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tv   Bloomberg Markets European Open  Bloomberg  January 4, 2022 3:00am-4:00am EST

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the cart el set for another boost of output. we'll talk to the head of research at energy aspects. francine: i have to say we're looking at all over the bank notes, looking at 2022. it seems like the themes are inflation and what's happening in china. 2022 could be far more challenging in terms of investments because of the fed hikes. tom: absolutely. banks closed for a bank holiday yesterday. weighing what's happening with omicron. there is an argument that investors are starting to look through that, fading that risk as the data suggest that severity is less than other variants. that is being shoard up even as you get a million cases recorded in the u.s. gains now across the cac. the spanish ibex is posting
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gains 6 gains on the ftse 100. we're talking energy as well in terms of opec plus. we'll dig into that story. in terms of the fed, you get those three rate hikes in 2022. we will look at how things for other assets. gains of two twenties on the u.s. futures. the yield and the treasury story. 1.26 crossing 1.6 yet. what is the pay point for stocks then in terms of these yields? 2%? 2.5%? the yen under pressure as part of this risk off move. crude again as i said in focus given that we have the opec plus meeting later. gaining .8%. the consensus is you're going to get additional output from opec
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plus. we'll dig into that story and get analysis. francine: that is filtering through some of the biggest sectors on the move. gas prices gaining some 22% in the last couple of minutes. one of the biggest gains we have seen on the week in the last year or so. china, healthcare firms, having declines. cutting short-term cash to the markets. the not really filtering through a lot of the european sectors overall be we see healthcare staples, raw materials still gaining not by huge amounts but it is nice to see this green especially after we had closures on some of the european markets because of the bank holiday. i'm thinking of the ftse. tom: catching up with some of the against a we saw yesterday across the european space for u.k. after that bank holiday.
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we're focusing on a couple of stories. credit suisse cutting the head downtown in new york. the fallout continues for the swiss lender. b.p., the energy space focus in light of what's happening with opec plus, gaining 3%. 2.8%. oil prices in the past two days have been rising as a result of this. let's get the bloomberg business flash with laura wright. >> david mccormick steps out to explore a potential senate run. has been deputy c.e.o. since february. credits suisse says it is laying off 69 flows new york.
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according to a company filing, the job cut also take place in march. the move comes in the wake of the -- which cost credit suisse 5.5 billion dollars in losses. verizon as agreed to a two week delay in a dediplomacy they vowed a day earlier to law firm this week. that was in defiance. they feared the 5g signals might interfere with aircraft posing a safety risk. the company is warning the device is running on the legacy operating systems will no longer be able to send a text message.
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that's bloomberg business flash. tom? francine? francine: let's get into some of the key movers that are key market driverses. we focus on stocks after we saw a huge move in yields yesterday. >> i think the big question now is as you start trading in ernest in 2022 is exactly what tom said earlier. where is the pain point for stocks here especially since we're seeing yields on the move once again. we're at 1.6% at the moment but i think there are already some bet in the market building for 1.5% by february. is that going to be too painful and will it dent some of the earlier market gains we're seeing? i think it is still too early to say. i think it is very odd juxtaposition for sure that
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we're seeing record gains in the s&p 500 just as u.s. cases hit record highs. questions stillsurrounding overe implications of cases as far as lockdowns are concerned. there is definitely something investors are going to be watching out for. the fact that we're seeing stocks, 2022 very much on strong footing here. francine: there is quite a lot of bankers -- it is going to be more difficult to get through 2022 given some of the gains we saw in 2021. >> the yen is very interesting. you can take it as a sign of at least the fact that markets are willing to look through some of the omicron risks and willing to hold on the the optimism we're startinging with year with.
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it is a question of how long this can go. there are so many questions of mention the the market. we'll have to take a look at the direction of the dollar the expect saying that the dollar will be stronger this year. on expectations of more ned fed tie itening. tom: pretty significant moves in terms of some of the corporates. apple and tesla. apple breaking through the $3 trillion. tesla adding $144 billion to its market cap after those deliveries? >> absolutely, tom. that spooks once again to really a lot of optd mitchell that we're starting this year with. of course there are questions once again as to whether the gains are very much limited to big tech, right? and so heading into 2022, the questions of course are whether
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these gains become more broad based within the equity market. europe has a lot of sectors that are more value oriented rather than growth oriented. are those gains dissh that optimism that we're seeing in big tech going finally spread across the rest of the equity markets for a healthier more broad based gain for this year? francine: a massive shoutout to our sam potter. what wall street expects in 2022. bankers are worried about inflation but what they could be worried more about is china expectations. how do you see the next couple of weeks playing out? >> i think that is going to be an interesting source of divergence. china is pivoting to more easing this year. just as some of the big central banks are moving to tightening. when you have the world's second largest economy pivoting to
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easing and starting to show worries about growth, that is gong to be very significant and it could be a risk factor for some of the expectation sphrs wall street this year. tom: all to have things that we should be watching in these markets. coming up, the views from a global market strategist. what it means for markets in 2022. that is next. this is bloomberg.
