tv Bloomberg Markets Americas Bloomberg October 1, 2021 10:00am-11:00am EDT
guy johnson. ♪ guy: friday the first of october. 30 minutes into the trading day in the united states. from london, i'm guy johnson. alix steel is over in new york. welcome everybody to "bloomberg markets." they can't make up their minds in d.c. they can't make up their minds on wall street, it seems. alix: a terrible close up to september yesterday, and of that third quarter. today we are chopping around. my board today is party like it's 1991. you had stocks kind of rolling over. the dow managing to hold on. merck rallying the most since 2009. yields go nowhere, but off of the highs we have seen the last couple of days. the question is always going to be what happens to the supply
chain and power prices. natural gas may be getting a bit of a break here, but the path of least resistance seems to be higher, and that will have severe imprecations across the board. guy: let's talk about what is happening in the manufacturing sector because it is being affected by those issues you raised. we get ism manufacturing. the data has been disappointing of late. this is positive. ism manufacturing, the headline number, 69.1, up from 59.9. prices paid, this is where life gets interesting, up to 81.3, up from 79.4. the survey was 74.5. we are at 81.2. alix: new orders for ism coming in also strong, 56.7. that is interesting. you have the higher prices paid, but new orders strong. sequentially also higher. at first blush, it seems like a
relatively strong read, but we want to dig deeper with tim fiore, ism manufacturing survey committee chair. walk us through the numbers. what stood out? tim: demand is still rocketing hard. customer inventory levels are still at record lows. absolutely positive. production side employment was similar to last month. performed relatively well, but still has a lot of headroom to move. the story was in the input side, and we did some reversals here because of suppliers having more difficulty delivering and prices going up again following three or four months of softening. so that is a bit of a disappointment, but the inventory counts maintained a high level. a lot of finished goods now along the supply chain, but a really good report. guy: we were in the 90's on the
price is paid, but picked back up into the 80's. these are still stratospherically high numbers. let's talk about where the bottlenecks are right now, where we are seeing the constraints. if i take a look at the pmi data , they can see them pretty much everywhere. it is acting as a restraint on the manufacturing sector's ability to satisfy the demand. what you see in -- what are you seeing? how do you compare and contrast the issues? tim: i think the predominant opinion is that this is going to continue into next year. i think there is a lot of hope that we see q1 improvements, but starting to get a little bit more pessimistic about that. hurricane impact are coming back into play in the plastics market, primarily. polyethylene, probably coupling, -- polypropylene, packaging
products certainly. we've got long lead times and increasing prices. it is really an operations manager's nightmare. alix: new orders are the highest we have seen since march, and the backlog of orders is still quite high. timothy: it is excellent. we just keep driving more and more demand, and it keeps building up as reflect by the backlogs. labor issues are still there. about 3% and kitted they're getting better. that is not much, but in august it was zero. so still at 83% looking tire, and about 40% of those works pressing difficulty. the same issues continue, although 7 million people came off the on the plummet rose in the month of september. we saw the big benefit of that in september, but hopefully we
will see more and more of that. guy: what do you think next month's numbers are going to look like? timothy: as long as leadtimes keep getting pushed out, new order rates are going to continue to accelerate. i am hoping we will see some relief on the other plymouth side and see the production number jump up into the mid-60's. i would expect that at this point with this kind of demand, and we just can't seem to get there. consequently, i would hope may be the inventory would come down a low bit down -- down a little bit. i'm still suspecting -- still expecting a very high pmi in the high 50's, low 60's for october. alix: what i find interesting, the stagflation conversation seems to be taking deeper root over in europe and the u.k. with their pmi's that were released today. is this that, a potential stagflation to an area --
taxation scenario, or is it something different -- stagflation scenario, or is it some big different? timothy: the earnings calls are very positive that the pressures are getting passed on to clients, so that is all good. at some point, my opinion on the labor side is that it is now mixed. at some point, not being able to bring people into the labor force is going to slow down demand. i think we are kind of at that point, but i am hoping we will see october improve. guy: what we have been talking about over the last few days is containers and ports. once we get through the stocking ahead of the holiday, do you think that is going to free up capacity and make some of these input cost factors, input availability factors, easier as we get into the year. timothy: part of the problem is
they are not shipping reliably into the u.s., which means you end up sitting on boats and all of that confusion. without that the ocean freight situation wouldn't get resolved until post-lunar new year. we are probably looking out the first half of the year before the port issue fixes itself. there's a lot of missed positioning of containers, and that is going to take months. adding all of the equipment in the right spot to get back to normal is probably a quarter. so the ocean freight issue is going to remain a problem through the first half of next year. guy: always to great -- always great to get into debt analysis on this numbers. it makes understanding the numbers so much easier, and therefore the whole process more useful. thank you indeed. nvra, -- tim fiore, greatly appreciated. this is bloomberg.
