'Bloomberg The Open' Full Show (09/19//2022)
JONATHAN: EQUITY STRUGGLING TO MAKE A COMEBACK, FUTURES DOWN BY ABOUT POINT 1%, THE COUNTDOWN TO THE OPEN STARTS NOW. >> EVERYTHING YOU NEED TO GET SET FOR THE START OF U.S. TRADING, THIS IS U.S. -- BLOOMBERG: THE OPEN WITH JONATHAN FERRO. ♪ JONATHAN: LIVE FROM NEW YORK, THE BIG ISSUE.
WHAT WILL CENTRAL BANKS TAKING CENTER STAGE. >> WE HAVE THE ALL REPORTS OF FED MEETING. >> THE FED HAS A LOT OF WORK AHEAD OF ITSELF AS DO OTHER CENTRAL BANKS. >> THE U.S. INFLATION IS HORRIFIC. >> IT FLIPS THE FED INTO OVERDRIVE.
>> THEY ARE FEELING THEIR WAY TO HOW FAR THEY HAVE TO RAISE. >> THE FED IS NOT GOING TO BLINK. >> THIS FED IS NOT RETURNING. >> 100 POINTS. >> SOONER OR LATER THEY WILL MAKE A POLICY WAS --POLICY MISTAKE. JONATHAN: JOINING US NOW IS VICTORIA FROM MORGAN STANLEY.
MY QUESTION IS HOW RESTRICTIVE ARE THESE RATE HIKES FOR HOW LONG? VICTORIA: IT WILL KEEP GOING UP. WE WILL BE EMBARRASSED BY ANYBODY WHO USED TRANSITORY. THEY TALKED ABOUT UNUSUALLY LARGE HIKES COMING OUT OF JACKSON HOLE. INVESTORS HAVE TO REMEMBER THEY DO NOT CARE ABOUT THE STOCK MARKET. THE ONLY REASON THEY MADE THAT
IS LIQUIDITY STARTS IN THE BOND MARKET. BUT I THINK WE ARE PAST THAT. ANYBODY LOOKING FOR A BAILOUT OR A PIVOT HAS TO LOOK AT REALITY AND REALIZE THE FED IS GOING KEEP GOING AND ARE COMMITTED TO KEEPING US THROUGH 2023. JONATHAN:
IT SEEMS TO BE THE CONSENSUS, DEUTSCHE BANK TALKING, HERE'S WHAT GOLDMAN HAD TO SAY. THE FORECAST BY 70 FIVE BASIS POINTS OVER THE LAST TWO WEEKS NOW EXPECTING THE FOMC HIKE IN NOVEMBER AND DECEMBER TO REACH FOUR .25 BY THE END OF 2022. A PREVENTER VISUALS ARE SAYING THIS ECONOMY CAN'T STOMACH IT. THERE IS A GROUP THAT SAYS THIS IS NOT ENOUGH. WHICH CAMP ARE HUMAN? >> I AM OF THE CAMP IT IS GETTING CLOSE TO BEING ENOUGH. THIS IS NOT THE PRE-COVID ECONOMY WHERE TWO .5 PERCENT
WAS ENOUGH. WE HAD MASSIVE FISCAL EASE FROM 2020 THROUGH 2021. THE FED HAS TO FIGHT THAT AS WELL AS AN INFLATION RATE THAT LOOKS ANYTHING BUT TRANSITORY.
FOUR .5% IS REASONABLE, BUT WE HAVE TO KEEP IN MIND THE MONETARY POLICY WITH LAG. WE HAVE HAD AN INCREASE IN INTEREST RATES AND I CAN'T REMEMBER THE LAST TIME THEY RAISED FOUR HUNDRED BASIS POINTS IN A YEAR. THE JURY NOW IS WHETHER OR NOT INFLATION WILL FALL FAST ENOUGH TO GET THE REAL FED'S FUNDS RATE RELATIVE TO CORE PCI.
JONATHAN: WHAT IS THE TIMELINE YOU THINK WE NEED TO GET INFLATION BACK TO TARGET? I UNDERSTAND YOU NEED A PERIOD OF LOW TREND GROWTH. HOW MUCH BELOW TREND GROWTH DO YOU NEED, POTENTIAL GROWTH, IN AMERICA TO GET THAT BACK TOWARD TARGET? >> I THINK ABOUT HOW LONG IT WILL TAKE TO GET THE TARGET. IF THE FED IS WORRIED ABOUT THE PLAN COSTING TO HEART OF THE SESSION, AND THEY ARE WILLING TO TAKE THEIR TIME --INFLATION, THEY ARE WILLING TO TAKE THEIR TIME, -- IT IS HEADED DOWN AND BY THE END OF NEXT YEAR --IT DOES NOT HAVE TO GO UP A WHOLE LOT. SOMEWHERE AROUND FOUR PERCENT IS PROBABLY ENOUGH.
BUT THEY WILL KEEP THEIR PEDAL TO THE METAL AND GROW OUR DUTCH KEEP GOING AND THAT IS WHEN WE SEE IMPROVEMENT. JONATHAN: FUTURES DOWN .1% ON THE S&P, YIELDS HIGHER BY FIVE BASIS POINTS. THREE .46, AFTER HAVING A LAG OF ABOUT 3.5. COMPARED TO WHERE WE WERE IN JUNE AND WHERE WE ARE NOW, I'VE GOT REAL RATES ABOVE JUNE EYES. AND EQUITY MARKET UP ABOUT FIVE PERCENT ABOVE JUNE LOWS. DO YOU CONSIDER IT INEVITABLE
THE EQUITY MARKET RETESTS THAT CHINHAE -- JUNE HIGH? VICTORIA: YEAH, YOU HAVE A WEAKENING FED, I DO THINK WE WILL REASSESS THE LOW. THIS IS A CLASSIC BEAR MARKET RALLY AND WHEN THAT HAPPENS WE PUSH LOWER. WE ARE FIRMLY IN THE BEAR CAMP RIGHT NOW. PEOPLE ARE LOOKING AT A FEW THINGS. UNEMPLOYMENT IS THE ONLY THING SIGNALING HOPE. THERE IS THAT MEME OF THE DOG
DRINKING THE COFFEE CUP WITH THE FLAMES AROUND HIM SAYING THIS IS FINE, EVERYTHING ELSE IS BURNING DOWN ON FIRE AND THE ONLY THING PEOPLE LOOK AT -- YOU HAVE TO TAKE DOWN THE TOTALITY AND WHAT IT IS TELLING YOU. THE INVERTED YIELD CURVE, THE SLOWING OF PMI, INFLATION BEING STICKY --NOT EVEN OIL AND GAS. CORN IS THE WORST. AND THEN THERE IS THE GAS PRICES IN EUROPE AND THE UNITED STATES AS WE SEE WHAT IS HAPPENING WITH RUSSIA AND THE NORD STREAM PIPELINE. YOU ALREADY HAVE THE UTILITY BILLS AND THE AMOUNT OF PRESSURE PEOPLE ARE MAKING FROM GAS PRICES, NOT ONLY CAR GAS BUT NATURAL GAS. EVENTUALLY WE WILL HEAD OVER
AGAIN AND SEE A RALLY OFF THE BOTTOM. BUT WE ARE GOING TO RECESS LOWER. JONATHAN: I WANT TO PICK UP ON THAT MEME, WE ARE ALL FAMILIAR WITH THAT.