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francine: welcome back to the open, everyone. we're 11 minutes into the european trading day. you can
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is it going to be overall more difficult to ip vest as volatility getss volatility gets underway? >> volatility is >> volatility going to beis high. we don't need to worry too much about omicron. deaths are not rising. hospitalizations, in europe and the u.s. is rising pretty sharply now. the u.k. iu cases are not rising so much. we don't need to worry too much about omicron justust yet. tom: maybe complacency around
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omicron. what does it signal to you and where is the pain point do you think in terms of yields and the impact on equities? >> i think equity markets -- 10-year treasury yield, 2%, 2.5% without too much trouble. if we got the 2.5% in a matter of days, some of the more expensivee expensive stocks hit the more defensive stocks as well. but i don't think you're going to see a're going to see a very rapid bond yield. if if omicron turns out not to be a problem, the bond yields would gradually move gradually move higher and the earnings would offset that. the bigger risk is people being complacent about omicron's impact on the economy. francine: whatfrancine: wh moree
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difficult? china? c orhina inflation? >> i think the timing on inflation is very hard to say. there is a question mark around how long the supply disruptions are going tosruptions remain ininare going to place. how long it is going to take for inflation too inflation to fade. if omicron is not a problem, which is a big if, iff, if omicn turns outs not to be as big a problem, then the labor markets look very tight, particularly here in the u.k. and also in the u.s that could he'suld he's to more sustained wage pressures. and people expecting higher core inflation over the next fewr thw years. the key point there is i don't really view that as a problem for the equity market. if that causes interest rates to go up quicker than expected, then i think the economy as a whole both in the u.s. and u.k.
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is not exposedded to higher interest rates. back in 2007, about07, about 20f mortgages were -- a deductibleae rate in the u.s today only about 5%. i think the economies are much less sensitive to higher interest rates today than they were were in the past. tom: just to through a you out on the questionuestion of china. do you see a relative underperformance of chinese equities last year -- has china had enough exposure there? >> the big risk is omicron. if their zero covid policy doesn't work against much againe infectious variant, that could cause problems for china. probl. if omicron turns out not to be a big problem, i think there is enough -- with the easing that
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we're seeing,ette should be a pretty big year this year. it all comes down to omicron. if omicron is a problem, i think the markets are a little complacent. if not, they look pretty good. francine: what are the chances of the fed tapering without marketet tantrums? >> i don't think taip tapering is going to be be a big problem. it might be some of the expensive tech stocks asas expensive stocks as thought that it would be beneficial for things like financial stocks and some of ste cyclical valued stocks that tend to benefit a rising bond yield environment. you may want to be selective within that. i don't think it isnk it is goie a major problem. tom: just briefly, you talked about the the reallitive resilie
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of households and corporates to a higher rate environment. what about household balance sheets.ets. do they stay relatively strong? doesoes household consumption st to be eroded this year? >> we still start 2022 in a pretty good place. looking at the good place. looking at the u.s savings are still significantlyy higher than they were prepandemic. consumers still have money left to spend. the other thing is even if omicron proves to be a problem, that tends to mean people are indoors and they save money and delay the spending rather than necessarily that it doesn't happen at all. maybe that's what markets are focusing on at the moment. household balance sheets going into this year looking to be in a prettyretty strong place althh
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not as strong as they were back in april of last year. francine: thank you so much. do you have a new year's resolution? mine is to stopo stop mistypings for my team but it only starts in february. i'm lookingoking for inspiration what is on your list? >> my new year's resolution is to get out a little bit more with my wife. we have a 1-year-old baby and we have not been able to get out much over the last year. francine: i love that. that is a good new years resolution. i'm going to put tom on the spot in a few a few moments as well. you're the kind of man, tom, that would have really good resolution. don't disappoints. tom: my resolution is not to have resolutions. i never meet them. that is my resolution. don't makesolution. don't make any. francine: there you go. that's the money resolution. coming up, the u.s.s. recorded 1 million new cases of coronavirus on monday. we'll talk covid next.
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this talk covid next is. this bloomberg. ♪
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>> we're going to see demand falling. you have to do something to control the leverage. not to have a huge volatility.