♪ alix: stories out there this morning moving markets. there's a lot of other data as well. personal spending, as well as income. we want to get to bloomberg's michael mckee with a roundup of all the numbers you need to know. i did spend, apparently. michael: your country thanks you. they hold onto this debate about inflation or reflation, because inflation is the story today. we are looking at the personal income numbers. they come in better-than-expected, up 0.8% for the month after a revised incline of 0.1% in the month of july. these are august numbers. the spending numbers come in a little bit at 0.4% -- 0.8% for
spending, sorry. getting confused here. here's the bad news. the bad news is the spending numbers are not adjusted for inflation. adjusted for inflation, they were only up 0.4%. in july, there was a 0.5% decline. for the quarter, we are seeing a very weak consumer spending number, and people are marking down their gdp forecast because of that today. the other number that comes out in this release is the pce price index, which matters to the fed. i forgot i through this in here. this is wages, and this is transfer payments. you can see how the economy has shifted. wages are still rising, up 0.5%, but the transfer payments, the government payments for covid relief, down from a 23% increase to a 2% increase on the month. so we are shifting the mix of incomes. now let's talk about the
inflation numbers. the pce inflation numbers obviously not particularly good news for the economy. we are looking at 4.3% for the pce headline, and now we are at 4.6% for the core. inflation is rising to where the fed doesn't want it to be. it just keeps going up. it is a little bit slower paced, but it is still not good news. what i want to show you here is the university of michigan sentiment numbers. they came out just a short time ago. a slight rise in the overall sentiment number and a slight rise in expectations and present situation. but what everybody has been looking at with michigan is the inflation numbers. you can see the white and blue lines are where they think inflation will be. the white line is a next year, and this is three to five years. this is the pc number. it is inflation expectations rising as inflation rises over
the next year, but not over three to five years, so the fed has to decide going forward whether this is an inflation problem or just a short run reaction to the headlines because they don't want inflation expectations to become on mort -- become unmoored. guy: transitory are not. there we go. thank you very much, indeed. a fantastic chart. the democrats may have averted a government shutdown late last night. nancy pelosi still working to get a vote held today on the infrastructure legislation. rep. pelosi: we are proceeding in a positive way to bring up the bill in a way that can win. so far, so good for today. it has been doing in a positive direction. guy: so they are caucusing, which sounds like a lot of fun. annmarie hordern is here. she's got the inside track as to
what is going on. what is the latest? annmarie: there will be caucusing in just about 17 minutes time. they are meeting at 10:30 eastern time. what speaker pelosi said yesterday, leaving the capital pop -- the cattle pop around midnight, is that there would be a asti capitol -- the capitol around midnight, is that there would be a vote today. she did not actually gavel out, so technically on the legislative calendar it is thursday, but we all know it is friday and they are past deadline. what they are trying to get negotiated between progressives and moderates is some sort of middle ground where the progressives are willing to vote for the bipartisan infrastructure, which at the moment they have succeeded in really holding hostage to say we need to see movement, real movement on reconciliation, or we are not going to vote for that hard infrastructure bill. alix: i love the gavel thing. that is actually amazing. thank you, bloomberg's annmarie hordern. that is one big risk, how much
money is really going to come out of d.c. the other risk is what is happening in the energy/power/gas market, particularly in europe. potentially it could get a lot worse this winter, according to back of america, predict and that -- to bank of america, predict and that diesel prices could top $100 per barrel and gas cooktop --could top $110 per barrel and gas could top $100 per barrel. are we still priced to one side of the trade right now? >> it is so hard to say right now. i think we are priced to one side of the trade, but china just basically launched a war in the global energy markets. they are going to buy cargoes of coal, lng, gas, or energy products. that just leaves demand now to do the job of bringing down prices. it is going to have to be demand
destruction, and china is allowed. guy: i love talking about the weather. is that where we are now? are we all going to become amateur meteorologists? >> absolutely watching the weather and hoping it is mild and windy so that we can have some wind power going on. i think that will be really key to getting us through the winter. guy: it is going to be interesting to see who is the best meteorologist because they are going to be in demand. this is what we do. it is going to be fantastic. i get to talk about the weather off air and on air. it is going to be amazing. we are good. is it mild today? is it not mild today? these are now critical factors. is it windy? this is big stuff. let's talk about what is happening with merck. the stock up on reducing covid
hospitalizations and deaths. joining us is max nisen. how big of a game changer could this be? sam: pretty enormous -- max: pretty enormous one. i was very happily surprised by the results which came sooner and were of a greater magnitude than i expected, given what we have seen from antivirals for post-covid and other viruses in the past. the thing that makes it such a big jake -- big game changer beyond the results is the fact that pills are fundamentally easy to make in large quantities relatively quickly, relatively cheaply, and they are very easy to distribute. it could be at your local pharmacy, at a clinic rather than antibody therapies, which require dosing at levit it sites and through a complicated -- at limited sites and through a
