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tv   Bloomberg Markets European Close  Bloomberg  June 14, 2021 11:00am-12:00pm EDT

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guy: 30 minutes to the close. what do you need to know out of europe at this hour? president biden ray commits to nato, calling the alliance essential to america -- biden re-commits to nato, calling the alliance essential to america. we are about to get the stilton berg press conference. they should -- the stoltenberg press conference. we will bring you that. in the u.k. come of the delta variant continues to surge. the prime minister holding a press conference at the top of the next hour -- actually, probably pushed as well now. the eu testing investors' appetite to fund the next
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generation recovery fund. this is going to be a huge process over the next few months. let's talk about where we are for the markets. equities down near session lows. we are up by 0.3%. what i think is interesting is that we are not getting much reaction and the pound to this news that we could be seeing this reopening trade here in the u.k. being pushed further out. i thing largely, the u.k. is open. this is the final phase of this, and the sense seems to be that the economy will continue to mutter ahead with the current level of reopening that we have. alix: it also raises the question, is this already baked in? in the u.s., it is relatively similar. still waiting for the fed wednesday, but the are performing sector within the s&p and individual stocks is the s&p oil and gas exploration index. occidental the top-performing stock within the s&p. will at a 32 month high. consolidation and asset sales is helping that group in general.
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lordstown motors down 20%. this is a fun one. ev maker goes public and then all of a sudden two executives quitting, and the board says there are irregularities. that stock down by 20%. the bloomberg dollar index pretty much flat. can you get much higher yields with the fed? i don't think we have that answer yet. copper down by about 0.5%. i bring that up because reports indicate that china could be selling some of the metals from its strategic reserve to tamp down prices. that is interesting because it is the action, not the rhetoric now. guy: you mentioned the fed. let's talk a little about what is happening. the fed has done a survey of consumer expectations. let's bring you the headlines. we will talk more about this in a moment with michael mckee. the survey seems to indicate
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that inflation expectations one year ahead have risen to a series high of 4%. consumers are notoriously bad at predicting inflation or even having an idea of how much inflation they are seeing right now. gas prices huge part of it, and that is one of the huge variants that we see in the data. inflation expectations three years ahead for 3.36 percent. basically, and it fades. that is important in terms of the transitory narrative. but 3.6% is still high. home price expectations rising to 6.2% in may versus 5.5%. so people are seeing housing costs going up. they do see inflation, but then they see it fading. alix: you can see that reflected in breakevens also. it makes you think that maybe the market is digesting the fact that it might be transitory. we will see if the fed agrees. guy: big day coming up this week certainly. is there potential for a hawkish
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surprise? let's get back to nato because we are getting some headlines coming out. we are working for the second. general -- for the secretary-general briefing to take lace. the room is filling up a little more. you don't want it to full. social distancing. we are starting to get a statement coming out. nato concerned about china's military buildup, according to the statement. nato saying that russia's actions are a threat to trans atlantic security. nato is agreeing on specific funding needs up to 2030 in the 2022 meet. i am not exactly sure what that last headline means, but funding has been a huge source of tension in terms of the way nato is funded, particularly germany maybe not delivering on that 2% requirement. that generally has not been adhered to. let's go to brussels. let's get a sense of what is happening just in terms of the
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choreography of what is going on. maria tadeo joining us there from nato headquarters. talk us through what is happening. we understand the art a one been pushed with the president -- the erdogan meeting has been pushed with the president. we are waiting for that secretary-general briefing. can you talk us through what is going to happen over the next few hours and what the tone is likely to be? maria: the meetings here are still ongoing. there's delay, but that is normal in a meeting like this. we have more than 30 heads of state meeting in this building you see behind me. in terms of the statement we just had, i would point out that nato says and reiterates that of course, all of the number states stand by the alliance, and reiterates that article five, this is when one country that belongs to nato is attacked, it would trigger an automatic response from everyone else that is part of the alliance. they are saying that this is as relevant as it has ever been, very much feeding into the
