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tv   Bloomberg Markets European Close  Bloomberg  January 17, 2022 11:00am-12:00pm EST

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the countdown to the close starts right now. ♪ 30 minutes to go until the european close. normally on a day like today, you expect volumes to be light. the u.s. is out. volume is actually all right. this talk about the price action we are seeing. stoxx 600 up by 0.8%. health care doing well, media doing well. technology is having an ok day. take a look at what is happening with u.s. bond futures. the market is closed, so you can get an idea of what is happening with the futures. we are pushing down our price. yields are coming up. when cash opens, will we see equities reacting at that point? euro-dollar at 1.1401. brent crude continues to be elevated. yes, i know we are pushing
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higher over the last hour, flatlining right now. energy prices remain incredibly elevated. $86.05 is where we are trading right now. that is the price action. let's talk about the politics. you finance ministers gathering in brussels for the first eurogroup meeting of the year. there are some new faces in the mix, including germany's christian lender. he spoke to maria tadeo today. >> now is the time to build up fiscal buffers again. we need resilience not only in the private sector, but in the public sector, and this is why i am very much in favor of reducing sovereign debt. guy: maria tadeo joins us now. he has been characterized by some as a fiscal hawk. is that the reality of the situation? maria: it depends.
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when you speak to him on the record, he does push what is a very traditional german finance minister line, which is of course we are here for fiscal prudence. we want to go back to the normal fiscal rules that we have before coronavirus, and he said this is a time to go back to creative buffers and cut back on some of the spending. behind the scene, they paint a picture that is much more nuanced. they say this is someone who won't come in to disrupt the debate to reject ideas, this is -- that he is very much willing to listen to ideas, but they say there is nothing to fear from christian lindner. that is the line we get from the germans here. guy: what does that mean in terms of the debate that will be happening at this meeting? the fiscal rules that used to exist within the euro zone?
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the french and the italians are pushing the idea that maybe they should be changed, softened. that we should consider certain areas of debt like those that correspond to how growth or green should be excluded. how is that likely to work, and where does he plug into that story? maria: of course, to get anything done in brussels and in the wider context of the european union, you need the germans to play ball, and you need an understanding between the french and the germans. that is essentially rule 101 in brussels. if the germans and the french are not on the same page, it is not going to get done. when you look at what bruno le maire is saying today, and he has done a few interviews across the european press to try and set out the scene, and this is also happening with the rotating presidents at the eu, he says that a lot of these rules in gdp, it does reflect the old fundament of the economy. there is an assumption in
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markets that debt to gdp will be much higher, especially coming out of the pandemic. he also says the defective markets look at debt and risk perception differently in the context of this crisis compared to the previous sovereign crisis , and also points to the eu next-generation funds, which says that a lot of these will not go into the debt to gdp because they are going for digital investment. so perhaps a continuation of that recovery fund, but it is still very early days. we are not going to get a breakthrough in the french presidency. this is going to end in six months. this is probably a story we are going to see play out in the eden of this year, but you do see -- i would argue that this time around, we are not really seeing that frugal force. they said frugality at the times is a good asset, but the narrative has changed, and that
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is perhaps what we are going to see now. guy: great stuff. looking to further reporting of what comes out of this meeting. we will certainly cover that tomorrow morning. let's see how this plays into markets. we are joined by madeline jones, european credit portfolio manager at oaktree capital. great to have you on the show. what do you see happening in europe? there is this debate about whether or not the high debt levels in europe are going to be a problem for growth going forward. can europe at a credit level generate the kind of growth necessary to pull ourselves out of this? >> when we look at europe, we look at markets, we look at companies on a daily basis, looking at their balance sheets in credit. we are really focused on how well they are positioned. are there any inklings of credit markets which could not refinance their debt. are there any and things of come in is which have challenges fundamentally which could lead
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to credit losses. this is the invest mcgray territory level i am investing in, and that is absolutely critical to get right to making sure you get returns and controlled investing. from what we see in our companies, they are really well-positioned to handle the challenges going ahead. the balance sheets are robust. there have been good capital environments recently for all of the companies that wanted to to refinance and extend their maturities, so really we are left with a strong cohort of companies that can face this latter stage of hopefully a recovery through to the end of this global pandemic, but we are always mindful here not to be too relaxed about that. we've got to maintain best protection, make sure that balance sheets are appropriately structured when new issues are coming to market. guy: we have seen a record start to the year in terms of government issuance and corporate issuance. what signal should i take away
