tv Bloomberg Daybreak Europe Bloomberg August 13, 2021 1:00am-2:00am EDT
♪ >> good morning from bloomberg's european headquarters in london. this is "bloomberg daybreak: europe" and these are today's top stories. the reflation trade bounces back. u.s. 10 year yields are set for their first back-to-back weekly gains since march. jp morgan's -- sees them on an upward trajectory. deltek concerns about.
china now partially shuts one of the world's busiest container ports. beijing's crackdown also hits sentiment. disney gets its magic back. the entertainment giant jumps in extended trading. subscribers top estimates and its parks make a profit for the first time since the pandemic. let's check in then on the markets with another record close over in the u.s. the s&p 500 posting gains once again. over in asia, not taking the cue from the u.s., partly as a result because of the concerns about that delta variant, not just in china but also in south korea and japan. and as we mentioned, the closure of that port in china raising questions about supply chains. msc i asia-pacific down 0.2%. in europe, as we look to the
futures, unchanged at the moment, 4223. is the reflation trade back? that's what's possibly being signaled by a grind up in u.s. yields. ppi stronger once again. let's get some analysis in terms of what's happening with the reflation trade. investors are assessing their level of risk to the u.s. and europe from the delta variant. we have already seen it continue to sap that sentiment in asia. taking a positive view on the outlook for reflation is someone from j.p. morgan. bond yields and cyclicals bottomed last week and are now on an upward trajectory. we are joined now by martin malone, chief economic advisor at alphabook. thank you for joining us. do you agree? is the reflation trade back? pres. biden: well -- martin: well, i don't think the
reflation trade ever went away. clearly, it was a problem in 2021. we are fundamentally and structure -- clearly, it was a problem in 2020, not in 2021. that would be 9 billion by the end of the. -- the end of the year. america can probably enjoy another 5 million worth of jobs between now and the end of the year at a pace of one million a month. we are very bullish. we expect 5000 is potentially the upper bound that we can reach before christmas. >> martin, how do you look to the delta variant then? it's not just china where we are seeing the impacts. the impact on the port, but also in the u.s. bloomberg has a story on this, hospitalizations, the desperate search for hospital staff. how do you look through the delta variant and for that more positive outlook -- the delta
variant for that more positive outlook? martin: we are bullish on the delta variant because it has led to an increase in vaccines across america. i think we can see in india, u.k. and israel, a very significant divergence between vaccine uptake, levels of immunity and levels of -- scenarios. it is very clear for everyone to see. i think this is behind the acceleration in vaccines that we are seeing. we are at a pace globally of one million per month for the third consecutive month, and it's very good to see that acceleration in the states. >> how do you read the risks around inflation? the cpi print that we got out earlier in the week largely in line with estimates. ppi stronger again in the u.s.
there's continuing questions as to what extent that will be passed onto the consumer and how that feeds into the reaction function from the fed. how are you assessing where we stand in terms of inflation risk? martin: well, we have seen 21 central banks hike interest rates in 2021. we expect actually a very sharp uptick in central banks hiking interest rates in september. there is a very good chance the fed will taper or announced the taper on september 21, 22 at their meeting. it's very good news that we have higher inflation. it's very good news that we have higher growth. we have seen a peak out in inflation expectations in germany this week and a slight peak out in core cpi. the inflation issue is very tricky. inflation levels are higher. they may not be rampant, but we want to see more central banks tighten. this is actually the exit strategy because of better economic outcomes. >> martin, we are looking at
around 1.35% in terms of the u.s. 10 year. there is a view from some analysts that you will continue to get a grind higher in those yields, particularly as the focus shifts to of course what the fed's action is going to be in terms of tapering, whether it's august or september or later in the year. what's your view on the trajectory for u.s. yields? at what point do they start to erode the earnings outlook for corporates? martin: currently, if yields are around 1.3, they actually started this year up 1%. we saw a peak in easter of around 1.75. we've had this technical rally of the past few months, which has been very positive for stocks. we want to see a gradual rise in yields of about 10-15 basis points per month. we would like to see higher yields because of the reflationary trade, which is ongoing. and you know, the negative from
markets would be if we see a counter trade, and for instance, a break of 1%. we are fundamentally bullish global stock markets. one part of us scaling back that bullishness, if we ceded the bond yield rally say towards one. we don't expect that. we expect 1.5, 1.7 or even 2% before the end of the year. >> is there anything that holds the greenback back at this point? you are talking about a higher yield environment, that shift to further growth as well, out of the u.s. in particular. is further dollar strength baked in by investors? should it be baked in? >> the dollar -- martin: the dollar declined 10% in 2020. our main fundamental factor on bullishness of the u.s. dollar, we expect another 3%-5% this year on dollar strength, so the
