tv Bloomberg Daybreak Australia Bloomberg March 31, 2021 6:00pm-7:00pm EDT
pain and stress is the only thing you have to lose. get it and get it now. your body will thank you. (announcer) find out more at aerotrainer.com. that's aerotrainer.com. haidi: very good morning and welcome to "daybreak australia." we are counting down to acer's major market opens. -- asia's major market opens. president biden lays out his multitrillion dollar infrastructure plans. the sec investigating.
sources say the inquiry is in early stages and may not lead to allegations of misconduct, and we talk to the leader of her talky and software company global logic after their $18 billion deal. shery: futures unchanged at the moment, fluctuating between gains and losses at the moment. stocks were lead higher today by tech and consumer discretion. a lot of optimism for u.s. growth fueling risk. we also had u.s. private employers adding the most jobs in six months, the 10-year yield ending your 14-month highs. oil fell in the regular session. right now, we are seeing it rise toward that $50 a barrel level. we see renewed lockdowns in europe, not to mention opec-plus
responding to increased demand. haidi: we are looking at how things are shaping up for essentially the last trading day before the long easter weekend. a second day of modest gains. we are looking at a pretty heavy day for australia with the retail sales as well as big trade numbers expected. the 10-year yield holding pretty steady at the moment with some concerns about a fiscal fallback potentially complicating the rba's goal. a pretty tepid start to trading and some modest downside in new zealand. shery: of course, moving markets today, president joe biden's plan to kick off a $2.25 billion infrastructure push after a drawn out battle for his covid
economic program. the package includes $620 billion for transportation, and also $650 billion for initiatives such as cleaner water and high-speed broadband, but it will require a tax hike. >> no one making under $400,000 will see their federal taxes go up, period. we are going to raise corporate tax. it was 35%, which is too high. they reduced it to do percent. we are going to raise it back to 28%. -- they reduced it to 21%. we are going to raise it back to 28%. it's going to boost american innovative edge in markets where global leadership is up for grabs. markets like battery technology,
biotechnology, computer chips, clean energy, competition with china in particular. haidi: get to our congressional government reporter who is with us in d.c. we are expecting republican pushback on all of this, particularly with the intent to be largely funded by corporate taxes. i want to bring up the charts and take a look at how much corporate tax dollars will be needed to fund this infrastructure plan over a period of eight years. the biden plan would spend almost $300 billion per year. that is without potentially overwriting costs. that makes a potentially higher corporate tax rate as well as the collection of corporate tax even more necessary. what is the pushback we are expecting? emily: we have already heard pushback from republicans even before today on this plan. republican minority leader
senator mitchum has said the tax hike would be a nonstarter if it would roll back pieces of the republican 2017 tax bill, as this one does. there has been opposition from republicans on this front, pushback not only on the price tag but also on the larger package. the infrastructure package was outlined today, but another part of the package will be outlined next month. it deals with things like health care, child tax credit, paid sick leave, and that is something republicans have already come out and said that should not be attached to an infrastructure package. it does seem at this point that even though president biden is doing outreach to republican members and talking to them today, that they are getting ready for democrats to go at it again, which means they are going to have to work to make sure all democrats are already on board.
haidi: talk to the substance of this plan. we were expecting something along the lines of climate change initiatives, but what caught my eye also was how much of a focus it has on building competitiveness, especially at a time in a race against china. emily: that is a big part of the messaging we have heard throughout the day. is president biden provoking china and -- evoking china and evoking america's need to remain competitive against china? i think part of that comes from the fact that as far as the sense that the u.s. seems to remain strong and competitive against china, it really is a bipartisan function, and even though it seems less and less likely that republicans will be able to join democrats on this bill, the thing you see -- you have seen the biden administration to in the past is highlight bipartisan support, not necessarily in congress, but in america as a whole.