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from that? madelaine: i think you can take away from that investors are likewise mindful to believe that there is strong health within corporate credit right now, strong health in which we can lend effectively with certainty that companies can pay us back and maintain those strong balance sheets. so i think it really speaks to capital markets to be supportive , and one that is still seeking out investment opportunities. one of the really interesting things this side of the year has been how well the lower echelons of credit quality has done. most of the turbulence has been in bb long-duration credit, and still there's a very strong bid for yieldy credit, even as far down as ccc's. they have done well this year, and that speaks of an investor base which is still strongly minded to look for good yielding
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opportunities against an ever-changing backdrop. guy: so looking for higher yields and shortening durations. is that indian dictation that there is concern growing about what is happening. in the united states, it looks like the fed is going to force yields higher. same story in the united kingdom. we have not had a credit cycle properly thus far. do you think we could start to see default rates picking up? do you think people are maybe starting to position for that? i appreciate what you are saying about the lower echelons, but i would take that as a signal that maybe people are getting more cautious. madelaine: i think you have to separate two risks there for fixed income investment. one is risk around credit quality, and two is risk around interest rate policies changing. you can to sting was the two by looking at the -- you can distinguish the two by looking at the lower quality echelon,
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but also those who have seen into floating-rate debt products , sub investment grade, similar qualities of companies within there, but there's a serious amount of money coming in because it is a better place to access the same market without having that risk of interest rate policy changes, so i still think there's a very clear indication that investors want to deploy and they see good quality reddit investing opportunities. it is just the way you access it and what access -- what asset class you make preferred, dependent on your view. guy: do you think your view is going to evolve? the language from the fed has been fairly aggressive, but nevertheless, it looks as if rates are going higher. does that mean you are more likely to focus on, as you work your way through this year, may be on the floating loans market to give you a little more insulation around that story?
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madelaine: i think it will come back to really where you think you are best positioned to head off the risks that you are concerned about. we look at hundreds of companies across many sectors, and it is from there rather than trying to take a read of central bank policy, which we don't think anyone can do well on a consistent basis, rather hearing from our companies with the issues are around supply chain management, around inflation, and building our portfolios up from that as real credit selection being the basis of how you position your risk and your investments rather than taking big top down, macro views based on your thinking that you can second-guess "central policies. but when you about second-guess "central policies. -- second-guess central bank policies.
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certainly, when we were looking at come knees last year, hearing about supply chain issues, understanding that this was a longer-term inflationary trajectory that we were in, we took a few changes to our portfolios. we started to look for those companies which would have trouble passing through inflation. we started to look for companies where they did not have real pricing power downstream to enable them to do that, but also we lent away from long duration. it did not feel appropriately compensated for the risks in that asset class. we also started to lean towards floating rates as a preferable asset class. guy: doing the bottom up work. thank you very much, indeed. greatly appreciate your time and your insight. madelaine joan -- madelaine jone s of oaktree capital joining us. pfizer says we may return to
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normal shortly after two years of dealing with the pandemic. dr. anthony felt he is a little more cautious. too soon to say whether the pandemic is shifting to the endemic phase. we will discuss all of this next with dr. sarah pitt from the university of brighton. that is next. this is bloomberg. ♪
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dr. fauci: is an open question as to whether or not omicron will be the vaccination everyone is hoping for because you have such a great deal of variability with new variants emerging. guy: dr. anthony fauci speaking
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earlier today at the world economic forum online conference. let's talk more about what is happening here. sam fazeli a bloomberg intelligence is joining us. there is a very live debate at the moment as to whether or not we are heading into the endemic phase. dr. waller was saying we will get back to normal very soon. dr. fauci sounds quite cautious. if we are going to get back to normality, will that normality include shot after shot? there are many conversations happening now about specific omicron shots, that that will be the fourth round we get. my question to you, does the data support that? sam: there is no data, so we are just seeing headlines now on the bloomberg that suggest that is really -- that israeli health