complicated process. they will be widely used and widely manufactured, possibly getting around some of those supply issues that have plagued the vaccine world in bringing needed relief to a lot of people, so incredibly promising and exciting. alix: thanks a lot. really appreciate it. thank you very much. we have some interesting numbers coming out here in terms of tesla. we are waiting for the third quarter deliveries, but bloomberg has noted that potentially they are going to be record of about 224,000 in the most recent quarter. that would be another huge milestone for the company. guy: i'm waiting for data to hit the screens. it is due about now. they calculate it's right up until month end, so we will hopefully get the data now. the stock has been a massive underperformer, worth bearing in mind when you consider what is about to happen. these are potentially strong delivery numbers coming through, but it has not been a great run. cathie wood has been selling the
stock pretty aggressively. alix: you also have to deal with the chip contagion, the storage issues, container issues, all of that. plus, european automakers as well as ford and gm really ramping up their ev strategy. we just interviewed the lucid ceo earlier this week. their cars are rolling off the line here. tesla kind of did the work, and now lucid gets to capitalize on some of that existing infrastructure. they are rolling off the cars. guy: and now you can't buy petrol in this country, lecture your cars some like a good idea. alix: you have to plug it in somewhere -- electric cars sound like a good idea. alix: you have to plug it in somewhere. still, if power prices are so high, are you going to want to plug in your car? i don't know. guy: in the middle of the night, maybe you get a slightly cheaper deal. we will talk about what cathie wood is up to. we are going to pick a look at what she has been doing at flagship art etf, suffering its
♪ alix: live from new york, i'm alix steel, with guy johnson in london. this is "bloomberg markets." time now for etf friday. bloomberg's ritika gupta is looking at some of this week's flows. ritika: it has been a really intense week, so let's see how that transcends into some of those etf flows. i am looking at the biggest weekly outflows, and you can see, no surprise, it is coming out of equities. spy,, $2.9 billion. tech bearing the brunt. you got your qqq, $7 billion about flows. tlt also getting hit on a week
where we have both selloffs in equities and bonds. let's talk about another theme, investors turning their backs on some of those tech names. we can see that by looking at cathie wood's flagship arc fund, which had its first quarterly outflow ever. this is as investors are nervous about higher inflation, higher interest rates, how it is going to hit some of those tech names, particularly at such elevated valuations area -- elevated valuations. guy: inflation is the story. we are all paying attention to it. are we seeing that reflected in positioning, and terms of the hedging that we may be taking on? is that showing up in the flows? ritika: we have seen inflows into some of those inflation protected securities in the etf's. millions of dollars of inflows this week. but also, if you look on a year-to-date basis, and we kind of extend that outcome a we are seeing a record amount of inflows into these types of
etf's. 25 billion dollars worth, double the previous record was set last year. guy: thank you very much, indeed. ritika gupta on what we are seeing in the etf flows. let's take a quick look at what we are seeing in these markets. equity markets don't seem to be able to make up their minds right now which direction we should be heading in. we are up, we are down. we are up, we are down. i guess we are watching with the data is telling us. we got a new quarter to deal with and d.c. which is pretty much the same. alix: did you read the article that came out about a huge options trade that came on for the s&p, basic a position for 3% upside and as much as 20% downside by the end of the year? same story in terms of retail traders. they are buying less calls and buying more puts. the mood music has definitely kind of shifted area now i think the question as we go into earnings season, what is priced
in at those levels? earnings downgrades for 2022 priced in? disappointment like we saw with bed, bath & beyond yesterday, are they priced in? that is no coming to the fore. guy: what i do know is what i am seeing every day now appears to be a sell side capitulation. the number of notes that seem to be coming out right now, talking about the fact that we could be seeing significant downside, even at the scale you are discussing, seem to be growing. what was the latest one today? bank of america on european equities, down 10% by year-end. alix: no surprise after you've had european stocks thing at the worst week since january. it has been a really bad week over there. guy: it has, and earnings season is still coming. we are still trying to figure out what the gas story is going
to mean. we've obviously had that impacting european industry already. you can see it showing up in the pmi data. this kind of narrative that seems to be coming out of the market about stagflation seems to be growing ever louder. u.k. feels what a microcosm of this at the moment. there's article after article talking about a return to the 1970's, which wasn't a particularly good period for the u.k. alix: for anybody. guy: no, but the u.k. in particular, the winter of discontent. that was a pretty grim period. we are going to be paying attention to this data. the shortages, the bottlenecks. alix: you were like nine. guy: at the end of the 1970's, yet. alix: anyway. guy: anyway, we will discuss this. this is bloomberg. ♪ ♪
