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tv   Bloomberg Markets European Close  Bloomberg  April 23, 2021 11:00am-12:00pm EDT

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we have to explore how climate change is relevant to our mission, that is what we are doing. ♪ guy: welcome to the top of the hour. let's talk about what is happening this hour and figure out exact he was going on. live from london, i'm guy johnson. alix steel is over in new york. we are counting you down to the european close on "bloomberg markets." the service sector and the u.k. bouncing back. the u.k. is coming out of lockdown. germany tomorrow, berlin more specifically, about to pull the emergency handbrake, a strict package of measures that effectively puts the country back into lockdown. how sustainable is this data? angela merkel giving testimony to the wirecard inquiry in berlin.
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we will hear from a member of parliament on the committee. what needs to change in germany in terms of the culture? and russia hikes again. the governor is in a hurry to normalize, today pushing rates up by another 50 basis points. we will have analysis on that story. european stocks under pressure once again. this could be the first week in eight that european equities are lower. euro-dollar, as you can see, catching a bid. we are up by around 0.3%. alix: we are very much diverging from you in the u.s. because you have equities around the highs of the session, totally schlepping off what we saw on the capital gains tax news that bloomberg broke. as we are in day two of the climate summit with president biden, the ishares etf is up over 1%. some strategists were talking about the rotation between tech and the more infrastructure names upon the climate plan.
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if you see qqq's that might tell you something about the trajectory, although both are out today. so the yield picking up a bit of steam. equities on the highs of the session, yields on the highs of the session. the vix continues to get more chill, even though there's some oxen bets looking -- some option bets looking for more volatility in june. but going off by more than 4%, under $50,000. that feels significant, but i can't deal with that number anyway. guy: we will see where it goes. going to see some volatility, i think. that certainly seems to be the story at the moment. momentum very important, but how much of a bid is there going to be from institutions? anyway, let's get back to the data. european and u.k. economic data today is really quite strong. on the services side, which is really important. the u.k. data, talking about the pmi data, accelerating at the fastest pace in seven or eight years.
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you can see the data here. you've got the composite, the services, the manufacturing. big hit in terms of the manufacturing, and then a bounce back. that is what we are starting to see, this bounce back. we are in the mid 60's, which is really nosebleed territory, and we are seeing a sort of joining of the data on both sides of the atlantic, which i think is interesting. how sustainable is this is one of the key questions. the retail data today quite strong. my question is, is this data going to continue to pick up? are we going to see people spending money? are we going to continue to see the services side coming back? fabrice montagne, barclays chief u.k. economist, joins us now to give us a quick snapshot of what is going on. he saw some really strong data. we've got the services pmi bouncing back in the u.k., retail sales data quite strong. you've got your own data.
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pollute together and give me a picture of -- pull it all together and give me a picture of what is happening here. fabrice: what we can say is that the economy is recovering as it reopens, and much in line with what we have seen last year during the previous reopening. i think at the numbers you mentioned, barclays spend a trend shows that aggregate credit card spending last week was 15% above february 20 levels. that is massive, knowing where we have come from. it is not unprecedented. those are levels we have seen over the summer last year. but it tells you there's nothing wrong in this reopening phase. it happens. at the same time, what the data tells us is that there's reopening's happening along the lines of the government. it has been a gradual reopening timeline. even though pubs reopened,
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capacity is constrained to limited areas, outside areas. that is also something we pick up in the data. i am particularly amazed talking about clothing and footwear, for instance. this sector is able to switch back on, back to life in a matter of days. now, fair enough. it might relies on a -- it might rely on a larger share of online spending then before, but still, it is generating a lot of activity within days. that is what the data tells us. alix: so the data tells you that now. what does the data tell you in three months? is it reopening versus exuberance? they are different things. what do you think we are going to see in the next six months, and how does the market think about it? fabrice: thank you for making this point. with the data doesn't tell you is precisely how this data
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focused on consumers, focused on cell data or whatever, how that translates into national accounts. we have been already 15% or more above february levels. i think one interesting thing to point out is because the timeline is gradual, because what we pick up from pubs is that it is not running full steam overcapacity, it might hold back a little bit. it might happen in a more steady way as opposed to a very sudden way. so we might get less of this overheating then we might fear if things happen in a very disorderly way at once. that is something we want to test in the coming months, but initially, and the first weeks here, i guess we can say it is happening in a gradual, steady, convincing way, and it is not
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totally over-the-top. that is 1.i would make. -- that is one point i would make. guy: you talk about this as happening in a reasonably civilized way. you think people are going to be cautious because they know ultimately, furlow -- ultimately, furlow schemes -- ultimately, furlough schemes are going to be wound down? fabrice: i am not excessively worried about these being there for too long. that was the discussion headline six months ago when people feared that people would not be called back. i think what we know since today with the data you mentioned from pmi's where households surveys, confidence surveys, we know that the outlook for employment might actually be stronger than what we thought, right? the sub index in pmi's suggests
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employers are willing to hire back, and the household survey tells us that households are not exactly worried about unemployment. so that is a very interesting twist, and i think it is clearly one we should follow because if anything, unemployment is probably the biggest risk to our forecast. so to answer your question, we will inevitably -- how should i call this? people losing their jobs, certainly a degree of turn in labor markets because it was frozen for nearly a year. so we will have those stories emerging of sectors either being short of staff or other staff losing their job, but that is part of the normalization process. also remember that in terms of bankruptcies, businesses are not even allowed to go bankrupt nowadays. so we will have a catch up on all of these metrics, and we should be able to look through that noise and towards what are the underlying trends.
