >> HE IS TRYING TO BRING ADVERTISERS BACK. ADVERTISERS LIKE ENGAGEMENT, I.E. SPENDING MORE TIMES ON PLATFORMS GIVES YOU A GREAT OPPORTUNITY TO PUT ADS IN FRONT OF USERS. HE IS HAVING TO CAP THE AMOUNT OF TWEETS PEOPLE CAN SEE. IMF LIKE HEAVY USER, I AM ON IT
ALL DAY, I HAVE NOT YET ENCOUNTERED THAT BREAK. BUT IT DOES MAKE IT HARDER TO SELL ADS. THE OTHER SIDE IS COST, IF THERE IS AN ISSUE WHERE AS MUSK STATES, THEY ARE GETTING LOTS OF SCRAPING HAPPENING FROM AI ALGORITHMS, THAT ADDS TO THEIR SERVER COSTS. THEY PRESUMABLY HAVE HAD TO MAKE A COST-BENEFIT ANALYSIS OF ARE THE COSTS TOO HIGH ON THE SERVER END, OR DO WE NEED TO BE SENDING TWEETS TO GET AD REVENUE AND THEY HAVE PRESUMABLY GONE FOR THE FIRST PART. KRITI: BLOOMBERG'S ALEX WEBB ALL OVER THOSE STORIES. WE GO FROM THE TECH STORY TO FRANCE.
PROTESTS CONTINUING FOR A FIFTH NIGHT OVER THE POLICE KILLING OF A TEENAGER. 45,000 POLICE WERE DIPLOID IN AN EFFORT TO CONTAIN CLASHES THAT LEFT HUNDREDS OF PUBLIC BUILDINGS DAMAGED OR RANSACKED. WE'RE JOINED BY CAROLINE IN PARIS. WHAT ARE WE SEEING FROM THE GOVERNMENT? >> IT SEEMS LIKE THE PEAK OF THESE RIOTS IN FRANCE MAY HAVE PASSED. WE ONLY SAW 150 ARRESTS LAST
NIGHT, COMPARED TO 1300 ON FRIDAY, AND 700 ON SATURDAY. SO IT SEEMS LIKE THIS PRESENCE OF 45,000 POLICE OFFICERS EVERY NIGHT TO PROTECT PUBLIC BUILDINGS ACROSS FRANCE IS SOMEHOW MAKING THINGS A LITTLE BIT QUIETER. ALSO, WE HAVE HAD CALLS FROM THE GRANDMOTHER OF NAHEL, THE TEENAGER WHO WAS KILLED BY A POLICE OFFICER LAST WEEK TO END THIS VIOLENCE. ALSO CALLS FROM MBAPPE, A SOCCER PLAYER WHO IS VERY POPULAR AMONG THIS YOUNG CROWD, BECAUSE THE RIOTERS ARE OFTEN VERY YOUNG. BETWEEN THE AGES OF 14 TO 18 YEARS OLD. THEY ALSO COME USUALLY FROM THE
SO-CALLED BANLIEU, LOW INCOME, UNDEREDUCATED AND UNDEREMPLOYED FAMILIES IN THE SUBURBS OF PARIS, BUT NOT ONLY THE SUBURBS OF OF THEIR BIG CITIES SUCH AS MARSEILLE WHERE WE SAW A RIOTS OVER THE WEEKEND. SO WE WILL SEE IF THIS SITUATION DE-ESCALATE'S OVER THE NEXT FEW DAYS. DANI: AS WE TAKE A STEP BACK AND LOOK AT HOW THIS EVOLVES, WHAT ABOUT THE ECONOMIC COST? >> AT THE MOMENT, THE FINANCE MINISTRY IS ESTIMATING THAT THE DAMAGES TO THE PUBLIC BUILDINGS WILL COST A MINIMUM OF 100 MILLION EUROS. BUT OF COURSE, THIS NUMBER IS LIKELY TO RISE IF THE RIOTS CONTINUE OVER THE NEXT FEW DAYS. MACRON HAS HELD CRISIS MEETINGS OVER THE PAST WEEK. TODAY'S MEETING WITH THE PRESIDENTS OF THE NATIONAL ASSEMBLY AND THE SENATE. TOMORROW HE HAS INVITED MORE
THAN 200 MAYORS OF ALL THE CITIES THAT HAVE BEEN TARGETED BY THE RIOTS OVER THE PAST FEW DAYS. WE WILL SEE WHETHER THERE IS SOME KIND OF PLAN OF ACTION FOR THE SUBURBS TO REALLY TRY AND DEAL WITH THE DEEP ISSUES THAT THIS YOUNG PEOPLE ARE FACING, AND THEIR INTEGRATION INTO FRENCH SOCIETY. DANI: THANK YOU VERY MUCH FOR THAT UPDATE. THAT IS BLOOMBERG'S CAROLINE HORN ON IN PARIS.
POLAND INCREASES SECURITY AT ITS BORDER WITH BELARUS AMID LACK OF CLARITY ABOUT THE FACT -- WAGNER LEADER'S WHEREABOUTS. A LOT TO DISCUSS, INCLUDING A SPIKE IN OIL PRICES THAT HAPPEN IN THE PAST FEW MOMENTS. SAUDI DISCUSSING A CUT OF ONE MILLION BARRELS A DAY THROUGH AUGUST. OIL IS HIGHER, AS OUR CONCERNS ABOUT THE ECONOMY.