it seems like the biden administration realizes that talking about the plan in this way is something they think can hit the right note with a lot of americans who might overall support the plan. haidi: when you kind of dig into the details, which are the parts of the plan that are quite clearly laid out challenging the rise of china? emily: they think there's a lot of different things in here. there's $300 billion to revise manufacturing. president biden throughout his presidency has tried to focus on american manufacturing, encouraging the federal government to buy u.s. products. he talked about workers in employment. and there is a sense, too, in the u.s., a lot of the infrastructure is older and weaker, and it is time to redo certain roads, highways, bridges, so there's hundreds of billions of dollars for that.
also, high-speed broadband and funding for the electric grid are uded. shery: the latest on more details on the overall bill aimed at rebuilding after the pandemic. we do have breaking news right now when it comes to those vaccines in order to reign in the pandemic. j&j coming out saying they are still expecting to deliver over one billion doses by the end of 2021. they will deliver an added 24 million vaccine doses through april. they have identified one drug that did not meet standards, this after about 50 million doses were ruined by a factory mixup, but j&j releasing a statement saying that they will deliver over one billion doses by the end of 2021. let's get to vonnie quinn now with first word headlines.
bonnie: thank you. the wto has raised projections for the year, forecasting and 8% rise in global trade. that would be the biggest increase since 2010. the director general said the projection would be tied to virus injections, saying that a new wave of virus infections could undermine recovery. >> no longer can we expect poor countries to stand in a queue waiting to get vaccines. the who said 70% of vaccine doses today have been administered by 10 countries. the inequity of access is glaring. bonnie: the biden administration has raised concerns about the tools china is using to spur its economy. beijing has been resulting --
resorting on discrimination against foreign companies. the ustr says it is working with japan to address this. one of hong kong's top police officers warned residents against testing the red line when it comes to beijing-imposed national security law. in an exclusive interview with bloomberg, the hong kong police deputy commissioner defended the police force and arrests made in the wake of the bill passing, saying the city faces pressing national security threats, including from the united states. >> yes, i'm talking about the united states, and i think it is also clearly stated what their intent is, to suppress the development of china. it is an open secret. vonnie: global news 24 hours a day powered by more than 27 hundred journalists and analysts in more than 120 countries.
>> building back better was the central theme of joe biden's presidential campaign. it is what the country needs. this is all very much on the right track. i'm particularly excited about the infrastructure and investment program, particularly excited about bringing that aspect. haidi: former u.s. treasury secretary larry summers there on
president biden's infrastructure plan. dallas fed president robert kaplan says there will likely be trade-offs for president biden's stimulus plan, but it will be worth it for the economy. he spoke exclusively to bloomberg. >> the important thing i look at on infrastructure -- we have had a lot of fiscal spending, which has been necessary to emerge from the pandemic, but a lot of that will fund current consumption, so the impact that has creates a bump in gdp, but over time, that bump wears off. the nice thing and desirable thing for me about infrastructure spending -- it's a long-term investment. what i mean is it is and investment you make today or over the years, and it should help in the future create higher potential gdp growth, higher sustainable growth, better productivity, so i would really differentiate infrastructure spending from other fiscal spending, and i think it is
clear we need more wi-fi, widespread wi-fi in this country, and other infrastructure spending to make us more productive and raise sustainable gdp growth for the future, so i think that is a positive thing. >> the government has already spent over $5 trillion fighting the pandemic. you expect that to lead to some transitory inflation. the fed things we will get 3.5% unemployment in a couple of years anyway. as this money is spent out -- and remember, joe biden is saying this should be good union jobs which would pay more -- does that maybe make the danger of lasting inflation greater? >> well, it is clearly going to demand more workers. it creates more demand for workers, so we already knew that cyclical forces of inflation from low unemployment in the months and years ahead -- that will spur the cyclical parts of inflation, and this will do that
even more. i think it is an investment worth making, but it will have that effect. we will just have to see how those cyclical forces are outweighed by technology, technology-enabled disruption, and those forces which were also strengthening -- we will have to see how that all shakes out. i have said several times about this inflation debate, on the one hand, my base case is i think you will see inflation moderate as we get through 2021 and into 2022 and 2020 three, but i also think it is wise for a central banker to have a good dose of humility and an openness to learning as this all unfolds. a lot of what is going on now is unprecedented, and i think the smartest thing i can do is keep an open mind, be humble, be open to learning, and adjust my views as this unfolds. >> what do your experts and analysts say will be the impact
