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tv   Bloomberg Markets European Close  Bloomberg  January 10, 2022 11:00am-12:00pm EST

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>> the countdown is on in europe. this is "bloomberg markets: european close," with guy johnson and alix steel. ♪ guy: 29 minutes to go into the close here in europe. ugly session when it comes to equities. stoxx 600 down by 1.6%. we are trading one point 78. the action very much at the front end of the curve, the selloff definitely happening in the two-year portion of the german curve, but we are watching to see as well whether or not we are going to get to zero when it comes to the tenure bun -- the 10 year bund. alix: we are really close.
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here in the u.s., the price action is pretty terrible. s&p 500 is off by -- financials trying to make a bid. that is not working. the nasdaq 100 off by 2.5%. we are below the 100 day moving average, about 200 points away from the 200 day moving average. the overall large-cap index has already broken through. that would be a producing can technical break. small caps getting hit, down by over 2%. small-cap growth down by 2.2%. you have small-cap value outperforming. we are down by 1%, but compared to the relative action of other areas of the market, it is still holding up relatively well. to blame is the 10 year. we had a higher jump in yields, but we are kind of off the highs of the session. the question is, can you break
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sustainably above 1.8%? hedge fund managers were very long going into this year, so you can imagine how much repositioning there's going to have to be as we shake out maybe four rate hikes for this year. guy: it is going to be interesting to see how the primes manage risk over the next few weeks. we were talking to bill dudley on bloomberg television earlier, formerly of the new york fed. he says for five hikes this year, than much more after that. veteran investor mark mobius telling bloomberg television earlier that the recent spike in treasury yields has room to run. he said market participants are currently under the inflation risks. >> i think they could go much higher. people are not going to be buying treasuries if they see they are only getting 2% or 3% when inflation is 7%, 8%, 9%,
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10%. so at the end of the day, those numbers have to go up. guy: that goes to our question of the day. does the fed hike water times this year? could it be more? what are the petitions for your polio -- for your portfolio? joining us for those questions is freddie lait, latitude investment ceo. do using the fed is going to have to go more than people are anticipating echo what does that mean for your portfolio? freddie: good afternoon. i think the price action so far has been very rational. it is clear that quantitative easing is slowing. i think it is highly likely we see four in the u.s., and that maybe sees the longer dated yield curve moving up, but still maintains quite a low yield environment. this is the direction of travel. what i think people have been missing is that a lot of equity
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markets, the more growth heavy like the nasdaq, the sector to ration in those equity markets is very high. by our estimates, the nasdaq duration is something similar to a 20 year or 30 year bond. so that is going to have meaningful applications for valuations over the next year or two as these rate hikes come through, and i think while earnings are probably still going to be reasonably strong, it is more of a valuation point at this stage. alix: does the valuation point spread to regional differentials ? freddie: probably to a degree it does, and also the overall weight within the more cyclical value end of the sectors. a lot of banks come a lot of sectors, led material companies, they are the sort of safe havens this year. they are the cash generative, asset-backed inflation assets that will also do well for an underlying fundamental perspective. we don't really invest
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regionally, but due to the composition of the indices in the u.k. and europe, it is probably going to be easier to find value and easier to find exciting places to invest for the next couple of years on the side of the atlantic than the other. guy: get a bit more granular. what are you liking? freddie: things we have been buying over the last couple of years that are working pretty well, we try to buy ahead of these sort of moves, but we really like the u.s. banks more than the european banks. we added to the portfolio by buying jp morgan last year. we have been adding to energy companies. started late last year. we own ecuador, bp -- e quinor, bp. asset-backed precast flow stories there have been very positive for portfolios. some thing is that is working
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quite well this year which has not been talked about much because it tends to be quite dull is the staples. staples stocks have done well this year, and that is from a combination of being so beaten up last year and place neri terms, as well is having that element of going out and not being embedded in their earnings, but this year they are performing quite well, and we own a few staples stocks which have been working. we still own text stocks that we still own tech stocks. so that is a more granularity. but i think the barbell is critical at this point. alix: if you take a look at the european bond markets, if we get to zero on the 10 year, if you get a two-year that is above the -50 basis point deposit rate for the ecb, does that change your view of european banks? freddie: it does, do a degree. all of the european banks have high interest rates, so interest rates moving higher or an expectation they will move higher will drive higher