THE OTHER SUPERLATIVE, THE YIELD CURVE IS INVERTING EVEN FURTHER, IT JUST HIT ITS MOST INVERTED LEVEL SINCE 1981. THIS IS BLOOMBERG. ♪ KRITI: THIS IS "BLOOMBERG SURVEILLANCE: EARLY EDITION". I'M KRITI GUPTA IN NEW YORK WITH DANI BURGER IN LONDON. A WEEK AFTER AN ABORTED MUTINY BY THE WAGNER GROUP IN MOSCOW, THERE IS LITTLE CLARITY AROUND THE WHEREABOUTS OF ITS LEADER PRIGOZHIN. MARIA, DO WE KNOW WHERE
PRIGOZHIN IS? >> IF YOU LISTEN TO THE WORDS OF ALEXANDER LUKASHENKO, AND THIS IS A HUGE LEAP OF FAITH, HE IS IN BELARUS IN MINSK. BUT THE ISSUE IS WE HAVE NOT SEEN ANY FOOTAGE OF PRIGOZHIN TO CONFIRM THAT INFORMATION. THE LAST TIME WE HEARD FROM HIM WAS A VOICE NOTE. IT WAS 11 MINUTES LONG, THE MESSAGE WAS HE DID NOT WANT TO TOPPLE THE RUSSIAN GOVERNMENT, TO GO AGAINST THE RUSSIAN AUTHORITIES.
BEYOND THE MAN HIMSELF IS WHAT HAPPENS WITH WAGNER AS AN INSTITUTION. VLADIMIR PUTIN GAVE THEM THREE CHOICES. HE SAID YOU EITHER JOIN THE ARMY, ACCORDING TO THE KREMLIN THEY WERE BEING PAID BY THE MOD FOR A YEAR. OR YOU CAN GO HOME, GET EXILED,
OR AHEAD TO BELARUS. AT THIS POINT, IT IS UNCLEAR HOW MANY WAGNER FIGHTERS HAVE JOINED THE RUSSIAN ARMY, BUT WE KNOW THAT THE WAR CONTINUES AND THIS NUMBER COULD BE CRITICAL. DANI: THERE ALSO SEEMS TO BE THIS FEAR IN POLAND OF WHAT THE FALLOUT MIGHT MEAN FOR THEM.
THEY HAVE DEPLOYED FORCES, THAT INCLUDES ANTI-TERROR UNITS, WHY IS THERE THIS CONCERN FROM POLAND? >> AGAIN, THIS IS A NEIGHBOR TO BELARUS, IN FACT, THEY SHARE A BIG LAND BORDER. WE HAD A STATEMENT YESTERDAY FROM THE INTERIOR MINISTER OF POLAND SAYING THEY WILL DEPLOY 500 OFFICERS TO THE BORDER. THAT IS ADDITIONAL PERSONNEL IN RESPONSE TO WHAT THEY BELIEVE IS NOW AN INCREASED SECURITY RISK FOR THE COUNTRY BECAUSE OF PRIGOZHIN, AND THIS IDEA THAT WAGNER FIGHTERS COULD JOIN HIM AND HAD TO BELARUS. THIS IS NOT THE FIRST TIME WE HAVE SEEN REAL TENSIONS BREAK OUT BETWEEN BELARUS AND POLAND. TWO YEARS AGO, POLAND ACCUSED LUKASHENKO OF SENDING THOUSANDS OF ILLEGAL IMMIGRANTS TO THE BORDER TO CREATE TENSIONS. THAT LED TO A WEEK OF TURMOIL. WE SHOULD NOTE THAT THIS YEAR
THERE IS AN ELECTION IN POLAND. WE DON'T HAVE A DATE YET, BUT FOR THE GOVERNMENT THIS IS ABOUT PRESENTING ITSELF AS BEING TOUGH ON RUSSIA AND BELARUS, AND ANY MIGRATION THAT MAY STEM FROM IT. DANI: THAT IS BLOOMBERG'S MARIA TADEO IN BRUSSELS. COMING UP, MAJOR U.S. BANKS RAISE THEIR DIVIDENDS FOLLOWING THE FED'S STRESS TEST. THIS IS BLOOMBERG. ♪
DANI: THIS IS "BLOOMBERG SURVEILLANCE: EARLY EDITION". I'M DANI BURGER IN LONDON. KRITI GUPTA IS IN NEW YORK. ON TO SOME BANKING FINANCE STORIES.
BARCLAYS IS SEEKING TO END ITS BANKING RELATIONSHIP WITH ODEY ASSET MANAGEMENT. THE HEDGE FUND HAS BEEN BATTLING TO CONTAIN INVESTOR EXODUS AFTER A JUNE ARTICLE THAT ALLEGED THE FOUNDER CRISPIN ODEY MISTREATED WOMEN OVER A 25-YEAR PERIOD. UBS PLANS TO MAKE CLEAR IT'S RESCUE OF CREDIT SUISSE ONE RELY ON FUNDING FROM CRESWISS TAXPAYERS.
