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tv   Bloomberg Markets Americas  Bloomberg  January 26, 2022 10:00am-11:00am EST

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kailey: it is 30 minutes into the u.s. trading day. here are the top market stories we are following at this hour. decision day. the federal reserve gets set to signal its first rate hike since 2018. march liftoff is big dan, but investors are looking for clues on the balance sheet. microsoft shares swing from losses to gains on an optimistic growth outlook for its cloud business. tesla is the next titan to report after the bell today. and the rebound for now, after a few days of volatile trading. the nasdaq 100 is leading a bounce back for u.s. stocks. the question, will it stick? from new york, i am kailey leinz , was guy johnson in london. alix steel is off today. welcome to "bloomberg markets." just about four hours until we get that for decision.
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what is that going to mean for this equity market? guy: i think we are going to keep a careful eye on what is happening, but in some ways, the main event is happening right now, the news we get out of the back of canada, which has decided to leave rates on hold, despite the fact that the bank of canada is saying economic slack is now "essentially absorbed." it's likely lowered its gdp forecast to 4% in 2022, 3.5% in 2023. inflation forecasts are higher, 4.2% average in 2022. i think we are at 4.8% right now. the main headline is that we do not have a rate hike. the market expected a rate hike. economists thought we would see a story of what we got basically, which is a hold. but the bank of canada removing its exceptional forward guidance, basically saying slack has been absorbed, but we are going to keep benchmark overnight rate at 25 bps.
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let's talk about this because in some ways, this was going to be the second major g7 central bank to hike rates, and if they had, maybe that would have stolen a bit of thunder from the fed. mike mckee joining us now, bloomberg international economics and policy correspondent, to give his take on that. a surprise? michael: i don't think so. the majority of economists thought they might hold, basing the get minority were predicting a rate increase. they are trying to condition the markets for a rate move doing forward. they do in their monetary policy statement raise their forecast for inflation, so they are acknowledging there is an issue out there. ab they don't want to get too far ahead of the fed because the interest rate differential could hurt the loonie and their efforts to provide growth in canada. so not a surprise, but i think it probably means it is coming
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soon. kailey: the bank of canada is coming on federal reserve day, and that is our question of the day, whether the fed is facing a big problem given the volatility in the equity market we have seen. it really has been confined to the large parts in the equity markets, the volatility of the last week or so. do you think the fed has a problem here? ira: it is not so much that the rates market is calm. i think the fed's problem now, do they think they are behind the curve, and do they think that because of their actions, that the market will price for significantly slower growth in 2023. i think that repricing of risk assets is something they are going to have to knowledge today. that is what jay powell and the press conference will have to acknowledge. i will say something about the bank of canada decision because even though economists thought the bank of canada was going to wait this meeting, the market
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was pricing about a 70% chance of a hike today, so you have seen the loonie actually start to come off a little bit on the back of this decision, so the markets are kind of prepared. the way i read some of the headlines, and i have not read the full report yet, obviously, is that the bank of canada might still move before the federal reserve because they have another meeting prior to the march 16 meeting by the fed. guy: coming back to the question, do you think the bank of canada in any way has reacted to the recent volatility we have seen in markets? it is not just confined to the united states, this has been a goebel phenomenon. or do you think there is something all set play? why did they decide not to go this time? is the background of what we are seeing on a day-to-day basis going to be a factor? ira: the language you mentioned earlier is essentially gone from
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the labor market. that is the kind of information i think they wanted to convey. to mike's point, the economists weren't expecting it, so i think they were may be looking at what the economists were thinking for this meeting as opposed to anything else. but we will still be price for another hike, and i think the challenge central banks are going to have is not when we left off, but what is the pace and what ultimately is the terminal rate, so how high do interest rates get this cycle. for most markets, they are not thinking they are going to hike more than six times in the terms of the event of canada and the event of canada and the federal reserve this time. kailey: bloomberg's michael mckee and ira jersey, thanks for joining us. remover to tune into bloomberg's special coverage of the fed decides today at 1:30 p.m. new york time. of course, it is a very interesting picture we are
