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tv   Bloomberg Markets Americas  Bloomberg  April 25, 2022 10:00am-11:00am EDT

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from the financial centers of the world, this is "bloomberg markets," with alix steel and guy johnson. kailey: it is 30 minutes into the u.s. trading day. here are the top market stories we are following for you at this hour. twitter talks, reportedly on track to reach a deal with elon musk as soon as today. the shares jump. china concerns. fears of a lockdown in beijing fuel growth jitters that ripple across markets. stocks and commodities sink while bonds catch a haven bid. u.s. defense secretary lloyd austin says they want to see russian forces ground down. they pledge another 700 million dollars in aid for ukraine and its allies. from new york, i'm kailey leinz, with guy johnson in london. alix steel is off. welcome to "bloomberg markets." it is not the prettiest start to this week, but also wasn't a very pretty end to last
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week either. guy: i think that is the point. we could blame china for the selloff we are seeing. it just adds to the growth jitters that are out there, and that has been building, but back end of last week, and i was reading about this remotely, it felt like more of a fear that the fed was going to raise rates aggressively and we needed to price even more. take a look at the s&p chart straight down. this morning you get a cap lower, but it is basically just a continuation of the theme. what do you think? you were here thursday, friday. from afar, that looks like pretty aggressive selling. kailey: it was much more driven by expectations of an aggressive federal reserve, the idea that they would be tightening even more rapidly into a larger scale than the market anticipated. that all comes down to inflation. i wonder if these things are mutually exclusive because in addition to the growth fear around china that lockdowns could cause, it could cause a lot of supply chain issues as well, and that feeds into that inflationary narrative. guy: let's go to our question of
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the day which tries to address this. how do you price in a beijing lockdown? it is interesting, the beijing health authority we understand is going to be holding a briefing shortly. we understand another district is going to be going for mass testing. it is a big threat. the question is, is it an inflationary threat or gross threat? kathryn rooney vera, bulltick investment management, joining us now. amy and sass our for bloomberg until it -- damian sassower for bloomberg intelligence here as well. beijing lockdown, shanghai lockdown. lockdowns across china. is this an inflationary threat we should worry about or a growth threat? damian: a little bit of both, but you have to look at mobility data. you have to look at peak traffic in shanghai, for example, running at 40% below what it should be on a year-over-year basis. if you look at data out of
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shanghai's largest airports, it is running at just 10% of capacity, so you really have to dig into the data because will get some pmi data this week it going to be abysmal, but it will not tell you much about what growth is going to do in china going forward or where expectations are. we are looking at growth in china down something like 3.9% year-over-year for full year 2022. that is well below beijing's 5.5% gdp growth target. kailey: how do you view this considering that there is a narrative out there that this is just going to mean easier policy , more stimulative measures coming from beijing? is that enough to support the chinese markets? kathryn: i think if we are in chinese equities, we have to be aware they are going to go lower before they go higher. so i have been recommended consumer discretionary in the space for some time now. think there's a threat to that given the irrational and illogical policy of zero covid
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tolerance. that to me says we are going to get a lot of both in terms of a hit to both inflation to the upside and to growth to the downside, not just in china. we are talking at a global level here. if we were thinking stagflation was a scenario, it should be our base case now. it was our base case going into this year and it is firmly entrenched now. i think we have to be increasingly cautious on the turn in the economic cycle. a recession is part of the economic cycle. it is inevitable. it is infamously difficult to predict. but it is coming a muscle let us position for those sectors that we know historically outperform at this point of the economic cycle. guy: so you're definitely not, by the sound of things, in the we can achieve a soft landing here from the fed camp. if that is the case and you have laid out your case pretty strongly that it isn't, where do i want to be?