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language that was heard from president biden today, who said it is our sacred obligation when it comes to the united states and the nato countries. there's also a lot about russia and this statement, where they say it has been escalating its military operations, and worries about the implications. it mentions belarus, but also countries like ukraine and moldova. we have seen a huge deployment of russian troops moving into the ukrainian border. that is really unsettling for the government there. the timing of this is very key because it is all happening right before that meeting happens on wednesday between the president and vladimir putin. so here, there's a lot to work with. russia saying -- here they are saying that russia is a threat to a number of countries in the european east. alix: let's stay with what to
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expect. president biden holding a bilateral meeting with turkey's erdogan and about an hour to discuss their strained relationship. for more on what to expect, we are joined by bloomberg's simin demokan. what is a win for both leaders here? simin: erdogan has said he wants to cooperate on -- he wants to concentrate on future cooperation when he meets with biden in an hour's time. the two leaders have known each other from the obama administration, but this is the first time they are meeting face-to-face. military matters are top of the agenda today. turkey could help protect airports when u.s. troops withdraw from annas gun -- withdraw from afghanistan. geopolitical tensions in syria and libya will also be on the table. there's a long list of grievances between the two
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countries running high for years. one of the main reasons for this is turkeys purchase of a russian missile defense system. this angered washington and resulted in mild sanctions. turkey is now keen to avoid further sanctions, which the u.s. congress has been pushing for for years. today, when the two leaders meet, they will be hoping for relationship building rather than anything resulting in major breakthroughs. guy: thank you very much, indeed. sarah and emma can -- searing demokan -- simin demokan joining us. we brought you headline a moment ago about the fact that the 2030 funding requirements are going to be due at next year's meeting. that is a papering over of what
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is a major challenge for nato going forward. let's turn our attention to what is happening in the u.k. boris johnson looking to potentially delay lifting pandemic restrictions completely as he cites growing concerns over the new delta variant. the delay could be as long as four weeks. i've heard some people talking about it being longer. let's find out what those with an ear to the ground are hearing down in westminster. bloomberg's alex mireles joins us now. the prime minister has been a nato today. he's on his way back. we will get a briefing at 6:00 p.m. what will we hear? alex: he's going to delay the full reopening from the coronavirus lockdown up to four weeks, is what we are hearing. prime minister has been anxious to stress that every stage of this, the dates he set out a few months ago are not set in stone.
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that the earliest possible date that things can reopen. we had three stages so far of the four step program. they have all been on time. the final step is due to be next monday on june 21, but it looks very much like because of the rising surge in this new delta variant that has taken hold in the u.k. that that fourth and final step will be pushed back. but i think, as you referred to in your intro, much of the u.k. is already open. shops are open. even cinemas and concert venues are open. but there are restrictions still in place. nightclubs haven't been opened for about 15 months now. they are due to reopen next month -- i mean come on june 21. restrictions are still in place on things like weddings and life events. so there are a few bits and pieces that remain that affect
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the way businesses can operate, and key amongst them is social distancing. even though pubs can open, social distancing rules mean they can't operate properly. so we will be watching for the prime ministers statement later today. alix: appreciate that. for inflation expectations, joining us is bloomberg's michael mckee. michael: this is something the fed is going to be watching, so this is something wall street is going to be watching. we have seen a dramatic increase in the number of people who think inflation is going to rise significantly. basically, the blue line is now above this. it has hit 4%. this is the one year and three year forecast for inflation, and it shows that may be consumers are starting to think inflation is going to be around for a while. that is something the fed is concerned about, making sure that inflation expectations stay contained. those are record levels for those numbers. let's take a look at the next chart, which is about the
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expected earnings growth. are you going to make more money? it seems a lot of people are thinking that we are going to be making more money, and that is driven, according to the newark red -- the new york fed, by people making the lowest amount of money. so low income people are thinking that things are going to get better. the probable of the of losing one's job is the orange line, and people are much more confident about the labor market. i've got one more to show you here. that is spending growth. people are expecting they are going to spend a lot more money. take a look at the white line. one year expected spending has a significant rise to a series high, and if you are rich, you are expecting to pay more in taxes. you can see another series high for the blue line there. that of the number of people who think their taxes are going to go up. so the news out there is sinking in. alix: mike, thank a lot. i decided to hold off on purchasing my car, so i feel like i am part of that.