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looking at here as we look ahead to the federal reserve, but also for the outlook for fiscal policy here in the u.s. guy: fiscal policy absolutely front and center in this as we thing about what is going to happen with build back better. we have a meeting with ceo's talking about that today. that is a factor we need to bear in mind when we think about what is going to be coming out of this administration. so let's talk more about that and figure out what is going to be happening here. we need to now go to washington, d.c. we have the commerce secretary standing by. we welcome our tv and radio listeners, and we welcome bloomberg's joe mathieu because we are joined now by gina raimondo, the u.s. secretary of commerce. take it away. joe: indeed, we are joined by the secretary of commerce, gina raimondo. thank you for being with us once again on bloomberg. as we consider the chip shortage as some where we would like to start at this moment and steps
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to get ministries and is taking to loosen this up, we have talked a lot about it. before we get into the next phase, i would like to set the baseline with you for our conversation. the white house was out with a report yesterday showing that this chip shortage is going to last longer than many do believe , likely through this year. will this get worse before it gets better? sec. raimondo: good morning, and thank you for having me. i don't know that it will get worse before it gets better, but there's no reason to believe it is going to get meaningfully better anytime soon. the commerce department but that data out yesterday, and what it showed is that there is a real shortage. demand is hundred percent higher than it was a couple of years ago. there's a huge mismatch in supply and demand. prices are high. prices are higher. so what has to happen is we need to make more chips. unfortunately, there is no easy solution. the solution is increased mastic
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manufacturing of chips, which is what we need to do. joe: it brings us to one of the big steps, a legislative solution, the competition and innovation act. it has made its way through the senate. the house version was released last night. a lot of us try to get through some of the thousands of pages, but once this dropped from speaker pelosi's office, we heard real pushback from republican leadership in the house. represented of michael mccaul, the representative on foreign affairs, said that democrats decided to torpedo any chance for a bipartisan bill. is he wrong? sec. raimondo: i think that is an unfair characterization. speaker pelosi worked incredibly hard with her team, with the chairs in a bipartisan way to put together this 2000 plus page proposal. let me say this, there is broad bipartisan agreement. a bill very similar to what came out in the house was passed at the end of last year in the
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senate, was 19 republican votes. and nearly every democrat. to my mind, this is very reminiscent of the bipartisan in for structure plan which the -- bipartisan infrastructure plan which the president signed last year. there is broad bipartisan agreement that we have a national security crisis on our hands if we don't increase domestic production of chips. right now we make no leading edge sophisticated chips in the united states. we purchase nearly all of them from taiwan. congress cannot sit on their hands and refused to take action on that, and i have talked to many republicans as recently at last week who assured me they fundamentally support the goal and vision of the bill, so what has to happen is let's get to conference and hash it out. it will be disagreements. the one thing i will predict to
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you, which is the bill will not look exactly like the bill that was proposed last night. so let's get together. let's get to a conference. this is a good starting point. let's solve the problems that right now americans are facing. guy: time being of the essence here, let's try to get a timeline for when it will clear, when it will clear the house. when you think that is going to happen? when do you think we will start to be able to take action? we have easily have the news over the last few days about the planned that intel is going to be building in ohio, but that is a long way off. how quickly can we resolve this problem in the united states? sec. raimondo: as you say, these things take time. i was in ohio friday. intel made a $20 billion investment what will be the biggest semiconductor fab in the
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country, if not the world. they also said they could go from $20 billion to $100 billion in the next handful of years in america if and when the act is passed. so we have no time to waste. we hope that the bill goes on the house floor next week. we hope for swift passage, and then we get to conference. we have to move quickly. i cannot emphasize enough, the chips we need go into the most sophisticated military equipment. this is about our competition with china. as is about creating jobs. this is about fundamentally shoring up america's economic competitiveness and national security competitiveness. joe: let's get into the national security aspect of this for a moment. we hear that line a lot. so what does it mean, as we hear talk of war on the other side of the world, a standoff with russia and ukraine? what is the u.s. doing to stockpile enough chips to take care of our defense?