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earnings for those businesses. the problem for us is that they are purely a macro investment. at the point at which interest rate rises are done, we don't think they will be generating excess return on capital. we don't think they will have above market eps growth, whereas in the u.s., we do believe they are going to be growing double digits, and the rate rises on top are a kick into that story and a beneficiary, but it is not the whole story. alix: really appreciate it. always good to catch up with you. we will get you back soon as the market is definitely having a pretty volatile start of the year. thanks very much. coming up, we will dive deeper into the biggest outperformer of last year. we will dig deeper into banks, particularly those european banks as well. this is bloomberg. ♪
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guy: let's carry on the conversation about what is happening with the european banking sector. definite outperformance in this sector over the last year as well. what comes next is a key question. the bond market obviously going to be playing a big art in that story. freddie lait just talking about the sector being a macro play. bloomberg equities reporter -- jp for net, bloomberg equities reporter, joining us now. freddie was making the point that this is only a macro sector . i am wondering what would have to change for that not to be the case, that this is more than just a high beta on what is happening with european growth. walk me through the narrative around consolidation because this has been an ongoing story. never really happened. i am wondering whether 2022 will
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be the catalyst to see that happen. jp: happy new year. narrative of consolidation never really happened. i actually don't see it happening this year. there is may be some consolidation more on domestic levels. we probably see some consolidation in spain or italy, or maybe in some cross-border consolidation. that stuff could happen, but the big stories that we have, like deutsche bank emerging or some thing like credit suisse merging with unicredit which was rumored, i think there are so many hurdles and obstacles and there is no political will to do that. i just don't see it coming through. alix: i feel like we have been talking about merging for these banks for a very long time. what are the best candidates to go and buy up stuff, and what are some of the weaker banks that still offer some kind of value that you could see some good tieups? what are analysts continuing to
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say about it? jan-patrick: of course, we have unicredit, with a strong voice at the top. you have started buying up stuff from the struggling banks like with the equity business that was bought from deutsche bank, for example. then you have the weaker ones. you have commerce bank in germany which is heavily reliant on the retail business, which we know was and very profitable, but could become profitable as they merge with a bigger bank. those kinds of plays will always be possible. the question is just will it create shareholder value on a sig. can scale. i have my doubts that this will happen. as long as it is not significant or not seeable, i doubt shareholders will push for it. guy: what is priced in terms of rate rises in europe? there's not a lot obviously in terms of the bond market. there's a possibility being priced of one hike may be
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towards the back end of this year for the ecb, but as yields pick up, walk me through the affect is on european banks and their profitability. jan-patrick: what freddie said earlier, i have to agree that european banks have a strong sensitivity on rates in general. the question is just how any rate hikes will we see in europe , or how much will the long-term end of the curve actually move during the shortened, and what will the curve look like. that is a big question. last earnings season, all the executives were very low when it came to rate hikes they had factored into their guidance and into the earnings estimates. so eyes and there is still room for banks to go. banks are coming from a very low level. they have underperformed in the last 10 years, and they are outperforming now in this environment. the rate play makes sense. earnings recovery makes sense as a return of dividends and share buybacks all makes sense. i strongly agree that this is
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probably a short-term play that will go through this year, but on the longer-term, all of the issues remain. week on earnings, tough margins, fragmented market, a big push from fintech into this market, which makes itself even more difficult, and the political will to make any changes. so going forward, banks will still have a tough time to be a great investment. alix: really great stuff. jp barnert joining us. coming up, a genetic approach to dealing with many types of diseases. we will talk to john evans, beam therapeutics ceo. this is bloomberg. ♪
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>> i don't say that we would not