DO YOU THINK THE FED IS AT RISK OF BEING INVOLVED IN THIS? MICHAEL: THE FED IS AHEAD OF THE DANGER. THEY GO TO FAR -- TOO FAR. ON THE OTHER HAND, LOOK AT JOB OPENINGS THE. SOFT LANDING IS ABOUT THE --CONSISTENT WITH A TWO .5% CORE PCE THAT ROTATES, THAT IS
AN ASSUMPTION WE WILL GET RIGHT NOW. I DO THINK THE FED IS BECAUSE THEY LAGGED BEHIND INTO THE ECONOMY HAS PROVED TO BE MORE RESILIENT THAN ANYONE THOUGHT. THERE HAS NOT BEEN A BALANCE, HOUSEHOLD SECTOR, CORPORATE SECTORS ARE FLUSH WITH CASH. JONATHAN: MIKE MCKEE WILL BE IN THE NEW CENTER LATER. HIS JOINING US NOW. GOOD MORNING. MIKE:
GOOD MORNING. THE WORLD HAS TO BE AS SCARED TO DEATH. THIS IS A WEEK FOR CENTRAL BANKS AROUND THE WORLD TO RAISE RATES. MORE THAN A DOZEN WILL MEET THIS WEEK. THE U.S. FEDERAL RESERVE, THE BANK OF ENGLAND, THE BANK IN SWEDEN AND THE SWISS NATIONAL BANK EXPECTED TO MAKE MOVES.
THE BANK OF ENGLAND, THE ONLY ONE AT 50 BASIS POINTS, BUT THERE IS A SCHOOL OF THOUGHT IT WILL GO 75 AS WELL. THIS WILL DRAW UP LIQUIDITY AROUND THE WORLD. IT WILL BE INTERESTING TO SEE THE IMPACT ON EACH COMPANY. DUTCH COUNTRY. --COUNTRY. THE FED IS GOING TO BE TELLING US NOT JUST WHERE THEY ARE RIGHT NOW, WHERE THEY ARE GOING AND YOU CAN SEE IN THE DOT PLOT NOT ONLY WHERE THE FED THINKS WE SHOULD BE BUT WHERE THE MARKET THINKS THE FED SHOULD BE ON THE LEFT-HAND SIDE. THEY WILL START GOING DOWN IN YEARS TO TURN DUTCH YEARS TO COME BUT WHICH OF THE DOTS MOVE? 2023 WILL BE THE BIG QUESTION, THE FIRST THING EVERYONE WANTS TO KNOW WEDNESDAY. HE BROUGHT THIS UP EARLIER ABOUT LIQUIDITY. YOU CAN SEE HOW THE FED IS
BRINGING QT. THE BLUE LINE IS THE BALANCE SHEET GOING DOWN AND TREASURY HOLDINGS. THE WHITE LINE IS ALSO GOING DOWN, TREASURY ISSUANCE. WHICH LEAVES A BIG HOLE TO FILL. AND LIQUIDITY GETS A LITTLE
WORSE. IT IS COMPARED TO THEM RATHER THAN ON THE FULL BASIS OF WHAT LIQUIDITY IS. CAN SEE THE OVAL. THAT WAS 2018. CAN SEE THE SMALL BUMP IN
LIQUIDITY TIGHTNESS THAT LED THE FED TO STOP RAISING RATES. WE WONDER WHAT WILL HAPPEN WHEN THE FED GOES HIGHER. JONATHAN: THANK YOU. I HAVE TO ADMIT I'VE BEEN STRUGGLING TO FIND A BULLISH NOTE. THIS IS THE LINE THEY USE. WE ANTICIPATE DECELERATING HAS THE TERMINAL, AND IS EXPECTED TO BE A NEAR 10 POSITIVE FOR RISK ASSETS AND STOCKS.
VICTORIA, I WANT TO COME BACK. THE ANTICIPATED DECELERATION BY THE MARKET WILL BE A NEAR TERM POSITIVE FOR RISK ASSETS INCLUDING STOCKS. WHAT IS THE PUSHBACK AGAINST THAT? VICTORIA: YOU ARE REALLY REACHING THERE. IT IS LIKE IF YOU LOST A FOOTBALL GAME BUT SOMEONE DID REALLY WELL, THERE ARE STILL RAISING RATES, AND POWELL HAS MADE IT CLEAR. HE WANTS TO BE COMMITTED TO
RAISING RATES AND HAVING A SUSTAINABLE PATH. YOU NEED TO LOOK AT EXPECTATIONS AND REALITY. THE REALITY IS POWELL IS HAWKISH AND THEY HAVE WORKED HARD TO BRING IT BACK AND MAKING SURE EVERYBODY UNDERSTANDS THE PATH FORWARD. THEY ARE SO RATE HIKES.