UBS ISN'T PLANNING TO TAKE CREDIT SUISSE'S DOMESTIC UNIT PUBLIC. I CAN'T HELP BUT THINK IS TWO STORIES ARE RELATED. WE ARE HOLDING ONTO THE PUBLIC UNIT AND WE WILL NOT BE USING TAXPAYER MONEY. KRITI: IT IS A PRETTY GOOD TURNAROUND FROM WHAT WE WERE EXPECTING INITIALLY, WHICH IS SIMPLY THAT THEY WOULD GOT THE COMPANY. -- GUYT T THE COMPANY, SO TO WITHSTAND ALL THIS IS A FAIRLY IMPRESSIVE SCORECARD. DANI: WE ARE ALSO TRACKING U.S. BANKS, TOO. JP MORGAN, WELLS FARGO, MORGAN
STANLEY AND GOLDMAN SACHS ALL ANNOUNCED HIGHER DIVIDENDS. THAT'S AFTER THE STRESS TEST. WE STILL NEED TO FIND OUT DETAILS ABOUT CAPITAL REQUIREMENTS IN BASEL THREE, AND ANY OTHER FOLLOW-UP FROM THE REGIONAL BANKING CRISIS. KRITI: THIS IS SO TYPICAL. AS SOON AS THEY GET THAT FLYING COLORS ACING OF STRESS TESTS, THEY BOOST THEIR DIVIDEND. OUR WALL STREET CORRESPONDENT WARNED ABOUT THIS.
SHE SAID A MASSIVE INCREASE HAS AN AFFECT NOT JUST ON THE STOCK BUT HOW MUCH LOANS THEY ARE WILLING TO GIVE OUT. DANI: WE HEARD POWELL IN FRONT OF CONGRESS SAYING IT COULD BE AS MUCH AS 20%, SO THEY COULD BE FACING A MUCH STEEPER CAP REQUIREMENT. COMING UP, WE WILL SPEAK WITH KRITI: THIS IS "BLOOMBERG SURVEILLANCE: EARLY EDITION". GLOBAL STOCKS KICKING OFF THE SECOND HALF OF THE YEAR IN THE GREEN, BUT SOME INVESTORS WARNED THAT CHASING THE RALLY MIGHT BE RISKY. JANET YELLEN HAS TO CHINA, SHE
WILL TRAVEL TO BEIJING THIS WEEK, BECOMING THE SECOND MEMBER OF JOE BIDEN'S CABINET TO HEAD TO THE CHINESE CAPITAL IN RECENT WEEKS. TESLA AND CHINA'S BYD SET RUSH QUARTERLY SALES RECORDS ON SURGING DEMAND FOR ELECTRIC VEHICLES. I'M KRITI GUPTA IN NEW YORK WITH DANI BURGER IN LONDON. IT FEELS LIKE IT IS ALL THE GEOPOLITICS AND MONETARY POLICY, THE EV STORY MIGHT BE DRIVING MARKETS. DANI: IT CERTAINLY IS DRIVING THE
ASIA SESSION. WE SAW ALL THOSE ASIAN EV CARMAKERS REALLY OUTPERFORM. IF THEY ARE STILL WILLING TO BUY CARS, ALTHOUGH TESLA IS MORE DISCOUNTED, MAYBE NOT FITTING HUGELY INTO THE EUROPEAN SESSION BUT WE ARE LOOKING AT CYCLICAL STOCKS OUTPERFORMING. BASIC RESOURCES AND ENERGY ARE DOING WELL.
HE WILL GET TO THE OIL STORY IN JUST A MOMENT. WHEN IT COMES TO CURRENCIES, MOST OF THESE EUROPEAN CURRENCIES ARE HAVING A HARD TIME FINDING STRENGTH VERSUS THE DOLLAR. BOTH STERLING AND EURO ARE WEAKER VERSUS THE DOLLAR, STERLING ESPECIALLY SO. MAYBE THIS IS STARTING TO FADE THAT STRENGTH IN THE FIRST HALF OF THE YEAR, THE POUND WAS THE BEST-PERFORMING G10 CURRENCIES FOR THE FIRST HALF VERSUS THE DOLLAR. AND THIS IS ALSO REFLECTING WAS GOING ON IN THE U.S., WE SEE
FRONT END YIELDS MARCHING HIGHER. SAME THING HAPPENING IN THE U.K., 5.3%, A GAIN OF THREE BASIS POINTS FOR TWO-YEAR GILT YIELDS. KRITI: A LOT TO DIGEST IN THE BOND AND AFFECTS SPACE. -- FX SPACE.
IN THE ASIAN SESSION WE SAW CONTINUED WEEK IS IN THE JAPANESE YEN -- IT GOT THE BRUNT OF THE HIT, PUSHING THE DOLLAR. THERE IS SOME BOND PLAY, BECAUSE THE WEAKER THE JAPANESE YEN GETS, THE MORE JAPANESE BONDS GET ATTRACTIVE. THE TWO-EURO THAT FOUR POINT 92, HIGHER BY THREE BASIS POINTS. WE ARE INCHING CLOSER TO 5% ON THE FRONT END OF THE CURVE. THAT IS THE TERMINAL RATE THE MARKET WAS PROJECTING, I WONDER HOW THAT CHANGES AS WE GET CLOSER TO THAT TECHNICAL LEVEL, AND WHETHER IT SURPASSES? RINGING US TO THE STOCKMARKET, WE TALKED TO THE EV STORY. A LOT OF IT IS COMING OUT OF CHINA, IT IS THE LEADER IN ELECTRIFICATION GLOBALLY DESPITE TESLA TRYING TO EXPAND.