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in everything i have seen over the past two weeks, they meet me feel quite confident. alix: i know you are a u.k. economist, but i want to do get your take on how far ahead you think the u.k. is, and the offset versus the rest of europe . the offset to that is when does manufacturing meet up to -- or, do services have enough juice to meet up with manufacturing? fabrice: we like to boil it down to vaccination rollouts. that is an easy chart to produce. but the reality is that the nature of the lockdowns is very different, and they that have been -- and the way they have been the synchronized. schools are widely open across the continent. bars and restaurants have been open in spain. so the position in this recovery is different on both sides of the channel. that is one thing to be mindful of.
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the other thing to be mindful of is brexit. we haven't mentioned brexit. it is good not to mention it too often. but it seems that u.k. manufacturing is held back in its export because exporters are struggling because of new paperwork and frictions. that might be exacerbating going forward, when europe comes up on the stronger side while the u.k. struggles a little bit. the last thing maybe i will throw in is that a smaller economy is naturally more volatile, and pmi's that have a higher by little the might rebound stronger. so a little bit of noise is in this kind of data. alix: really great analysis. fabrice montagne of barclays, thank you. the world's biggest chipmakers' latest results show that they
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could be losing market share and customers. pat gelsinger, intel ceo, joins us next. this is bloomberg. ♪ ♪
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alix: live from new york, i'm alix steel, with guy johnson in london. this is the european close on "bloomberg markets." intel saw a steep decline in revenue profit margins. we will dig a little deeper into those results with pat gelsinger, intel ceo, and bloomberg's emily chang. emily: thank you so much for taking the time. shares are still down this morning. investors really concerned about margins, though you did slightly raise your full-year forecast. do you have to say to them right now? what do you have to say to the
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skeptics? pat: right now, a little bit disappointed to see the market's down on us. usually when you beat by $1 billion and raised by $500 million, i would expect the market to like that. but we understand some of the concerns around data center and where we are. we had a blowout last year in datacenter in the first part, and we were a bit ahead of where we thought on datacenter. we had some major new products in that area. exciting because it means we are getting more competitive and back on our front foot with our manufacturing capabilities, but it does bring some cost into the business as we bring up new technologies as well. so our story is a very different one. we feel good about our future. alix: --emily:emily: you explained that drop in datacenter revenue as inventory
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correction, but investors are concerned about long-term loss in market share. is that market share gone for good? who feels that cap -- who fills that gap? pat: we just had a major product launch in key areas like ai, where we are over 70% performance improvement. the ramp for that with our customers is going very well. we also pointed out that enterprises are starting to come back to life. good growth in the government sector. this is a period where they were adjusting more building out, and we are starting to see them lean into the business as well. so we feel like we are ramping this year, seeing all the signs that that will be the case, but we are going to fight for market share. we also commented that we are going to be aggressive here. we are bringing our software, platform, new silicon assets to the marketplace, and we are going to be quite aggressive in
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holding and winning back market share in this critical business for us. intel is back, and we are going to be very competitive going forward. emily: you mentioned winning back market share. we heard tim cook seriously touting the new chips in their max, the ipad. and amazon executive says they want to see their new chips in not just servers, but in kindles , alexa. since you built your news hendr -- your new foundry ambitions, what are your expectations that customers will come back when they are also competing with your design? pat: overall, what we have described with our 2.0 integrated design and manufacturing technology, that we are going to be producing our chips, but also being it foundry for other people's chips, and the response to that has been tremendous from the industry. i would point to the fact that today, there is so much concentration, mostly in asia,