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sec. raimondo: of course, we do stockpiling, but you can only stockpile so much. we need to make this in america. and by the way, i have spoken with probably 50 movers of congress since january 1. democrats, republicans, many republicans. they agree the only solution is to make more chips in america. purchasing 60%, 70% of the most sophisticated chips from taiwan is a vulnerability that is staring us in the face, and the bills before congress are a solution. so i understand republicans don't like every aspect of what the speaker put out last night, so than do your job. solve these problems. find compromise and get the bill to the president.
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guy: madam secretary, are we in danger of weaponizing the chips industry? is that what is happening here? "the washington post" was talking about the fact that the administration is looking at the foreign production rule to restrict access to the chips industry come to the most sophisticated chips out there, even some of the less sophisticated chips. is that what is happening here? sec. raimondo: i obviously am not in a position and will not comment specifically on specific tactics and strategies that we may use these of ukraine and russia. the president has been very clear that the united states, with our allies, is preparing a range of very severe economic measures to impose on russia if it further invades ukraine, and i will say it is not weaponizing semiconductors. the fact of the matter is semiconductors are a vital component of every piece of
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technology, including military equipment. guy: matted secretary, we will watch with interest. we will watch certainly what is happening in the house and watch the progress of the chip bill as it works its way through. we look forward to seeing some results. the u.s. a country of commerce -- u.s. secretary of commerce, gina raimondo, are thinks to you. be sure to tune into joe's "sound on" on bloomberg radio, weekdays at 5:00 p.m. in new york. let's move on and get some reaction to what we just heard and look ahead to the fed and thing about the locations of what we heard from the bank of canada as well. jan hatzius, goldman sachs chief economist, joining us now. can i start a little bit on what is happening with the economy? we just talked to the commerce secretary about what is happening with the supply bottlenecks we are seeing in the semiconductor sector. how much of a problem is that going to be as an ongoing issue that we need to think about in terms of the inflation narrative
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, the inflationary narrative that is currently working its way through the u.s. economy? jan: i do think it is still going to be a factor that is important for the price level as we go through 2022 that does not seem to be a quick solution, so i do expect that prices in a number of goods producing sectors and especially ones that rely on some conductors are going to continue to be high. with that said, inflation is on the rate of change of prices, so i think the goods producing sector is going to go from up very sharply on a year on year basis to much more stable a year from now. the question around inflation is really more in terms of how much of an acceleration you get on the services side and how tight the labor market is and what that means for wages. so there are definitely some clear upside risks to the
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expectation that inflation comes back down to something to bun 5% to 3% which is basically the fed's view, but i don't think it is as much about goods and clearly more about services than the labor market. kailey: let's talk about how the u.s. consumer factors into this as well. i want to point to a tweet from claudia sahm, previous economist at the white house and the federal reserve, and she said the white house will not have to do as much as congress things because congress is doing its best. the child tax credit was putting $200 billion at annual rate in the hands of parents while covid was one and riled. i know the child tax credit in alaska played into your downgrade in the forecast for u.s. growth. how do you square those two things when we are talking about potentially less consumption, consumers may be having a little more price intolerance, and a federal reserve you think could hike at every meeting from march, in theory?
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jan: there are a lot of moving parts in the growth outlook, i and i would certainly agree that fiscal policy is going to be a drag on growth in the short term, basically because the amount of support is being stepped down. no more tax rebates, no more extended unemployment benefits, and probably no more expanded child tax credit, so that is going to be a drag. on the other hand, there still is a significant amount of recovery that we can see from both pandemic normalization, especially in the service sector of the economy, and that has been on hold a little bit in the near term because of omicron, but we do think that is still going to be a factor. where we come out is that the economy is still going to grow above trend in 2022, and in an environment where many labor market indicators are quite close to full employment, the
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fed is probably going to want to slow things down tomorrow a trend pace. i think that is still going to require higher interest rates. so we have four hikes in 2022, which is consistent with market pricing, but the risks are potentially that they would have to do more, and we think, even in our baseline, that as you go into 2023, 2024, it will be good for rate hikes. guy: how quickly do you think we get there? you talk about four hikes this year. presumably we will have to have more next year. is that going to be enough to get to the point you are talking about? where is neutral, do you think, in terms of where the fed is lightly to get to? jan: neutral is always difficult to estimate, of course. there are a number of estimates out there.