dxy index of 93 at the moment is a very solid place to remain long. volatility levels across all markets, even crypto, are actually relatively low, and that means that we must have significant levels, we should have significant levels of leverage in a low volatility environment. it's a very dollar positive environment, simply because america is outperforming at so many levels. >> martin malone, thank you for those insights. you are staying with us. we will get more from martin. let's get the first word news with annabelle droulers in hong kong. >> thanks. the u.s. has cleared third jobs for some immunocompromised individuals. pfizer, biontech and moderna covert shots cannot be used, but the fda says other fully vaccinated individuals do not need a third dose. meanwhile, a u.s. supreme court judge has rejected a
challenge to indiana universit'' requirement that alls students be vaccinated for covid for the coming semester. the case marks the first time the nation's highest court has ruled on a vaccine mandate. the pentagon says it is sending about 3000 extra u.s. troops to afghanistan to help evacuate clement -- evacuate diplomats. the u.s. currently has around 4000 people at its embassy, many of them american citizens. taliban fighters are reported to have captured the birthplace of the movement, and the second largest city in afghanistan. they were driven out of the city during the u.s. led invasion of 2001. police in plymouth and southwest england have confirmed six people, including a suspected gunman, have died in a firearms incident. three females, two males and a suspect died. no motive has yet been reported. murders committed by firearms average about 34 per year in the u.k.
airbnb shares fell during late trading after it forecast a declining quarterly bookings. that is compared with pre-pandemic levels. the company blamed the spread of the delta variant of covid-19 for the gloomy outlook, but it did be wall street's expectations for second quarter revenue, which came in 30% up on 2019's levels. global news 24 hours a day, on-air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. tom: annabelle droulers, thank you very much indeed. a delta outbreak partially shut. one of the world's busiest ports. more on the fallout from the virus spread in china and the ongoing regulatory clampdown. you can see a live shot there of shanghai, the financial heart of china. markets there under pressure as the regulatory squeeze continues. this is bloomberg. ♪
♪ >> let's start off with that alibaba news. >> executives saying that they are going to be facing higher taxes going forward. >> it's important to comply with all the regulations. >> learning that tiktok owner bytedance may be eyeing a revival of its hong kong ipo plans. >> local media in china, 21st century business news, as well as bloomberg news, saying that bytedance has denied that report, saying it's inaccurate. >> may be hit with a $1 billion antitrust find, you have tencent being sued over its youth mode. >> investors for the past decade were basically pulling the wool over their own eyes. >> i think things will be much clearer under the new rules over
the next one or two years. >> the chinese authorities are in their long march. >> online insurance companies signaling china's push to regulate the economy will be deep and sustained over the next five years. >> this will be the most significant of all the regulatory resets that china has done. we think it's going to reshape the landscape for china equities pretty quite profoundly. tom: a round up their of the key moments in what has been a q. week for china's regulatory environment. we've seen a wave of crackdowns culminating and a signal that there are likely to be more to come. that regulatory environment, as well as the virus situation, is playing into some negative sentiment in the equity session. the msci asia-pacific down, the csi at 300. in terms of technology in hong kong as well bearing the brunt of those losses, down more than 2%. the latest fallout, the
partial closure of a port in china, which is raising fears of a global hit t shippingo. martin malone still with us from alphabook. martin, how are you assessing the covid delta impacts on china? are you having to rerate the chinese outlook in terms of the economy, the economy on the outlook for china, are you reassessing that now? martin: not at all, actually. i think their very effective management of the virus, they have a fantastic rollout of vaccines, and the bigger picture on china is actually very, very simple. we have spent the last 20 years in a dramatic growth story in china. the economy went from $1 trillion to $15 trillion. that growth is going to continue, but at a much slower
pace. in the next five years, it's going to go towards $25 trillion, still very, very aggressive growth level, but single-digit, rather than double-digit. and the base case is that the last two decades was not really regulatory driven, and now we have the flip to a domestic driven focus by xi jinping, and that is looking at everything that is very positive for chinese consumers. the regulatory capture in the short-term it may be negative various sectors, technology, medical, education. for the normal person in the streets in china, is actually very good news on a medium-term basis. tom: but for the investor and this is key, you touched on this, and this was outlined in that five-year plan in terms of that regulatory framework is the long-term. they stated that in the five-year plan, this is about a long-term plan.
