tv Bloomberg Markets Bloomberg May 30, 2023 1:30pm-2:00pm EDT
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>> i'm john heilemann with the first word news. gearing up lobbying campaigns to avert a u.s. debt default. they expressed confidence it would muster the necessary votes. the house rules committee is meeting on the bill today. the final houseboat, on wednesday. -- house vote, on wednesday. [indiscernible] hard-line republican lawmakers are threatening to exact rebate for the debt deal with one conservative saying he plans to press mccarthy's ouster.
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and bishop of north carolina told reporters today he plans to trigger the formal process to remove the speaker. he declined to answer questions on whether he would stick to mount his challenges. elon musk joined apple's tim cook and other technology company bosses and emphasizing the importance of maintaining ties with china. musk met with china's foreign minister in beijing today. he said the interest of china and the u.s. are intertwined. and tesla opposes decoupling and is willing to expand in the country. global news, 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i'm john hyland. this is bloomberg. ♪ >> let's get a quick check of
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what's going on in the markets right now. we do see the s&p 500 down about a quarter of a percent, even after the weekend agreement on the debt ceiling. the u.s. 10 year yield, coming down as well. off by 10 basis points at 36904. the dollar index, really little changed at 1245. nymex crude coming down 344 to under $70 a barrel, trading at $69.23. >> energy stocks under pressure. of the 11 subgroups, you've only got three that are positive territory. to your point about tech, that is helping at the very least keep us closer to the flatline. the nvidia story still getting attention,, the stock off its highs, still joining the $3 trillion club. we will talk a little bit more about that coming up. we just heard about elon musk's trip to china.
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the big goals for the company on how many electric vehicles it sells this year. china becomes a key part of that story. investors watching that one. shares of about 2.5%. last week, ford tapped into tesla's supercharger network. jeffries is pretty encouraged about what it is seeing on the execution front of the company. shares are up about 4%. anheuser-busch under pressure. new data suggesting that there is notable softness in bud light sales, as a company continues to figure out its marketing plans going forward. >> all right. interesting move there in ab shares. even as president but and speaker mccarthy actively lobby for votes on the deal, many believe the worst of this process is behind this. >> everything i'm seeing come out of this negotiation gives me a source of optimism and thankfulness that we are going
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to get past this. >> i think the clown show is over. i think there's a 100% chance this passes next week and we are done with this for the time being. >> this deal is pretty good. it's not great. it's not perfect. but no deal ever is. i'm very satisfied with it. >> i think global financial markets and economic watchers more broadly will be breathing a big sigh of relief. >> we have seen some of that relief playing out in different parts of the market. katie greifeld joins us now for today's set up to explain. >> there are clear winners that have emerged in this early market action. let's look at the treasury bull market. that's been the most obvious effect of that pyramid -- effect of that. i want to talk about the pink line. that was a bill maturing on june 1. that bill yield had reached 7% less than one week ago. right now it is looking at
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4.5%. a really huge rally in some of those treasury bills. a relief rally, if you will. that is the treasury paper market. let's look at the equity market. you have so far i up -- sofi up at the top. this deal would put an end to the pause on student loan payments. they see that as a positive for sofi since some of those loans would be refinanced. you can see the stock market agrees. this is an interesting one. h&r block and intuit, part of the deal would reduce new funding for the irs. that reduces the likelihood that the irs might create their own e-file competitor. intuit, dealing with some issues of its own, down 1.7%. there was specific language
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included in the deal that would expedite the approval of the mountain valley pipeline pyramid echo trends is the lead developer on that pipeline. -- equitrans is the lead developer on that pipeline come up a point -- up 33% right now. matt: i want to quickly break some news here. we see goldman sachs preparing another round of layoffs, according to the wall street journal. journal says these cuts could impact managing directors at goldman sachs. although the layoffs are going to affect fewer than 250 jobs. the managing directors and senior executives could be hit according to the wall street journal. let's get back to our regularly scheduled programming. let's bring in the btig director of policy research. isaac, thank you for joining us on this debt ceiling agreement
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that the president and speaker mccarthy hashed out over the weekend. what is the likelihood that it goes through the house and the senate? are there strong objections? >> i think it's fair to say that our national nightmare is almost over for the time being until 2025. i am highly confident that this package is going to make its way through the house by the end of the day tomorrow, through the senate by the end of the weekend. and get signed by the president before the june 5 date. >> katie was walking us through some of your findings, but perhaps winners so to speak of getting to the finish line here, can you walk us through that analysis? >> the biggest winners we are not going to have to worry about until 2025, we can now remove this from the equation for investors and start to focus on the plethora of other things that are in the markets' eyes right now.