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the fed's estimate is 2.5% in nominal terms, 0.5% in real terms. we have a similar estimate. i think there is a reasonable case that we go a little bit beyond that if the labor market continues to improve and inflation is still somewhat above the longer-term 2% target, which is our expectation, but it is obviously going to depend upon the data. there's not going to be a sort of preset plan to get to a particular level, nor should there be. the fed will need to respond to the incoming information on the economy and on financial conditions. kailey: when we look at that incoming information, it is going to be wages, or do you think we are already in a wage price spiral? jan: i think wages are definitely an important issue for the inflation outlook, as we discussed. i think the question is what do
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wages tell us about where output and employment are relative to potential. we have seen some very rapid wage increases in the last couple of quarters on a sequential basis, quarter on quarter annualize. our estimate is that is between 5% and 6%. but there are also reasons to believe that maybe some of this is more temporary because of retention bonuses and things like that, until the end of the summer we still have the extended unemployment benefits, which make an impact on wage growth at the bottom end of the pay scale. so some of these things i think are going to be normalizing. we should see in our forecast somewhat slower sequential wage growth as we go through this year, but i think one of the key questions over the next six to 12 months. guy: the phrase i here at the
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moment is threading the needle. everyone talks about the fed threading the needle. do you think the fed is going to have to choose ultimately, i think this is relevant to what you just said about wages, do you think the fed is ultimately going to have to choose between tackling inflation and growth? which side you think they're going to come down on? do you think they will be prepared to tolerate higher inflation to keep people employed and see wages going higher? using the fed is going to be able to -- do you thing the fed is going to be able to thread the needle? jan: i do think threading the needle is a reasonable way to look at it. they have tools on both inflation and employment, so they are going to one to put some weight on both to bring growth down tomorrow a trend pace, and thereby stabilize
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measures of labor market lack before you get clearly passed full employment, and i think that is going to be the goal. i don't think we are necessarily so far away from that. i don't think we need a very aggressive tightening of policy to get to more of a trend growth phase, especially if financial conditions continue to tighten. we have seen some tightening in financial conditions. it has not been very big so far. but i think that is ultimately probably necessary to be a slowdown to more of a sustainable growth pace. kailey: i am glad you brought up the tightening of financial conditions because our question of the day today is if the volatility we have seen in the stock market creates a problem for the fed, do you think it makes their job easier or harder down the line? jan: i think it is what usually
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happens when you see a change in direction on monetary policy. a few weeks ago i think you would have said it has been surprising how little impact we have seen on the equity market from the shift in the near term monetary policy outlook. so now we have had some very volatile days, but i would still say overall financial conditions , while tighter than they were four's ago, still have not tighten so much that the fed would want to abandon the idea of a march rate hike, for example. we are not close to that, in my opinion. guy: can you give me your thoughts on how we should think about hikes versus balance sheet runoff? it is not one-for-one, and i don't know how you should think about it, but can you explain
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your thinking about how you are trying to work out this problem, about what effect runoff is going to have and how that compares with rate hikes, and what the fed is going to be thinking about about this issue? jan: our expectation is that they are going to rely predominantly on rate hikes for normalizing financial conditions and the stance of policy, and the balance sheet runoff occurs in the background and is much less responsive to new information about the inflation outlook or the growth outlook. so not quite autopilot because if there are no exchange is, the balance sheet policy could be revised as well. we also think, based on our estimates of the translation of balance sheet size or asset holdings into financial conditions, we don't think there's going to be a very large
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impact from the balance sheet adjustment, with most of the impact on financial conditions based on our estimates and the academic literature that has looked at qe and its impact really says that it is more interest rates and the policy rates and fund rate. kailey: market pricing has a come quite far in terms of the expectations for future fed policy. what you think would be the biggest hawkish surprise that the fed could deliver today? jan: i would not expect necessarily large hawkish surprises here. what in theory they could say is we are stopping qe right here. that is something that has been talked about. they are currently signaling to go and end in march. they could do that, but we don't expect them to do that, just based on what we have heard from fomc members, chair powell at
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his confirmation hearings, for example, about the qe program. he said it would end in march. so it would be a surprise. i would not expect that. otherwise, the tone of how they talk about the inflation outlook obviously is going to be important, and there's always going to be something for the hawks and the doves. however, i would not expect very disruptive type of conversations. they are trying to get ready for normalization. kailey: unfortunately, we have to leave it there, but thank you for your valuable insight on this said day. i appreciate your time. in addition to monetary policy, we are watching geopolitics, and the u.s. is now urging americans in ukraine to consider departing now. we are seeing stocks off of session highs, still at 1.8% on the nasdaq. this is bloomberg. ♪
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♪ kailey: we are about an hour into the u.s. trading session.