BUT NEVERTHELESS IT IS GIVING A TAILWIND TO NASDAQ FUTURES, HIGHER BY 0.2%, OUTPERFORMING S&P AND RUSSELL FUTURES. THE STORY OF THE LAST 15 MINUTES COMES TO THE COMMODITY SPACE. LOOKING AT BRENT CRUDE HIGHER BY 1%, TRADING WITH A $76 HANDLE. SAUDI ARABIA EXTENDING THERE VOLUNTARY CUT OF ONE MILLION BARRELS A DAY THROUGH AUGUST. THAT WAS THAT INITIAL SPIKE YOU SAW, NOW SPIKING AGAIN THAT RUSSIA IS CUTTING BY 500,000 BARRELS A DAY IN AUGUST.
SOMETHING THAT THE ENERGY MINISTER NOVAK SAID WAS SOMETHING THEY WERE DOING TO STABILIZE THE OIL MARKET. THE COMBO OF THAT PUTTING OIL AT THIS $76 HANDLE. DANI: IT IS WORTH TAKING A BA.2, AND WISHING MAYBE AN UNHAPPY BIRTH DATE TO THE YIELD CURVE.
ONE YEAR AGO EXACTLY, THE YIELD CURVE INVERTED AND HAS STAYED THERE EVER SINCE. HERE IS THE STRANGE THING. WE ARE ALL DOUR ABOUT THE ECONOMY, BUT OVER THE PAST MONTH , WE HAVE HAD REALLY STRONG ECONOMIC DATA. IN FACT, THE BLOOMBERG ECONOMIC SURPRISE INDEX IS AT ITS HIGHEST SINCE 2021. IN OTHER WORDS, THE ECONOMIC DATA HAS BEEN BEATING EXPECTATIONS FROM ANALYSTS BY THE MOST SINCE TWO YEARS AGO. SO, WHAT IS RIGHT? THE ECONOMIC DATA, THE SURPRISE, OR THIS BOND MARKET? LET'S BRING IN ANNEKA TREON, CHIEF ECONOMIST AT VAN LANSCHOT KEMPEN. IS THE BOND MARKET TOO PESSIMISTIC, OR IS THAT
INVERTED YIELD CURVE SHOWING THAT AT SOME POINT WE WILL INDEED GET RECESSION? ANNEKA: IT'S THE QUESTION EVERYBODY IS ASKING, ARE EQUITIES MARKET RIGHT, OR BOND MARKETS RIGHT? HIS. TORY NORMALLY TELLS US BOND MARKETS ARE LEADING AND WE SHOULD FOLLOW THAT. THERE ARE PROBABLY GETTING FACTORS, ONE IS THE DIVERGENCE BETWEEN MONETARY AND FISCAL POLICY. WHILE CENTRAL BANKS ARE GETTING MORE STUBBORNLY HAWKISH, FISCAL POLICY IS REACHING RECORDS AMOUNT OF STIMULUS BEING GRANTED. THAT'S ONE.
SECOND, BECAUSE CENTRAL BANK'S WERE TOO LATE TO DEAL WITH INFLATION, INFLATION HAS BECOME EMBEDDED IN THE SERVICES SECTOR. LABOR MARKETS ARE VERY STRONG, THAT'S A MASSIVE SUPPORT FOR THE ECONOMY. DANI: TRANSLATE THAT INTO YOUR ECONOMIC CALL THEN. ARE WE STILL GOING TO GET ECONOMIC RECESSION IN THE U.S.? ANNEKA:
IT HINGES UPON ONE THING, IT IS NOT ONLY IN THE U.S., IT IS BROADER. OUR CENTRAL BANKS GOING TO STICK TO THE 2% INFLATION TARGET, AND ARE THEY GOING TO BEHAVE ACCORDINGLY? THAT IS WHY A FED INTRODUCED A PAUSE IN THE FIRST PLACE. IF THE CENTRAL BANKS ACKNOWLEDGE WE ARE IN A STRUCTURALLY HIGHER INFLATION ENVIRONMENT, ALSO THANKS TO FISCAL POLICY AND REWIRING OF GLOBAL SUPPLY CHAINS, THE EFFECT OF RUSSIA/UKRAINE ETC., AND CENTRAL BANKS CAN TAKE A
STEP BACK AND NOT FEEL THE URGENCY TO CROSS SERVICES INFLATION. WHICH ACTUALLY THE LABOR MARKET HAS BEEN VERY SUPPORTIVE. IF CENTRAL BANKS REMAIN DOGMATIC ABOUT 2% TO RESTORE CREDIBILITY, THEY WILL SIMPLY KEEP GOING ON. IF THEY KEEP RAISING RATES, THAT COULD INDEED TRIGGER THE RECESSION WE HAVE ALL BEEN TALKING ABOUT SINCE SEPTEMBER OF LAST YEAR. KRITI:
I WOULD ARGUE PERHAPS EVEN LONGER, DEPENDING ON HOW BEARISH YOU ARE. WE GOET THE PAYROLLS REPORT ON FRIDAY, ONE OF THE INDICATORS IS SOFTNESS IN THE LABOR MARKET, WHAT ARE YOU EXPECTING ON FRIDAY? ANNEKA: THE BIGGEST SURPRISE -- THERE HAS BEEN A FEW SURPRISES AS HE SHOWED IN THE SURPRISE INDEX -- IS THE STRENGTH OF THE LABOR MARKET. WE HAVE ALL BEEN LOOKING AT INDICATORS WHICH SHOWS A SLIGHT WEAKENING, ESPECIALLY IF YOU LOOK AT LAYOFFS, CENTER OF . EVERYONE WILL BE DOING THE MATH, TO WHAT EXTENT ARE WAGES GOING NOMINALLY, AND WHAT IS THAT DOING TO CORE INFLATION? IF WE GET TO A POINT THAT REAL WAGES ARE GROWING FASTER THAN CORE INFLATION, THAT'S A CONTINUING SUPPORTING FACTOR FOR THE ECONOMY. THAT'S WHAT EVERYBODY WILL BE LOOKING FOR. KRITI: THAT'S THE KIND OF BROADER STORY, WHEN YOU LOOK WITHIN THE NUMBERS, HOURLY EARNINGS ARE NOT IMPROVING WHEN YOU LOOK AT REAL WAGES.