johnson. alix steel is in new york. this is "bloomberg markets." we've come through a turbulent september. we now deal with october, which is going to deliver a lot of earnings, and we are going to have to figure out exactly what kind of areas we want to focus on. but clearly, what is happening with the supply chain story, the inflation narrative is going to be because that is going to be at the heart of this issue. we were talking about this yesterday with rbc. can companies continue the narrative that they are ok with this, that they can manage this? or are a few going to start saying we've got a problem here? that was the question or a calvo scene was raising yesterday -- question lori calvasina was raising yesterday. alix: some nervousness about what the downside could be over the next few months. let's get more with joe gilbert, integrity asset management portfolio manager. talking earlier about this big options that could protect to as much is it 1% downside by the end of the year.
-- as much as a 20% downside by the end of the year. is that what camp you are in? joe: i think ultimately that is a good set up for the market because if you want to see a little bit less complacency, which i think at the beginning of the summer in june or july, there was a lot more complacency in the market, so the fact we have individuals trying to position themselves for a greater downturn in the market gives me a little bit more comfort. guy: where do you think we go during the quarter? do you want to position for the market to be positive? do you want to position for the market to kind of go sideways? or do you want to hedge, if you believe in that, hedge downside at all? joe: i think that is a great question. i think what you really want to do is as we came through the summer and kind of have a lot of seasonality, september historically has been a pretty bad month for the markets generally, october has been
known to also be a little bit more volatile, and then we end up with the november and december being a lot stronger, i.e. the santa claus rally, i think we are still following the same seasonal patterns here, but you have a lot of underpinning of stronger economic growth, and i think that ultimately, earnings are going to be surprised to the upside because i think a lot of the names have deriisked and equity revisions have come down. alix: lori calvasina was talking about that, that some of the big players are dipping their to in industrials because earnings estimates have come down so much. where do you see those opportunities? joe: within the industrials, that is kind of the epicenter of where a lot of the supply chain disruptions are most impactful because these are companies that have operating leverage come both positive and negative within that, you have your machinery names and trucking names that are going to actually
benefit pretty strongly from this recovery. right now, but we have is a little bit of pricing pressure, but what has happened is you still have the volumes to an extent. the numbers have come down, so the expectations aren't nearly as high. happiness is always a function of expectation, so the bar is that the comedies will outperform and beat these estimates out there. guy: energy continues to knock it out of the park. how much longer cannot continue? -- longer can that continue? joe: right now we have a recent point of demand destruction. consumers having a lot of savings still and companies still pretty flush with cash is one of those things where we don't know exact it with that ultimate level will be we talk about crude oil, natural gas, but probably getting there. i think within energy, there is
still some room to run because there's still a lot of velocity within the economy. alix: it is a similar question two financials as well because supply chain issues may not be as relevant, plus if you have higher yields, how much they re-rated? joe: but we had a beginning -- had at the begin of q3 was yield curves flattened. we saw rotation go into a lot of perceived gross names -- perceived gross names. right now, with interest rates backing back up, the yield curve steepening a little bit, that gives a little more momentum earnings wise going into the back half of the year and for 2022. guy: if you are worried about these markets, what do you do? do you want to take money off the table? there's this whole sort of tina
argument, there is no alternative did you look at the bond market. everybody hates bonds right now. portfolio managers hate their bonds. so what do you do if you are worried about what is happening here? what do you do if you want to de-risk your portfolio? joe: i think what we've had this year has been coined as rolling corrections, and has basically gone throughout different sectors of the economy. so i think beginning of the year, you had a lot of consternation within the technology names. then you had the uplift with the industrials and you turn back to those technology names, and now you have a little bit more footing for the cyclicals and industrial names ultimately, we have to realize that there's a great rotation because from a lot of investors, there is no alternative. kind of have to pick our spots and be a lot more tactical about
where it is going to be going. right now, that is in the more economically sensitive names -- economically sensible names and sectors. alix: i've been so confused about the dollar the last couple of days. you have rate differentials leaving the dollar higher, yet the dollar is outperforming certain currencies that are maybe actively tightening monetary policy, that are going to do it before the fed and the dollar. it is still higher, and at some point that it's going to come home to roost for equities. i wonder how you are looking at it. joe: to your point, i think the bias is for a stronger dollar, especially as the fed has indicated they are going to be less accommodative to an extent. obviously, the market always trades on the margin. that gives the dollar a strong tilt, and also does create a headwind somewhat as far as earnings for larger international companies. when with about that, it is probably better to be more u.s.