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i think the really long-term goal is to manage that. tom: that was goldman sach's chief economist on what the goal is for policy makers in the chinese policy sentiment. the evergrand story is far from over. it was confirmed they have been told to pull down a number of their properties on an island, a holiday destination for many, something like 30-plus buildings. that was a reminer that officials are not going soft on this company. they are not giving up this squeeze on evergrande. francine: january 4, 2022. sometimes it feels like they have blinkers on. so much tapering that the fed does they forget about the slowdown that we could see from chinese policy makers. we'll keep an eye on evergrande.
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this is the perfect show to tune in to for all analysis on china. onto the latest on omicron. news that more than 1 million people in the u.s. were diagnosed with covid-19 on mono. the highest record by any country in a single day by a large margin. joining us to talk about this is rachel chang. we have a lot -- many, many case numbers but it doesn't necessarily translate with people going into hospital. if it displaces the delta variant, can omicron be an encouraging thing in the pandemic? >> i think that is the biggest question now and what everybody is waiting to see. we know that omicron is diving a surge like never seen before. just last week cases were about half a million a day. you have seen that double basically every week. to be honest, those numbers are probably far underestimated. even a million a day is lower than what is actually going on in the u.s a lot of people are using rapid
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tests at home and are not being called by officials. the real number is millions, probably millions. the same thing happening around the world. the question is we know hospitalizations and deaths lags case numbers by two weeks to a month. will the death toll pick up in the same way or will it decline as we have seen in south africa? tom: absolutely, rachel. what are we seeing in testimoniesor disruptions? the impact on airlines in the u.s is it more broad than that in terms over the impact of omicron? >> we have seen lort destruction. china and hong kong are insistants of maintaining covid zero. lockdowns. people complaining about food shortages. the scene is like what happened two years ago. very much trapped in the cycle. at the same time in the u.s., people have been saying should
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there be greater measurements taken? the u.s. government has been quite clear. we have these vaccines. people should get vaccinated and boosted to present themselves. otherwise we need to get back to normal and people need to live their lives. it is very much moving forward and not turning back to the lockdowns of last year or two years ago. francine: goldman sachs thinks china will keep the border closed for the year. do we see this zero tolerance on covid? >> china's position has really just become even more isolated over the year with omicron so infectious, literally no one believes they can really keep it out. what the problem really is, the system of maintaining zero infections and the facts the vaccines are not as effective against the variant.
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when it gets in, that is going to race through. it is going to be -- tom: thank you for that update. plenty more coming ahead including what is going to happen at opec plus. this is bloomberg. ♪
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francine: welcome back to the open. 30 minutes into the european trading day. the u.s. hits a record one million virus cases in a single day, the most any country has reported since the pandemic victim. i want sing act. opec-plus meets today. and a trial that has gripped
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america and the world. elizabeth holmes is convicted of defrauding theranos investors. looking at the markets, we had a big move in treasuries but equities were really supported today. tom: another rally stateside. is there complacency in the market regarding omicron? gains of 0.5% in the first 30 minutes. the cac and the dax with gains. gains of more than 1% for the ftse 100. when we switch it to the sectors, we see what is driving the price action. omicron is a factor or relief around it even with the warning about complacency from our previous guest. travel and leisure gaining 3%. studies showing this is a less severe variant but as rachel
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cheng says, we need to work out the impacts on health and services around the real. impacting travel and leisure stateside is significant. in terms of the sectors in the red, chemicals and health care. energy is up 1.7 percent. focusing on the energy companies in light of what is happening with opec-plus. digging into that in the next few seconds. francine: and a passing memory for the blackberry that dies today. we were sorry to see it go. devices running on the original operating system will no longer be supported after today. it's go straight to opec. reviving more oil production. they will meet her today. this will have an impact on prices. this is after giving a tighter outlook in terms of global markets. they are on track to go with
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400,000 barrels a day. happy new year, amrita sen. a lot of focus on opec-plus. what are you expecting them to decide? amrita: opec-plus should carry on with the planned 400,000 barrels a day. that has been on the cards for a while especially after the data suggesting omicron or is milder. the demand is not taking as big a hit as some fear it. that will be the biggest change versus the december meeting. that should give them a lot of our assurance to go ahead with their planned increases. tom: no concern that the market can absorb this particularly when we look at the airlines? amrita: the thing is, even if they add 400,000 barrels a day in terms of quota increases, the
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actual barrels coming to market is much less. in january, we only expected 130,000 but they offered 400,000. every country outside the core middle eastern group is underperforming particu west africa. nigeria, underperformance because of underinvestment. saudi arabia knows this in particular. the headline number is 400 but what is coming to the market is half of that. maybe even less. that is an important point to reiterate. you are not seeing 400 to the market. francine: we have a great chart. it is true they often promised something and don't deliver. we have seen that from the day opec started. overall, how difficult is it to forecast how much demand for oil
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there will be from china? amrita: right now, it is very tricky because china is embarking on a slightly longer term policy which has been reducing emissions or energy intensity. that has included key energy sector such as refining. we are seeing china -- we are not seeing china give out export quotas. usually, you should have those quotas announced before the end of the year and we still don't have those numbers. it is difficult for refineries to plan. you must take demand is fine but china is a big products exporter. they don't have product export quotas. i would say this is a paradox shift in the market. it means other countries like india and korea will have to run more because ultimately, as demand picks up, someone will
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have to service that. tom: when it comes to the question of iran, some modest progress in terms of negotiations with vienna. is it too early to start factoring in iranian oil? amrita: it is still a long way from that. we have iranian barrels coming back from september. away the talks are progressing, iran is dragging its feet and even negotiators from the west, the rhetoric has gotten more strict or the headlines we are seeing. talks are going to take some time. yes, to be honest, in our view, a lot of concession needs to be made. there has been some progress but it is not going nearly as smoothly as even the west was hoping for. francine: what do you do with gas prices right now?