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number two, it is worth highlighting the defense sector won again. they are a top line their top line budget numbers going to go up about 3% next year. that is a theme you can always return to in times of political uncertainty. beyond that, the act which rends mountain valley pipeline is something we have been watching for a while because that is something that is exceedingly important to one person. the student loan because ending is something that's been going back and forth in d.c. and of investor concern in part because there is a belief the supreme court is going to rule against the biden administration's debt cancellation plan as early as next month. at that point, the biden administration will be put to a
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decision. that decision is, julie let the payments go -- do they let the payments restart in september or do they try to little moves outside of it? where payments will restart but there will be no penalties for not paying. to that point, -- >> to that point, you noted in the research the student loan saga is far from over. given the factors you have laid out, sofi's rally right now, is that her current to you that maybe this is not as clear-cut as a winner as the market thinks it is today? >> my sense of this is, it is a headline positive for sofi, because they have been waiting for a return to payments because they want student loan refis. that is a clear part of that story. then you've got a peel back -- you've got to peel back the
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onion a bit and see, will we reas massive tidal wave of student loan refi's? that is the part that i am not sold on. you have seen interest rates move higher. the benefit is no longer as clear. furthermore, i think there's a real argument for folks to stay in their federal loans, just from a fundamental perspective. you have the potential of future government action. which will only impact federal student loans. and there are a number of programs in place, things like income driven repayment, that have real positive outcomes for borrowers. i think it is positive from a headline perspective. we can move past the student loan moratorium story of the last three years but there's not going to be a massive tidal wave of refi's. >> you laid out some of the clear winners here from an equity perspective. do you see any clear losers potentially stemming from this deal? >> i think number one, if we are looking for losers, the one item
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that was left out that surprised me the most was that we did not see broader energy permitting reform. it can take as much as four years to get a project [indiscernible] based on 2018 data. there is bipartisan effort to narrow and reduce that timeline. that was not included. we got some marginal changes that will help a bit but they are not seismic. the other lesson to keep in mind is, those queen energy tax credits that were in the ira bill last year, they are not getting changed. there was an effort, there was discussion, but it was not in the final bill and i think that is something you should underscore because they are not going away. matt: thanks very much. i appreciate getting your research in my inbox every day. thanks very much for that. and thanks to katie greifeld as well for taking us to that interview. a bloomberg tv programming note --
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how can referees -- hakeem jeffries will join us live, talking about the debt ceiling deal, that interview at 5 p.m. wall street time, it is one you don't want to miss. coming up, what is next for nvidia after entering the trillion dollar club. it is there, folks, and some analysts think it can go much higher. this is bloomberg. ♪
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start for free at godaddy.com ♪ (upbeat music) ♪ ( ♪♪ ) ( ♪♪ ) ( ♪♪ ) -awww. -awww. -awww. -nope. ( ♪♪ ) constant contact delivers the marketing tools your small business needs to keep up, excel, and grow. constant contact. helping the small stand tall. >> time for our stock of the hour. let's talk nvidia. the company's market cap, getting to a trillion dollars for the first time before pulling back. you asked before the break, are people willing to pay up for
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a stock that is already up 175%? looks like analyst on average think -- analysts on average think the shares could climb a little more. the company is expected to generate about $40 billion in revenue this fiscal year, $50 billion next year. >> absolutely. after what we heard from the ceo of to -- see over the weekend, there are a lot of things that not only could they do with ai but that they are going to do with ai. it is not what they hope. they are actually selling chips that people use for generative learning. whatever that means. in any case, we do see the stock holding back a little bit from the trillion dollar mark. right now trading at about 995 billion dollars in market cap. it did hit and surpassed the mark earlier. i've seen one analyst who says he thinks it could climb another 60% from here.