I KNOW HE WANTS TO KEEP THEM ELEVATED FOR LONGER PERIODS THAT IS POSSIBLY REACHING --TORCH IT LONG ENOUGH AND THEY WILL SAY ANYTHING AND THAT IS A LITTLE BIT REACHING FOR SOMETHING. IT WILL GET BAD BUT I DON'T THINK WE'RE THERE YET. JONATHAN: WE WILL REPLAY THAT CLIP. THANK YOU VICTORIA. DOWN ON THE S&P 500, HERE'S ABBY. ABIGAIL: WE YOU HAVE STOCKS DOWN AS YOU WERE MENTIONING AND TECH IS WEAK. YIELDS ARE RISING, MAKING IT MORE EXPENSIVE FROM A VALUATION PERSPECTIVE.
RELATIVE TO APPLE, AT LEAST ONE ANALYST BANK SAYING THE DEMANDS OF THE NEW IPHONE, THE LAUNCHES MAKES. THE HIGH-END IS GOOD BUT SHARES OF APPLE ARE DOWN ABOUT POINT 73%. THE NVIDIA ANNUAL EVENT IS TODAY. THEY MISSED PRE-ANNOUNCEMENTS, PREANNOUNCED NUMBERS. THE STOCKS DOWN MORE THAN 50% YEAR TO DATE. THEY HAVE A LOT TO EXPLAIN, PRESSING ON THE BIG CHIPMAKER AS WELL. BANK OF AMERICA DOWN ONE .3%, SOMETHING TO DO WITH THE INVERTED YIELD CURVE BEING MORE INVERTED ON THE DAY, THE SHORT END HIGHER THAN THE LONG END.
THE 10 YEAR YIELD UP, BACKING AWAY. AND A BRIGHT SPOT, NETFLIX UP TWO .5%. THEY WILL OUTPERFORM ON ADSENSE, THE PLAN SAYING IT SHOULD ACCELERATE GROWTH. TRUE, BUT ALSO A RACE FOR CONTENT. IT WILL BE INTERESTING TO SEE HOW THINGS WORK OUT.
THE STOCK DOWN 60 7% FROM PEAK. -- 67% FROM PEAK. JONATHAN: WE WILL TALK ABOUT THE TECH NAMES. COMING UP PRESIDENT BIDEN STRIKING AN OPTIMISTIC TONE.
PRES. BIDEN: WE ARE IN A POSITION WHERE THE LAST SEVERAL MONTHS THERE HAS BEEN A SPIKE. WE HAVE CREATED JOBS AND PRICES THAT HAVE GONE UP BUT THEY HAVE COME DOWN FOR ENERGY. JONATHAN: IN NEW YORK CITY, THAT CONVERSATION, NEXT.
>> I WAS TELLING THE AMERICAN PEOPLE WE WILL GET CONTROL IN THE SESSION. WE ARE IN A POSITION WHERE IN THE LAST SEVERAL MONTHS IT HAS A SPIKE. IN THE MEANTIME, WE HAVE CREATED JOBS AND PRICES HAVE GONE UP BUT THEY HAVE COME DOWN FOR ENERGY.
WE STILL HAVE A PROBLEM WITH COVID AND WE ARE STILL DOING A LOT OF WORK ON IT. BUT THE PANDEMIC IS OVER. I'M MORE OPTIMISTIC THAN I HAVE BEEN IN A LONG TIME. JONATHAN: THE PRESIDENT ADDRESSING CONCERNS OF HOME AND ABROAD. PRES. BIDEN: WE AGREED WITH WHAT WE SIGNED ONTO A LONG TIME AGO. THIS ONE CHINA POLICY AND
TAIWAN MAKES THEIR OWN JUDGMENTS ABOUT THEIR INDEPENDENCE. WE ARE NOT ENCOURAGING THEM BEING INDEPENDENT, WE ARE NOT ON THEIR POSITION, BUT WITH U.S. FORCES --THERE WAS AN UNPRECEDENTED ATTACK. JONATHAN: ANNE-MARIE HEREIN NEW YORK CITY, THERE WERE SOME COMMENTS NOT FOR THE FIRST TIME. >> THERE IS THE PART AND PARCEL PACKAGE WE ARE USED TO NOW.
IN MAY HE SAID SOMETHING SIMILAR, THE IT WAS NECESSARY. TRYING TO PUT THE CAT BACK IN THE BOW --BAG. THIS OF THE U.S. CHINA POLICY HAS NOT CHANGED. THERE IS MORE AMBIGUITY INTO THESE DAYS, SAYING IF THEY WENT BACK, THEY SPECIFY WHAT THAT MEANS, IT WILL HAVE PEOPLE QUICKLY SAYING IF THE ONE CHINA POLICY HAS NOT CHANGED, IT'S AT THE POINT NOW OF HIM GETTING TOO FAR AS PRESIDENT, MAKING A POINT. THAT IS ONE BIG TAKE AWAY FROM THAT INTERVIEW LAST NIGHT. JONATHAN:
I EXPECT THE INTERNATIONAL CONCERN, THE DOMESTIC ONE COME AT THE MIDTERMS AROUND THE CORNER. >> ABSOLUTELY, BUT THE PRESIDENT SAID HE IS OPTIMISTIC AT THIS MOMENT. THEY'RE OFF THE HEELS AND A NUMBER OF LEGISLATIVE WINS, THE CHIP ACT, THE INFLATION REDUCTION ACT, AND JUST LAST WEEK, THEY WERE SITTING NEXT TO EACH OTHER IN THE ROSE GARDEN. THE WHITE HOUSE WAS ABLE TO INTERVENE AND MAKE SURE THERE WAS NOT A REAL STRIKE. JOSH AND I WERE TALKING TO UNION LEADERS AND REAL LEADERS.
THEY GIVE TONGUE-IN-CHEEK HUGS. THIS IS SOMETHING THE PRESIDENT WAS ABLE TO AVOID WHICH WOULD HAVE WREAKED HAVOC ACROSS THE ECONOMY. THEY ARE ABLE TO MAINTAIN THE PATH THEY ARE ON. THE DEMOCRATS IN THE POLLS ARE
DOING BETTER. THE NBC POLLS, ASTONISHING. THE APPROVAL RATING IS NOW 45%. WE HAVE NOT SEEN THIS SINCE OCTOBER 2021. JONATHAN: WE HAVE A QUESTION NOW BASED ON WHAT HAPPENED IN THE LAST WEEK. ANNMARIE: YOU MAKE THE POINT OF BASICALLY LABOR DEMANDS ARE CHANGING.