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and the world needs a more balanced supply chain. europe, and particularly the u.s., we need manufacturing done by u.s. companies, and we are stepping into that in a big way. we announced two new fabs in arizona, a 20 billion dollar investment, and we already have 50 customers in our pipeline working with us on taking advantage of these new foundry service capabilities. great response. but i would also respond that a few of those you mentioned in your list are looking and saying, i can now use intel's products and combine it with my intellectual property to come up with more optimized hybrid solutions as well to better meet their costs and needs for the future. so this is a new chance for us to engage with the largest cloud manufacturers, the largest tech companies of the world, and give them new opportunities to innovate with u.s.-based manufacturing, innovate with intel-based ip, and really bring
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their own capabilities to the market, and so far the response is very encouraging to those new capabilities. emily: historically, intel had gross margins over 60% -- had growth margins over 62%. do you think you can -- over 60%. do you think you can get back to that? when? pat: this is an investment cycle for us, building back our profit leadership, so we are putting more into the engineering. we are seeing engineering teams wanting to come back to intel and bring us back to the front foot. but we expect that over time, we get to industry relevant margins in our foundry business. we are going to be leaders in that area. it is a good business area. as our products get back to leadership, unquestioned in every category we are per dissipating in, leadership products -- we are participating in, leadership products produced
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leadership margins. so we will be getting back to the competitors of -- to the competitiveness the industry has come to expect of this iconic company. emily: you talked about couldn't i -- about supply constraints, and we have been talking about the chip shortage. do you have any new input on how that will let up and how? pat: it does take a while to build up new factories. you don't just turn them on overnight. we sort of had the perfect storm. demand was starting to accelerate, and then covid caused amand to go off the charts, and supply chains got disrupted, so supply diminished. that gap is pretty large. i think it's a couple of years until we get back to a more reasonable supply and demand. we are investing, as well as others, and the industry to build out more manufacturing cape abilities, but this is a couple of years until we see things get back to where they need to be. we have seen very good response from the administration of what
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they are hoping for for american competitiveness in the manufacturing area, so quite pleased with the biden plan for manufacturing, research, and semiconductor investment. so this will help us go faster and bigger in the industry, but shortages will last for a while. guy: good morning. can i just pick up on the point you just raised about the incentives being provided by governments? first up, do you think $20 billion is enough to be long-term competitive with tsmc? tmc -- tsmc, they are based in taiwan. there are huge incentives that come from governments both state and local. i am wondering whether you think you've got enough from the u.s. government to be competitive against that, and you think the u.s. government needs to do more to attract more fabrication back into the u.s. from asia? pat: overall, when you look at
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the big numbers, the u.s. 25 years ago, 37 percent of manufacturing on u.s. soil. now that is 12%. most analysts before these last discussions were predicting that to further decline. we say, for something so critical as semiconductors, remember, the world is becoming more digital, and everything digital relies on semiconductors. having less of that in the u.s., this is a great risk and issue we believe for the industry. we need a more balanced supply chain across the globe. that is something we are leaning into very aggressively. what has been proposed, the $50 billion that has been suggested in this area, is working through congress. it is a good step forward, and we believe it will be enough to stop the decline, but we believe more than that will be required to get us back. i suggested that we lay out a moonshot for our nation to get back to 30% of the world supply on american soil by american
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companies with american ip. i think such a focused area for such a critical infrastructure industry is the right thing. as you suggest, when foreign companies are seeing, and we estimate up to 40% of a $20 billion investment being offset by government incentives, that is a competitive gap. while we are encouraged, we think this requires a national agenda, and we have been very pleased with the biden adminstration's support in this area, and we are excited to be putting our chips on the table, and i emphasize that we have made these commitment for our next two fabs without any incentive commitments. we want to go bigger and faster with additional support from u.s. and european governments. alix: pat, this is alix in new york. can you put a number of how much you want to see come out of the government in terms of support, and you can -- and can you do it if you have to pay more taxes?