WE'RE LOOKING AT PRODUCTIVITY NUMBERS THAT HAVE BEEN DROPPING FOR SEVERAL MONTHS, IF NOT A YEAR NOW, TALK TO US ABOUT HOW THAT COMPARES WITH THE AI STORY THAT IS DRIVING EQUITY MARKETS TO GREEN ON THE SCREEN? THERE IS A NARRATIVE, LARRY FINK THE CEO AT BLACKROCK SAID THE ACCELERATION IN THE AI STORY COULD ACTUALLY HELP THE DETERIORATION YOU ARE SEEING IN PRODUCTIVITY. ANNEKA: IT'S INTERESTING WHAT YOU SAY ABOUT THE AI STORY DRIVING EQUITY MARKETS, THE REASON IS OBVIOUS. LOOK AT THE SHARE PRICE OF ALL THOSE AI BENEFICIARIES, WHICH CONTRIBUTES TO EARNINGS GROWTH, EVERYBODY LIKES THAT AND EQUITY MARKETS GO UP. THERE IS ONE THAT IS SLIGHTLY DEEPER AND PERHAPS MORE INTERESTING. I MENTIONED THERE ARE A LOT OF STRUCTURALLY INFLATIONARY FORCES WORKING THROUGH MARKETS, WHICH IS WHY MANY ARE QUESTIONING WHETHER 2% IS THE RIGHT TARGET, OR 3% SHOULD BE THE NEW NORMAL. YOU MENTIONED LARRY FINK TALKING ABOUT THE ONE MAJOR DEFLATIONARY STRUCTURAL 4S THERE COULD BE AI. LET'S TALK ABOUT PRODUCTIVITY.
AI COULD BE THE FACTOR DRIVING PRODUCTIVITY GROWTH. IF AI CAN REALLY PLAY ITS ROLE IN MANAGING THAT, AND THEREFORE MANAGING A MORE HEALTHY LONG-TERM INFLATION AS A RESULT OF THAT, THAT'S ALSO VERY SUPPORTIVE TO EQUITY MARKETS. THE BIG QUESTION IS, HOW MUCH OF AI IS WORKING THROUGH TO INCREASING PRODUCTIVITY IS SOMETHING WHICH WILL PAN OUT IN THE FUTURE? AND HOW MUCH IS IT SOMETHING THAT WILL MOVE THE NEEDLE IN THE SHORTER TERM? DANI: I CAN'T HELP BUT THINK, AS YOU DISCUSS THE IMPACT OF AI ON JOBS, AS I ATTEMPT TO GET READY TO ASK YOU ABOUT OUR [INDISCERNIBLE] HOW FAR OUTSIDE THE HISTORY OF HISTORICAL NORMS ARE WAITING? ARE WE AT THE POINT WHERE A LOT OF THE MODELS WE USE ARE JUST NOT WORKING RIGHT NOW, CONSIDERING HOW DIFFERENT THIS TIME AROUND IS? ANNEKA: IT'S THAT FAMOUS, "THIS TIME IS DIFFERENT," IT GETS COMPLICATED BECAUSE IT ALWAYS SOUNDS LOGICAL TO SAY IT, BUT LOOKING IN THE FUTURE YOU SAY RETROSPECTIVELY, IT WASN'T. BUT THE TWO MAJOR FACTORS WE NEED TO TAKE INTO ACCOUNT IN THE "THIS TIME IS DIFFERENT" FREDERICK IS THE DIVERGENCE BETWEEN FISCAL AND MONETARY POLICY. THIS IS HUGE, THINK ABOUT THAT
TRILLIONS OF DOLLARS BEING PUT OUT BY GOVERNMENTS, BE IT NATIONAL SECURITY, INFRASTRUCTURE NEEDS, THE INFLATION REDUCTION ACT, CLIMATE CHANGE SPENDING PROGRAMS. THESE ARE HUGELY BENEFICIAL TO THE ECONOMY AND MARKETS TO JOBS. CENTRAL BANKS CAN MAKE MORTGAGE RATES MORE EXPENSIVE AND LOANS HARDER TO COME BY, BUT THAT FACTOR IS HUGE. THE OTHER ONE IS OBVIOUSLY TECHNOLOGY. WE HAVE SEEN TECHNOLOGY WAVES
IN THE PAST, BUT THIS SPEED AT WHICH AI IS ACCELERATING THINGS IS QUITE NEW FOR US. KRITI: I LOVE THAT YOU MENTION THE DIVERGENCE BETWEEN FISCAL AND MONETARY. EVEN LAST WEEK WE GOT THE SUPREME COURT KNOCKING DOWN PRESIDENT BIDEN'S LOAN FORGIVENESS PROGRAM.