for the short-term, medium-term investor looking at china, is a time to avoid too much exposure at this point and wait until the dust is settled? martin: quite difficult to say actually. china is a very significant part of global economic conditions. there is a lot of ways to get exposure from china. for instance, if we look at big tech in america, the big five who were very positive have a market cap of a trillion dollars. we expect that to go to -- of $8 trillion. we expect that to go to $20 trillion. they are globally focused. that's the same with a lot of asian names in korea, taiwan and japan. it's a very tricky situation just to focus just on one country because financial markets are so globalized. tom: what is market
reaction if we get a significantly divergent picture from the pboc and the fed? we are hearing from officials now suggesting that there should be a rate cut. of course, the fed looking to taper. that divergence, what will be the market reaction to that? martin: we will potentially see that in the currency market. that's one of the reasons why we are fundamentally bullish the u.s. dollar. the currency market is where we are going to see that. the growth part of it we can see within the aussie dollar. if we see a very significant growth acceleration in china, that will be below 5% potential growth levels, that would be bad news. but we are not expecting that, because the entire focus on china for the next five years is domestic, domestic, domestic. they may not cut rates but they
absolutely will target credit easing to specific sectors to make sure growth does not decelerate below 5% potential levels. >> that targeted support, you mentioned the currency, cny. martin malone bullish essentially, also on the delta variant, thinking the vaccine rollout will assuage concerns. martin malone, chief economic advisor at alphabook, thank you for joining us. from regulation in china to regulation in the u.s. bloomberg has a scoop that the new head of the federal trade commission thinks more mergers should be blocked rather than relying on other remedies to fix the deals. joining us with the details is bloomberg's bruce einhorn. what does this say about the biden administration's approach to m&a? bruce: this involves a letter from the head of the ftc to
massachusetts senator elizabeth warren. and that, khan said she is skeptical of the process of imposing -- on how companies operate. she said these so-called behavioral fixes are difficult to monitor, they often fail to prevent the merged companies from engaging in anticompetitive contact. she said asset divestitures is another common way for companies to win approval for mergers, that those could also be problematic. tom: how does this fit into other recent moves from the ftc in terms of the framework, in terms of what they are looking to build out in response to some of these concerns? >> lina khan has only been in their job since june. that's one president biden and named her as chairman of the ftc. since then, she has already
taken steps to beef up enforcement. she is warned companies proposing mergers that the ftc could investigate and challenge their deals, even after an initial review period expires. in this letter to senator warren, she said i believe antitrust agencies should more frequently consider opposing problematic deals outright. tom: we've got a major deal involving lockheed martin. is that at risk now as a result of this additional scrutiny from the ftc? bruce: yes, i think that's a fair conclusion. lockheed has proposed a $4.4 billion deal to purchase aerojet rocketdyne holdings. people see that as a real litmus test for how the administration is going to address antitrust. raytheon technologies has objected to the deal, in part
because it would put one of its major suppliers in the hands of lockheed. senator warren has also warned of the harms if a deal like this goes forward. this letter does indicate that the biden administration may not allow this just to sail through. >> bruce einhorn on the evolving views of the ftc and the potential implications on some of those deals lined up in the u.s. coming up, elon musk has touched down in berlin before the electric car maker hosts one of the front runners to succeed angela merkel as chancellor in germany. we will get the latest. this is bloomberg. ♪
tom: welcome back. this is "bloomberg daybreak: europe." elon musk has touched down in berlin this morning to meet -- this morning. -- transforming germany's auto industry is a key concern for september's important national election as europe's biggest economy tries to modernize one of its key sectors. let's get more from maria tadeo, who is outside that tesla factory. what is the significance of elon musk's visit today? maria: good morning, tom. we are outside of the tesla berlin-brandenburg site, which you can see is under construction. i have to say, it is 7:00 a.m. in the morning here and there has been a constant flow of activity here. you see a lot of trucks in and out and a construction that does seem to be working in