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coming up, more on those development's with judy dempsey, nonresident senior fellow at carnegie europe. this is bloomberg. ♪
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>> an age of global competition, europe and north america must stand -- guy: the nato secretary-general david delivering -- sector general delivering a press conference in brussels. what does nato do to take us into the eu summit and that putin meeting later this week in switzerland? judy dempsey, nonresident senior fellow at carnegie europe,
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joining us now. how aligned are the united states and europe right now? judy: in terms of language, they are certainly aligned. that wouldn't be very difficult after the previous years of donald trump. but in terms of content, i think there will be some sticking points over china. if you read the g7 communique, it is very interesting what it does leave out. i think there are big differences inside nato and the european union when it comes to china, and if they are going to really align with the united states over china. i really can't see this happening at the moment. alix: what does that actually mean? they are going to say something, but it is going to be moshe and no one is going to follow through -- going to be mushy and no one is going to follow through? judy: i think the time for mushy language is over. i think joe biden is going to push very hard.
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inside nato, there is enormous reluctance as a relianc -- as an alliance to get engaged militarily with china. i cannot see them actually going towards the south china sea, and i am not sure the biden adminstration would ask them. i think what biden wants to hear is of nato as a political alliance. guy: how does europe have a single voice when they are arguing with the europeans about 70 things? brexit feels like it is -- about so many things? how on earth do we have a strategic liberal vision, a strategic global authority in europe when we argue and picker -- and bicker? judy: i think boris johnson has
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finally gone home to london, so maybe northern ireland will be taken off the agenda. given bidens background and the role of the united states in brokering the good friday agreement, the united states has a big stake in this. this is the first thing. but on the bigger issue of foreign policy, i since two things. one is finally, i think there's a common perception that china and russia are serious threats. but in terms of dealing with these threats, there is no consensus. this is the weakness of the eu. the big number states have different ways of dealing with china. the small ones want a more robust policy. when joe biden finishes his talks with nato and moves on to the eu, he will really want to hear what kind of relationship you want with china, and are you going to go along with me as a coherent, united west in dealing with china?
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the united states does not want to go this alone. alix: i guess my question is, can they agree to disagree on similar things? can they all unite in saying they don't want china to be a military operation in africa. they don't want china to be a military might. they want to emphasize cybersecurity. can they disassociate that with the economics? as in, germany clearly needs china to sell its goods. can they do that? judy: it would be very difficult, actually. i don't think you can disconnect anymore because china is ubiquitous in some ways in africa and other parts of the world. you can't say we want this from china, but we don't want this from china. i think what we need is a coherent overall policy towards china on the economic once a view, and a strategic point of view. the eu is in africa, but it is a
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pittance to what china is doing there. we are talking about the west. we are talking about the europeans, the australian scum the canadians, the united states -- the australians, the canadians, the united states coming to denver -- coming together. guy: do you think the europeans trust that we will not see trump or someone like trump returning? because if that is the case, europe is on its own. judy: is it? guy: it felt like it was under the trump administration, wasn't it? judy: first of all, we don't know. joe biden is in a hurry and he wants to undo the mistakes very quickly that he inherited. he needs the europeans right behind him and he needs to get this done. he needs to bring it together not only in writing, but in practice of doing things together much more. he's got a very limited time. the europeans can't go it alone, and if they go it alone they get weaker and weaker. germany has its own agenda.