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russia is shipping less gas then at the start of the year. new prices just go higher? how much pressure --do prices just go higher? amrita: gas has been a yo-yo. there is a great chart going around where it was like a christmas tree. it went up and came back down. we are bullish on european gas prices. the winter has not been particularly cold in europe but it is just the start of january. and it is to do with russian supplies and ultimately, we are seeing and we have been saying this for some time, that prices will have to go up because we need to refill storage which are at very low levels. with gas prices where they are -- saudi arabia once oil out of the limelight and i think they will get that. compared to gas, not just
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volatility but levels. tom: $79 a barrel, a sweet spot for opec-plus. what is your forecast? amrita: we have been forecasting $85 for some time. mostly predicated on the fact that we will be coming out of covid and demand will be slower but in the second half, it should be stronger but it is mainly to do with the supply side. underinvestment. spare capacity. we just don't have this be a capacity. look at russia, despite rising quotas, production was flat month on month in december. that tells you a lot. as demand rises, supply will be able to keep up with it which means higher prices heading well into the 90's by year end. francine: let's get straight to the bloomberg first word news
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with laura wright. laura: you i.e. -- uae set to be placed on a list. uae is taking the gray list very seriously. it would be a significant step. elizabeth holmes has been found guilty of criminal fraud over the collapse of her $9 million -- $9 billion blood testing company. she was convicted on four counts of the 11 she was charged with and now faces up to 20 years and. she is expected to appeal. the white house is likely to nominate jefferson for the board of governors. he would be just the fourth
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black man to hold the position in the history of the organization. he is an economics professor at davidson college in north carolina and has worked at the fed twice before. the new york attorney general has subpoenaed ivanka trump and donald trump, jr. the attorney general, letitia james is examining what the former president's real estate business manipulated the value of key assets for tax and insurance purposes. donald trump sued james last month saying the investigation is politically motivated. 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. this is bloomberg. tom? tom: coming up, could bitcoin hit $100,000? or will the fed taper take some for out of crypto? we look at the prospects of bitcoin. this is bloomberg.
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♪. ♪
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francine: welcome back to the open. 43 minutes into the trading day. look at the equity moves, nicely supported the ftse here in the u.k. gaining some one point 2%. the big story is apple and
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tesla. they had a good start to the year. tesla delivered more than analysts were expecting. i think elon musk's fortune went up by $30 billion. and apple hitting the $3 trillion mark. tom: it is remarkable. what happened to the semiconductor supply chain worries? they are still there but these companies are successfully navigating them. tesla, context is important. adding 144 billion dollars in market value which is equivalent to the entire honeywell or starbucks. incredible. because they delivered almost a million vehicles last year. francine: we did go through some of the notes from the analysts and they said, these are amazing starts but they say this will be a rough 2022 because they have
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to deliver -- hit those targets quarterly. what about bitcoin? some analysts are sticking out there next. the managing partner forecasting a handle in june. others are more skeptical. a key driver for crypto is likely to be central bank policy. eddie van der walt joins us with more. this is the reason i am back in the newsroom. i miss the daily update. what happens now? eddie: it is anyone's guess. on any given day, where get -- where crypto goes is unclear. it is hard to get direction. does it go to $100,000? quite possible. $20,000? also quite possible. it is extremely volatile.