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lay it out for us. guy: the top -- kathryn: the top performers in terms of s&p 500 sectors in stokley's neri periods our energy, staples -- in a stagflationary periods are energy, staples. they are very nice because they are defensive in the event of a inflationary period. -- a reflationary period. it is going to be in a norma's ha -- an enormous haul for the fed to nail the landing in this period of high inflation where the fed has to both engage in decreasing its $9 trillion balance sheet, jack operates where the market is finally pricing in the enormous task that the fed has really entrenched itself in. so if the fed itself has engendered a lot of these inflationary pressures, they have far extended their expiration date in terms of policy accommodation, and now
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they have to play a huge game of catch up. so 50 basis points is already baked in, 75 is a possibility. the market is already starting to price it and, finally. but the fed is at the end of the day taking inflation seriously, and it has been very long in the tooth incoming. kailey: what kathryn is describing is a fed that is tightening, and aggressively so. the pboc is not tightening. there's conversation about policy getting easier. we saw the ethics ratio reserve cut earlier today. does that move the needle? what else would you expect? damian: we expect more policy easing ahead. we expect another 30 bps on the medium-term lending facility. i think kathryn makes a great point. it is going to be messy and volatile, but eventually the world will come to the
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realization that we are going into a slow growth period, and that is usually good for bonds. i know that the 10 year and the 30 year are going to test these levels, maybe 3%, whatever the case may be, but i do believe there is some value you can finally find by carrying in the long end of the u.s. treasury yield curve, and by default that means japanese yen, which has really taken on the chin, you're going to see a little bit of a rebound. i think one of the things that have been overlooked is the reason you are seeing the yuan depreciate is because the yen has depreciated to the extent it has. that mix japanese exports more attractive relative to china and korea, and i think china sees this. they are waking up to this reality. i'm not calling for a seven handle on dollar-you want -- dollar-yuan anytime soon, but we could see it. guy: how do you feel about a significant lease stronger dollar stays up for a while? kathryn: i think it prisons opportunities. i certainly agree in the fixed income space, even in the equity
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space, i think we are going to go lower. they have gotten a hammering year to date, but i would be looking at opportunities to enter there because effectively, china does have the ability to go for big fiscal stimulus, big monetary stimulus at the drop of a hat. i think we have room to go lower their. within the dollar spectrum, of course the dollar is going to be stronger before it gets structurally weaker, which is my base case over the medium-term, but we have the combination of a massive interest rate differential between a fed that is already massively behind the curve and an ecb that is already massively behind the curve, but the empress rate -- the interest rate favors the dollar. so certainly we are going to get upside pressure and continue to see so from now through year on the dollar for we see any weakness going forward, so this year i am bullish on the dollar. i do think there's opportunities and select emerging market currencies, specifically colombian peso and brazilian real.
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i see opportunities in the fixed income space long-duration on quality sovereigns in both of these countries. kailey: i have the benefit of sitting here on set in new york with damian sassower, so i can see his facial expressions as he listens to you. some eyebrow movements. your reaction to what we just heard please. damian: i think kathryn makes a good point. if you look at margin levels, they have come down pretty significant lee. if you look at technicals, you can make the argument that positioning in china and the technicals are turning more favorable, and any time this happens, you tend to see a dip form. but fundamentally, i just can't go near them. with all of the overhang going on, the fact that china is not taking a position really on putin's war in ukraine, the fact that the adr listings in the u.s. are going to come under pressure and many of them are going to have to delist, there's just a lot of risk there. so i would stay away from chinese equities.
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i agree on all of that, but i do believe that there is some value in perhaps starting to ease into dollar-denominated emerging-market debt, which is something on the order of 13%, 14% this year. it is a huge number, a lot of it driven by the high-yield space, driven by china property issuers, driven by those bonds along the frontier. donna, pakistan, sri lanka. a lot of this is going to run its way through, but it is setting up for a bit of a rebound here, especially if u.s. yields start to normalize. kathryn: that mix a market, right? the buyers and the sellers. [laughter] so i think that it's fantastic. i do think structurally over the long term i would be starting to accumulate, so certainly there's different viewpoints. i think consumer discretionary and china has a long upside potential for a sustained period of time. so if you don't have any, i think we can start accumulating. of course this is not for
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everyone. this is for guys and gals looking for outflow that are risk tolerant and are looking to engage in something that can give them more sustained upside than 2.7% in treasuries. [laughter] or in s&p 500 very close to where i am sing levels. kailey: are you looking at a bloomberg terminal? [laughter] guy: i hope so. kathryn: so i think we have to be looking for opportunities in more to see markets than the developed ones, where i think we are going to see limited upside from now through year-end. kailey: do you see limited upside as well for technology stocks? this comes back to the story and china, supply chain issues in production capacity in asia are a big issue. kathryn: absolutely. i couldn't agree more. that is why i started the conversation talking about how inflation and growth are going to be adversely impacted by this
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zero covid policy in china, which means lockdowns in beijing. that is going to exacerbate the supply chain disruptions we have seen and the inflationary story. so this is not just putin. this is not just oil prices. this is not even just supply chain distortions. there are so many impulses to inflation. one of the sectors that do the worst in this type of environment is stagflation era/recessionary environment, that is tech. i think we need to readjust the portfolios and realize that we are at that point in the economic cycle where we need to change from cyclicals to value and from growth to defensive. guy: damian, the fed looks like it is potentially behind the curve. i wonder about the chinese authorities. they seem very slow to move, and i wonder why you think that is. damian: things are coming in.