HE IS SAYING WE WILL FIND ALTERNATIVE MEASURES. HOW'RE YOU THINKING ABOUT THAT FROM ACROSS THE ATLANTIC? IS THAT SOMETHING YOU ARE WORRIED ABOUT, WHAT THE BIDEN ADMINISTRATION IS DOING TO HELP PEOPLE WHO CAN REALLY LIVE AT A TIME WHEN THE FEDERAL RESERVE IS TRYING TO GO EVEN HARDER ON INFLATION? ANNEKA: I GUESS WHAT BIDEN REFERRING TO IS IT IS ALL ABOUT THE CONSUMER. THE ONE REASON FOR WHY THE ECONOMY IS HOLDING UP MUCH BETTER THAN EXPECTED, LET'S REMIND BACK TO SEPTEMBER, OCTOBER OF LAST YEAR. HAD WE KNOWN THAT THE GDP NUMBERS OF EUROPE WOULD HAVE ONLY BEEN A SLIGHT NEGATIVE, WE WHO WOULD HAVE BEEN OVER THE MOON. WE WERE EXPECTING THE DARKEST PERIOD WITH THE ENERGY CRISIS, ETC.
WE HAVE BEEN HARPING ON ABOUT U.S. RECESSION, LOOK AT Q1 GDP GROWTH, IT WAS VERY STRONG. Q2 LIKELY TO BE POSITIVE AGAIN. FROM THAT PERSPECTIVE, THE CONSUMER HAS PLAYED AN INCREDIBLY IMPORTANT ROLE. PART OF IT WAS SAVINGS AROUND THE PANDEMIC, SAVINGS RATES HAVE FALLEN FROM PRE-PANDEMIC 10% TO 4%, THERE IS STILL RUNWAY AHEAD AS LONG AS CONSUMERS FEEL COMFORTABLE AND CONFIDENT.
BECAUSE HEADLINE INFLATION NUMBERS ARE COMING DOWN, BECAUSE JOB MARKETS ARE STRONG, CONSUMERS CONTINUE TO FEEL QUITE COMFORTABLE. THAT'S THE POINT. THAT'S WHAT EVERYTHING IS HINGING UPON. DANI: CONSUMER CONFIDENCE DATA SERVICE CONTINUE TO COME IN STRONG. REALLY GREAT TO SPEAK WITH YOU THIS MORNING, ANNEKA TREON, [LAUGHS] THERE. WE WILL LOOK AT 10 THINGS TO FOCUS ON IN THE NEXT QUARTER.
OUR BLOOMBERG INTELLIGENCE TEAM HAS THE DETAILS. THIS IS BLOOMBERG. ♪ LATER TODAY AN CHAIRMA NI BIGT -- INTERVIEW WITH THE CHAIRMAN OF THE ISM MANUFACTURING SURVEY. AT 10:00 A.M. IN LONDON. THIS IS BLOOMBERG. ♪ DANI: THIS IS "BLOOMBERG SURVEILLANCE: EARLY EDITION". I'M DANI BURGER IN LONDON. KRITI GUPTA IS IN NEW YORK. WE ARE OFFICIALLY IN THE SECOND
HALF OF THE YEAR, CONGRATULATIONS YOU MADE IT. BLOOMBERG INTELLIGENCE HAS LAID OUT 10 FOCUS IDEAS TO WATCH FOR THE THIRD QUARTER. JOINING US IS TIM CRAIGHEAD FROM BLOOMBERG INTELLIGENCE. WE HAVE 10 COMPANIES, TELL ME
ABOUT THEM. >> OUR FOCUS IDEAS ARE COMPANIES WHERE WE SEE THINGS GOING ON. NUMBER ONE, OUR ANALYSTS HAVE A VERY STRONG FUNDAMENTAL CALL. NUMBER TWO, THEY BELIEVE THEIR VIEW IS DIFFERENT FROM WHAT THE MARKET IS DISCOUNTING. NUMBER THREE, THEY SEE CATALYSTS AHEAD THAT CAN SHIFT THE MINDSET.