JONATHAN: FOR PRETTY MUCH EVERYONE. ANNMARIE: AND NOT JUST FOR UNION WORKERS. THERE'S THE BROAD-SPECTRUM. IT IS A TIGHT LABOR MARKET AND ESPECIALLY ON COVID-19, YOU SO THAT WE NEED HEALTH CARE, PARENTAL LEAVE, YOU SEE WORKERS COMING BACK AND ASKING FOR MORE.
IF YOU LOOK BACK HISTORICALLY ON STRIKE, WHEN YOU HAD TRUMAN AND THE STEEL STRIKE, IT WAS ABOUT WORKER WAGES. WITH ROOSEVELT WAS ABOUT COAL, SHORTER DAYS AND WORKER WAGES. NOW THIS ONE, IT WAS NOT HIGHER WAGES. IT WAS WE WANT TO MAKE SURE WE CAN TAKE MEDICAL LEAVE AND SICK LEAVE AND SO HAVE OUR JOBS. JONATHAN: ANNMARIE, THANK YOU.
JOSH, THANK YOU AS WELL. SOMEONE WROTE -- WITH THE MARKET PRICING 75 FOR NOVEMBER 2, THERE IS ZERO PROBABILITY. WE WANT TO KNOW WHICH PARTY CONTROLS THE SENATE HOUSE OR BOTH, AND THE AFTERMATH COULD BE CONTESTED. THE FED HE SAID COULD MONITOR
THE FIXATION. DO YOU THINK THE FED HAS TO CONSIDER THE MIDTERMS ABOUT A WEEK LATER AFTER THE NOVEMBER DECISION? >> I DON'T THINK IT WILL BE A PRIMARY FACTOR IN DECISION-MAKING. IF INFLATION DATA BETWEEN NOW AND THEN REMAINS POOR AND STAYS HIGH WITH NO SIGNS OF DECELERATION, IT IS TOO EARLY TO HAVE IT AND FEEL LIKE THEY ARE CAVING INTO SOME KIND OF POLITICAL PRESSURE OR WORRIES ABOUT THE FUTURE.
INFLATION IS THE NUMBER ONE WORRY, AND ADDRESSING THAT MEASURE, ADDRESSING INFLATION, THE FED IS DOING ITS JOB. IT WILL NOT BE TO NEGATIVE ACROSS THE POLITICAL SPECTRUM. JONATHAN: WHAT I WOULD ARGUE IS THE DISCOURSE IN WASHINGTON, D.C.. EVERYONE IS ON THE SAME PAGE,
THE SAME SCRIPT. WE WANT TO --THE FED TO DO WHAT IT DOES UNTIL UNEMPLOYMENT GOES SOUTH. TO CAPTURE THE RISK OF A SO-CALLED HARD LANDING, TO CAPTURE UNEMPLOYMENT RATES THAT HAVE TO GO HIGHER, GROWTH RATES THAT HAVE TO GO LOWER. >> THEY HAVE SHOWN THE WILLINGNESS TO TALK ABOUT ON--UNEMPLOYMENT. AND THE LABOR MARKET IS AS STRONG. THERE ARE ALREADY THROWING THAT
OUT AND I DON'T THINK THAT'S NECESSARILY GOING TO CHANGE. IT IS SUPPOSED TO BE APOLITICAL. THEY NEED TO DO WHAT IS RIGHT IN THE LONG TERM, NOT SIX MONTH OR 12 MONTHS. THEY NEED TO GET INFLATION UNDER CONTROL. AND YOU SAW IN AUGUST, WITH FOOD PRICES, SHELTER A MASSIVE PROBLEM AND THOSE ARE HARDER TO FIX. IT IS EASY TO SAY THAT.
I'M NOT ON THE FED BOARD. BUT THEY WILL STRUGGLE TO GET THE SOFT LANDING. THEY ARE TRYING TO DO THEIR BEST TO COMMUNICATE, A LOOK AT WHAT THEY DID IN SEPTEMBER. THEY HAD TO LOOK -- RIP THE BAND-AID OFF AND PIVOT. THEY ARE DOING A GOOD JOB OF COMMUNICATING. I'M NOT SURE THERE'S A SOFT LANDING REGARDLESS OF WHO IS AT THE HELM. JONATHAN: IT IS LIKE LANDING ON A PICNIC
BLANKET. MICHAEL AND VICTORIA, THANK YOU. THREE POINT 94 ON THE TWO-YEAR IN THE 10 YEAR UP BY THREE BASIS POINTS. THE MOMENT ABOUT 3.48. TECH STOCKS, EXTENDED DECLINE AFTER THE WORST WEEK SINCE JANUARY. LIVE FROM NEW YORK, THIS IS BLOOMBERG.. ♪ JONATHAN: -- DOWN .9 PERCENT ON THE S&P
500, YIELDS HEADING NORTH ON THE TWO-YEAR. THREE POINT NINE FOUR, THE TENURE VERY BRIEFLY, 3.5. YIELDS UP AGAIN BY THREE BASIS POINTS, TENCENT TWOS.
LEVELS WE HAVE NOT SEEN SINCE 2007. FROM OVERWEIGHT TO UNDERWAY. THE RECENT SELLOFF. THE--ACCOMPANIES LEASING -- ACCOMPANIES RECENT ACQUISITION WEAVES LITTLE ROOM FOR ERROR AND CELEBRATING SUBSCRIBER GROWTH. UP MORE THAN 6%. RECALLING THE WORST WEEK SINCE JANUARY. EXPECTING AMERICA'S BIGGEST TECH GIANTS TO BECOME A CHALLENGING BACKDROP.