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pat: we believe a combination of incentives, taxes, tax relief at the federal level and the state level, the $50 billion is a good start. we have agreed that we need to study this more carefully, and i am talking to secretary romano later today, in fact, to make sure we have some agreement on what it takes to get back to that moonshot i suggest of 30%. but i think the industry, we have bipartisan support in congress, and $50 billion is a great start. that is at least enough to stop the decline, maybe not to see some reverse in it, but i do think it is going to need to be larger than that to really get back to this moonshot i am suggesting that is simply the right thing for the nation. this is an industry that we created. every piece of life is going on to digital platforms, and we want to make sure we are well-positioned for the long-term of the industry and our nation in this area. emily: intel is still benefiting
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from a record year for pcs, with so many of us on lockdown. as the world returns to work, returns to school, what is your outlook for pc demand? does it drop back to where it was ultimately? pat: it has been just a stunning acceleration in the pc industry. we had over 50% growth in our mobile laptop business, off the charts. this is probably going to be the largest pc shipment year ever in the history of the platform, and we are getting back to one million users a day in this area, so a great momentum. we do think that what has happened is that people are now becoming multi-pc households. we are seeing entire economies where we might only have six or seven pcs for kids in educational environments around the world, where we just have way more pc penetration area and we have also seen through
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lockdown that we haven't seen for normal pc refresh, so we are looking at a pc refresh cycle. our estimates are that we have a long way to catch up with today's demand, and we are expecting continued growth the next year and the following year as well. the pc is the stable for a just to be did work from anywhere, -- for a distributed work from anywhere, help from anywhere platform for the globe. guy: we really appreciate your time today. thank you for sharing so much of it with us. thank you as well to bloomberg's emily chang. pat gelsinger, the intel ceo. some breaking news while we were talking to pat that impacts the u.k. joe biden, president of the united states, is going to travel to the u.k. and belgium, the u.k. and brussels in june, and there will be an eu-us su mmit, trying to bring the allies together. alix: the cdc is speaking right
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now, talking about the j&j vaccine, saying there's only been 15 cases of side effects from that j&j vaccine. they've had three deaths, seven hospitalized, and five discharged after those blood clots. we have a virtual emergency meeting to discuss the vaccine that is going to go for the next six hours, so we will keep you updated on any of those headlines. guy: absolutely. european equities down on the day and down on the week. i think we are heading for our first week down for european equities in eight. we are dropping 1.25% for the 5100, the cac of 0.5%. -- for the ftse 100, the cac off 0.5%. this is bloomberg. ♪
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guy: we are wrapping up the week
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in europe. we are about to start the auction process. we are down on the day and down on the week. we had the tax story in the united states yesterday. we have been going lower, going sideways. the session closed, and then we have been climbing since then into the close. it does look as if we are heading for a negative week. that is the first negative week. it is the first negative week in eight. european equities have been on a real tear and we are starting to get a little bit of consolidation, down .8 of 1% in terms of the stock 100, down a look bit more in terms of what we are seeing on the markets. we are seeing a high degree of variance. the stoxx 600 down .8% of 1%. let's talk about the session and get an idea of what has been going on in terms of the shares
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we are seeing on a rotation basis. the mining sector has done well. i will so you what is going on in just a moment. a chinese smelter making positive noises about upside in copper. the european mining sector has been reacting to that. basic resources storming ahead. the travel and leisure sector bouncing back. i've been talking to a load of european aviation ceos this week. they are a bit more cautious about the summer, but the sector has been under a little bit of pressure. maybe we are starting to see pullback. technology is coming back. the staples, the bomb story -- the bond story, real estate is down, health care is down. great numbers from nestle yesterday. you're going to see a pullback after such a solid day for the world's biggest food company. that is the sector rotation in europe. net net quite neutral. on the week, down for the first
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time in eight. let's talk about individual names. reporting season continues. this is the most important story in europe. montclair -- moncler doing quite well. the stop down 4.2%. it has been doing quite well. i've seen analysts say something today. libido profit taken may be coming. -- a little bit of profit taking maybe done there. all funds, 20% at the ipo today. this is a mutual fund distributor. it decided to list in amsterdam. the stock is up quite strongly. that is part and parcel to the narrative between what is happening with the city of london and what is happening from the european financial capitals as they try to merge. amsterdam continues to take the bulk of the gains when it comes to the ipo story. i mentioned what is happening with rio tinto.