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authorities do not think that a fourth shot is preventing omicron infection. remember, we are in a situation where we are not necessarily trying to stop infections. the way to stop infections is by keeping people apart. we are trying to stop severe disease and convert this disease as much as possible to as close as possible to the common cold. so whether we need fourth shots or not, i am not in that camp. i think we might need it for the very susceptible people, immunocompromised, but beyond that, i think this is just a virus that we are not going to be able to keep this particular genie in a bottle with vaccination. guy: so what will this pandemic look like in a year's time? are we just going to have to accept that we will have maybe every autumn, every winter, a new wave, and we will have to
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mitigate that by dealing with that via masking, and by making sure that those at risk get an additional shot? is that the best we can hope for? sam: i think that is one possibility. i think it is a strong possibility, assume another of -- assuming no other variant comes along, but that is an assumption given what we have already seen. if we go with the possibility that omicron is so transmissible that you are going to find after a few months you get reinfected, maybe there is an element of seasonality that comes into it, then perhaps we are just going to get exactly what you just described. maybe fourth shots for people who are in need of it to stop severe disease, and then the rest of us just get on with our lives. one thing i have to say is i would like to see the data of whether an omicron specific shot
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is better at neutralizing omicron than repeated fourth shots of the same vaccine. i need to see the data before we get anywhere. guy: you would hope it would be, otherwise the efforts would seem rather wasted. bloomberg's sam fazeli joining us from bloomberg intelligence. dr. sarah pitt comfortable elector of microbiology at the university of brighton, joining us now -- after sarah pitt, -- dr. sarah pitt, professor of microbiology at the university of brighton, joining us now. how realistic is that? dr. pitt: we really don't know, but i think my reading of all the information we've got so far is that we want it to turn into some sort of common cold virus so that we can find a way of living with it without too many
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restrictions, without too many vaccinations. but people are latching onto the fact that there are other coronaviruses which cause common cold, but actually there are lots of coronavirus, there are lots of groups of coronaviruses, and the group that the virus is in is in the same group as the respiratory virus that has been around for 12 years, and it causes quite small, contained outbreaks in the middle east every year, and is still just as nasty as it was 12 years ago. so i don't think we necessarily know that this code 19 virus is going to settle down in that way. we all hope that it will, but we don't know for sure that it will. guy: the middle east has learned to live with mers.
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is it the right way to approach this? dr. pitt: you have big outbreaks every now and again, which they then put in measures to contain it, and i am not so sure that that isn't the way we are going to see the covid-19 virus. what we really need to do, we need to understand that this is a global pandemic, so we are not going to go into the post-pandemic phase until it is sure all over the world that the numbers of new cases are really quite low. the other thing is that people have been using the word endemic quite a lot recently, i have noticed. the thing about endemic viruses is they settle down and they are entirely pretty double, and they don't necessarily cause big outbreaks in the way that we
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have seen with covid so far. so we are not really anywhere close to endemic, and it might be that it never becomes endemic . things like ebola virus which has been around since 1976, we have outbreaks of ebola which we then control. obviously, they are different viruses and the environment is quite different, but that is what living with ebola looks like. something like norovirus, we have big outbreaks occasionally in hospitals or in schools, and then we tried to bring it under control. that might be the future with covid-19, and i think that is more realistic to be aiming for at the moment, with possibly regular vaccinations for the people who need it. i would imagine that the best thing to do is to tweak the virus -- sorry, tweak the vaccine so it stays in tune with the virus as it is changing. guy: when you talk about
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bringing it under control, what does that look like? dr. pitt: it looks like number of new cases is small, and it is not something that is really interfering with our ordinary, everyday life. guy: but what kind of action you need taken that a fireman? if you get an -- that environment? do you have to lockdown that area? do close school? what does containment look like? dr. pitt: if we get to a point where the number of new cases is usual infection, then you might have a local lockdown, local closing of schools for a short amount of time. what you might do is where you vaccinate everybody in the general vicinity who might be at risk from the virus, and of course, you can do surge testing
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, would you go around door-to-door and test everybody, and then ask people who test positive to stay in isolation for seven days, 10 days. in the u.k. we are moving towards five-day isolation as long as you test negative at the end of that five days. so it might just be that a small area, people will be inconvenienced for a short amount of time, be a couple of weeks, just to avoid spreading any further. that is what we might be seeing in the future. but as i say, we are quite a long way from getting to that point just now. guy: always appreciate your insight. thank you very much, indeed. dr. sarah pitt, university of brighton, thank you very much, and deed. -- very much, indeed. this is bloomberg. ♪
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♪ guy: four minutes to the