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tom: last year was very much the year of the institutional buying into these cryptocurrencies. what does this year have in store? eddie: i think it is right. last year was a breakthrough year for bitcoin. we saw a real etf adoption. we saw the futures market coming into its own. there are a lot of venues for institutional investors to get involved in the cryptocurrency space where there was not before. and they have taken that opportunity with both hands and run with it. this is the big breakthrough for cryptocurrency but this year is going to be more about regulation. the regulators are taking note saying, this is becoming systemic and therefore we need to have rules in place for how people interact with
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cryptocurrencies. francine: a lot of that regulation especially coming from the u.s.? eddie: i think the u.s. is waking up to this. the jurisdictions -- it has been very varied with how jurisdictions respond to cryptocurrencies. on one end you have el salvador that has made it legal tender. and then you have other places that want to ban it. this is a space where the u.s. can set the tone for other countries but it has been lagging. this is the year in which we finally here where they -- in which we finally hear what they will do. tom: will there be a change in leadership in terms of the biggest arctic cap? -- biggest market cap? eddie: i will stick my neck out on this one. i don't know if ether takes
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over bitcoin this year but i think it is coming. the new technology, the fintech and innovation happening there are phenomenal. it was a leader in the space when we came into this but it is constantly paying checkup -- catch up with the other currencies. francine: given the narrative changed a little last year or changed a lot because it became a lot more mainstream. will we see some of the climate change risks on cryptocurrencies come back in 2022? eddie: esg also had a big breakthrough. if cryptocurrencies cannot address those concerns, it will start facing more pressure also
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from regulators. other cryptocurrencies are already moving away from this work model which is so energy intensive. that is important. it shows where the technological leadership is moving in this space. tom: bloomberg markets live editor, eddie van der walt. thank you. let's get a bloomberg business flash with laura wright. laura: bridgewater associates have named two co-ceos for david mccormick. bar dea and mark ber tolini. credit suisse is laying off 69 employees in new york according to a company filing. the cuts will take place in march with the lender set to
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wind down its prime services division in august. this comes in the wake of the archegos issue. it is the end of the road for an iconic smartphone. washington post reporting that today is the end of the life date for the blackberry. the company is winning devices running on blackberries legacy operating systems will no longer reliably function and will not be able to send a text message or dial emergency services. the phones popular -- the phone 's popularity dave it its nickname, crackberry. francine: tom goes back to the big one. i had a pager. tom: i am not that old. i do remember my dad having one of those things. it felt cool at the time, the 1980's rick of a phone.
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you plug it in and charge it and at last about an hour. i had the nokia that was very robust. francine: i miss those days. you could not take pictures. we have plenty more on the markets it also elizabeth holmes faces up to 20 years and for defrauding theranos investors. this is bloomberg. ♪this is bloomberg. ♪
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tom: welcome back to the open. we are almost 54 minutes into the european trading day. gains of 0.6% across the benchmark, the euro stoxx 600. the ftse coming back with a bang. travel and leisure gaining significantly in today's session. up 3.4 percent as a sector. health care and chemicals in the red. let's turn to one of silicon valley's most dramatic falls from grace. the founder of theranos, elizabeth holmes has been found guilty of criminal fraud over the collapse of her $9 billion company. joining us now is simone foxman. what was the background? what would --what did the jury decide in the case? >> it decided she was guilty of
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four of the 11 counts put in front of them and not guilty of another four and they could not decide on the final three. the four counts carry a maximum penalty of four years. -- 20 years. convinced folks like former secretary of state george schultz, henry because under, the former ceo of beck tell to get on her board and investors were sold on this pouring money into the start up. it turned out that some of the things she said were not true. that was a real black stain on the startups in silicon valley. for a long time, you had journalists and vc's looking at these companies with googly eyes and taking the claims at face value but not diving into the details. there were a lot of funds that
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specialized in biotech that did not get on board. ultimately, many put their money in theranos and lost 600 million dollars according to the wall street journal. there are investors that have this fomo idea that this was one of the first stories where not everything said should be taken at face value. francine: the fall from grace, her testimony which is unusual. what comes next? simone: we have to get the sentencing. a lot of experts do not believe she will get the full 20 year sentence. that will be for four charges. she may also appeal the criminal conviction. the u.s. attorney for the case has not decided what they will do about the three counts the jury did not come to a
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conclusion on. what we are watching as we head into 2022, february, the president of the company will go on trial for similar charges and he could face similar convictions. tom: simone foxman thank you. markets up 0.5%. the u.k. up 1.3%. this is bloomberg. ♪
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are, mistake about it. -- >> i am optimistic about it. >> is needed to do mandates for certain reasons, let's do that and then come around. this is a new reality we must face. >> this massive case explosion, of the developed world's feel more normal finally within weeks.


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