operational full-time. we are expecting that message from elon musk. he said that this will be tesla's most advanced but also high-volume site making electric vehicles. this is a site that has been problematic for the company. there has been a number of delays in terms of the opening of the production site. we know that the ideas to open in 2021, but exact date is still problematic. elon musk has complained about the famous german bureaucracy, saying there's been a lot of paperwork around this. on that note, speaking of shortages, it's also interesting that this visit is coming after a day in which elon musk tweeted that "we are operating under extreme supply chain disruptions." ubs upgraded their price target for tesla. it's always unclear what elon
musk will do on a day on a visit, but of course, there's a lot of expectations here in terms of the political ramifications of this. he will be meeting the cdu chancellor candidate here. tom: great stuff. we will be coming back to you throughout the morning. that is maria tadeo in berlin for us outside of that tesla factory being constructed. elon musk, the ceo of course, will be on the ground in the next few hours with some of those german politicians. let's check in on the markets as we lead up to break. in asia, the msci asia pacific down. in mainland china, csi 300 on. bigger losses when it comes to technology. once again, it is tech leading the selloff in hong kong, down about 165 points currently. in korea, concerns about semi conductors and the delta variant. blockbuster results for disney as consumers subscribe to its streaming service, disney plus.
shares rally in after-hours trade. we are going to give you the details next. this is bloomberg. ♪ (announcer) back pain hurts. you can spend thousands and still not get relief. now there's aerotrainer by golo. you can stretch and strengthen your core, relieve back pain, and tone your entire body. (man) and you're stretching your lower back on there. there is no better feeling. (announcer) do planks for maximum core and total body conditioning.
♪ tom: good morning from bloomberg's european headquarters. i am tom mackenzie. this is "bloomberg daybreak: europe." here is what you need to know. the reflation trade bounces back, u.s. 10 year yields are set for their first back-to-back weekly gains since march. jp morgan sees them on an upward trajectory. delta concerns about.
china's outbreak partially shots one of the world's busiest container ports. beijing's crackdown also hits sentiment. disney gets its magic back. the entertainment giant jumps in extended trading, subscribers top estimates and its parks make a profit for the first time since the pandemic. it was a slightly different picture, by the way, for airbnb. concerns about bookings as a result of the delta variant. a positive picture for disney in terms of those corporate earnings. we can check in on the markets, in terms of summer losses in terms of the asia-pacific. the restrictions in china continue to impact on the -- a slow pickup in terms of vaccinations. officials in japan flagging that as an issue. the msci asia pacific down. you had a record gain once again
for the s&p 500 overnight. the futures currently flat in europe. 4,222 as we go into the weekend. disney posting a strong set of results and defined its streaming skeptics with a beat on new subscribers to disney plus. shares are rising in post market-rate. and ceo bob chapek defended the company's strategy for box office releases on streaming and in theaters. >> a lot of the leaders of our creative and distribution teams determined this was the right strategy because it would enable us to reach the broadest possible audience. tom: joining us for more is laura wright. what are the key takeaways from these disney earnings? laura: disney beat expectations with these earnings. the stock was rallying in post market-rate. disney plus now has 160 million
subscribers, an increase of 12 million from the previous quarter. investors are saying that disney's pivoting towards that direct to consumer model. one activist investor from a hedge fund has been calling for disney to prevent more aggressively towards disney plus over the last 12 months. the streaming business is lossmaking, but disney reduced the extent of those losses significantly this quarter. the parks were profitable for the first time in the pandemic, a real milestone for disney, but there is concern around the delta variant. some airline data starting to show signs of cancellations to orlando. one negative from these results was the linear network. disney is the parent company of espn, it has the rights to the nfl, nba, major league baseball. there was a significant cost due to sports resumed. disney has espn plus. if it can bring people online to
the streaming business through espn plus, that generates more revenue per user than even disney plus. tom: more foots in the parks, how long will that be sustainable? how do they continue to pull in subscribers? how do they mesh those offerings and compete in an increasingly competitive sector? laura: they are focusing on the simultaneous release model. they release films in cinemas and on the disney plus platform. subscribers pay an additional $30 to access those films. there is a risk that they could be cannibalizing studio revenue. you remember the contentious case of the "black widow" release with scarlett johansson. she says she has been unfairly disadvantaged because the majority of her earnings is coming from those studio releases in cinemas. netflix is focusing on original content generation going forward.