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up 1.8%. the copper story driving the mining sector in europe. alix: also corn is surging. next time you have to give me an aggie die. in germany angela merkel wrapped up her testimony into wirecard, saying she did not know about allegations against the company until shortly before it collapsed. that happened last year after the financial payment giant admitted $2 billion of funds were missing. the inquiry has been investing how fraud of that scale went undetected for so long. earlier we spoke to one of the lawmakers leading the probe, fob io tomasi of the left-wing party. he questioned angela merkel's claims about what she knew and when. fabio: told a year ago that a former minister walked into her office and told her something about wirecard and then she decided so happily to go to the
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most powerful man in china long before wirecard in china. that is not very convincing because china is a huge market and an official visit by the chancellor would be thoroughly prepared. we see from the documents that wirecard was the diplomatic checkpoint because it was the first company with a cross-border payment line from the chinese financial market. it was something that was prioritized. i think there are a lot of small-scale investors who lost their life savings. this is something that is saddening. we know of a man who lost all his life savings. those people feel deeply affected. their number is not so high that you would have an impact comparable to the discussions
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around the coronavirus crisis, where more people feel our vaccination rollout should have been organized more efficiently, or the corruption within the cdu and peace casting in on protective masks, i think those events will have a larger impact than this particular one. wirecard will be part of the german economic history books, i am sure about that. guy: fabio de masi. in the run-up to the collapse, there were red flags who played the company's numbers did not add up. they were banned from shortselling. it is one of the key elements of the responsive government to what was happening. a lot of annoyance expressed at the time. fahmi quadir joins us now.
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thank you for taking the time to join us. what do you hope comes out of this inquiry being held in parliament today and has been for some time. what you hope comes out of it? what needs to change as a result of what happened with wirecard? fabio: thanks for having -- fahmi: thanks for having me on today. the committee work has continued on for nearly a year and unfortunately we still see witnesses trying to find new and unimaginative ways to avoid accountability in the face of increasingly damming facts. in that time the u.s. has already indicted, tried, and convicted does to individuals critical to wirecard's network. it was good to see the german ministry of finance seems to be coming around to the fact that wirecard was little more than a global laundromat. when we talk about coordinating
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our efforts to get money laundering and transnational crime, it requires a global effort. here wirecard was a domestic issuer and much of the primes -- much of the crimes originated on german soil, so we need to see a good-faith effort on the part of the german establishment to engage in willingness to prosecute wirecard for these crimes. alix: do think that is actually going to happen and regulators will make a difference? fahmi: it has been heartening to see some of the changes that have already been made. there has been a clearing of the house at the top, and they brought in mark branson. that is very commendable. this inquiry should only be a starting point. the fact is the inquiry itself has been limited. it only goes back a few years, when really what needs to be investigated is the evolution of wirecard over the past two dictates. my hope is that after this
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inquiry is completed, it will be passed on to law enforcement authorities who will that engage with global authorities to bring justice in this case. guy: let's talk about the market mechanism and how journalists work as well. the market has a mechanism for expressing concern, and that is shortselling. shortselling was banned in this situation by the authorities. journalists were gone after by the authorities as well. what needs to happen to make sure that does not happen again, that there is a culture of understanding that the market can be right, market mechanisms can work? fahmi: there were just some odd circumstances here. on the date the decision was made to put the shortselling ban in place, the shortselling chief was at the dentist office. the decision was made when he
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was not even there to have any input. on top of that, it has, out that the band was driven by a bio cocaine trafficker. this is an issue of willful blindness. the facts were there, and for whatever reason, particularly the munich public prosecutor refused to engage in some of the allegations the financial times and others were making, and actively protect the company from those investigations. you cannot make some of this up. as employees were engaged in insider trading with the stop, -- with the stock, wirecard employees were taking plastic bags filled with millions of dollars of cash to different officers. alix: when you look at the investing world in germany, wirecard was the crown jewel. in your work, i wondered if your
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assessment is there was a lot of confidence and love for the type of business wirecard did, or do you have a feeling, and have you seen their other issues -- have you seen there are other issues like companies and sectors? fahmi: globally we have issues relating to regulatory capture and the idea of protection of domestic issuers. i do not want to say this only happens in germany. we see it everywhere in varying levels. the thing is, with wirecard it was a collective failure. there were auditors who abandoned their professional needs, there were investigators -- there were politicians who were fraternizing with executives and lobbying for wirecard at home and abroad. investors also embraced money laundering as a prophet driver, and lowered wirecard's cost of capital. wirecard was possible because of an ecosystem.