centric when you look at small and mid-cap names that have less exposure. guy: in terms of the potential for this market to move higher by year end, how would you handicap that? i'm getting a lot of sell side notes saying we think there's going to be a really big correction. we think the market is going to be lower by year end. santa claus could be one of the only people delivering this christmas, so let's talk about how he delivers. what is it going to take to get this market to go up? joe: i think if you look at it, the first thing giving back some of the gains from earlier today, you have the news out of merck as far as the antiviral therapeutics. i think we got into this with a lot of shutdowns and a lot of fear. a lot of the fear is coming out of the market as far as covid goes. i think what we have is every
day that we are in this, we are getting closer and closer to a solution. when you get a solution to have people operate at full capacity, people not being scared to go back to work, they will return to the office, and that opens up a lot of economic activity. that becomes the catalyst that propels us further along. we have seen the cases of covid rollover, and you get to the point that the fed is not going to be nearly as hawkish as people expect. so that sets you up for a lot of momentum from within the equity market. alix: guy, you mentioned santa? forget it. we will have no plastic christmas trees because they are stuck in a port somewhere. it is going to be a very depressing couple of months. guy: right, and santa doesn't exist, right? is that what you are saying to me? alix: well, he's not buying stocks. he's going to be buying chips and supply chains.
guy: hopefully he is delivering all of the stuff we need for christmas because it is going to be a long list get your not only going to have to deal with that. joe says he's got to deliver a market rally as well. we will see what happens. have a great weekend. thank you, sir. see you soon. coming up, staying with that christmas theme, gmm nonstick coatings just finished their busiest phase of the year for cosmos production. the bad news, their clients have over 100 containers stuck in ports. we'll talk supply chains. we may even throw santa in as well. gmm nonstick coating's coo is going to be joining us. this is bloomberg area -- this is bloomberg. ♪ bloomberg. ♪
let's check in on the bloomberg first word news. i'm ritika gupta. house speaker nancy pelosi will try again today to get a vote on that infrastructure bill that has been held up by a fight between moderate and progressive democrats over president biden's economic agenda. progressives have vowed to stall the bill if the senate doesn't vote first on an economic package worth $3.1 trillion. a treatment from merck reduces covid hospitalizations and deaths. they are seeking emergency authorization from u.s. regulators. shares rose by the most since 2009. supreme court justice brett kavanaugh has tested positive for covid-19. he has no symptoms and has been vaccinated since january. his wife and daughters tested negative on thursday. the court is scheduled to begin
its nine month term on monday. global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm ritika gupta. this is bloomberg. alix: thanks so much. let's get back to those supply chain issues that are hammering industries around the globe. we side in the ism as well. bp's ceo said the issues are here to stay. >> the containers are a problem. we have made customers who are looking for containers. so freight is continuing to have an amazing time. guy: he's been doing that job for a long time. he knows what he's talking about
in terms of what we are seeing with global freight. let's carry on the conversation. raven gandhi -- ravin gandhi, gmm nonstick coatings coo, joining us now. we were talking about christmas. i'm really curious because you guys have to have a lot of visibility about what is happening. we are all focused on supply chains right now. you are probably laser focused. if i want to buy my wife a new frying pan for christmas, when does that pan get made? where does it get made? when does it get on a boat? ravin: i would say 80%, 85% of this multibillion-dollar industry is made in asia and primarily in china. we typically start getting busy for christmas in june, and that
goes through about amber. so any time in that phase, depending on if it is a piece of cookware, bakeware, or a small appliance, it could be made usually in that range. alix: first of all, please do not your wife a frying pan. guy: there's a simple rule in our house. i joke about this. it is more likely i will get bought one area if it has a plug on it, i'm not allowed to buy it. if it is a piece of cookware, i am not allowed to buy it either. those are the civil rules. as long as you stick to those, you are absolutely fine. alix: but the idea is if you wanted to buy one of those frying pans for the holidays, you may be under some stress. i want to get an idea of where in the supply chain you are seeing the most stress. i know everywhere, but is it on the factory production level, and distribution? can you rank them for me? ravin: for us, it is shipping number one.