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also see acquisitions, but right now in this specific area, we feel that partnerships would give us exactly what we want without the amount of capital that would be needed if we wanted to acquire the company's. alix: that was pfizer's ceo earlier on his partner with pharmaceutical company beam. here with us is john evans, beam therapeutics ceo. congrats on the partnership. how did they come about, particularly in light of covid? the covid backdrop, mrna technology, how did that make this partnership happen? it is great to be with you. we are very excited about this partnership for sure. it really does flow directly out of the covid vaccine story for pfizer. it is pretty amazing. they found themselves with incredible capabilities and expertise in developing a new kind of way of delivering medicine, and coding them in
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mrna and delivering them to the body. they said, where else can we apply those capabilities? the mrna is transient, so you want to have a permanent therapy after delivering the mrna. so when idea is the vaccine, you create permanent protection from the vaccine. the other is gene editing, where we will deliver a little bit of the mrna with an editor and it, and as a result we will permanently change the dna and give you potential a lifelong benefit. so they looked at the whole landscape and shows the technology we are looking at, called base editing, so they called us and we could not have been happier with the conversation, and from there the deal went very fast. guy: good morning. i will add my congrats. let's talk a little bit about how that initial conversation went. when that conversation happened, was it we would like to partner with you, or let's discuss a range of options, one of which is a partnership, one of which may in acquisition? as we heard a little earlier,
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just a few moments ago, maybe from a pfizer point of view, the most efficient way is a partnership, but was in acquisition ever discussed? john: we did discuss a range of different options. i think ultimately, we landed on this deal construct, with root -- construct, which really works well for both parties. it is a targeted deal with three programs that pfizer will benefit from. we have an option to participate in any one of those programs for commercialization. but it leaves alone the rest of the pipeline. we have a really rich pipeline. our first program is moving forward this year, so we really prefer this kind of structure. so i thing it is a really positive signed up pfizer and form in general are starting to pay attention and get involved. alix: what is interesting is
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that some individuals who do not want to get the vaccine might say they are worried it is going to change their dna. a partnership or a vaccine between you guys and pfizer will do just that, it will change your dna. i wonder, how do you think about the anti-campaign in relation to changing the dna that's the anti--- the anti-vax campaign in relation to changes dna? john: i think it has thrust us into a public health situation that maybe the market was not prepared for. the products we work on are not vaccines. our technology will not appear in the pfizer covid vaccine or anything like that. what we work on his changing genes to fix genetic diseases and potential he prevent other kinds of diseases. so this is really different than the covid situation. what we want to do is take a disease where patients are suffering, they don't have good options, but we know exactly what is wrong genetically.
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that is a grievous problem, so we can go in with our technology and potentially fix that and give them a permanent cure for a disease that otherwise has really no therapeutic option. guy: how are you going to use the uproar payments you are getting to further that process? john: we have been investing aggressively. beam works on a technology called base editing, so in general we are trying to create medicines that you give just wants to a patient, and they might have a lifelong benefit after that, so this is a profound idea and a very exciting one. beam and particular is working on a nexgen or a version of jean editing called base editing, so whereas earlier technologies, you could target a gene at a certain point and hope to put it back together again in a therapeutic way come with base editing we can actually make a much more precise single letter change, so that is the
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breakthrough. we are investing very aggressively in this technology. we are also investing in those mrna and nano particle delivery technologies to cover as many different diseases as possible. so we will be doubling down using this investment capital and all of our platform, accelerating our program and doing even more programs for more patients that we will work on with pfizer. alix: i ask something similar to the motor and a ceo, but your stock has had a really rough year, especially from its high that it hit in the middle of 2021. i am wondering, does that tell you anything? as a ceo, you're going to say no, i don't look at the stock price. i get that. but does it tell you anything about the confidence in the business? does it tell you about what shareholders want to see you do? john: the whole sector in biotech has been very volatile. obviously last year was quite