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european close. european equities trading on the front foot, and highs. a little bit of a head scratcher. take a look at what happened with u.s. treasury futures. they indicate that tomorrow, we could see quite a decent yield spike. we are trading circa 1.8% right now. it does seem as if people may be are paying attention to what is happening with futures. but nevertheless, markets doing well come out and decent volume -- markets doing well, and decent volume. european equities well bid with decent volume. we will deal with the details next. the close is coming up. this is bloomberg. ♪ >> we are wrapping things up
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here in europe, when it comes to
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cash equity trading, european equities are having a fairly solid session. the action is in london and paris, with a little bit of munich pulled in for good measure. the swiss market is up nearly a full percentage as well. moving the markets as much as they are in just a moment, let me show you how the session has progressed. as you can see here in europe, trading for .84. we have been moving throughout most of the day, it is where positive and on decent volume. it is a holiday in the united states, markets are closed. you have the media sector, around 1.9 percent today, the luxury sector, about one point
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6% -- 1.6 percent. technology training higher, health care, having a good day. bottom end of the market is the travel, leisure, and grocery sector. unilever is under loads of pressure today that is why that sector is underperforming. unilever, glasgow senate client is looking to offer its consumer health business. we are talking about advil and sensodyne. unilever is thinking about buying it. it is not particularly high-growth. and makes you wonder what unilever wants to buy it. the community has come out today and slammed this proposed deal. they do not like the price, the
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integration problems that could come, they do not like the growth opportunities, they wonder about a whole range of factors. glaxosmithkline is getting a lot of price for its business and unilever worries about the execution story around this. unilever is down off of the back of this and has not had a great run, the stock is down another 6.5% today. the other story is credit suisse. the chairman, nine months ago, expected to come in and take the business and stabilize it after a whole series of crises. having achieved that over, may have fallen foul of the quarantine rules in switzerland and as a result of which has had to step down. adding to the since of crises around this business. down by 2.26%.
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let us understand the impact this is going to have, michael moore joins us now. let us discuss what happens next for credit suisse. we have a new chairman and ceo. what is the trajectory that credit suisse is now on? can it stabilize itself on return to growth? -- and return to growth? >> you have leaders who are familiar with the swiss landscape and has a risk management background. i think that plays into the story of credit suisse pulling in the rains and becoming a bit more cautious as they go through this restructuring. we have seen them cut risk on the prime brokerage side. that strategy is already coming into effect and cannot be unwound even if the new chairman wanted to. i think, the new chairman had
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said he is on board with the strategy, they are moving forward with it. at this point, it is a bit of a show may start because investors want to see some meaningful change. guy: what do we know about him? >> a long career in insurance and ubs, somebody who has held risk officer positions before, who has run the swiss division at ubs. none within zurich, less of an international profile. -- known within zurich, less of an international profile. guy: is it about keeping regulators on board and making sure that they are ok with what the business is doing? or does he need to take further
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steps? does anything really need to change at credit suisse in terms of the culture or is that problem largely being fixed? >> i think it is too soon to tell if the culture has been fixed. stability is a big piece of changing that culture. the happen so many strategy shifts because there has been so many changes in direction. i think that has contributed to this sense of drift with credit suisse. having some stability in there, putting this plan in place, what investors want to see, are there y able to hold onto the franchise, can they hold onto the rest of it? show some stability witho a blowuput in the next couple of years. -- without a blowup in the next
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couple of years. guy: i.e. number -- a number of staff have left. does that exodus continue as a result of what has happened here or does this not change that in an meaningful way? -- a meaningful way? >> people worry about the investment bank being spun out or chop down to ask and advocate level. they have already left during the summer. they got out of the prime brokerage. it was not as dramatic as some has feared -- have feared. those who did leave, they left in the summer months while there was still a lot of uncertainty floating about both in terms of the bank's directions and the year end pay figures as well. there is a little bit more
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uncertainty around the franchise and the potential upside there. guy: thank you for updating us. another set of companies we are watching carefully, unilever and glasgow. the analyst community very much against this. joining us now is joe easton. talk us to the deal that has been proposed here -- through the deal that has been proposed here. >> it is around 60 billion pounds which is what was offered. given to the company, glasco was not happy with any of them. the worry is that unilever will keep coming back and some are saying that they may even have to to add another 10 billion pounds onto it which would take it to 60 billion pounds. we are getting into really high multiples of undervaluation's.