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there were systemic failures at multiple levels. that all needs to be investigated, particularly the influence and the power wirecard wielded. this was not just a matter of trying to promote german technology abroad and have a big fintech player on the global stage. there is clearly more to the story. we are finding that out as this inquiry continues. guy: thank you very much, indeed. fahmi quadir, founder and cio of safkhet capital. let's turn our attention to what is happening in russia. the bank of russia surprising
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markets with a 50 basis point hike. it has word -- it has warned geopolitical risks is fueling inflation in russia. joining us is polina kurdyavko. let's talk about the hurry the governor is in right now. how much of a hurry is she in and why you think she is in such a hurry? polina: thanks for having me again. those two years feel like distant memories. we set a 50 basis hike was likely ahead of the consensus, but the key is if you are combining the pace of economic recovery and risks, the normalization of monetary policy is worth it. if you remember, we are targeting -- the central bank is targeting between 5% to 6% inflation rate, 4% inflation
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rate versus the current five to 6%. to reach their target of 1% to 2% real rate, they should embark on a hiking cycle. alix: it is alix in new york. i am curious as to one of the few central banks that are into raising rates, how anymore hikes will we see this year and how quickly will we see them? polina: we would be surprised to see another hundred basis points between now and 12 months from now. if you think about the objective of the central bank, the target is to reach real rates of 1% to 2%, we are at the bottom of that range. we could see up to 100 basis point increase over the course of the next year. guy: how should investors deal with this? what is the play in russia? a lot of people have been quite
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positive on russia for a while. does this change the speed of change alter that? polina: it does not. at the end of the day if we look at the valuations and rates, fundamentally russia is the strongest economy in emerging markets with 80% domestic gdp. affects reserves of over $600 billion. it is hard to find a country with a more bulletproof balance the -- with a more bulletproof balance sheet. i would say if it were not for the -- russia would be trading 10 to 15% lower at the ruble would be stronger. alix: there is a risk that can't -- there is a risk that could come into play more. what you make of russian putting troops back to the ukraine border. can you tie that in with the sanctions -- with the economy? polina: i think it is difficult to rate those maneuvers on a
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daily basis. i think it is easier to make a conclusion that the risk is not going away, and if anything could be increasing. the reality is sanctions on the primary desk, if we were to see further escalation and sanctions being put on the secondary market, that is where there is more volatility because russia like counts -- russia accounts for three to 10% -- if that were to happen we could see a rise in risk, excluding index -- excluding russia from the index. that could force investors to reconsider their position. despite the fact domestic support is there, if worn investors -- if foreign investors -- more volatility on that front. guy: you talk about the discount
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being applied as a result of the risk that exists right now. do you think that is correctly priced? we watch what is happening with alexei navalny, what is going on between united states and russia. you think the market pricing is about right right now, and if we were to see a deterioration of alexei navalny's health -- how should investors react to that? do you see the discount getting even greater? polina: i feel the wrist is priced correctly. i do think if you think about the upside down side, if you will, if risks were to reduce pump and ultimately we could see improvement, there could be between 100 basis points on the right side and 10% to 15% appreciation on the currency. if risks were to increase come and hear the biggest implication
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could be on the local market, the 20% -- that might have to reconsider their positioning if they were to see sanctions applied to the secondary market and could cause 100 basis points bread widening in the local range. i feel the risk reward is symmetrical. alix: last question. we did not talk about covid. i wonder how your forecast played into the variants we are seeing, case counts rising in certain countries, etc.. polina: i think russia has done a good job on decoupling the economic recovery and cases -- and covid cases. if you look at the economic -- back to the pre-covid levels. we have to applaud the authority that achieved that result. to me the real question is what is the prize for russian
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citizens. all of the challenges we've experienced more recently with the covid. you could say that russian citizens have become poorer. the question is what policy is needed to increase the potential growth in russia -- beyond the infrastructure bill and social support, it is russian businesses and foreign businesses that have to have confidence in long-term visibility to reinvest their profit in the economy. alix: smart conversation, really enjoyed talking with you. polina kurdyavko. coming up, president biden's climate agenda. what does it mean for jobs? we will speak to heather boucher, a member of the white house council of economic advisors, next. this is bloomberg. ♪