of a green energy program on your district at the heart of the oil and gas industry? >> i think a lot of what is going on with when the rebels and the green energy program has already been internalized pretty significantly in my district and in the energy business. what i mean by that -- we are seeing energy companies across the board -- fossil fuel companies -- spending and planning to spend billions of dollars on how to reduce greenhouse gas emissions -- carbon capture, sequestration, how they deal with water, sand, other things -- and also a substantial amount of capital going into battery storage and other renewable r&d. the issue would be as cap it flows heavily into renewables, it is very difficult to attract capital to fossil fuels -- as capital flows heavily into renewables. even with aggressive transition,
our analysis is we will be dependent on a healthy fossil fuel industry not for the next few years, but likely for the next two or three decades. shery: that was dallas fed president robert kaplan there. tech stocks let shares higher today. this as president biden unveiled his next stimulus plan. joining us now to discuss his bond portfolio manager dave ellison. we have heard of these plans from president biden for a while now. i wonder how much of the build back better agenda has already been priced into markets? >> as you said, it has been out there for a while. i think they are talking about getting something done or getting something resolved in the house in july, so we are going to be talking about this for a while, and, obviously, the
first time we have had to deal with new taxes -- we have not done that at all in the pandemic. i'm not too concerned. i think it is generally the right thing to do, spending money to fix things. that certainly is something i'm in favor of and most people are. i don't think the taxes are going to matter, though some people will make a big deal out of it. i think generally, the conditions that are existing in the marketplace are very favorable for the economy to grow and jobs to come back. haidi: no wonder we are seeing all this optimism lead yields higher. banks have been a big beneficiary of that. the gtv chart on the bloomberg shows that now. given how much of a run-up we have had in financials already, do we have room for a leg higher, perhaps when regulatory concerns are in the cards?
>> people have been levering up behind our backs since the beginning of money, and this is just another example. i think it is another case of, you know, the trading of money is possible until it isn't, and it happens very quickly. it is unfortunate that the system is still allowing this type of leverage to exist hidden . i did not know anything about it, and i'm in the business. nobody else did over here, either, but i think generally, while we are coming off a very low base percentage, it is meaningful because banks in a small way were really signals of the economy getting better from the perspective of loans and deposit flows. i think the banks came through
the pandemic very well with the help of the government, and now they are sitting there making lots of money -- the banking industry is very profitable now. to me, as a pm staying in this business for 30-plus, almost 40 years now, the game plan is to try to pick the companies who are going to take advantage of this environment and in a fit shareholders. haidi: you talk about banks needing to get bigger. talk about this given the concerns that still exist over "too big to fail." >> again, since 2008, the fed's balance sheet is up about 11 fold from 2008. it is better than most stocks. it continues to grow. the large banks adjusting for
acquisitions and deals they did during the pandemic like jp morgan and bear stearns -- they opted to not grow, so the industry is incredibly insignificant relative to what they can do in the system, meaning that the repo markets move up a gear and a year-and-a-half ago, and the banks could not do anything about it. the fed had to come in and by $500 million-plus of money. the banks could not do it. if you go back to pre-2008, and i started in the early 1980's, the banks controlled all of that. the fed did not do any of that. the banks are way too small to be relevant. we need to have bigger banks if we are going to fund deficits cannot have the fed be the only one that does it all. shery: great to have you with us. the sec has opened a preliminary investigation over the leveraged
haidi: let's get to the latest to the fallout over the implosion of the family office run by bill kwong. we have been following this story from the beginning. what have you learned? su: confirmation the sec has begun a formal civil probe, that it is in its early stages, and it is being led by the active management unit of the enforcement division. we also find it unusual when a fund has blown up the way this has. it is not necessarily going to