JONATHAN: LIVE FROM NEW YORK, 20 SECONDS AWAY FROM THE OPENING BELL. GOOD MORNING. COMING OFF A BIG WEEK FOR THE S&P 500, THE NASDAQ IMPACTED. FUTURES DOWN 5% ON THIS PEAK, THE NASDAQ ABOUT 4% ON THE SMALL CAPS. A LITTLE MORE THAN ONE
PERCENTAGE POINT. YIELDS ARE HIGHER, MUCH HIGHER ON THE 10 YEAR, FIVE BASIS POINTS, 3.49, WE SAID THE HIGH WOULD BE IN JUNE BUT WE TOOK OUT THE JUNE HIGH THIS MORNING. A TWO-YEAR BUT CLIMBING FOR EIGHT CONSECUTIVE SESSIONS. NINE BASIS POINTS.
NOW THERE IS A TWO WEEK FIELD IN AMERICA. YOU CAN IMAGINE HOW MUCH STRONGER THE DOW IS RIGHT NOW. 1.97 ON THE EURO-DOLLAR AND CRUDE DOWN ON WTI. HERE IS ABBY. ABIGAIL: IT HAS EVERYTHING TO DO WITH THOSE RISING YIELDS AND THE STRONGER DOLLAR PRESSING STOCKS DOWN.
MICROSOFT DOWN MORE THAN 1%, ONE .1%. LAST WEEK WE HAD A NUMBER OF COMPANIES, BIG CONGLOMERATES ON THE DOWNSIDE. MICROSOFT WAS ON THE FIRST TO DO THAT ON THE FOREIGN-EXCHANGE EFFECT. EXXON MOBIL DOWN 2%.
OIL IS FOLLOWING MORE OF THE STRONGER DOLLAR, PRICING RISK ASSETS OVERALL. BANKS NOT GETTING A RISE IN YIELDS. THIS IS THE YIELD CURVE INVERTS MORE. MORE THAN THE 10 YEAR YIELD ON THE LONGER END AND THEN I WILL DARE TO MENTION CRYPTO, COINBASE AND BITCOIN. TECHNICALLY VERY WEAK ON THE WEEK OF A -- BRINK OF A BIGGER BREAKDOWN.
EVERYTHING RELATED TO CRYPTO AND BITCOIN, COINBASE DOWN ON THE SESSION. JONATHAN: THANK YOU. STOCKS DOWN, BONDS DOWN, YIELDS UP. RIGHT NOW, MUCH EVERYONE IS INVESTED IN THE MARKET. YIELDS HIGHER, EQUITIES LOWER. ENERGY ONE OF THE UNDERPERFORMANCE AREAS. INFORMATION TECHNOLOGY DOWN. EXTENDED ON TECH STOCKS. THE NASDAQ POSTED THE WORST WEEK IN A MONTH.
>> WE'RE DOWN .7 PERCENT ON THE NASDAQ 100, THE WORST WEEK SINCE JANUARY. IT WEEK THE NASDAQ SHARED ALMOST NONE HUNDRED BILLION DOLLARS IN MARKET CAPS. THIS IS NOT JUST THE MOST SPECULATIVE CORNER OF THE MARKET. YOU LOOK AT THE LOSSES OF THE LAST FIVE SESSIONS AND HALF OF IT CAME FROM SIX NAMES, THE CRIME TO LOOK FROM OF MEGA CAPS. -- THE CREME DE LA CREME OF
MEGA CAP. THE OUTLOOK FOR GLOBAL GROWTH, THE SLOWDOWN IN THE GLOBAL ECONOMY ALSO ERODES THE PROFITS FOR TECH COMPANIES. 77 STOCKS DOWN. ONE SPOT IN THE GREEN IS NETFLIX, THAT UPGRADE FROM OPPENHEIMER, TALKING ABOUT AN AD SUPPORTED TIER. NVIDIA FROM THREE PERCENT TO 1%. ARC INNOVATION UP ALMOST 400,000 SHARES. JONATHAN:
GOOD TO SEE YOU. ED LUDLOW BREAKDOWN THE TECH MOVES. WHAT A MOVE, THE FRONT END OF THE YIELD CURVE UP EIGHT BASIS POINTS. A CLEAN BREAK OF 70, 80, 90. FIVE BASIS POINTS AWAY ON A TWO
YEAR AND YEAR. KAILEY: ABSOLUTELY WILD, THREE POINT 5% ON THE 10 YEAR IT REALISTICALLY IS WHAT WE ARE LOOKING AT ON THE NOMINAL YIELD. WE TAKE A LOOK AT THE 10 YEAR REAL YIELD, NOW LOOKING AT ONE POINT 3%, THE HIGHEST BACK TO 2018. THAT WAS PROBLEMATIC FOR EQUITIES AND TECH STOCKS.
THE NASDAQ ONE HUNDRED DOWN ABOUT 11%, 27 PERCENT YEAR TO DATE. AND FOLLOWING --VOLLEYING HIGHER HAS EVERYTHING TO DO WITH THAT. EARNINGS ESTIMATES ARE ESSENTIALLY HANGING IN THERE. ALL OF THE MULTIPLE
CONTRACTIONS, IT HAS BEEN ON THE PRICE SIDE. WHERE THE MULTIPLE STANDS NOW GOING FORWARD, ABOUT 22 TIMES FORWARD EARNINGS. IT IS DOWN FROM WHERE IT WAS A COUPLE OF MONTHS AGO BUT IT IS ELEVATED. NEW STOCKS ARE STILL EXPENSIVE. WE ARE TALKING ABOUT ALREADY PUBLIC COMPANIES HERE BUT THIS IS HITTING THE PRIMARY MARKET, TOO. NOT A LOT OF TECH COMPANIES WILL FIND A WARM WELCOME IN THE
PUBLIC MARKET RIGHT NOW. ABOUT SIX HUNDRED MILLION DOLLARS WORTH OF TECH AND COMMUNICATION ANNOUNCED THIS YEAR, A MOST ALL IN JANUARY. ACROSS EIGHT MONTHS COMBINED YEAR TO DATE THERE HAVE BEEN FEWER TECH OFFERINGS THAN ANY INDIVIDUAL MONTH LAST MONTH. JONATHAN:
THOSE NUMBERS ARE INCREDIBLE, OR THE LACK THEREOF. THANK YOU SO MUCH. YIELDS UP CONTACT DOWN. THE FED IS MAKING IT --MAKING IT A BRUTAL MARKET ON TECH. DAN IVES JOINS US NOW. LET'S BEGIN. A TO 20 PRICE HIKE ON APPLE. HOW DO YOU GET TO 220 ON APPLE
IF THAT IS THE BACKDROP? DANIEL: YEAH, CLEARLY IT IS A BRUTAL BACKDROP FOR TECH STOCKS. WHEN THEY UNVEILED THE IPHONE 14, IT IS TRACKING HIGHER THAN SINGLE DIGITS, AND I THINK THE GROWTH, UNDERLYING NUMBERS WE DISTORT --RESTORE THAT. WE ARE SEEING THE FED BACKDROP IN TERMS OF GROWTH AND SERVICES THAT IS STILL UNDERESTIMATED.