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volatile in the correction. but nothing has really changed in our business. there's a lot of macro things going on. i know some of your previous conversations were having met. we are investing against what we see is a megatrend in biology over the next 10 to 15 years. i really believe this is going to be the century of biology where these biotechnology tools, things like base editing and delivery of mrna are going to shape things for good. this is going to be quite disruptive for the health care sector long-term. i think as you see the sector's progress, the fbi signing us on a -- the fda signing off on us moving forward, with pfizer and others in pharma starting to pay intention -- pay attention and get involved, this is all accelerating. you ask yourself, intent, 15 years, how much of the therapeutics landscape is going
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to be one-time curative therapies, it is going to be a lot more, so we are investing to make that happen. guy: how has the pandemic changed the rate of change within that process? we have been talking about this with a number of our guests this morning. partnerships suddenly seem to be incredibly invoke. we have learned a lot about how the ecosystem can work. it doesn't need to be about consolidation. it can be about partnerships. can you give me an idea of the rate of change increase we have seen over the last 18 months? john: it has had an accelerating effect, especially these covid vaccines. it really just brought the mrna field forward by five or 10 years. that said, i think it is not that we are starting from scratch. folks like us have been working on mrna based delivery of our medicine, the base editing and jean editing we do. that has been ongoing for the last 5, 10 years. so it does take that kind of steady progress to have success
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like you see with the covid vaccines. i would also say the ecosystem is evolving. it is very much now i technology company. we have accumulated a lot of depth in jean editing, manufacturing facility in north carolina that will be the biggest in the jean editing field read want to accumulate all of that technology so under one roof, we have everything we need to create the medicines we want to create, but we can't do it all ourselves. we will have to do partnerships like this one with pfizer so we can unlock the value from the platform and move if a more programs forward for patients in addition to the ones we are doing internally. guy: we are all excited to see the progress you're making. we really appreciate it. john evans, beam therapeutics ceo. thank you very much, indeed. later in the hour we will carry on the conversation. a big focus on health care today.
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where we going to be talking about before them? u.s./russian talks in geneva wrapping up around an hour ago. we will discuss with the former u.s. ambassador to ukraine. what happens next? clearly this is going to have a meaningful impact on what happens here in europe. we are focusing very carefully on the impact it can have, particularly on the energy space. european markets coming in towards the end of the day. we are near session lows. technology is down. the docs down by 0.8%. the cac 40 in paris down by 1.42%. this is bloomberg. ♪
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guy: turns out to be not exactly
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the relaxing monday some may have been hoping for. many people's first day back in the office today. what a brutal data come back into the office. if you're looking at these markets, are seeing is selling, selling. the banking sector is looking ok. this is the picture. the cac 40 is under more pressure than most. the nordics are under significant pressure. luxury is down and technology is down hard. a brutal selling. delivered on quite high-volume, which is interesting in terms of people going back to the office or in front of their terminals. let's show you what is happening with the session. this is how the day has developed. it has been fairly relentless. there is a. -- there was a period midmorning when things look like they might have stabilized. as the afternoon has progressed, down towards session lows.
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still down 1.43%. flirting with the 480 line. one sector in positive territory. it is up .3%. hearing from freddie like early on, this was just a macro play. the bottom end of the market, technology down hard. the luxury sector is down hard. that is weighing on the french story. there were soupy fed -- there were significant technology stories hitting the french market hard. athos down today. i will read you a quote. odo is saying about the profit warning, at one point down nearly 20%, taking you down to june 2012. they call it a massive and company specific profit warning. the market has reacted violently to what we have seen.
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other companies have taken on the chin in terms of the payment space. citigroup cutting their stock. it says the payment sector is open to war and there are a lot of companies competing in the space, particularly heavyweights. other big companies compete, as a result of which valuations may have gone too far. i brought up credit suisse, but i could've picked another of different banks which are having a better day. there are rumors about what is happening talking about m&a. this is the story that has done the rounds time and again. that is not why we are seeing the sector being lifted. we are seeing the sector being lifted on the macro play. credit suisse up 1.3%. guy: banks not getting that same kind of left.