lead to allegations of misconduct. they were unable to meet margin calls last week, forcing a number of banks from goldman sachs to credit suisse and others to unwind $20 billion-plus in positions, most of it in one day -- friday -- and some of it extending too early this week. the sec has previously confirmed that the ceo was the subject of a prior investigation. his former hedge fund management pled guilty and paid big fines after trading in illegal tips about chinese banks. shery: we continue to hear more about losses incurred by banks and prime brokers involved. what is the latest? su: we know the securities unit of japan's largest bank has taken about a 270 million loss, less than they had previously estimated, and that is according to a statement from the bank. we also now know from a person close to the matter that
deutsche bank indeed dodged a potential for billion-dollar loss through a quick, private sale. we do not know if it is to one individual or more than one, but that occurred on friday. goldman sachs, morgan stanley, wells fargo also appeared successful in dumping multibillion-dollar positions through block trades. credit suisse, however, seems to have been exposed to the largest loss. shery: here's a quick check of the latest business flash headlines. amc's chief executive is stepping down, capping off a troubled tenure of less than two and a half years at the top. he will be replaced by and see's executive ceo -- anz's executive ceo. deliveroo's ipo failed to
>> you are watching daybreak australia. joe biden has unveiled his massive infrastructure plan and discounting on businesses pay for the deals. it will pay for manufacturing, research and development, and high-speed broadband. to find this, he wants to raise the corporate income tax. it would also impose a minimum tax of 21% on minimum -- on global earnings. >> we are going to raise the
tax. we all agreed five years ago it would show that it should go down -- we agreed that it should go down to 28%. they reduced it even further to 21%. we will raise it back to 21%. nobody should be able to complain about that. >> pfizer claimed its vaccine hundred percent effective children is to add adolescents to its authorization. the results could allow teens to get shots before the next school year. pfizer and its partner biontech say they plan to submit the data to regulators as soon as possible. french president emmanuel macron has stepped up restrictions, imposing a nationwide lockdown. it is an attempt to contain a surge in infections he called contagious and deadlier. and includes a nationwide school closure and a domestic travel
ban. it comes as cases in europe continue to spike. meehan mars ousted parliament -- myanmar's acid parliament is planning to set up a government in defiance of the military junta. it will be a coalition of domestic -- of democratic forces with ethnic armed groups playing a key role. the military junta has declared the committee to be unlawful. global news, 24 hours a day on air, on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. >> we have breaking news at the moment hitting the bloomberg terminal. the dow jones reporting that micron is eyeing a potential deal for a japanese semi conductor company at around $30 billion. sources are saying this is not a guaranteed deal. it is unclear how it might be
structured. we know the japanese firm is control -- the japanese company is controlled by a private equity firm bain capital and had considered an offering before shelving it. this would come at a time when we continue to see a global shortage of semi conductors. dow jones reporting that micron and western digital are looking at a possible deal for kioxia. we will watch for kioxia when the markets open in japan. haidi: hitachi will buy a software company for $8.5 billion, one of the largest acquisitions ever for the japanese firm. joining us now, hitachi co and global logic's ceo. this is a rich price to play.
-- to pay. it is four times what global logic was valued at. why does this make sense for hitachi? >> thank you for having us. , for us -- for us, the pandemic has been accelerating migration to the cloud and digital transformations. looking at global logic, we have been extremely confident with their business and forecast, including the ability to drive international growth outside of japan. that is what has driven us to make this acquisition and we are very excited. haidi: how has the pandemic affected local logic -- global logic's business? and what are the most attractive aspects of how it was done? >> the pandemic has only
accelerated the digital transformation. the companies that have thrived in the camp -- in the pandemic are further ahead and those sitting on the fence are negative. it all helps global logic business because the business is to use digital services to get these companies into a digital space. hitachi is perfect for sectors like automotive industry, communication, and media. it is a perfect combination to try to get to the next level. haidi: what is global logic bringing to the table in this merger, especially when it comes to your client network? >> global logic, 60% of businesses are fortune 500 clients. we mary data together to see the world the way it should become a
the way it is today. that is essential for companies like hitachi to transform themselves and their clients. >> when it comes to the business hitachi is joining, how much could come from overseas and what is the target? >> 53 percent of our business is outside of japan, and the growth momentum we are seeing across our businesses, whether it be direct to customer businesses, or our industrial businesses, so everything from our bullet trains and elevators to water systems and energy. we are seeing a significant push in digitization of those services. we really see global logic together with hitachi to put together digital solutions on top of the product space we have.