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this is going to be four years in a row where you have seen reserves declining. china has a lot of reserves, i think 3.1 trillion, so they have plenty of cushion to predict on any drawdown, but i think for me, the fundamentals are starting to roll over. there's $90 billion of property debt that needs to be paid back to external creditors between now and year-end, so it's a lot of money. they need to kind of make things a little bit easier i think for a lot of those private property developers to repay their creditors. if they don't, there's going to be a slew of defaults and you will see more pain ahead. kailey: a lively conversation to start the week. thank you to damian sassower of bloomberg intelligence and kathryn rooney vera. coming up, we turn to elon musk, and the final stage of negotiations to buy twitter for 43 billion dollars. we will have the latest on that next. this is bloomberg. ♪
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kailey: it could be one of the biggest internet acquisitions ever. twitter is a final stretch of negotiations about that $43 billion sale to elon musk forget joining us from san francisco is bloomberg's ed ludlow. we understand from the reporting we have seen $54 20 cents is still the price tag. what is different today that was not true just days ago when it did not seem like twitter was taking that seriously? ed: sources say that essentially
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after muscat disclosed that he had the committed financing, at least on the debt side, you have morgan stanley, bank of america, barclays committing to $25.5 billion of debt financing alongside other banks, and once that was put in place, according to sources, twitter's board confidence around this actually happening changed. the other piece of really adjusting reporting is that sources tell us musk continues to vet potential equity partners , the other $21 billion slice of this pie, which raises a lot of questions. who does he do this with? how much cash does he front himself? what does the final configuration of the deal look like? guy: stock still not at $54. it is at $50.57. why? ed: there are some out there who consider this a lowball offer. last year, twitter traded nero to $70, 75 dollars a share, and
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when elon musk was tweeting over the course of the last two weeks , the board had a fiduciary duty to take his offer, which was $54.20 a share, at a current premium to where the stock traded. the are their argument was the board has a fiduciary duty to get the best possible outcome for shareholders, which in many people's opinion was a higher offer price. kailey: to that point, could we see them shopping themselves out and potentially a higher price coming from someone else? ed: it is interesting. elon musk has reiterated, according to sources and reporting by "the wall street journal," that $54 20 since a share is the final offer. he has maintained that line all along, take it or leave it at this point. it is interesting to see what the specific terms of the deal would be because as always with a deal, sources are telling us is could be protracted, but it could also fall apart altogether. guy: that is probably why the
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merger arbitrage story has it at $50 still. there was this idea that this was something that other people might bid on. nobody else is bidding on it. do you think the board was waiting for somebody else to step in that has not appeared, and as a result of which, the argument kinda flips that the fiduciary duty is to get the best value for the business? ed: that is certainly the analysis of some sell side. i think what is interesting and why we want to know who musk's vetting and who he will ultimately partner with on the equity side of the deal is that some of the names, for example apollo, at the time, sources told us apollo could come in and combine with musk's bid, but they could also have gone straight to twitter and acted in their defense to ward off musk's bid, so his private equity so playing a role, or does musk go to other high net worth
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individuals, family offices, like-minded people and say get in on this bid if you believe in the changes i want to institute at twitter? guy: busy morning. it is going to be a long day. could be an interesting day. ed ludlow in sanford disco, thank you very much, indeed. coming, u.s. secretary of state and defense secretary going to ukraine for a late-night meeting with president zelenskyy. we will give you the highlights of that high-level meeting at one it means in terms of policy and action on the ground. that is next. this is bloomberg. ♪
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>> in terms of russia war aims, russia has already failed and ukraine has already succeeded because the principal aim that president putin brought to this, in his own words, was to fully subsume ukraine back into russia, to take away its sovereignty and independence, and that has not happened and clearly will not happen.