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right now we're looking at a live shot of the russian deputy foreign minister briefing on the results of the high-level talks between russia and u.s. officials. their talks in the ukraine border wrapped up about an hour ago. showing us for more is bloomberg's maria tadeo. did anything happen in these talks? did we learn anything? maria: the timing is complicated because the briefing had only just started. what we know is this was a meeting that started at 8:55 local time in geneva and ended about an hour ago. you are looking at a full day of bilateral talks between officials from the united states and russia. the press conference is about to start. it will begin choosing to see whether or not the changes or differences from this morning will both say the expectations are very low and we are not here to concede anything. alix: in terms -- guy: in terms
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of the rest of the week, walk us through the choreography. maria: the key date to watch out for is date of. a lot of the tensions playing out is nato. ukraine joining nato, russia says that would be a redline. that meeting between ukraine and nato and russian officials could signal whether we are heading into an escalation or a de-escalation. today the head of nato said i still believe we can cut a deal with russia. we have done it before and can do it again. guy: maria, thank you bro much indeed. let's take a listen. >> i do not think we can expect the meetings will follow up with the issues -- will solve all of the issues. what we are hoping for is we can agree on the process. it is not realistic to expect we
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will have finished this week, that the problems will be solved. guy: the nato secretary-general. stephen piper, former ambassador to ukraine for the united states joining us now. the secretary-general a little cautious. what are your expectations for the meetings that will take place this week? where are we going to be friday? stephen: today is the first of three meetings you have. the meeting between american and russian officials. on wednesday there will be a nato and russian meeting and on thursday there is the organization for security and cooperation in europe. the real question is are the russians prepared to abandon some of their most outlandish
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demands such as -- there were some items and russian proposals that might be a basis for negotiation if the russians take a serious approach and are prepared to hear out western concerns. alix: it is wonderful to talk to you on this. one thing is the talk. the other thing is what all of the countries can afford to do. i'm wondering if you have any insight on to ken vladimir putin afford to invade ukraine in terms of the sanctions, what the stock market has been doing, can russia afford this? steven: i think it has been made clear by the white house that if russians take military action, there will be sanctions that go far beyond what has been imposed on russia in the last seven years there will be greater western military assistance to ukraine to help ukrainians better defend themselves and nato will enhance its military presence on its eastern flank
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closer to russia out of concern for russian activities. the big cost would be imposed by ukrainians. at the end of the day the grady military will lose but there will be serious russian casualties. those are serious costs but vladimir putin seems to operate under a different logic. he has built up troops near ukraine, including troops from the russian far east. there is still a real concern russians might take military action. guy: to update everybody, two briefings taking place. one from the russian side, the u.s. also briefing. the u.s. saying the talks were "frank and forthright>" ." the u.s. is formally pushing back on nonstarter proposals, rush agreeing with united states nuclear war must never be far off.
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he says russia has no plans to attack ukraine which makes you wonder why they have 100,000 troops on the border. what i am seeing is a lot of what i have heard before. therefore i am wondering, if the russians are just biding their time. now's not a great time to put boots on the ground, anyway. are these just a series of talks to keep the world focusing on what is happening but opening the door to the russians to take action when they want? steven: that is precisely the question, which is the russians put forward a draft u.s. russia treaty and a draft agreement in december. there are lots of provisions that are unacceptable, and the russians had to know when they drafted the agreements they would not be acceptable to the united states for nato. the question is, those agreements put forward as the opening, you put forward large demands with the idea he would give up something in a negotiation.
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flip forward in that sense, or did the kremlin put those forward with the idea they would be rejected by the west and that would become another russian pretense for military action against ukraine? at this point we do not know the answer and it may be that vladimir putin has not yet decided. from his perspective the ideal outcome would be western and ukraine concessions because of the threat. there are still things in play. by the end of this week after these discussions that take place between nato and russia we may have better indications what the russians want to do. alix: the difference between what the west did with iran and what the west is doing with russia is the unity of the western governments. it feels like for germany any sanctions on energy is a complete nonstarter. they do not have enough natural gas, prices are spiking. the u.s. does not have that kind of issue with russia.
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energy sanctions could be on the table in that perspective. to sanctions matter unless it is energy and unless it is united? steven: the russians have said going back to 2014 that sanctions do not bother them, that they can work around them. i think that is false. we have seen accounts saying sanctions prevent at least 1% of russia's gdp, which is significant when you have an economy that is fairly stagnant. in the aftermath of the conversation that took place on december 30 between president putin and president biden, a russian account said it was made clear to president biden there would be more american sanctions, that would lead to a real rift in u.s. russia relations. it could be the folks in moscow do care about sanctions and they may have some impact. there will be certain limitations, but the united states and the european union
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have been talking about sanctions for five or six weeks. my guess is they have a pretty good set of sanctions in mind. how much it gets to the energy sector i do not know. i think the pipeline that runs from russia to germany is at risk. germans were not prepared to shut it down in the event of russian military action. my guess is the united states government would not be prepared to wait sanctions on european companies as they did last year. guy: we are just getting more commentary. russia facing a stark cost if it invades ukraine according to the u.s. side. the russian side more optimistic about talks but the key issues unresolved. that is where we leave it. steven, we will have to leave the conversation with you as well. thank you very much. let's look at the final numbers in europe. near session lows as we come through the end of the day. the auction is over.