shery: this is different than the idea a lot of people have about hitachi being an appliance maker or hardware maker. the ceo said this deal is kind of a reform for the entire company. how transformative is it and how does it feed into the view of how the company looks in five or 10 years time? >> it is fundamentally transformational for us as hitachi. every business we are in, digital is becoming increasingly more pervasive and as you asked earlier, covid has only accelerated that transition. for us to be successful, we have to be as much of a technology company as we are a software company. low logic gives us that the
underpinning to characterize our journey and that of our customers so that is what makes us really excited about this. >> when it comes to these structural changes, will there be redundancies or business parts that need to go? >> we look at this as an addition to our existing technology portfolio. 20% of our business today is technology. in many ways, it strengthens the technology footprint we have in addition to providing a service capability in a deepening our capability to deliver solutions to customers. it will enable ourselves and clients to open up new revenue by building software for our businesses.
haidi: so much strength and growth in your industry as a result of the pandemic. we see these trends continuing. >> the digital transformation is a continuum. it is not about application of something four-year but to get these companies on the continuum. we feel most of the fortune 500 companies are going to be on this continuum. >> same question for you. >> i think he is absolutely right. it is the journey. we are not going to be able to go in and flip the switch and turn them into a digitally transformed company. we have been through a couple of iterations and this next generation around digital product engineering is i believe going to be even bigger than the
cloud transformation we are going through and we see a long road ahead of us. i am looking forward to a longer market trend that supports the two businesses coming together. shery: the biggest challenge in the next 10 years? >> just transformation in general and embracing digital. >> talent. talent is the biggest challenge. the scope is so huge, the talent will be the biggest challenge. >> it was great having you on. a fun conversation. congratulations, to touchy ceo and global logic ceo there -- hitachi ceo and global logic leo.
forecast the exchange rate here at the end of the year. haidi will be hearing from the vice minister of trade of chile very soon. i spoke to him and he mentioned some of these challenges when it comes to vaccinating the entire population and they are doing it well. one of the most successful campaigns in the world. haidi: also reliance on a successful global vaccination program is demand for oil. thank analysts say it has renewed lockdowns in europe, we have seen the latest out of france during ongoing restrictions in asia to be limiting further growth in consumption, but opec could see a strong jump in demand with the easing of restrictions and better economic growth. >> opec's top official warned
that oil demand became fragile, this is the cartel and its partners headed to talks to prolong their best production. our next guest says there are signs of the beginning of a durable recovery. katie, great to have you with us. we have seen markets being pretty volatile. this chart on bloomberg shows how volatility has surged to levels we have not seen in a year. what are you expecting at of this opec-plus meeting? -- out of this opec-plus meeting? >> thank you for having me. the market has become very choppy, very dependent on an unequal vaccine rollout around the world as countries continue to grapple with covid. the market is hopeful the end is in sight.