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guy: tony blinken, u.s. secretary of state, visiting this weekend ukraine's president zelenskyy. did so last night in kyiv. joining us now is bloomberg's annmarie hordern in washington. the defense secretary was there as well. we are going to see returning of diplomats and we are going to see more weapons. what are the implications of this trip? annmarie: first off, it was symbolic in the sense that we have not had was officials of this level go to ukraine and return to the capital to meet face-to-face with president volodymyr zelenskyy since the start of that war. we have had other officials, allies in europe, but not the united states, so this was very meaningful as president zelenskyy said, but then he said it was fruitful, and you mentioned two of the big takeaways, that the u.s. is going to be working on burning back their embassy to the capital and we are going to have u.s. diplomats coming back and ukraine starting next week, and the second piece of that is more financing and funding, military
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funding to 15 countries earmarked to kyiv, as well as 106 $5 million worth of ammunition -- $165 million worth of ammunition. this is where it is going to get difficult for ukraine because the geography is going to be to try to contain russia and push them back, but for russia, it is going to be much easier for them to try to maintain that stronghold because geographically it is obviously a much smaller space. kailey: talk to us about where else that aid is going because it is not just ukraine. it is a number of other countries. annmarie: there's a lot of aid that has been given to other countries, especially eastern urine cup -- eastern european countries that are trying to help with humanitarian aid and have been moving military aid into ukraine that now need to repurpose their own stockpiles. think of places like poland and slovakia which have moved some
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of their older soviet era military weapons and machinery into ukraine. potentially they need to now up their own. there is one take away from this meeting that really struck me from lloyd austen. he said we want to see russia weakened the degree that it can't do the kinds of things that it has done in invading ukraine. i think this is a nuance and how the united states sees this. this is potential he no longer just about ukraine, but we getting russia as well. -- but weakening russia as well. guy: could you see a situation where boris johnson, joe biden goes to ukraine? annmarie: i could see a situation like that if potentially it was maybe months down the line and the fighting was starting to quell a bit. you saw may be in smaller areas there was not as much of a potential threat the way there still is potential threat in kyiv.
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if you look at the twitter posting of official ukrainians, there was overnight across the entire country this weekend sirens to make sure people can take shelter. they are not going to send a u.s. president into a war zone where there is no u.s. military base when you have sirens going off for potential missile attacks or bomb threats. but potentially this is something down the line, but that is a question for the secret service. kailey: the secret service probably not eager to sign off on this one just yet. coming up, we will turn away from politics back to the markets and tech in particular. we will talk about twitter with one of the pioneers of the venture capital industry, primetime partners cofounder alan patrick off -- alan patricof. this is bloomberg. ♪ ♪
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kailey: we are an hour into the u.s. trading session. bloomberg's ritika gupta is
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tracking the moves. not the best start to the trading week, but at least we are off the lows. ritika: we do resume the selloff we had in u.s. equities that we had on friday, but this is a global story, is it a good look at the msci world index. this as the china sentiment is feeding through the story. will it weigh on the demand for commodities? you see oil trading below $100 a barrel, investors flocking to havens, so that treasury yield down from 11 basis points. let's stick on that demand story because it is affecting the commodities in a big way. you're seeing iron ore, aluminum down to the tune of 4.25% now. unsurprisingly, when you see some of those risky assets trading lower, bitcoin moving in tandem. let's look up the board and go back to the nasdaq because this is actually heading for its worst month going back to 2008. that is the height of the lehman brothers collapse.