THERE IS ABOUT 100 OF THESE ACROSS SECTORS THAT OUR ANALYSTS HAVE ON AN ONGOING, ACTIVELY MANAGED BASIS. THESE 10 ALL HAVE CATALYSTS THAT ARE COMING UP IN THE THIRD QUARTER THAT WE THINK ARE PARTICULARLY NOTABLE. KRITI: TIM, TALK TO US ABOUT THE AI STORY. SPECIFICALLY AS IT PERTAINS TO ALPHABET.
I'M CURIOUS ABOUT THIS BECAUSE A LOT OF THE FRONT RUNNERS OF AI HAVE COME OUT AND SAID, ACTUALLY THIS IS DANGEROUS TECHNOLOGY, THIS IS SOMETHING THE MARKET IS GETTING AHEAD OF THEMSELVES WITH. HOW ARE YOU APPLYING THAT KIND OF RHETORIC TO A COMPANY LIKE ALPHABET THAT HAS THEIR HANDS IN A BILLION MILL -- MILLION THINGS? >> OUR VIEW IS THAT THE FOCUS IS ON NVIDIA AND SEMICONDUCTORS. OBVIOUSLY, A NUMBER OF STOCKS HAVE GONE TO THE MOON ACCORDINGLY. AND THAT IT COULD BE BAD FOR THE BASIC SEARCH BUSINESS THAT IS ALL ABOUT GOOGLE WITHIN ALPHABET. WE WOULD ARGUE THAT ACTUALLY AS AI CONTINUES ITS RAPID ADOPTION, THAT THAT WILL BE REALLY GOOD FOR ALPHABET'S CLOUD BUSINESS MORE BROADLY. THAT WILL OVERWHELM ANY RISK THAT THERE IS TO SEARCH.
BEYOND THAT, THEY HAVE YOUTUBE, AND THERE IS A LOT OF INTERESTING THINGS GOING ON WITHIN THAT BUSINESS THAT WILL CONTINUE TO BENEFIT THE COMPANY. DANI: I DON'T WANT TO TALK ABOUT AI, I JUST WANT TO TALK ABOUT CHEESECAKE. I WISH IT WAS ACTUAL CHEESECAKE. I SEE THAT THE CHEESECAKE FACTORY IS ONE OF YOUR 10 STOCKS, I NEED TO KNOW MORE ABOUT THIS.
>> THESE AREN'T ALL POSITIVE IDEAS. THERE ARE SIX THAT ARE CONSTRUCTIVE, THERE ARE FOUR THAT ARE SITUATIONS WHERE WE HAVE CONCERNS. YOU ALL HAD BEEN TALKING IN THE PRIOR SECTION ABOUT ECONOMIC SLOWDOWN, AND IS IT GOING TO HAPPEN OR NOT, ETC. WE DO SEE WITH CHEESECAKE FACTORY A POTENTIAL CONCERN.
THAT IS, IN THE MIDST OF AN SLOWING ECONOMIC ENVIRONMENT WHERE INTEREST RATES ARE HIGH, CONSUMERS ARE PRESSED. THAT EXPECTATIONS ARE REALLY ROBUST FOR CHEESECAKE'S COMP STORE SALES ON AN ONGOING BASIS. WE THINK THAT IS REALLY FAR-FETCHED. WE THINK THAT COMP SALES MAY ESSENTIALLY COME BACK DOWN TO LEVELS PRE-PANDEMIC, AS OPPOSED TO DOUBLE THAT THAT IS CURRENTLY IN EXPECTATIONS. DANI: I FEEL LIKE IT SHOULD BE LIKE BEER, IF YOU ARE SAD, YOU DRINK BEER, IF I AM SAD I AM GOING TO EAT A PIECE OF CAKE. KRITI: SOME PRETTY SOLID LOGIC FROM
DANI BURGER. I WILL ALSO POINT OUT IT IS IN THE MIDDLE OF LONDON, A BIG CENTER FOR FOOD. IF SHE SAID THERE WAS ONE RESTAURANT SHE WOULD PICK FOR THE REST OF HER LIFE, IT WOULD BE CHEESECAKE FACTORY. DANI:
THEIR MENU IS HUGE. I AM GOING TO STOP. TIM, THANK YOU SO MUCH FOR JOINING US THIS MORNING. COMING UP, THE MARKET-MOVING EVENTS YOU NEED TO BE WATCHING THIS WEEK. KRITI AND I HAVE IT ALL COVERED FOR YOU, AND THE PREMARKET MOVERS. THIS IS BLOOMBERG.
DANI: THIS IS "BLOOMBERG SURVEILLANCE: EARLY EDITION". I'M DANI BURGER IN LONDON. KRITI GUPTA IS IN NEW YORK. AHEAD THIS WEEK, IT IS BUSY DESPITE THE HOLIDAY WORKWEEK, WE'RE GETTING U.S. PMI AND ISM MANUFACTURING LATER THIS MORNING BEFORE U.S. MARKETS CLOSE EARLY AHEAD OF THE FOURTH OF JULY HOLIDAY. THEN, OVERNIGHT IN THE U.S., ON TUESDAY WE GET AN RBA RATE DECISION ON DECK.
THEY ARE EXPECTED TO SPEED UP THE PACE OF HIKING. THEN FOMC MEETING MINUTES COME OUT ON WEDNESDAY. THURSDAY U.S. TREASURY SECRETARY JANET YELLEN BEGINS HER TRIP TO CHINA.