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france has its own agenda. perhaps tomorrow this will become clearer, when biden meets the european union, but talking about the europeans going it alone and strategic autonomy, this is just not on the practical agenda. alix: judy, thanks a lot. duty dempsey of carnegie europe and editor-in-chief of strategic europe. jp morgan sinking to session lows, down 1.6%, as jamie dimon says that the banking system is going to be in tough shape, and jp morgan is going to have to fight really hard against tough competition from things like square, saying banking is just not inventive enough to come up with something like that. guy: this is not the first time he's said something like this. jamie dimon pointing to what is happening in terms of the threat coming from fintech. the last time he did it, it felt like he was pushing for more regulation. now i think this is clear, he's
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basically making the point that we are in a real fight there. alix: also talking about net interest income for the year. seems to be right in line with estimates. we will follow that story as well. now let's get some market reaction here. eleanor taylor jolidon, ubp cohead of double equities, the story in the u.s. is going to be looking ahead to the fed meetings. the story in europe is still are going to see inflation in europe and para back -- and para back -- and pare back pepp. how do you prefer that? eleanor: i think we are getting leg which at the moment coming out of the fed which needs to prepare people slowly but surely for any kind of tightening they might want to do. they don't want to have the missed message of jay powell and
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messages misinterpreted by the markets, as recently as the end of 2019. so they are clearly preparing and massaging the market in the u.s. having said that, i think we have seen peak inflation in the u.s. i expect we are going to see much more of a quieter curve moving forward, and i wouldn't expect to see much tightening before we get to 2023. as regards europe, inflation is perhaps a hotter subject in european minds. people are more nervous about inflation than they would be in the united states, which could suggest which then leads to an earlier tightening. i don't think we are getting anywhere close to needing to do that in europe. guy: what does that do from an investment point of view? the fed is cautious to get the message ready. the ecb doesn't sound like lagarde in any shape or form is ready to do anything significant at the moment, other than keep the taps on. walk me through the investment
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thesis that goes with that. eleanor: for us, the thesis is an equity investment thesis, so we are looking at companies that can still create value regardless of what central banks are doing. that means we do stay away from value stocks, which need some kind of economic support in order to be able to perform. we prefer to have trades which do benefit from the fact that they can create value themselves. i don't think we are going to see a higher level of inflation in the united states. i think we are going to move away from some of the value trade we have seen during the first quarter and into the second quarter of this year, and return to a more growth, quality situation that we had prior to the enthusiasm of post-pandemic. alix: i guess the question then becomes what do you do, when you switch back to more defensive names?
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morgan stanley says they see growth now, but value later. does that hold when you are investing in europe? if so, when do you make that switch? i would suggest that one should never invest behind a factor. you should be investing behind companies which are going to be able to create value for their shareholders and for their stakeholders. we know how interested society is when there is regulation. we know the ideas with sustainable investment. that is what you are going to be looking at, rather than thinking i need to have this factor or that factor, which i don't think is a particularly attractive way of investing. guy: we are going to leave it there. great stuff. thanks very much. we have an interesting headline coming out from "business insider," talking about goldman sachs moving some traders to
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florida. that was certainly turn out to be a fairly big decision if it were taken. coming up, momentum in the logistics business. we have obviously seen the covid crisis deliver huge pickup in terms of what has been going on with logistics, and many companies have been pushing their businesses to third parties. we are going to talk about what is happening with the spinoff of gxo. mark manduca is going to be joining us to talk about that story. they are leaders around the world. they are about to be spun out of xpo. they have some really strong numbers they are talking about. we will find out how solid those outlook statements are with mark , next. this is bloomberg. ♪
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guy: ramping up the monday session in europe.
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-- wrapping up the monday session in europe. light volume, just obsession lows. equity markets continue to provide the we have been on for quite some time. especially in europe. in the united states equities coming utterly bit of pressure. ftse, dax, ibex, a pressure from the spanish market. up around .9%. range of businesses. madrid outperforming. the ftse up .3%. the car sector is one of the losers today, as are the financials. that is why were getting on performance from the tax. -- from the dax. autos down at the bottom. the travel and leisure sector also under pressure. we will get that news out of the u.k. earlier on.
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iag trading to the downside. worth keep an eye and what is happening with the oil prices. then you getting into a weird mix. real estate up. then you get into the technology sector, then you get into retail. retail data tomorrow. a mix in terms of the narrative being delivered from europe. cannot deduce much from that. phillips has a ventilator which has reduced sleep apnea. a bass of recall. that hit it -- a massive recall. still down 4%. e3, the huge gaming conference is underway. ubisoft one of those companies out with a new first-person shooter. it's stock up a little bit, .3%. keep an eye on that. then the vendee. -- then vivendi.