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some of the oil stocks having a better day. some of the banks having a better day. the dax down 1.1%. the cac 40 down 1.4%. we carry on analysis at the top of the hour, transferring to bloomberg radio, the cable show on bloomberg digital radio. you can also find us on itunes and spotify. alix: we are transferring. i do not know what that means, but it sounds like we are cool or robotic. coming up, we will transfer to mark. -- we will transfer to merck with rob davis, the ceo. this is bloomberg. ♪
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alix: this is the european close . you're lucky to live shot the principal room. coming up, jane harman at 12:30 in new york, 5:30 in london.
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this is bloomberg. guy: let's get back to the virtual jp morgan health care conference taking place this week. we have always had a solid lineup of ceos. israel adding to the list of countries getting their shipment of merck pills for covid treatment. it december the u.s. fda authorizing the pill for emergency use for mild to moderate infections. joining us from the jp morgan conference is rob davis, the merck ceo. thanks for spending time with us today. you have taken over mid to endemic -- mid pandemic. how is it looking? what are the challenges? rob: thank you for having me on the show. it has definitely been an
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interesting ride. it is all good. we are performing quite well. we made a lot of great progress in 2021 the -- a lot of momentum in what we've achieved and the growth we will deliver this year . we will see that momentum continue with growth into 2022 and even beyond that into 2025. as we look at it, we are facing unique challenges as we deal with the impact of covid and the pandemic, but we have come to it fairly well and feel good about where we are in our future going forward. guy: -- alix: unlike other companies, we are depending on you to get through the pandemic. any data on how your drug deals with omicron and other potential variants? robert: as it relates to
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omicron, we have done preclinical testing, and it does appear to work well against omicron. we believe it should. when we look at what is the mechanism of action of how it works, it operates in a way that is not tied -- if you think of spike proteins on the coronavirus. this is a drug that has shown it works against the variants we have seen and work against variants we would see in the future as well. guy: there's something about drug names i find incredibly hard to say. they always seem to be slightly complicated than you think they are ready first look at them. are you expecting anymore orders? what do you think demand will look like? so far the readout is fairly positive. can you update us on whether the u.s. will be ordering more? robert: we will have to see what the u.s. puts forward if they come for additional orders.
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what we are focused on is fulfilling the orders they have in place. i am proud to say we were able to, shortly after reza be received a emergency use authorization, we delivered the first 900 courses in the u.s. in december. we will add 3 million courses to the u.s. by the end of january. we are insuring we get the product out rapidly, not only in the united states as well as outside the united states, where we have focused on how we think about access. i am proud of how we partnered with voluntary licensees to make sure we get this truck out broadly to the people that need it. as you think about what is the demand you're seeing for this product, based on contracts we have on hand right now, between what we will book in the fourth quarter which is somewhere between $500 million and $1 billion, we expect by the time we get to the end of 2022 we will hit the guidance range
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we've indicated previously of $5 billion to $7 billion. alix: you mentioned some of the challenges taking over the helm. i'm wondering what are the challenges to fulfilling that revenue goal, and that is my way about asking about your bridges, supply chain issues, staffing. robert: we are obviously very focused on ensuring the supply chain. we started manufacturing at risk and have committed to having 10 million courses done before the end of 2021, which we achieved. we have 10 million courses manufactured that just need to be labeled and shipped. our goal is to add at least another 20 million courses in 2022. we are well on our way and have been thoughtful about the supply chain to make sure we can have those deliveries. i can tell you based on the work we have done and what i'm hearing from my manufacturing team and our supply chain folks we are confident we will deliver
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the product. we are not seeing issues. i give credit to my team because it has been a herculean effort in unprecedented times what they've been able to achieve. guy: i think we all lend our thanks to those teams making sure they are getting this out to the public. one of the challenges with therapeutics like this is making sure they are delivered at the appropriate time. do you worried the availability of tests are not good enough at this point to make sure the people that need it get it? robert: obviously that is something i know governments are focused on. for us it is about ensuring that if you're a patient who is diagnosed with covid come in that first five days you get on this therapy. if you're someone that has mild to moderate disease. we are very much focused on ensuring we have the product available so the governments
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ensure they can bring forward based on the testing. alix: good to catch up with you. we would love to get you back as we progress throughout the year. robert davis, merck ceo. nasdaq off 2%, the s&p off 1.6%. chris murphy of susquehanna joins us now. chris, what you do on a year like this? chris: last week when i was on i mentioned we were surprised we were not seeing quite as much volatility in the tech stocks and the nasdaq as we expected to see. we like to see in aversion before -- and a diversion before we start to think -- we like to see in inversion before we start to think that we did see that this morning. guy: so a buy? chris: that is something we will look for for near-term trading bottom.