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those lower yields today not helping it out. in this month, you only have about 18 of the stocks within the nasdaq that are moving higher, and we have a host of tech earnings on deck this week. will they be able to improve investors -- to prove investors wrong as we have seen this shift from growth to value? kailey: we have seen a lot of destruction in technology. at the very least we are now positive on the nasdaq 100, may be helped out by the fact that yields are moving lower. thank you so much to bloomberg's ritika gupta. bloomberg has also learned that twitter is on track to reach a deal with elon musk on that $43 billion takeover. it could happen as soon as today. going us to discuss is one of the pioneers of the venture capital industry, alan patricof, also cofounder of primetime partners. great to see you. what is your take on this elon musk/twitter saga? what if he actually succeeds in buying? alan: it is another example of what i consider this
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competitiveness problem going on in the whole world with facebook, google, and apple. now we are going to have another major company controlled by an individual, and it bothers me, frankly. whatever the price is and whether it gets done or not done , the idea of him having this kind of control over a major media outlet should be everybody's concern. it may be a free-form afterwards. who knows? he may just open it up without any rules or restrictions. you don't know what is going to come across. guy: there were some that were suggesting another large tech company could step in and be the white knight here. that has not happened, and i am assuming the reason, and of a bet or a micro -- and alphabet or a micro soft, is to get through regulators would be virtually impossible. i wonder whether we are starting
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to see a meaningful impact now every delivery pushback. they have not stepped in, and the reason they have not stepped in is they know that m&a is now virtually impossible, large-scale m&a is now virtually impossible in their businesses. is that a silver lining in your view? alan: i would not call it a silver lining. i think it would be almost impossible to have one of the major faang's or microsoft, one of the top six or seven. we should be very concerned with concentration. i have been concerned for a long time, even though i am a beneficiary and some of our smaller companies come about when you have google with 90% of the search volume, amazon with a high percentage they've got of retail trades, and now of course there's david cicilline's committee in the house and amy klobuchar and grassley who have
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just come out with their senate proposal, you've had the european proposal which a week ago, i think it is called the digital media or digital marketing act, which are all addressing that issue, and i would think it would be almost suicidal for a major company to try to buy twitter at this moment in time. i certainly would be very unhappy if it was considered to be happening. kailey: are we getting to these point where these tech companies are too big to fail? alan: i don't know about too big to fail. i think they are too big. we have too much concentration. i'm sure google knows you and i are sitting here talking right now. they probably even know what we are saying. i think it goes for a lot of other things. the data is critical, and the data is controlled by these limited number of companies. at the same time, it sorts the opportunities for single
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companies, young companies. you see my book on the screen, my new book just coming out next week. lots of small companies love to be bought by bigger companies, but i think we are better off as a society to see them grow and nurture. what if apple had sold out in the third or fourth year, which i am should it could have sold many times, and a lot of the others? but they stood against the wind and we now have major companies. i'm not against big companies. i'm just against concentration, and i'm not in favor of necessarily breaking these companies up, but i think we have to have some restrictions on what they do. the major competitive laws, the major mably laws were passed in 1890 and 1913, and they didn't even know what the internet was. kailey: it was a very different world. alan: we need new regulations to
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figure out how to deal with these companies. guy: is the book available on amazon? alan: thank you for asking. [laughter] it is available for preorder on amazon and has been. i gather it is trending well. guy: i guess my point is there aren't many other options, and the world we live in at the moment is one that is dominated by these companies. so my question is, as we go through into this next phase of higher inflation, as we are in this new phase of higher inflation, higher yields, what do thick of these companies' business models? they have been built in a time of globalization, low interest rates. as we enter a new period, do you think that these companies are built for that new period? do you think they are able to thrive in the same way they have done in a past in a world with slower growth, higher inflation, higher interest rates? alan: honestly, i don't think
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inflation and interest rates are the factors. i think the focus for most of these companies is advertising. if advertising slows down, and there seems to be indications that that is happening, i think snapchat made some comment about that recently, we are going to see a decline in the facebooks and the googles and amazon. i forget the exact number, amazon is now in advertising bemus. so they are all going to be affected by that. kailey: that is where netflix is turning to, potentially a way to keep growing now that its subscriber base is actually shrinking to some extent. is there a lesson to be learned more broadly from what we saw from netflix last week, the idea that maybe the peak is behind us already? alan: you saw cnn+ happening. there's an enormous
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proliferation. we both know what we did last night and how we searched. it is just overwhelming to figure out what you're going to watch. i think netflix is in that struggle. i think they will figure it out. there's advertising right now. i forget who. maybe it is hulu. there's advertising on several of the channels already. so you will be able to get it with and without, just like a lot of other services. i know a lot of podcasts will give you a sub and service without advertising or with. you don't pay less or nothing. guy: you can get your kindle with or without advertising as well. sorry to jump around, but time is short, and your views are really interesting. what do you thing about chinese tech, about the supply chain problems, things like lockdowns in beijing and shanghai?