WE'RE GOING TO ROUND OUT THE WEEK WITH U.S. PAYROLLS DATA ON FRIDAY. KRITI, YOU WILL BE WATCHING THIS ONE. KRITI: I'M STILL OBSESSED WITH THE
FACT THAT LARRY FINK SAYS THE AI BOOST CAN POTENTIALLY OFFSET SOME OF THE DECLINE WE'RE SEEING IN PRODUCTIVITY NUMBERS. THAT MAKES SENSE FOR A LOT OF FOLKS SAYING WORKING FROM HOME IS NOT POSITIVE FOR THE ECONOMY. THAT IS ONE CASE TO BE MADE IN THE MARKETPLACE, BUT I'M WATCHING A LOT OF THE MICRO AS WELL. PREMARKET STOCKS IS WHERE MY HEAD IS AT, SPECIFICALLY WHEN IT COMES TO ELECTRIC VEHICLE STOCKS, FUELING A BOOST IN NASDAQ FUTURES. TESLA SHARES HIGHER BY 6% ALREADY. A RECORD NUMBER OF DELIVERIES. THEY TOOK A HIT ON THEIR
MARGINS, BUT IT IS A STRATEGY THAT WAS INITIALLY MET WITH A LOT OF RESISTANCE, AND YET THEY ARE ABLE TO PULL THROUGH, AND AT THE SAME TIME, IMPRESS INVESTORS. THIS IS PRETTY IMPRESSIVE I HAVE TO SAY. DANI: 83% JUMP YEAR-OVER-YEAR, AND HE PUT IT REALLY RIGHTLY. THIS DECISION OF THEM TO CUT PRICES, PRIORITIZE VOLUME, IT HAD BEEN REALLY CRITICIZED. BUT HERE'S THE THING, THESE NUMBERS ARE REALLY STRONG. PART OF THE GOAL OF TESLA WAS
NOT JUST TO GET THE DEMAND, BUT ALSO DELIVER MORE VEHICLES INTO NOT HAVE THIS INVENTORY GLUT, AND THEY WERE ABLE TO DO THAT. THE NUMBERS SHOW THAT THIS PLAY BY TESLA AT LEAST FOR NOW HAS BEEN SUCCESSFUL. KRITI: I WONDER HOW MUCH ITS PEERS LIKE GENERAL MOTORS AND FORD TRY TO TAKE A PAGE OUT OF ELON MUSK'S LABEL. YOU SAID THAT THE TESLA STORY WAS GOING TO FUEL NASDAQ FUTURES, THE COUNTERFORCE IS APPLE. THEY ARE CUTTING THEIR VISION PRO GOALS AFTER SOME PRODUCTION ISSUES.
THAT IS THE VIRTUAL REALITY HEADSET THEY BOASTED AT THEIR SHOW -- THERE IS A WORD FOR IT -- DEVELOPERS CONFERENCE, GIVE ME SOME TIME EVENTUALLY I WILL GET THERE. THE MOVE THERE IS INTERESTING BECAUSE APPLE IS ALSO A HEAVY WEIGHT. IT DID ALSO HIT $3 TRILLION IN MARKET CAP LAST WEEK, SO PERHAPS SEEING A LITTLE PULLBACK BUT IT IS KIND OF A WEIRD DAY IN THE U.S. SESSION, SO PERHAPS LIGHT VOLUME NOT PLAYING IN THEIR FAVOR. DANI: I ALMOST CALLED IT A WEB
DEVELOPER PALOOZA, HONESTLY THEY SHOULD REALLY NAME IT THAT. IT LOOKS LIKE SKI GOGGLES, BUT PART OF THE REASON IS IT IS COMPLICATED, THERE IS A LOT OF TECH GOING INTO THIS. GOOGLE TRIED IN THE PAST UNSUCCESSFULLY. WE WILL HAVE TO WAIT A LITTLE BIT LONGER TO SEE THESE BECOMING MAINSTREAM. KRITI: A LOT OF FOCUS ON THEIR PRODUCTS, BUT YOU KNOW ME, I WAS OBSESSED WITH THE ANTITRUST STORY.
IT CONTINUES ON MONDAY AS WELL, THIS TIME IN THE BIOTECH SPACE. GILEAD SCIENCES IS ONE OF THOSE KEY BIOTECH STOCKS A LOT OF PEOPLE PLAY. IT IS TAKING A HIT THIS MORNING, DOWN 1%, THEY WERE CLEARED FOR THEIR PAY TO DELAY HIV DRUG. IT GOT PUSHED FROM ANTITRUST, THEY HAVE GOTTEN THE ALL CLEAR SO YOU HAVE M&A ARBITRAGE AT PLAY, THAT ANTITRUST GOING EVERYWHERE FROM BIG TECH TO BIOTECH IT IS PLAYING INTO THE STORY. DANI: AS WE HEAD TO THE END OF THE HOUR, I WANT TO GIVE ANOTHER CHECK ON OIL. OIL RALLYING MORE THAN 1%.
TWO HOTHEADS ON YOUR TERMINAL. SAUDI WILL BE EXTENDING VOLUNTARY CUTS OF ONE MILLION BARRELS PER DAY, AS IS RUSSIA.
2023-07-07 16:59