IT IS COMPELLING --YOU HAVE IT SIX MONTHS OUT. JONATHAN: THE SHIFT TO THE HIGHER XP AS WELL IN APPLE UNITS. IS IT JUST THE AVERAGE PRICE GIVING YOU MORE CONFIDENCE? DANIEL: YEAH, THE 80 AND 90% ARE PRO-MAC. THAT IS MORE THAN 65% FROM A YEAR AGO. A LOT OF IT IS CHINA DRIVEN. OVERALL, AND TERMS OF THE ECONOMY, SALES IN THE U.S.
OVER THE LAST WEEK. JONATHAN: ARE YOU CONFIDENT THEY CAN MEET THE DEMAND ON THE SUPPLY SIDE? DANIEL: HAVE DONE ALMOST SUPERHERO ABILITY, WHAT THEY'VE DONE IN ASIA TO GET READY FOR THE IPHONE. 90 MILLION UNITS WAS THE INITIAL ORDER AND THAT IS ALREADY IN. I THINK THEY THE POTENTIAL OF UPPING THOSE UNITS.
SUPPLY --IN TERMS OF TECH, THERE IS IT RISK. THE SUPPLY CHAIN. WE ARE SEEING IT MODERATED AND THAT IS WHY IT IS BULLISH FOR APPLE AND NAMES LIKE TESLA. JONATHAN: MANY PEOPLE ARE FORECASTING WEAKER ONES OVER THE NEXT 12 TO 18 MONTHS. THERE IS THE BULLISH THESIS AROUND WHAT IS ESSENTIALLY A HIGH-END CONSUMER PRICE PIECE OF HARDWARE. DANIEL: IT IS EASY TO PAINTED WITH THE SAME BRUSH OF THE ECONOMY.
I LOOKED AT OUR NUMBERS, IS ABOUT 240 MILLION OF A BILLION IPHONES THAT HAVE NOT BEEN UPGRADED IN THREE .5 YEARS. THE DEMAND IS MASSIVE SO IT CONTINUES TO POWER THROUGH ANY SORT OF ECONOMIC DOWNTURN WE ARE SEEING. THAT IS WHAT WE HAVE SEEN PLAY OUT. WHEN YOU LOOK AT APPLE, IT IS THE SERVICES BUSINESS THAT WILL SEE AN UPTICK. YOU HAVE THE ROCK OF GIBRALTAR NAMES, APPLE, CERTAIN NAMES IN PALO ALTO. IT IS EASY ON TECH BUT OUR CALLS HAVE BEEN IN THESE ENVIRONMENTS.
IN 2000, 2001, EARLY TO--EARLY 2020'S. JONATHAN: DO YOU NEED THE REPRICING OF YIELDS TO LOWER FOR THESE CALLS TO WORK? DANIEL: CONTINUE DESPITE -- CLEARLY DESPITE THE FED WE CONTINUE TO SEE COMPRESSION. YOU SEE A LOT OF PRICE TARGETS FOR THESE NAMES AND I THINK IT IS THE MOST NEGATIVE TECH ADVANCERS GOING BACK TWO THOUSAND 9, 2010 IN TERMS OF NAMES. A LOT OF THAT IS NOT JUST THE FED AND MACRO. THEY DID THAT RELATIVE TO
GROWTH. AND ALSO UP, MICROSOFT AND OTHERS. JONATHAN: A NAME YOU MENTIONED -- YOU DO NOT MENTION, MOST OF THEM YOU MENTIONED, BUT YOU DID NOT MENTION FACEBOOK.
HOW DO YOU THINK THE SOCIAL MEDIA NAMES WILL HOLD UP IN THE FACE OF SLOWING GROWTH NOT JUST DOMESTICALLY BUT WORLDWIDE AND TIGHTER FED POLICY? DANIEL: I THINK THERE'S A BULL'S-EYE ON SOCIAL MEDIA, SPECIFICALLY NAMES LIKE META. THEY ARE GOING TO HAVE A HURRICANE. NOT JUST BECAUSE OF MAC BUT THE DIGITAL --YOU HAVE FACEBOOK GOING TO THE METAVERSE AND OTHER AREAS, GOVERNMENTS CONTINUE TO BE UNDER PRESSURE. THAT IS WHY IN TECH, IT IS A BIFURCATED TECH LANDSCAPE. WE STAY AWAY FROM SOCIAL MEDIA
NAMES AND FOCUS ON ENTERPRISE AND OUR CONSUMER NAMES. JONATHAN: I'VE GOT TO FIT THIS IN. YOU ARE A BULLISH GUIDE. APPLE MIGHT BE A NAME AND I'M SURE HE WOULD APPRECIATE. WHAT IS THE NUMBER ONE RISK? DANIEL: THE NUMBER ONE RISK IS CHINA. THAT IS THE NUMBER ONE RISK IN
TERMS OF APPLE DESPITE EVERYTHING WE HAVE HEARD. SO FAR, GOING BACK THE LAST MONTH, I'M FEELING A LOT OF THAT FROM THE SUPPLY CHAIN PERSPECTIVE IN THE REARVIEW EURO. JONATHAN: -- MIRROR. JONATHAN: DAN IVES ON APPLE AND META. COMING UP, >> IT WILL BE EVEN MORE TRANSITION IN TECH --MORE PRECIOUS. JONATHAN: EQUITIES DOWN ABOUT .5%. THAT CONVERSATION NEXT.