netflix will release 70 films this year. they decided they would venture into gaming. barclays sees this as a real revolution in the online streaming space. disney plus all enlarged in 2019. they have 160 million -- 116 million subscribers. netflix has 210 million subscribers so the space is certainly heating up. tom: some rapid onboarding of subscribers. thank you for that breakdown. let's get more on this with matthew bloxham, who covers media for bloomberg intelligence. matthew, in terms of that subscriber rate for disney plus, do you expect it to be sustained, the momentum that we are seeing? matthew: absolutely. i think on the call yesterday, they were clear to point out that they do still have to launch the service and a number of important markets.
with those lunches over the next 12 months or so, you will continue to see strong growth of the disney plus platform, and still potentially some opportunity. definitely encouraging signs about momentum. tom: do we have any clarity on pricing for disney plus? are they in a position to start to raise some of the pricing of these offerings? matthew: they have went through some price increases in some markets. they said -- was down despite price increases. i think that is giving them encouragement that the market can absorb price increases in select markets. it's a market by marketing. about 40% -- it's a market by market thing. about 40% of the subscribers are
in india. >> how potentially damaging is this spat with some key talent when it comes to in-cinema releases versus director streaming services releases? can they just kind of look past these arguments by actors? matthew: you know, i think they are trying to look through it. i think without calling out scarlett johansson yesterday, they were definitely trying to say they are working hard in the background to adjust the model for how they pay talent. again, they were very clear that streaming is a very important part of new content releases going forward. the cinema business was under pressure before the pandemic hit anyway. i think this just accelerated their plans. they say they take every release on its own merits. with some of the ones coming up, they were very clear that the theatrical release, for example for "free guy," was taken out of their hands.
it came as part of their distribution agreement. i think very clear signs from them yesterday that the future is going to be leaning even more towards streaming over cinemas. tom: the parks business profitable for the first time since the pandemic. we have to talk about the delta variant. hospitalizations in states like florida, texas, but also in asia. hong kong has a part, japan as well -- has a park, japan as well, shanghai. what are the concerns around the parks part of the business in terms of what we may see in terms of consumer reluctance? >> they are obviously sensitive to the delta variant and what it might do to them. as things stand, they are still seeing very strong demand for visitors to the parks business into the next quarter and beyond. and they have also launched more
cruise services. i think consumers are kind of looking to that. they will have to respond if they close down again. as things stand, consumers are wanting to visit the parks and they are operating largely at full capacity. looking pretty optimistic for them in terms of what they can control. tom: still tapping into a lot of pent-up demand for the parks services. matt bloxham, thank you for that insight. let's get the first word news with annabelle droulers in hong kong. >> thanks, tom. well, the u.s. has cleared third jabs for some immunocompromised individuals. pfizer, biontech and moderna covid shots can now be used, but the fda says other fully vaccinated individuals do not yet need a third dose. meanwhile, a u.s. supreme court judge has rejected a challenge to indiana university's requirement that all students be vaccinated against covid for the
coming semester. the case marks the first time the nation's highest court has acted on a vaccine mandate. the pentagon says it is sending about 3000 extra u.s. troops to afghanistan to help evacuate diplomats. the u.s. currently has around -- has more than 4000 people at its kabul embassy, many of them american citizens. taliban fighters are reported to have captured the birthplace of their movement, and the second largest city in afghanistan. they were driven out of the city during the u.s. led invasion of 2001. police in plymouth in southwest england have confirmed six people, including a suspected gunman, have died in a firearms incident. three females, two males and the suspect died. no motive has yet been reported. murders committed with firearms average about 30 per year in the u.k., which has some of the world's's gun control laws.