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stocks are rallying. bloomberg's abigail doolittle is tracking the moves. i don't know if i trust a rally after the action we have seen over the last couple of days. is there a sign this one might stick? abigail: there has been so much volatility, who knows how we will end up? but we could see these gains for stocks stick. we have the s&p 500 up more than 1%, the best day of the year. theme deal for the nasdaq 100 come outperformance of 1.8%, also the best day of 2022. encouraging signs in terms of the possibility that maybe these gains will stay around. we do have the vix coming in right now below 30, and bonds about flat. this is of course going to depend on the fed, but you have the 10 year yield back at 1.77%. anything above 1.70% suggest yields are probably about to go higher. so is haven bonds are selling off, that would support maybe the idea that stocks will continue higher. the other big deal here is earnings. take a look at microsoft. we see that shares are higher. in the premarket -- or the after
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hours, i should say, yesterday there was a selloff because even though they put up 50 billion the letters -- $50 billion of revenue for the first time, cloud growth was helping the stock go higher. tech reports after the bell, and then perhaps the biggest of them, apple reporting tomorrow, today really hoping this markets, up 1.1 percent. let's see how that quarter comes in, and this company also getting a nice piece of news from china around the iphone being the top smartphone in the fourth quarter. as for microsoft, last week we were talking about sell the debt. this chart makes a very strong case for sell the rips and not buy the dip. what we are looking at is a one-year chart. in blue, the 50 day moving average. technicians love looking at the slope of the moving averages. you can see the 50 day moving average, the near-term buyers, the strength of the debt buyers is starting to dip down.
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you can also see microsoft has been trading in a trend of lower highs. that mix a very strong case for sell the rips. there is a reason to think there will be a rep to sell, so we could likely see microsoft climb back towards the top of that range, but it less it makes an all-time high, the -- this chart suggests there could be in your time high, but a pretty bearish fall at some point later this year. guy: it is all about timing. tough to do. thank you very much, abigail doolittle on what is happening with the tech sector. let's continue the discussion and talk more about the earnings we are getting. mark lehman, jmp security ceo, joining us now. he's the perfect person to talk to. let's talk a little bit about the big picture story, then we will dig into the earnings. it has been a really tough start to the year for big tech. is this an opportunity for investors? do you want to put money to work
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in this sector right now? what do you make of the price action? mark: it has been come of the end of the year was exactly the beginning of the year, which was difficult, especially for the high-growth, high multiples stocks, and that was tempered by the action in the first few weeks of the year. we saw some stocks get much lower then i think even some of the most bearish people expected, and that is what happens in these kind of violent rallies and violent contractions in stocks. i think the vix is telling you we are going to have more days like this, and you're going to get more opportunities. microsoft is a perfect example of that. it is the most understood stock, one of the most highest market cap companies in the world, and that stock has traded in a 10% range from last night to right now. that is problematic for the market in general. we want these to be a little more tempered, and days like
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yesterday and last week are showing that there are probably more days ahead, but the valuation number look for some of these stocks is intact. i think there's lots of capital on the sidelines, and i am not talking about people going to put a few bucks to work. we haven't talked about private equity, about some of the people who sweep in when valuations contract. ice and there's lots of that potentially on the sidelines. it gives me confidence that the year is going to be just fine. kailey: talking about that valuation contraction, the nasdaq 100 is trading at a multiple of about 25 times, the lowest since may 2020. that is still 30% above the 10 year average. how much further do you think we could see that multiple contraction? mark: i think the overall opportunity is high. what i think is some of the less valued companies, the lower valuation companies probably get a second look, the company's that have been trading at market caps to revenue because profits