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what impact do you think that will have on chinese tech? what impact do you think that will have on u.s. tech? alan: it's got to have a big impact. i got a nemo from the weekend from a young -- i got an email over the weekend from a young man who worked for me when he was getting out of columbia business school 10 or 15 years ago. he wrote me a long email about what it is like to be living in china, married with a young kid, and how he has not left his apartment in a months, and how food has to be delivered to the door. it has a tremendous impact. the factories have got to be slowed down dramatically. supply chain is not going to change overnight. china is going through a very difficult period, and as an american, or say a non-chinese come you've got to be concerned about investing in an area where you just don't know what the regulations will be tomorrow and what the economy is going to do.
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they slowed down for the first time in decades. kailey: on the subject of what tech you do and don't invest in, often when i ask about technology on the show and others, people tell me you need to differentiate between profitless tech and those that are quality growers, have the cash flow, etc. i know your book takes a look at your career in venture capital. i would love to take a look at how you different jade between companies that are worthy of investing in and the technology space and those that maybe are not. alan: you have to understand, i invest 100% in private companies. since a lot of them are a very early stage, i would say, i don't want to give a percentage, but it could be 80% or 90% don't make money. they are all equity financed. that is why i say inflation and interest rates don't have much effect when you are equity based. i don't see any cessation of investing in these young companies. we are in an entrepreneurial
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society, a risk-taking society that is permeating all over the world today. i remember 10 years ago trying to get my firm to invest in africa. now africa investments are interesting, and there's a whole startup community all over the world. india, of course, is a big startup area. so i think a lack of earnings is not going to affect it. when you go to the markets, i can't give you an opinion except to say i have always followed the policy that companies can sustain themselves ultimately in just shareholder continued investments, whether it is secondaries, following rounds. at some point, people say where are the emperor's new clothes. they want to see some kind of debt free cash flow ultimately,
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but we have been living in an iconic environment, a stock market environment for years that has forgotten about that. i was brought up on p/e ratios. kailey: you mean fundamentals? [laughter] alan: we are not going to be talking about pe again and not price times ebit. or price times revenues. it gets down to all to millie, this should be some return. no need to name the companies, but there are still some of our major tech companies that have started up in the last 10 years, 15 years, that still lose money, and investors are still giving them high valuations. what happens at one point or another is you have an air pocket, just like if you are on a plane and it drops 10,000 feet. it does not go down a little bit at a time. it drops. we could see that happen if
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people finally say where are the emperor's clothes, i am tired of supporting these companies that don't show profits and don't improve their bottom line. kailey: we have to leave it there, but great to get your perspective. that is alan petra off, primetime partners cofounder -- alan patricof, primetime partners cofounder and author of "no red lights." we will talk with joe walsh -- joe wall of goldman sachs next. this is bloomberg. ♪
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kailey: small business owners say it is getting rough out there. a new survey from goldman sachs
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found that inflation, supply chain issues, and workforce challenges are having a negative impact on small businesses. joining us now is joe wall, goldman sachs national director of 10,000 small businesses voices. right to speak with you. 91% of small business owners say broader economic trends are having a negative impact on their business. that is the vast majority. which issue, inflation, labor, is the greatest for them? joe: thank you for having me on this morning, we have done now 12 surveys dating back over the last two years of our small business community. we started at the beginning of the pandemic and have seen sort of the roller coaster that has occurred over the last two years your get our most recent survey in january acutely spotted that inflation supply chain issues and workforce challenges were obviously weighing on small business owners to a significant degree. our survey we are releasing this morning asked the question,
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compared with january, have things gotten better, worse, or are they the same. what we found on impatient is that 80% is more business owners say in place in our pressures on their business have intensified. but we found on workforce is that 88% say it is either worse or the same, and on supply chain, 80% say it is worse or the same. so the key militant impact of that has really painted a picture that is indicating that the economic conditions for the small business community have gone from bad to worse just in the last three months, and i would add in the new variable is that energy prices are having also a real negative implication for business owners across all industries. we sorted it by sector. there was not really a discrepancy from the construction industries to retail industries or even services. we often lose sight of the fact that those energy prices also way on employees who are just trying to commute to work and perhaps picking up their kids from school.