after spending a decade of trying to revive, adidas has sold its underperforming reebok business for around $2.5 billion. the majority will be paid in cash, with the deal expected to close in the first quarter of 2022. authentic brands has acquired more than 30 names in the growing consumer company line. -- line-up. global news 24 hours a day, on-air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. tom? tom: thank you very much indeed. earnings season is winding down. cyclical stocks have consistently beaten estimates in europe, but will that continue into the second half of the year? we are going to discuss the earnings outlook up next. this is bloomberg. ♪
daybreak: europe." welcome back. as earnings season is winding down, cyclical stocks have consistently beaten estimates in europe but will that continue into the second half of the year? and where uncertainty about the pandemic persists, how much will china's crackdown also way on future earnings? we are joined by louise dudley from hermes fund managers. let's talk about your key takeaways from this earnings season and what portfolio changes you have been making in light of some of these details. louise: so definitely a really strong earnings, record beat across both revenue and earnings, and really setting companies up for a strong second half of the. we continue to see those economic rebound names coming through strongest. on the financial side, a lot of
the companies coming out with pure provisions, things looking more rosy. that cyclical, that value risk on trade continues to persist. and so really, that's the key thing. cannot talk about earnings without mentioning inflation. it was probably the most -- probably the word we heard the most. a lot of companies where they have big labor forces, we are seeing that tight labor market coming in and prices coming up. definitely in july, we saw those companies which had strong profitability being rewarded, and those companies that had control of their pricing power, that kind of large cap tilt, also being favorably rewarded. a couple of those trends coming through, but definitely inflation the watchword i think for next quarter in terms of those earnings.
how much will that impact companies that do have those more innovative areas, those newer products, that do have that pricing power are going to be the ones that continue to be rewarded. tom: let's unpack that little bit. which sectors or which companies are best positioned in terms of being able to absorb some of that pricing pressure? you talked about the big caps, is that where the focus should be? louise: yes. actually, looking across the world, the u.s. continues to look stronger than europe. the u.s. consumer continues to be very strong. and although we have, you know, seen some supply chain hurdles, definitely the price of freight extremely high at the moment. but it's those companies that have either been able to relocate some of their distribution to be more localized, that they do have that kind of control, they are the ones that are doing better. it's really, as i mentioned,
just the large-cap, the names that are may be a bit closer to the consumer that have been stronger brands are the ones that we are looking at the moment. >> i am thinking about the reopening stocks in light of the delta variant in the u.s. we are seeing hospitalization rates in some states like florida and texas at very high levels indeed. are you rethinking the reopening trade at all? louise: yes, so hospitality has not come back quite as strong as some were expecting. we continue to see that being pushed out may be a bit more, so some of those cruise liners, certainly some of the airlines as well within europe, where things just not have come back on board quite as quickly, people are still cautious. the rise of delta globally is also impacting that. may be things not quite as rosy
as they could be, but we are seeing some consumer discretionary spend, particularly within the high-value markets, high-value areas of the market, so those high consumer goods names looking most favorable at the moment. you know, there was a bit of that revenge spending coming through, and people do want to spend money on going out again. the concern on delta is there, so it's sort of weighing those two things at the moment. >> cyclicals, do you expect that to be sustained in the week said? louise: yes, we do. it has been pretty strong for them. as we come out of earnings season and everyone starts to focus on next year, and has very much been the type of market where everyone is focusing on that outlook. you know, yes, companies have been beating, but irrespective
of some of those beats, if the outlook has not been as strong, companies have been punished. definitely forward -- definitely looking forward to those companies that continue to do well. this brings in the china concern, were some of those markets really being impacted in the next couple of years, where you know, there is uncertainty about how those companies will be impacted by some of those changes. to a certain extent, really eroding investor's trust within that market and therefore less favorable on that looking forward. >> an erosion of trust in the chinese market, maybe something officials have not counted on when they laid out this regulatory framework. maybe they don't even care. louise dudley, thank you for your time this morning, portfolio manager for global equities at hermes fund managers. the fda has cleared a booster shot for people with weak immune systems. we thought this was coming, now we have the details.