we can see that a little bit from the cartel, looking at the second quarter as kind of the opportunity to see a more durable and substantive turnaround. we are expecting to see stockpiles kind of normalize at the end of the second owner, and those are very optimistic hopes for the global markets but definitely that has made a lot of members shift their hopes to the future. shery: let's talk about hopes for the future. one piece a big news in the u.s. was president biden's infrastructure push and a broader economic plan that includes green initiatives. how does opec-plus deal with this electrification trend? >> i will say it is difficult
for us based in d.c. to look at what is happening amongst the opec-plus numbers and not see some corollary to what is happening in the u.s.. the reality is that all oil-producing companies have got to find a way to capitalize on and embrace this clean energy transition. we subdivided administration today with a $2.5 trillion american jobs plan and a build back better infrastructure plan, really centering electrification of the transportation sector in that plan. that is a warning sign to all producers of liquid fuels that they have really got to have some kind of vision for the future in order to continue to be competitive and profitable. it is hard to look at opec and
not also see that. haidi: i have been looking at this chart oil assets are just sitting idle. opec capacities actually sitting at a record high. if the long-term trends towards electrification capacity in the u.s. and other places, does this capacity ever comes back? >> the biden team pointed out that the u.s. is in a race against china on this electrification business. it is not just a u.s. story but a global story and that is definitely the question. we do expect to see idle capacity come back but it will take longer. it is no longer just a game of
recovering from covid. it is embracing and leaning into the trends. as an operator, hattie continue to drive value for shareholders when you know that the runway is getting shorter for liquid fuels? i think it's too pessimistic say -- we will see stranded assets for idle capacity, but the long-term picture is definitely dimmer. >> let's take a look at the short-term. how much of a bump the expect demand to be this year given the unevenness of the vaccination rollout and how much of a bump the you expect when air travel resumes? >> right.
we have seen very significant optics -- upticks in airtravel. those are huge moves, but it is the law of small numbers thing where we are moving off of a low baseline. the second quarter is feeling like the make or break quarter for the market. we don't see vaccine rollout from around the world as prolific as we would like to see. we don't see inventories stabilizing by the end of the quarter. we see in the industry met that demand for the uptick in driving. it's much more painful in the second quarter. we do expect a gradual increase,
that is a little less seasonal, but the driving demand could be more painful if we do not see a demand -- and uptick in demand heading into the summer. haidi: what are you seeing in terms of investor interest in traditional energy assets? >> great question. we spend more than half of our time talking about this. this is a very interesting time for the market. biden's inauguration was excessively pessimistic, it felt like the end was nine. -- nigh. energy constituted only 3% of the s&p 500 and that's down from 50% only a few years ago.
the sector has been under pressure for a long time and is experiencing a bit of a resurgence. energy is a beneficiary from that, but the companies that are demonstrating a real opportunity for clean energy, those are really the ones that are sparking enthusiasm at this time. it's probably a bit bubbly right now, but companies that have a plan for the energy transition we think will outperform those that. haidi: on a programming note, do turn into our conversation with robert lee 5:00 p.m. in hong kong. this is bloomberg.
our mandate and our pledge to the economy. shery: that was the ecb president christine lagarde. the iba has been rewarded by bond traders with traders pushing down bond yields. now it confronts a fiscal pullback that could complicate its job school. they are said to complete its qe after tuesday's policy meeting and will follow up with another program of the same amount. the governor philip lowe is expected to keep the yield target at .1%. shery: let's get a check of the latest business flash headlines. chinese regulators have approved a restructuring of sinochem after years of speculating about a merger. the two firms will become a new subsidiary of a new holding company. sinochem says it will aid the
development of china's chemical industry. both companies were added to the pentagon's blacklist for having links to the chinese military in 2020. goldman sachs have closed that has closed off vehicles to assets of its pregnant investment unit. it plans -- has closed off vehicles to assets of its private investment unit. the largest u.s. maker of memory chips expects revenue of $7.1 billion, beating average estimates. it expect profits of one dollar .60 two cents a share. -- of 1.62 share. -- a share. demand has been boosted by devices needed to study at home.
these companies are expected to go public via a u.s. listing that could offer up to $1 billion. the mobile advertising services business is backed by softbank which owns 40% of the company. jp morgan, goldman sachs, and citigroup are reported to be working on the ipo. haidi: taking a look at australia and new zealand. australia's largest energy retailer is on watch over plans it is splitting its coal-fired generation into a separate company, agl is a topic that of greenhouse gases. bhb, that stock rising after a bump in weekly iron or exports. the minor has been -- iron ore exports.
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