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alix: it is date two of president biden -- of president biden's summit. joining us is heather boucher -- heather boushey, member of the white house council of economic advisors. president biden is saying the green climate plan create jobs. the unions think differently. they say the plants are not as good and the pay is not as good as other industries. how do you fix it? heather: the president has said when he thinks about climate he thinks about jobs, and good jobs. the american jobs plan, he he laid out a number of weeks ago, has a number of proposals to boost the kinds of innovation and technological change we need to see so the united states can be a leader in energy technology, as well as to make sure u.s. firms are benefiting from the deployment of that, and that u.s. workers are
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benefiting. the jobs plan has a series of steps along all of those phases of the process to make sure workers benefit from the new investment. i have to be clear. this is the innovation agenda of the next few decades. this is where the good jobs are going to be coming from. we must make these investments now at all stages of the production process and in the research and element so we can create those good jobs and keep our focus on that goal. guy: it is guy in london. can you define good jobs? i am curious as to what that means. at the moment you do seek relatively high-paying jobs in dirtier industries. how do you make sure that these are better jobs? heather: there is a number of steps. one thing is the american jobs plan includes what is called the pro act which gives workers greater capacity to organize and
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collectively bargain, forming unions and being a part of those is a clear way workers in the united states -- the president has supported that. he has made that a part of the jobs plan. there are also ways to think about how you implement federal procurement and labor standards as a part of any spending the government does. if the government is going to go out and spend money on something , they can say these are the kinds of standards we want to see in terms of labor. we can also be thinking about labor standards more broadly. making sure we are tying the funding that goes out to the industry in support of the element or deployment of new technologies can be tied to making sure these are going to create good jobs. i am not going to say it is easy. it will certainly require attention and focus. there are a lot of different levers at our disposal to make that happen. guy: it seems like there's a lot of tension between the plan and
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how you pay for it, and how the mindset is affected if you're a company. if you take a look at the capital gains taxes bloomberg broke yesterday. standard economic theory says taxing capital gains discourages investment. what evidence do you have to support that will not happen and it will go to creating these green jobs? heather: i looked to the past few decades, especially the past few years. when the last administration put into effect the 2017 tax and jobs act, they told the american people that would lead to a robust increase in investment. we now have a series of research that shows we do not see that bump in investment. that throws cold water on that idea that there is not room to make sure those at the top are paying for their fair share. the corporations are paring for their fair severe -- for their fair share in investment that
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benefits american business and american workers. it is getting those things right. that is what the president's tax plan seeks to do. guy: can i talk about a different tax? carbon and europe is trading at 43.80 this afternoon. how do you calculate, how should united states calculate the cost of climate change on a per ton basis? what should that number look like? heather: it is a good question. the president has not put forth a plan to tax carbon in united dates. the american jobs plan focuses on providing incentives to industry and to invest in the innovation and to get that employment and commercialization , as well as the clean electricity standard that will spur the power sector to invest in new technology and innovation. those are the important issues we've been focusing on in the united states. alix: that is definitely the elephant in the room when it comes to climate globally.
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thank you. heather boushey, council of economic advisors. creating new jobs and all of that is definitely good. it just depends on what the circumstances are. it does feel like there is coming to a head, a lot of different things companies need to be focusing on. eight years of infrastructure investment versus higher taxes. guy: this is a critical moment, and balancing these things out will be pivotal for this administration in washington, but for countries around the world this will be a challenge everybody will have to deal with. alix: staying with politics, coming up, lanhee chen, bloomberg research fellow joins david westin. happy friday. this is bloomberg. ♪
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david: from bloomberg's world headquarters in new york to our tv and radio audiences
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worldwide, welcome to "balance of power," where the world of politics meets the world of business. i am david westin. we start with a check on the markets come as we do every day. the big question on most people's mind is equities dipped on this news of a possible repealing of the capital gains tax. how are they doing today? kriti: they came right back up. he saw the s&p 500 pay or all of the losses when we know the capital gains taxes paints the market -- yesterday story was tech underperformance. think about it as the baker stocks get hit on capital gains tax. today's story is tech outperformance. i want to show you that the nasdaq 100 is over 1%. an important risk on move. volatility goes lower. yields now dropping. for the majority of the morning session, you did see yields higher as well. lastly you have the bloomberg dollar under pressure, which we also look

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