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are farther down the road, those will contract. we will see kind of the lower valuation companies go higher and some of the highest valuations stay lower, and that is a good backdrop for the overall market. it is never a good sign when there's a small band of stocks doing extremely well and the overall market is doing poorly. even before the last couple of weeks, half of the nasdaq was down 50% from its high. it was hidden by the fact that the things -- defang -- the faang's held up. there's is no quick fix here. guy: what is the read across from microsoft in terms of the details on the earnings into the rest of the sector? mark: i think the read across is that the health of the economy and the health of technology is real. there's is a proxy about corporate america, about cloud
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and some spend. it is healthy. the economy is getting better, and yes, we have this omicron weight that is probably going to lift to a back to normal, back to work market place. that is going to happen through the rest of the year. we have sony more weapons we are going to have to crimp back omicron and get the supply chain intact. that is going to happen as the year progresses. that means rates will start to dissipate, or the fear of rate rises will start to dissipate. the health of the economy will continue, and i think that is great for the overall rate. microsoft is a lens on that, and the report was just fine and the outlook was just fine. that is what i think was more important than anything. kailey: on those outlooks, how good is good enough for some of these tech stocks? mark: it is really high. if you love the stock at 100 times revenues, why do you love
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it now that it is as 60 or 50 times revenues and profits are not even in the review mirror, they are not even in the mirror right now? that is the question for the market. i think the richly valued, profitless companies are getting repriced, but what i am seeing from the investors we talked to and some of the funds we talked to is that they are ready if these corrections stay permanent to put more capital to work, and frankly, i don't like we have seen that yet. i have walked and talked with a lot of portfolio managers the last few weeks. i smell no fear from these people. i always say the market is getting close to a bottom, and my mother called me and says, are you ok? she called on monday and said, are you ok? these portfolio managers are ready. they are doing the work they need to do because the fundamentals of the economy, which change the digitization come of the fintech companies, some of the other things we have talked about have not changed
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despite some of the multiple compression that we see. guy: another market indicator we have to now look for, mark's mother. let's talk a little bit about some of those companies that you talked about having the potential to go down here. microsoft is at that place on the m&a front. nevertheless, cathie wood talks about innovation being on sale right now. is there a potential for some of these big companies with a lot of cash, with a lot of potential to generate cash, to do some consolidation here? can they go shopping? mark: they will. these are the most richly valued companies with cash on their balance sheet. we saw a company get acquired for cash recently. i am getting old enough where 2016 seems like a long time ago, but this time of year in 2016 we called the tableau linkedin
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friday. both companies missed earnings substantially. stocks went down 30%, 40%. and guess what? microsoft stepped in and bought linkedin. tableau got purchased, too. i think we are going to set ourselves up potentially for that backdrop. that drawdown was more substantial than we have seen today, but the innovation is probably more substantial today, so obviously it hasn't happened yet. we have seen the rebound, the nasdaq up 10% or so from the bottom from the lows of friday. we will see that because innovation never dies, and i think there's lots of opportunity for these big companies to buy these broken angels if that happens, and i think they are assembling their lists, and that example is a perfect one for what we saw a recently. kailey: innovation never dies. i'm going to get that printed on a t-shirt. thank you so much to mark lehman, jmp securities ceo. we do want to get to some breaking news for the oil
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market. we just got the eia inventory data. crude inventory is up 2.3 8 million barrels last week, a larger build than the estimate for just one million barrels. interestingly, you're still seeing crude climbing right around session highs on wti, north of $87 a barrel, and on brent crude, we just got a little taste of $90, right now at $89.87. the gains continuing for the oil market in this risk on day. we are making a shift to ev's, you don't need oil so much, but ford is investing in electr ic truck startup, rivian. we will hear from ceo jim farley on how long they will hold on before it catches out. stay tuned for that conversation. this is bloomberg. ♪ g. ♪
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ritika: coming up, scott minerd, guggenheim ceo, at 2:00 p.m. new york time, 7:00 in london. this is bloomberg.