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not much action. maybe a pushback on the spinouts of the music business. bill ackman will be taking a stake in that. the market is trying to figure out what is happening. an idea of exactly how big that state is. we are up around .5% on that. it will be interesting if we see the guys going at it in terms of which direction the company will be going. i'm certain there is a joke in there somewhere. alix: i'm not the person to make that but it does remind me with the thing with herbalife. let's go to another story, logistics and transportation company xpo logistics is plenty to spin off its logistics unit later. abigail doolittle is looking into the strategy. abigail: a lot of logistics, indeed. the stoxx hail -- the stoxx hail
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over -- the stocks exhale over the last year -- the spin up of jso logistics, the logistics portion of the x po business, that will be the case going forward. it is expected to happen in the third quarter of this year. gx will be the -- gxo will be logistics part and xpo will handle the transportation. the gxo portion of the income has been around $6 billion. for 2020 close to $6.2 billion. about 35% of the overall revenue picture. this will be leaving the xpo and going off to gxo. tremendous performance. investors think this is the right move for both xpo and gxo.
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xpo in orange, beating the index. good outperformance. investors seem excited of this spin out of gxo from xpo logistics. guy: we have seen the note being published in we are starting to see details of what we think the financial performance of the new business will look like. let's bring in an old friend of the program, mark manduca. used to talk about airlines, now he is getting his hands dirty in terms of this spin out. he is gxo's chief investment officer. thanks for your time. let's think about the numbers this business can generate. you are positive we be seeing a solid margin number. 8% to 9%. how are you having the confidence this will be what the business can do? mark: you are very kind for the intro. this will be growing this year,
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the midpoint is around 30% from keep it up and next year -- from ebida, and next year -- this is not a flash in the pan pandemic play. it is more secular. the reason i moved here is because the contract logistics market is heading towards .4%, scale, global, good balance shoots -- good balance sheets. it is a hugely fragmented market and will become a winner takes all market. there are three big secular drivers underpinning the growth i'm talking about. it is outsourcing, automation, and e-commerce. alix: congratulations on the new gig. two thirds of the revenue comes from europe, one third from north america. how quickly do you grow those segments? mark: in terms of organic revenue we are forecasting 8% to 12%.
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that is organic. that is pricing power. that is volume growth from e-commerce, which makes up 14% of our revenue. the right place at the right time. when it comes to thinking about the organic growth opportunity, i think we are focused on the organic side because there's so much to play for. on the inorganic side it is rare to have our scale in the market with the second-biggest contract logistics player in the world. we can be a consolidator in this space. we have a balance sheet to do it if the right multiples come along in the right opportunities present themselves. it is an organic story and in inorganic student -- in inorganic story and being done at high returns. guy: you acquired k&n's contract business recently. should we talk about this idea you can do organic and inorganic? mark: the market is so fragmented.
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when you are as big as we are with 900 warehouses and about 100,000 employees, you will always run a bulldog type deal -- run a bolt on type deal. we are big in europe, two thirds, north america one third. i since if we are going to engage in organic growth -- alix: what is going to disrupt your thesis? what keeps you up at night? mark: there are number of things going on in the world which obviously are problems. you brought it up with malcolm, the ceo. you talked about the supply chain pressures. we have seen a lot of that talk on the weekend. we've seen warehouse prices go up. we talked about inflation on the ground floor in regard to the team that is seeing it. there a number of things that are concerned for our industry. i would say, these are exactly
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the reasons, the problem of the supply chain are exactly the reasons why third-party logistics will be a big area for the next five to 10 years. supply chains are becoming more complex and that 70% of the market that is still sitting on our balance sheet is waiting to be outsourced as people want to refocus their energies towards their own businesses rather than managing increasingly complex and automated supply chains. they need us, and we are here to provide a service. guy: in terms of the verticals, can you break it down? how much is e-commerce and how much is logistics areas. which you see growing fastest? e-commerce has been a huge beneficiary of the pandemic. mark: in terms of our growth area, e-commerce underpins our growth.