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it could be up to 25 times profit. that could be a lot higher than the trade in that sector. guy: why does unilever want this so much? it sees something that may be the analyst community does not or is it a reflection of the fact that the rest of the portfolio is actually even a lower growth than this portfolio? >> that is another big worry, if they're wanting to pay so much money for a pretty low growth business in consumer health, how bad is the growth in the current unit? that is something we have been hearing a lot of people talk about. also, the synergy. analysts are questioning where
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is the synergy? a company that makes pot noodles and mayonnaise are warning drug products, that shar wanting drug -- wanting drug products. guy: what about these kinds of shifts? >> they usually do reasonably well. a lot of the businesses have been in the food area and that has come back to bite them because the growth has stagnated. even in the emerging market areas where there is growth in consumer health, other is not a growth in the food products business. trying to make up for past
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sins. it has gotten in a bit of a boost during the pandemic with people generally more concerned about health and people who expect that trend to continue, even as the pandemic fades. they have done pretty well but they are trying to make up for some of the not so good deals with this one. guy: even before this bid emerged, there was a lot of criticism of management at your liver. -- unilever. nor focusing on maximizing shareholder returns, activists are watching the business, i am wondering if there is any pressure here. if the deal does not come off, the shift management to strategy. >> it feels like that they were when all of their eggs in one box. they have announced this
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attempted deal, they probably knew it would be negatively received, that they did not do the research or speak to people before they got involved or announced it. i am sure that they knew what they were getting themselves into. they have also announced a strategy update, going to sell off these food businesses that investors are not happy with. this will be a transformative time for the company. if it does not work out, it is hard to see how investors will continue to back the leadership. we would like to give it some time and see how it pans out before we make any judgments there. guy: thank you. let us wrap things up, european stocks are down on the day.
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still, not quite a session high in europe. it is going to be an interesting start to training as we start watching what is happening in the united states. let us see what we are going to be discussing next, eastman chemical is going to build the molecular plastic recycling facility. we talked to the ceo, next -- we talk to the ceo, next. this is bloomberg ♪. . ♪
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>> let us check in on the first
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word news. boris johnson faces unknown other bruising week with his future in the balance. six lawmakers have called on him to redesign over allegations of drink parties while the country was locked down. british media reports that johnson is a planning staff changes and a series of popular policy announcements. moderna is moving closer to having a vaccine designed for the omicron variant. clinical development for they shot will begin soon. -- the shot will begin soon. >> there is a sequence, an omicron specific vaccine, it is being continue to be made. >> the economic form event on the pandemic, the conversation was followed by francine lacqua. the central bank has cut a key
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interest rate for the first time in almost two years. beijing is trying to bolster an economy that has lost momentum and repeated coronavirus outbreaks. china's product growth is up higher from a year earlier, global news, 24 hours a day honor and in gloom -- and in -- global news 24 hours a day, on-air and at quicktake, powered by more than 2700 journalists and analysts in over 120 countries. guy: eastman chemical will build the biggest molecular plastics recycling facility in france. the plant will start operations in 2025. the company's ceo is joining us today, mark costa. let us begin with a chemistry and we move on to the economics
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-- with the chemistry and we will move on to the economics. what will you be doing here and how will you make it work? >> it is great to be here and talk about this investment. when you think about the world in which we are headed today and eastman's focus on sustainable materials, the key to the challenge is the triple challenge. improving climate, addressing the plastic waste prices, and improving the quality of life or the growing population all around the world. our technology focuses on how to do all three at the same time. we are the world leaders in polyester and biopolymer. this is focused on our long history in polyester. there is a tournament as amount of plastic waste, it is having a bad impact on the environment. a needless impact on the climate. our technology takes that