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♪ let's check in on the bloomberg first word news. the federal reserve is in the spotlight today at the end of their two-day meeting. lousy makers are expected to single plans to raise interest rates for the first time since 2018 -- policymakers are expected to signal plans to raise interest rates for the first time since 2018. president biden has wrapped up the efforts to deter russia from war. he says he would consider personally sanctioning vladimir putin if the russian leader ordered an invasion of ukraine. president biden has already threatened some of the most severe economic penalties the u.s. and its allies can muster if ukraine is invaded. opec and its allies are expected to stick to there's plan -- to their plan and ratify a production increase next week. the coalition will probably
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rubberstamp 100,000 barrels a day for march. global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm ritika gupta. this is bloomberg. kailey: thank you. 40 ceo jim farley is one of 10 business leaders who will doing president biden today to discuss the build back better economic package. earlier, we set down -- he sat down with bloomberg's emily chang to discuss finances and what he intends to do with their investment in electric truck startup rivian. jim: we really like rj and what he is doing. the fact of the matter is we are both in the same segments. so we will work through that. we really have always seen this as a strategic investment, so there's a lot of possibilities that we could do with rivian beyond just building a vehicle together. i won't go any further than that.
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kailey: sohn -- emily: so no plans to sell. jim: no, but we will look at everything. everything is on the table. our lockup period ends in the middle of may. our f-150 lightning is not out yet. they are just scaling up, so it is early days. i don't expect us to be in the same shopping in early days. it is very different than their truck. it is much smaller. this is for a lifestyle, off-road. ours is kind of a work truck, a working person's vehicle. each transit is very different than their amazon van. as the brands build out, i don't see us being cross shopped initially, but we are in the same segments. guy: jim farley, really interesting conversation. if you want to hear more of it,
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coming up a little bit later on "bloomberg technology" is where you will find it. let's look ahead to what is happening with tesla, which reports a little bit later on. ed ludlow joining us from san francisco. let's talk a little bit about rivian first of all, and then migrate our way towards tesla. rivian-ford, that is an interesting combination. the f-150 lightning is going to be a huge product for ford. you've got rivian in terms of a potential competitor to that. how would rivian do if ford was no longer a partner, if they actually sell rivian as a competitor? ed: it is a really good question. ford made that initial investment at a time where there ev strategy was not as focused as it is present day. the marquis had not yet been revealed. they had not revealed the f-150 lightning. their investment commitment wasn't clear. this was them hedging their bets
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a little bit on an upstart that had not really started production. i reported, along with keith norton here at bloomberg news, that rivian kind of relies on ford a bit more than ford perhaps relies on rivian. ford has helped rivian get set up in a factory in northern illinois. clearly, it represents a healthy return for the company, but farley seemed really transparent in that clip. i call it frenemies. [laughter] kailey: i think that is an accurate description. there's a ton of players in this space, and the dominant one is tesla. when it comes to trucks specifically, are we going to get more information about when we are expecting to see a cybertruck today? ed: i think that is what the tesla fans want to know. tesla is such an interesting company to cover. you have the big institutional investors that hold the stock
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partly because they attract the s&p 500. there's the retail investor which is also a tesla vehicle owner or fan that is so present, and they want to know about this stuff, the product roadmap. elon musk made this egg splash about not wanting to be on earnings calls anymore because it wasn't a great use of his time, but then he turned around and said this quarter i am going to participate because i want to sit out the product roadmap. pickup trucks are big in the u.s., but there are so many other big-ticket items. i thing you guys had the data, but i ran this twitter pole what surprised me -- put her pol -- this twitter poll, and what surprised me is this factory in germany. guy: this is a company that needs to ramp up production. it is efficient. it is doing well. but we need more. i am wondering what could hold that story back. i thought it was a really interesting poll that those who took part focused on this.