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it is telling us the rest is being priced into the current market. once that can be fully priced in and digested in the current market we will feel better about a near-term trading bottom. things are very unique this year with the hawkish pivot from the fed. near-term trading bottom is more likely when term structure inverts. alix: talking about volatility, where is it still cheap? the volatility for the nasdaq has been much higher than the underlying s&p. where is it still cheap to protect? chris: we are also looking compared to the vix it it actually looked like it may have peaked last week. that was telling you the tech stocks were expensive, but the vix itself and other areas of the market were not. when we see the peak we start to see the stress moved to other places. for it happens those places will be cheaper. guy: what you see the set up
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around cpi wednesday? chris: everyone is expecting it to be pretty high. that is probably mostly priced in. a lot of the trading we are seeing is probably in anticipation of that. an in-line number, even if it is the higher end of what is expected is priority already pricing in the market as evidence of the term structure today and where volatilities are. guy: really appreciate the update. thank you ray much for jumping on and setting us up. chris murphy of susquehanna financial. the next 24 hours, this will be a busy week. a lot to think about. in the next few minutes the italian prime minister is holding a covid-19 presser. the u.s. senate opens this afternoon. a virgin orbit space launch. tomorrow things start to warm up, certainly on the fed front. alix: we get the powell renomination hearing around 10:00. there could be some fireworks.
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terry haines of pangaea says it is not a done deal jay powell gets the approval. there are some doubts. the outgoing buddhist bank president is formulate handing the reins over. do we get a different type of bank in the middle of this covid environment, then you get the world bank global economic prospects report. the world economic forum global risk report, china cpi and ppi thursday. all of this is a precursor to wednesday. how high will we have to see? what are we looking at, does that change the calculus of the fed rate hike scenario? guy: you put those two things together, the jay powell confirmation hearing in the cpi number, it will be a fascinating 48 hours. as we were just hearing from chris, what we were seeing today is the price action baking and
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that 7% number. is it going to be better to travel that arrived? i know will be looking at this long way around. you get that number and you get a sigh of relief it is not higher -- in no way will have a visibility on that number. alix: he does not. i will confirm that. guy: -- you have the nasdaq nearing the 200 day moving average. coming up, nobel laureate paula roemer be joining "balance of power" with david westin. guy and i are transitioning to radio. guy: transiting. the cable is coming up. this is bloomberg. ♪
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>> from the world of politics -- >> senator manchin seems to feel
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that unless it is bipartisan it is not worth doing. history says otherwise. >> to the world of business -- >> i think we do want to look below the surface of the employment rate to see who is still trying to should get a job and ensure we are making space for them to get a job. >> this is "balance of power" with david westin. david: from bloomberg's world headquarters in new york to our tv and radio audiences worldwide, welcome to "balance of power." markets are showing some nerves today, with the nasdaq leading equities lower again. but the s&p 500 closed behind. yields on the 10 year pushing up close to 1.8. it is all being driven by inflation and the federal reserve's likely reaction, with cpi numbers coming on wednesday and confirmation hearings for jay powell on tuesday and board
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