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40% of our sales. we also a big consumer skew in our business. food and beverage makes up 13%. consumer package goods mix up 13%, and consumer tech is also 11%. or than three quarters of our business is in nonindustrial markets. back to what i said before, the right place at the right time. our business is very diversified so we have no single customer making up more than 4% of revenue. when it comes to thinking about growth, one of the things i say it is the high value-added service we offer the customer's. one of them is management. when your family buys anything online that typical averages to return one and three things you by, which means someone has to manage that. that it's really complex for your average business and that is where we stepien. that is the area for growth. if it is done well it can be a margin increase for any business . it goes back to my point about
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how you can drive a high return business by solving customer problems will return in the high 20's, along with all the growth i talked about in the start. alix: specifically when it comes to workers, what is that like for you right now? mark: the nice thing -- inflation is never a nice topic. we are providing real service. it is even less of a problem. it is not just in the port of los angeles. post east coast and west coast, parts of the u.k. we are beginning to see inflation. the reality is inflation will be here to stay. in our contracts, we find customers wanting to bring inflation before it happens. they want to have motivated workers on the floor. it is also written our contracts . notably is our real estate
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liability matched in our contracts come in the inflation of our workforce is also written into our contracts. we are protected in regard to the business. i know your question was a global question. guy: we are all trying to figure out what is happening. the fed paying a great deal of attention to that. thank you very much, indeed. looking to hear more. mark manduca, gxo chief investment officer. european stocks wrapping up. ftse 100 dipping a little bit. the dax into negative territory, the cac 40 only up .2%. blow the surface come interesting stock stories. vivendi certainly one of them. keep an eye on that story. alix: coming up, let's say with the fed and inflation. henry mcvey, kkr head of global and macro asset allocation will be joining us next.
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his view of what is transitory and how the fed will handle it in the longer-term expectations of the world with lower rates. this is bloomberg. ♪
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ritika: this is "the european close." coming up, brad smith, microsoft president and chief legal officer at 5:00 in new york and 2:00 in san francisco. this is bloomberg. alix: the main event this week, the fed decision on wednesday. morgan stanley sigma market is not positioned for any hawkish surprised. let's get the private equity take with henry mcvey, kkr head of global asset allocations. he says the market is likely entering a new more challenging period for returns. equity markets are high, credit spreads are tight.
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henry mcvey joins us now. henry is also on the fed advisory board and cio at kkr. thanks for joining us. alix: give us the insight. what will happen to the fed and address the transitory inflation. henry: there a couple of things to keep in mind. first, the fed wants to separate the bond buying from the short rates. what i think we will see this summer or certainly by jackson hole is they start to talk about bond buying as being related to the tapering. they want to separate that that is pandemic, but they are not going to shift their focus on the average inflation targeting. the aig they're all about a year ago. they are fully committed to that. that is a more accommodative monetary policy and means inflation will run hotter than in the past. the fed has degenerate 50 basis
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points per year because of technological change and all of technological change and all the transparency it creates. i think we will have higher inflation but i do not think it will run away the way some people do. to that end, i think we will move higher but not unattractive levels. guy: what does higher mean? are we talking 3%? 4%? henry: ultimately at kkr, we think rates will back up to 2.5%. when you look at the past couple of recoveries, bond yields have gone up about 160 basis points from the bottom during the first parts of the recovery. we've only moved up about 100. there is wiggle room that to make you north of 2%. that is the bull case for why rates will go up. let me give you the offset. transitory inflation is probably peaking. the bond market, and we got the huge print last week started to
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rally. i think -- savings is supposed equal investment. i do not think that is the case. there is so much money in the system that savings will be above investment in the yarn for yield will remain huge. we have over 200 companies globally, we own an insurance company. what central banks have done is they've taken away from savers and that has created pent-up demand for yield. you see that in the way we are ultimately starting to see clients need income in their portfolios. alix: there is a huge longer-term implication. even at rates of 2.20 5%, that is so low. does higher inflation, growth that is going gangbusters, more savings and lower rates, does that imply investors left to the risk curve? what is the implication. henry: ultimately it will be a
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combination where what happens when that unfolds as you will see the more speculative parts of the growth market come under pressure. what will win be cash flow and pricing power. we are in an environment where the input costs are rising faster than the consumer price index of the output cost. that creates a margin squeeze. we saw this when china built out its fixed investment two decades ago. companies were not ready for that. 86% of the companies in the s&p next year are supposed have rising markets. it is not going to happen. there will be a focus on reflation investment. there will be a focus on pricing power, and when you think about what we are doing across private equity, we have a real asset portfolio. that is where we are driving our balance sheet. alix: -- guy: what are the portfolio companies telling you about how that cost story is developing? where is it coming from?