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when do those plants start to really get into gear, if you can get into gear with an electric vehicle, and our semiconductors going to be an issue in terms of getting that production online? ed: this is interesting in the context of a earnings season and the moves we have seen in major indices because they had a strong fourth quarter of deliveries, 300 thousand vehicles, well above expectations. that is almost a leading indicator of sales growth. the street sees 46% topline growth for tesla throughout 2022, but if we have learned one thing from the early days of this earnings season, it is that beating the top and bottom line in any given quarter is not really defocus. what the street wants to see is a strong outlook, and how me vehicles -- how many vehicles come out of austin and how many come out of berlin is a big part of that. think the consensus is for 1.3 million vehicles delivered this year, but the ramp is a big part of that. we know the tesla ramps were paid for in fremont, california, but very successful in shanghai.
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in berlin, you can get a tesla in the u.k. right now, but it is built in fremont or shanghai, and a big part of the core growth strategy for tesla has been building vehicles in the markets where they are due to be delivered, and there's a lot of excitement about that because you might see deeper penetration in europe where tesla faces more competition from the european legacy players, which we don't even talk about in the u.s., like peugeot, renault read they have models in the real world and tesla has to combat that. kailey: thank you so much to bloomberg's ed ludlow. we will look for those results after the bell today. right now and the cash session, tesla shares are up about 2.6%. this is bloomberg. ♪
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ritika: it is time for the bloomberg business flash. i'm ritika gupta.
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at&t posted fourth-quarter earnings that were better than expected. that gives investors less reason to be concerned about the cost of lavish free phone promotions and 5g and cyber network expansion. -- and fiber network expansion. it already announced subscriber growth in 2021 was the fastest in 10 years. the controversial cryptocurrency project that mark zuckerberg once defended in front of congress is unraveling. the reason, regulatory pressure. the fed was uneasy with the crypto initiative now known as ddm association. it is now returning capital to investors. most global finance firms are planning to establish or expand operations in the u.k. this year. that comes from professional services firm ey. it is a boost for the city of london. it's status as an international finance center has been questioned since its exit
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from the european union. guy: long have people talk about the idea that we are going to see the city of london suffering as a result of brexit. you have seen some evidence of it, so a number of big american firms have moved out of the city , moved trading over to places like paris and amsterdam, but we are not seeing the destruction that may be a lot of people anticipated, and it is going to be interesting to see ultimately whether the ecb and other regulatory bodies in europe push back on that. kailey: i wonder how much this is a cased of the post-brexit u.k. picture evolving over time because when you buy initially did their survey in 2019, only 11% of firms wanted to build up a presence in london. it was 50% in early 2021. this is a significant shift. i am wonder if it comes as it is being seen that the u.k. is actually more stable post-brexit and maybe initially thought. guy: i think if you take a look at the politics and the u.k., stability wouldn't be the first word that comes to mind, but we will see how that develops over the next few days.
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let's talk about where we are but the markets right now. the pound not on the move today. there was some speculation that maybe will get the sue gray report into boris johnson's parties today. maybe we don't get that today, but the pound certainly stable right now, barely budging. the stoxx 600 is definitely on the front foot. we have seen a re-rating this year, but today we are bouncing back quite strongly. one of the reasons for that is the energy sector is on top. brent crude touching $90 just a few moments ago. we are trading at $89.98 right now, flirting with that $90 level. that is the reason why european stocks are on the front foot. stephen englander -- steven englander, global head of g10 fx research at standard chartered, joining us next. this is bloomberg. ♪
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guy: wednesday the 26th. european stocks very green today, ironically led by the oil industry.
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the countdown to the close starts now. >> the countdown is on in europe. this is "bloomberg markets: european close," with guy johnson and alix steel. ♪ guy: 30 minutes to the close, this is what the price action looks like in europe. stoxx 600 i .66%. energy stocks leading. not much reaction here in the u.k. to the political shenanigans taking place in westminster. we are expecting news from sue gray at some point that may determine the future of boris johnson. does not look like it is going to come today. brent crude the real reason why european stocks are surging today, now north of $90, $90.11, up by 2.2%. kailey: three hours to go u

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