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$1.6 trillion valuation. if you take a look at other companies that have hit the mark and what they have done after that, the pool is just not very big. some of them have had great momentum in the short term. that is what it took to get there. they have not gone too far after that. there are only very few of them to choose from. coming up, citigroup's co-head of banking joins us on the state of financing and the next fed rate hike this summer. this is bloomberg. ♪
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layoffs we have seen in less than a year. possibly impacting the managing directors and senior executives. one of the considerations is according to that reporting, how that impacts the workforce is something to be watching. we want to talk more about the wall street landscape right now. there's a lot to talk about including on the debt ceiling front. sonali basak joins us now, as well as tyler dixon, citigroup's co-head of banking capital markets and advisory. i guess we will start, tyler, with the general state of affairs on wall street right now and what you are seeing in front of you. >> naturally, the ceo's we have talked to have been cautious given the economic backdrop and specific issues like the debt ceiling. we are carefully optimistic about progress that was made over this weekend and more work that needs to be done in order to settle markets down and rationality to prevail. as we look to the second half of the year, we are cautiously
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optimistic activity will pick up on the back of that confidence. matt: we have been hearing, and sonali has been talking about this massive avalanche of issuance we can see from treasury. the concern is we see a trillion dollars in t-bills the next three months that could hit liquidity hard. do you feel that? are you worried about that? >> we are watching that. we are looking at all contingencies for whatever the economic backdrop is that presents itself, we could see a hard landing, but when we work our way through it, we are setting to see green chutes or signs that we will see a goldilocks dynamic. as we really look forward and looked towards what we think can be more -- can be a more optimistic picture, the potential for the activity levels to happen in the second half of the year gets us a bit more excited than we were going into the end of the first quarter. >> even if things come back, do they come back to where they were before things started to go
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south? you kind of see that picture showing up in the layoffs, now at multiple banks, twice, three times in certain places. >> i think the banks are doing what they should in order to right size their teams for the complicate environment we are in. citi has mentioned publicly we want to right size the opportunity set against what we see. we've got an outstanding pipeline. citi's model is a universal integrated model so that we can help with corporate banking and investment banking and capital markets and advisory. given the diversity of opportunities, we are actually seeing some of our clients be quite active. if you think of large multinational corporate it's doing a lot to manage the risk, doing a lot in the investment grade market like debt issuance, we have started to see green shoots and leverage finance. we think activity could start to present itself. we have evincing the equity capital markets come back to life. i think the thing that it's
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-- that excites me most is we are getting to a point where some of the conservatives and we have seen an m&a could not produce action. if you look at the activity, the first quarter was quite quiet. if you look at the second quarter of activity for m&a, we have seen a big increase. we are now at the trillion dollar mark of announced m&a pyramid that is in line with averages over a longer cycle. not nearly as good as the peak activities we have seen recently. but we think that is a start. >> those are the green shoots. not to mention some of the risks still under the surface. there's a question of whether we will see more of these banking issues resurface after a wave of failures we saw earlier. is there a sense at citigroup that this could be a reality? >> we have to be prepared for all eventualities. we feel great at citi we are one of america's most well-capitalized banks and we think the actions that have been taken have stabilized the market opportunity. as we look forward, obviously there's more work to do, but i think our view is, again, progress will prevail. it won't be perfect.
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and there will possibly be additional bank closures. we are hopeful that the balancing act continues. >> there's a sense that consolidation could be possible. you have citigroup that was working on another investment bank deal. mizou's deal. . what does that say for more consolidation? >> obviously there are a lot of changes in the marketplace. when you look at the winning banks, those banks are the universal banks right now. business is cyclical. you are also seeing changes in the competitive landscape not only in the domestic market with the regional banks having their own issues, but also international banks that compete for investment banking activities. i think citibank, and our position, we feel like we have a unique opportunity to differentiate our brand and capabilities in this environment and we intend to do so. matt: one of the things we have to ask about his headcount. we saw the wall street journal
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story on goldman sachs. a number of banks have been -- even if it is tactical, reducing headcount and cutting costs. what are you doing right now? we have been looking at this in the past. >> we have been active. we are looking at our business, supporting those businesses having strengths. in the banking arena, investing in commercial banking, protecting corporate banking, with the wallet deterioration in investment banking, we have been careful to continuously right size the business. we see this as an opportunity for citi when there's a specific opportunity for us to add talent, where we have gaps, we are doing that as well. we will be careful looking at the cycle, and the cycle outlook is not perfect right now, but our view is we want to be positioned on the others this downturn to capture the true benefit of the upturn. >> before we let you go, we were mentioning elon musk making the trip to china. that market -- the market is trying to figure out this year
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how the chinese market fits into the overall economic outlook. >> i promised to come back. i'm headed out to asia in about a week or so. i will get my own hands on the view of things. but we clearly have seen the china economy standout as one of the engines of growth. or at least confidence of growth over the long run. they have their own series of issues they are looking at. we live in a complicated world where geopolitics and the influence of separating economies as front of mind with a lot of our clients -- is front of mind with a lot of our clients. we are a global bank. we want chinese companies moving into the international markets and international companies doing what they want to do with china and that is what we are excited about. but we would say we feel some optimism from those of the citi team that have been in china and that is why i am on my way there next week. >> we will hold you to that promise. we want you back in the studio. tyler dixon, citigroup's cohead of banking capital markets and advisory. sonali basak, a star reporter on
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wall street. thanks for joining us. this is bloomberg. ♪ thanks to avalara, we can calculate sales tax automatically. avalarahhhhhh what if tax rates change? ahhhhhh filing sales tax returns? ahhhhhh business license guidance? ahhhhhh -cross-border sales? -ahhhhhh -item classification? -ahhhhhh does it connect with acc...? ahhhhhh ahhhhhh ahhhhhh ♪ ♪
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romaine: the promise of ai, the reality of stretch valuations. romaine bostick here kicking off to the close. a risk on by out of the holiday weekend but reality sitting in within the first 30 minutes of trading. the nasdaq 100 deep in overbought territory. demand for oil pitching wti futures below 70 and that 11 day selloff we had an to year treasuries seeming an event now.
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