♪ >> the u.s. government should open up. there is no reason not to. you know, you can fly from countries that have much higher covid infection rates, but you cannot come from countries in europe where infection rates are much lower. that is not a risk-based approach. when it's going to open up, i couldn't tell you. it's something we continue a dialogue on with the administration. >> jetblue's ceo calling on the u.s. to open up travel. tourism continues to be impacted by the spread of the delta variant. countries including japan and australia are facing the worst impacts so far from the virus spread. in the u.s., the fda has cleared
the pfizer and moderna vaccines in the last hour or so as booster jabs for some people with weekend amused an -- weaker immune systems. what is the significance of this fda approval for booster shots? >> the people who are most likely to fall severely ill or die from coronavirus infection are those who don't have a strong immune system, who cannot work with the vaccine and th eir own a immunity to be the virus. the fda has said that group of people, people who have had an organ transplant or are fighting cancer, that they should get three doses of the vaccine. they are hoping it boosts their antibody levels so if they see the virus, they will have a better shot at beating it. this comes as other countries in the world don't have access to any vaccine at all. we are seeing an issue of any quality care across the world. when it comes to the u.s., where
there is plenty of vaccine, they want to make sure it is getting to the people who need it most. >> that's the u.s.. and china, there are concerns about the efficacy of the vaccine in china but they have been successful in curbing the latest outbreak. what the have they been doing -- what have they been doing? >> china is doing everything that is known to be done when it comes to controlling coronavirus infections. they are shutting down travel, banning the movement of people from trains, subways, buses, reducing airline flights, shutting down ports, they are mass testing everyone in entire cities to make sure they are catching every single one of these virus cases. and their vaccination rate is phenomenally high. they are well over 50% of the population is vaccinated, be it less potent vaccines than in other places. when you put all of those pieces
together, when you have masking, social distancing, restrictions on movement, isolation, quarantines, lockdowns and vaccines, then you get the virus under control. >> different picture in australia and japan. what's going on there? >> these places also have access to all this information and all of these products. they are not countries like in latin america, south america, some parts of asia that don't have access to vaccinations. but what they do have is a reluctance to embrace some of those things. vaccination rates in some of those places are pretty low and they are tired of these lockdowns. we keep hearing these stories of people who are going out and looking at houses, or going to karaoke bars and spreading this delta variant. as we have been talking about, the delta variant is incredibly potent. every person that has it infects 6-8 other people. when you are getting out into public with those kinds of numbers, you are going to keep
that virus spreading unless you go into some sort of tight lockdown and there is reluctance to do that in some places like australia. >> airbnb touching on the impact the delta variant, in terms of rental and that demand. how is that playing into airbnb's prospects? >> airbnb is going to take a hit on this one. they said they are going to have a drop in bookings in the next quarter because of this delta variant and. people know that going out there is going to expose them and they are reluctant to do that. the biggest hit will come in the international markets but we might even see in the u.s. and europe where people will be less excited to go out and travel. people are going to hunker down to get through this next wave. tom: our bloomberg health reporter with the latest on the virus situation, the delta variant, particularly in asia. that is it for "bloomberg daybreak: europe." the european open is up next. stick around for that.
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>> good morning and welcome to bloomberg markets, the european open. i'm tom mackenzie. mark cudmore joins me in singapore to take us through all the market action at this hour. the cash trade is just less than an hour away. here are your top headlines. the reflation trade bounces back. u.s. 10 year yields are set for their first back-to-back weekly gains