COMING UP, THE NEW YORK EXECUTIVE CHAIRMAN 11:30 A.M., 4:30 IN LONDON. THIS IS BLOOMBERG.. ♪ >> WE ARE EVEN MORE LOOKING INTO THE NEED TO BE DEFENSIVE, THE RISK AS A TODAY AND IN THE COMING DAYS. WE MAY NOT BE FAR FROM THIS IN THE U.S..
THERE'S A LOT OF UNCERTAINTY BECAUSE WE FEEL IN THE MARKET -- JONATHAN: DOWN BY ONE THIRD ON THE S&P AFTER POSTING THE WEEKLY DECLINE. TAYLOR: YOU HAVE BEEN MENTIONING TECH AS THE BIG UNDERPERFORMER, BUT IMPORTANT TO FOCUS ON THE BROADER MARKET. HONING IN ON THE S&P 500 AS WELL. SEPTEMBER HAS BEEN
TRADITIONALLY A TOUGH MONTH AND THIS MONTH AND THIS YEAR IS SHAPING UP TO BE NO BETTER. STILL FROM THE WORST MONTH ON THE YEAR, OFF ABOUT 3%. THE AVERAGE GOING BACK TO 1996 IN SEPTEMBER IS TRADITIONALLY A .8% DECLINE. YOU ARE SEEING THAT THIS YEAR WITH THE RATE STORY. A LOT OF THAT UNDERPERFORMANCE AND VOLATILITY WILL COME OUT.
YOU MENTIONED TECHNOLOGY. THE S&P 500 DOWN ABOUT $8 TRILLION YOUR TODAY. THAT IS COMING FROM THE TOP SEVEN FOR A BIG TECH COMPANY. I HATE TO BE A BROKEN RECORD, BUT THIS DOES FEEL LIKE YIELDS ARE FINDING A RATE OF CHANGE AND PUTTING PRESSURE ON LONG-DURATION ASSETS. JONATHAN: EQUITY TRYING TO BREAK AWAY
THIS MORNING. YIELDS ARE UP HIGH FROM THIS MORNING. THE NASDAQ DOWN BY .2%. THE YIELDS ARE ON THE HEIGHT OF THE SESSION, TWO POINT 95 ON THE TWO-YEAR. THE 10 YEAR DOWN, JUST SHORT OF 3.5.
IT IS DIFFICULT TO FIND ANY CONSTRUCTIVE AT THE MOMENT. MAYBE JP MORGAN, HERE'S WHAT MORGAN STANLEY SAYS. COLEMAN TALKING ABOUT THE POSSIBILITY OF PROFITABILITY TO PILE UP. THERE TALKING ABOUT TIGHTER FINANCIAL CONDITIONS AND KAILEY LEINZ IS BACK WITH MORE. KAILEY: A LITTLE BIT MORE OF A RECORD, YOU CAN COUNT ON THESE TWO TO BE BEARISH MORE OFTEN THAN NOT. BUT YOU STILL HAVE AN INFLATION PROBLEM IN THE U.S.. NOT ONLY DOES IT PUT PRESSURE
ON CORPORATIONS ON THE MARGIN SIDE, BUT YOU HAVE A FEDERAL RESERVE HIKING INTEREST RATES. THOSE HIGHER INTEREST RATES PUT PRESSURE ON CORPORATE, TOO. THAT IS WHY YOU SEE THE S&P 500 DOWN ROUGHLY 9% ON A YEAR-TO-DATE BASIS. BUT IT DOES NOT NECESSARILY MATCH UP.
YOU SEE A GENETIC --DRAMATIC DECLINE IN EQUITIES. IF YOU LOOK AT ANALYST ESTIMATES FOR 2020 TWO AND 2023, THE ROLLING 12 MONTH EARNINGS WILL MAINTAIN A STANDARD -- STEADY GROWTH. EVEN WITH THE RECESSION RISK THAT IS STILL HOLDING. EVEN THOUGH THE REVISIONS ARE OFTEN GLACIALLY PACE, THERE IS A LONG WAY TO GO BEFORE IT IS PRICED. THE S&P BOTTOMS NEAR 3400.
BUT IN THE RECESSION SCENARIO IT WOULD BE MORE LIKE 3000. WALTER NOT AS PESSIMISTIC. THE AVERAGE ON WALL STREET AT 30 3.46. THE AVERAGE OTHER ESTIMATE DOWN AT TWO .24. THE AVERAGE FORECAST HAS BEEN TRENDING LOWER FOR MONTHS. WE ARE BELOW WHAT IT WAS IN
APRIL. BUT IF THOSE ESTIMATES ARE HERE, IT IS LIKELY THOSE ESTIMATES ARE GOING TO FALL, TOO. JONATHAN: NOW IN 2022, WE HAVE SEEN THIS FULLY MATERIALIZE. NOW THE EARNINGS SHOCK AS WELL. KAYLEE TALKED ABOUT SOME OF THOSE NUMBERS. WE THOUGHT THE S&P 500 WOULD
BOTTOM NEAR 30 400 AND OUR BASE CASE. 3000 IN OUR FAIR CASE RECESSION SCENARIO BEFORE REVALUING THE FIRST HALF OF NEXT YEAR, GROWTH AND ACCELERATION. MIKE WILSON, 38 POINT 59 ON THE S&P. THEY EQUITY STORY ABOUT 20 MINUTES INTO THE SESSION, HERE IS ABBY. ABIGAIL:
LET'S TAKE A LOOK AT WHAT IS HAPPENING FOR THE S&P 500 SECTORS. WE ARE OFF OF THE LOWS AND THAT MEANS NOT ALL S&P 500 SECTORS ARE LOWER AT THIS POINT. WE HAVE BEEN FOCUSING SO MUCH ON THE TECH.
HEALTH CARE IS THE WORST ON THE DAY, RIGHT ABOVE REAL ESTATE. FOR THE FIRST TIME IN A LONG TIME IN MY MEMORY, WE CAN SEE THAT THESE SECTORS ARE ACTING AS THEY SHOULD. THEY ARE DOWN WITH YIELDS ARE HIGHER IF THE DIVIDENDS LOOK LESS ATTRACTIVE. TECH DOWN, IT WILL BE INTERESTING TO SEE HOW THIS DAY FINISHES.