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talk me through what you're seeing in terms of input costs, what labor is doing, and how that is shaping your opinion of how this process is unfolding? henry: labor is the area of the most pressure globally. if you look at the u.s. workforce there are 9.5 million available jobs. about 7 million unemployed. about the 7 million unemployed, about 4% are in the travel and leisure sector. that means you have about 4 million people for all of the other job openings. that is where the tension is coming, from drivers to manufacturing and even now you're starting to see a boom in services. ultimately i think you will see rising labor costs. real wages did not go up for the past decade. it drives hugely in terms of how we think about applying capital, which is the whole prior cycle was about betting on the slowdown in growth and getting along secular growth.
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we still like secular growth but what we are telling you is you will see a cyclical recovery. you will need more reflation assets, more infrastructure, more real estate, ultimately more asset based finance. in private equity you will probably have companies with more pricing power that can do acquisitions. i saw your earlier segment on corporate carveout. that is happening globally in japan, korea. it is very bullish for companies that want to get better, that can ultimately optimize their footprint, particulate around labor costs. alix: let's get to the geographical location of where you might go. in some ways the strong growth will benefit the u.s.. then you have the emerging-market angle, if you go value you will go europe. can you give the regional breakdowns? henry: ultimately we traffic more in private markets than public markets. we are trying to get long areas where we are linkedin to rising gdp per capita.
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most of the big public indexes in europe and asia own multinationals and banks. you have a revolution going on with the global millennial. there are 60 to 80 million in europe and the u.s. and their 800 million global lineal's in asia. they're all buying differently across health care and financial services. that is what drives our investment. the human element of the pandemic has hit areas such as india as well as southeast asia. what we saw the beginning of the recovery is a show was leading us out. right now what we see is the u.s. is. we are starting to see explosion in services. the concept of nesting where individuals want to fix up their home and do more domestic travel. they want to get reunited with their family and friends and have experienced. those will be multiyear themes and there is capital deployed behind that. alix: last question, small caps, u.s., what do you do? henry: you have to own more than
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you did in the last cycle. small caps bottomed and were in a bear market in 2018. they started the bull markets when the vaccines were announced. ultimately the ones that were levered, the energy transition levered consumer spending and industrials, they will do well. it will be a mix. it is not valuing growth. it is owning companies with good management can improve their businesses. alix: is such a pleasure to catch up with you. we appreciate your time. henry mcvey. thank you very much. this is bloomberg. ♪
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alix: we are waiting for the bilateral meeting between president biden and president erdogan to take place. bloomberg television will keep you updated. there's a lot happening next 24
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hours. president biden will speak at the nato summit. orest as johnson is hosting a news conference which i feel will not be good news for you. -- boris johnson is hosting a news conference, which i feel will not be good news for you. guy: that will take place at 6:00. in an hour time we will be getting that. tomorrow the u.s.-eu summit begins in brussels. that meeting very much focused on china. a look ahead to later in the week. president biden traveling to geneva for his meeting with vladimir putin. alix: that wraps it up for me and guide. coming up on balance of power, novavax president stanley erck will be joining david. you can also catch up with our interview with him on the cable. this is bloomberg. ♪
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>> from the world of politics -- >> i just don't want to repeat the infrastructure week every
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month that never happens. >> to the world of business -- >> things like covid really reinforce that you want to have control of your supply chain. >> this is "balance of power" with david westin. ♪ david: from bloomberg's world headquarters in new york to our tv and radio audiences worldwide, welcome to "balance of power." we begin again today with president biden in europe. this time in brussels for meetings with nato and the eu. coming off of his does go days at the g7 summit in cornwall. we welcome ian bremmer, founder and president of the eurasia group. you coined the phrase g0 before. i heard tony blinken say this is the most consequential g7 meeting he is ever seen. on a spectrum from zero to most consequential, where you rank this one? ian:

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