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guy: you have titled the new report from bad to worse. my question to you is how do we go from worst to bad? how do we start to turn some of these things around? joe: some of the more macroeconomic conditions are obviously complicated, to say the least. the federal reserve is very mindfully watching them and indicated based on their commentary. they are likely to raise rates again in may. supply chain issues, i think one thing that the small business community feels like could be acing and resource is creating a more durable domestic supply chain, which i think is something that over time, we have lost sight of, and that has become quite apparent not only with the war in ukraine, but also obviously a growing, complicated relationship with china. so as we think about the modern supply chains that fuel the
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u.s., i think small business owners feel like they want to have a key role to play in ensuring that we have durable supplies. kailey: we have talked about how the costs these businesses are facing are going up on the supply side, on the energy side. what are they telling you about their success in passing those costs on and raising prices to offset that? joe: for a lot of them, what we saw this survey is that the inflationary dynamics are obviously having a significant impact on labor related issues. so 2/3 of businesses say they have raised wages to hold onto their employees or get about 6% have raised wages to recruit new employees, and about 60% say they have had to raise their prices as a result of the inflation dynamics right now. so obviously the tail impact of inflation is being felt not only across the labor side of small businesses, but also when it
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comes to the cost of goods and services. guy: is this a global phenomenon? how does the u.s. compare with europe? joe: our survey sample was just the u.s., so i can't speak for our small business owners in london, paris, but i would say it is quite clear based on the economic conditions around the world that these data points are probably not dissimilar to what you are seeing in europe. kailey: obviously we are talking about existing businesses here, but in the environment you are describing, especially one in which the fed is tightening and borrowing costs are going to go higher, what does that mean for new business formation >> -- new business formation? joe: that is only going to make the access to capital a more can challenge for small business owners, and that is obviously something that we readily see in our data as well. the reality is her most existing small business owners on the
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capital side is because of their financial statement from 2020 in 2021, they obviously are having a difficult time seeking traditional financing, so for a lot of them they are still relying on the covid era loan programs that for a lot of them were really a godsend in terms of making sure that they had access to flexible and dynamic capital that they could deploy, whether it was to pivot their business or to simply keep their business up and running during what has been a very dynamic and totally unpredictable climate over the last two years. guy: in terms of how this new environment is going to shape policy going forward, how should the government be thinking? they are relying on covid era policy to do with the new environment they are facing. what does government need to do? how does policy need to be tailored to better suit the new environment versus the covid era environment?
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i know we are talking about it with relation to china, but it feels like a distant memory in some ways relatives the experience we are having now. joe: in the u.s., believe it or not, the small business administration has not been reauthorized by congress in over 22 years. 2000 was the last time that congress reauthorized it, and by reauthorizing, and layman terms, congress usually every few years looks at government agencies and re-examines the programs, sees if they are working or not, seizes there's new programs they can perhaps incorporate to catch up to the modern small business. in 22 years that has not been looked at, so our chief objective this year is to build momentum for congress to reauthorize the sba and really tailor programs that meet the needs of today's small business, not the small businesses from 22 years ago. guy: it is great to catch up. it is fantastic the work you do. fantastic to get the insight to
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what is happening in this community. joe wall, goldman sachs national director of the 10,000 small business business voices. this is bloomberg. ♪
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guy: not much of a macron bounce here in europe. euro-dollar earlier with a 1.06 handle. now with a 1.07 handle. up next, the european close. christine verger is going to be joining us to talk about that election. ♪
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guy: not much of a macron bounce. the cac underperforms. the countdown to the close
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starts right 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, the price action looks like this. european stocks down hard. we did not get the macron bounce, but in some ways the election victory was priced in. we will talk about that more any moment. is this the china effect we are seeing represented across europe? some of the nordic markets down more, but the stoxx 600 down by 1.70%. euro-dollar with a 1.06 a little earlier on. we've got a 1.07 handle now. down by 0.8%. there is certainly a bid in the bond market all the way across europe, all the way across the curves. the french 10 year catching a significant bid

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