LAST WEEK, TECH ABSOLUTELY BRUTAL. THE SELLOFF. AT ONE POINT, S&P 500 OVER THE LAST WEEK WAS DOWN SEVEN .5%, THE WORST WEEK GOING ALL THE WAY BACK TO MARCH 2020. YOU CAN ALSO SEE THE NEW YORK STOCKS, THE INDEX WITH THOSE CHINA TECH STOCKS AND THE GOLDEN DRAGON CHINA INDEX DOWN 8%. TECH IN A ROUGH SPOT AS THEY CONTINUE TO BACK UP.
WE WILL SEE IF THAT CONTINUES. TODAY, A LITTLE AMELIORATION. JONATHAN: THANK YOU. DOWN POINT -- A THIRD OF A PERCENT ON THE S&P. COMING UP, WE WILL TALK WITH GUY JOHNSON IN LONDON. THIS IS BLOOMBERG. JONATHAN: QUEEN ELIZABETH II'S COFFIN ARRIVED AFTER THE LONG PROCESSING AT WINDSOR CASTLE. DESCRIBE THIS FOR US.
>> WHAT IS HAPPENING RIGHT NOW IS THE ROYAL HERS HAS MADE ITS WAY FROM CENTRAL LONDON. IT IS NOW MAKING ITS WAY THROUGH WEST LONDON, IT HAS LEFT WAS LONDON AND APPROACHING WINDSOR. IT IS MAKING ITS WAY FOR WINDSOR CASTLE, ULTIMATELY ST. GEORGE'S CHAPEL WHERE THE SERVICE WILL START AT 4:00 P.M.. AFTER THAT, THE QUEEN WILL BE BURIED IN THE KING GEORGE VI MEMORIAL CHAPEL AND HER HUSBAND'S BODY WHO DIED LAST YEAR WILL BE EXHUMED TO BE BURIED WITH HER. THAT WAS FOR THE WORLD. THIS IS FOR FAMILY AND FRIENDS. THIS IS THE ROYAL FAMILY COMING
TOGETHER TO PAY RESPECTS TO THE QUEEN AS THEY SAY GOODBYE. JONATHAN: THE OFFICIAL PERIOD OF MORNING IN THE COUNTRY CLOSES. IS IT BACK TO USUAL? BECAUSE BUSINESS IS NONNORMAL IN THE U.K.. GUY:
YOU WERE JOKING ABOUT THIS, BUSINESS AS NORMAL CONFRONTING REALITY. ALL THIS WILL BE THE NARRATIVE FOR THE NEXT FEW DAYS. THE PRIME MINISTER HAS BUSY DAYS, SHE WILL GO TO NEW YORK AND THE U.S. AND HAVE A BILATERAL WITH THE PRESIDENT OF THE UNITED STATES. BEFORE THAT HAPPENS, WE WILL GET THE DETAILS OF THE ENERGY PLAN TUESDAY AND WEDNESDAY. ALSO THE BANK OF ENGLAND IS
COMING UP AS WELL AND WE HAVE THIS EVENT TAKING PLACE ON FRIDAY. WE ARE WAITING TO FIND OUT EXACTLY WHAT THE DETAILS ARE GOING TO BE ANNOUNCED IN THAT. A PERIOD OF MORNING -- MOURNING COMES TO AN END AND THE COUNTRY NEEDS TO ADDRESS THE DIFFICULT FINANCIAL SITUATION AND A DIFFICULT WINDSOR. JONATHAN:
WHAT DO YOU THINK ABOUT THAT, VERSUS THE BUDGET ON THURSDAY? GUY: IT WILL BE A BETTER IDEA TO GET THE FINAL DETAILS IN THAT BUDGET. I WOULD IMAGINE THERE ARE SOME LINES OF COMMUNICATION BETWEEN THE TREASURY AND THE BANK OF ENGLAND SO THEY HAVE AN IDEA OF WHAT IS ULTIMATELY COMING TOWARD THEM. IN PART, THEY HAVE WORKED CLOSELY TOGETHER.
IT WILL BE INTERESTING TO SEE WHETHER THAT TAKES PLACE AGAIN BETWEEN THE CHANCELLOR AND THIS GOVERNOR. I WOULD HOPE THEY AT LEAST HAVE A CLEAR UNDERSTANDING OF THAT EVENT IS GOING TO LOOK LIKE. I THINK IT IS THE FED THEY WERE WATCHING OVER THE SHOULDER CAREFULLY FOR. I THINK THAT WILL MAKE THE DECISION MAKING PROCESS AT THE BANK OF ENGLAND EVEN MORE TRICKY. AND MAYBE IT IS NOT THE PHYSICAL EVENT, IT IS THE FED. JONATHAN: LOOKING AT 113 AGAIN TODAY. ALONGSIDE ALIX STEEL, GUY
JOHNSON WILL CATCH UP WITH THIS SITUATION IN THE U.K.. IT WILL KICK OFF IN ABOUT FIVE MINUTES TIME. THE REST OF THE WEEK LOOK AHEAD NOW, STAFF ON TUESDAY, WEDNESDAY KICKING OFF WITH --AND PRESIDENT BIDEN DELIVERING A SPEECH AT THE U.N. GENERAL ASSEMBLY. THE CEO SPEAKING ON CAPITOL HILL. FOLLOWING CHAIRMAN POWELL.
THE BOD COMING ON THURSDAY. THE BANK OF ENGLAND IN A TOUGH SPOT. LET'S GET ANOTHER ROUND OF THE JOBLESS CLAIMS ON THURSDAY AND TO CLOSE OUT THE WEEK ON FRIDAY, THE EQUITY MARKETS FACING A RECOVERY AT THE MOMENT, DOWN ABOUT POINT 2% ON THE S&P. ON THE NASDAQ, ALMOST FLAT ON THE SESSION. GIVEN WHAT IS HAPPENING IN THE BOND MARKET THAT IS SOMEWHAT SURPRISING. YIELDS UP A POINT NINE BASIS
POINTS ON THE TWO YEAR AT THREE .95. THANK YOU FOR CHOOSING BLOOMBERG TV. THIS WAS THE COUNTDOWN TO THE OPEN.
2022-09-23 18:37