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polyester waste, whether it is plastic waste, or carpet fiber, or textiles, and did that polyester -- and put that polyester into its building blocks and we can make that same exact polymer today with the same quality and we do it at a lunch -- much lower carbon footprint. in the plant in france, we will have an 80% lower carbon footprint than current recycling. this waste is often incinerated or put in a landfill or down cycled into low-end applications instead of closing the loop. we can replace fossil fuels with waste plastic. guy: why france? mark: france was an excellent
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opportunities for three -- excellent opportunity for three factors. president macron has a bold vision for the country around addressing climate and its impact. all of his ministries came together as a team and worked well for us to see the opportunity to invest here and supported us in the elements of this project that we needed. france is filled with very strong, french brands that have been very engaged with us and committed to working with us around this project. companies like l'oreal, global brands as well like estee lauder , customer engagement or these companies have very strong commitments to being leaders and achieving targets and climate targets. working with these brands to support them, in there backyard
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-- in their backyard is important. france has substantial facebook plastic waste that we could use and the infrastructure commitment to rebuild and enhance that infrastructure has been attracted to us. guy: you talk about the feed stock. is this something that is going to be limiting on how it is going to get the supply chain around this up and running? mark: the feedstock is one of the more interesting challenges. we have a vast amount of plastic waste in europe and across the world. recycling infrastructure is not as developed as a needs to be to be prevented from getting into landfills or into incineration or even worse, into the environment. it is a lot of collaboration at the government and local level and companies that manage that
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waste though have been working with to be suppliers to us. we are seeing great engagement on that to access what we call hard to recycle polyester net cannot be easily used. mechanical recycling is focused on clear bottles that can be cleaned up and top up and reused. -- chopped up and reused. these other waste streams, we can take all of that, packaging, park it -- carpet fiber, polyester, use that as a for us. that gives us a way to address a lot of waste. it is another significant waste stream that needs to be recycled and reused. guy: we wish you well. these are the kinds of steps that we really need. that eastman is the -- that is
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the eastman chemical ceo. this is bloomberg. ♪
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guy: this is a live shot of the city of london. the skyline, enhanced by the full moon sitting over the top of it. we are looking ahead to what is going to be happening tomorrow as wall street returns after the holiday. some of the biggest names reporting over the next few days. we are not done yet, tomorrow we get goldman sacks, wednesday, bank of america and morgan stanley. big names you want to pay attention to.
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we have already had fargo and jp morgan. goldman sachs tomorrow, bank and morgan stanley coming out on the 19th. the markets here in europe, a strong start to the week, up by .7%. u.s. bond futures dipping, an indication that we could see yields rising, 1.8 as of friday. steadily climbing throughout the day, 86.40, up another .4%. i hope that you have enjoyed the holidays, stateside. we look forward to seeing you tomorrow. this is bloomberg. ♪
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>> how hydrogen can change our energy usage, how it can be a game changer in the climate revolution. from iron ore to green hydrogen, one of australia's richest men tells us about his pivot to sustainable energy. the hydrogen revolution, we will speak with the ceo of an italian firm and how a marine hydrogen can be competitive within five years. >> it is the only way to
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decarbonizing certain sectors. >> do not miss this week's addition of bloomberg green, airing on air and online -- edition of bloomberg green and airing on air and online. >> this is a paid program. the opinions and views expressed do not reflect those of bloomberg. >> this is soul. >> ♪ one of a kind ♪ >> of music that comes from deep in the heart from the artist that we love. ♪


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