between our large american clients, we have people that have over 100 containers sitting in various orts and factories because they either can't get a vessel due to scarcity, covid regulations are changing crazily in china, and cost. we this year have seen cost for a container from hong kong to the states go from $1500 to $15,000. that is crazy. so i would put that number one. guy: let's assume my wife wants to buy a new frying pan for me. how much more is she going to pay this christmas versus last christmas, do you think? ravin: we have raised our prices between 15% and 25% for our clients this year. that has come in three different tranches. normally i am loathe to raise prices at all, but the fact that we have had to do it three times this year speaks to the fact that we have been getting raise after raise from raw material vendors. i have never seen anything like this from an inflation
perspective. in my view, all of that price increase is going to end up at amazon, walmart, target, which of course, hits the u.s. consumer. it is above my pay grade to breeding how much my clients are going to pass that on to the consumer, but i think a large component of it, they are going to. alix: have you been able to pass on 100% of the cost increases? ravin: absolutely not. we are in a very competitive industry, so we are kind of at the frontline of capitalism. there's no way to pass on everything, and one of the things that we do is have dozens of these r&d chemists sitting around formulating all the time. we try to use innovation and find new materials to take cost out in some way. 49 alien people in america use -- 49 million people in america use our products. guy: is this -- how long do you
expect this to go on for? ravin: we normally get about six months order visibility from our clients. right now it is down to 60, and in some cases even 30 days. but we are going to figure it out. have dealt with this before. fundamentally, people need to eat, so we know that our market has to go on, but it is really challenging. we have a couple of operations in asia, operations in india, operations in europe. so it is juggling a lot of balls to keep a lot of stuff in the air right now. alix: the overall feel is that yes, the price increases and supply chain issues will at some point be temporary. we don't know how different temporary means. i am more interested in what you're thinking is going to be after-the-fact. are you going to put more plants
in the u.s.? are you going to have larger inventory and warehouse bills for your customers? are you going to be more active in increasing prices? what is the longer-term effect for you and how you do your business? ravin: like i said earlier, the vast majority of our industry is produced in china. when i started my business into thousand seven, i had to build in operation in china not because i wanted to, but that's because -- but because that is where all my clients were. it was radically different when i started in this business. i don't think that i could start my business today, just given what is going on in china from an authoritarian perspective. so i would be extremely happy if i could build in operation in the states. the question is, will i be able to produce the coatings for those pots and pans at an economic level that still allows me to get this, that was to allow me to get his miss at
amazon? if americans are addicted to one thing, it is low. guy: you wonder whether or not that is ultimate going to have to change. carry on. ravin: the other thing i would say is the u.s.-china relationship is, i think, clearly going to be the big story in the global economy for the next decade. i feel like the industry has just seen it because we all watch our clients get offshores in the ninth -- we all watched our clients get offshored in the 1990's and we thought it was this utopia. as he china tariffs started happening under the prior president, we had operations and age of the -- operations in asia that started going gangbusters get we are seeing a scrambling of china, a lot of those factories getting pushed other places in asia. we aren't seeing it come back to the states. i'm a very patriotic guy. i would love to start building america if we can come up at it is all about the capitalism. alix: we love talking to you.
♪ alix: live from new york, i'm alix steel, with guy johnson in london. this is "bloomberg markets." we like to do our favorite charts of the week. there were so many to pick from when it comes to the energy and gas crisis. this is actually a chart of the dirtiest coal you can burn and their prices. it is from indonesia. you can see the massive spike we have seen, despite the fact that it is among the dirtiest. we saw prices as low as $20, $20 a ton, now looking at $135 a ton
as of this week. they just want the energy, no matter the cost, and potentially no matter what the environmental impact will be. they are really into decarbonization. this isn't cutting it. guy: it is interesting to see what they are saying about coal at the moment. they won't be building any external, but they weren't really doing any external coal plants anyway. so when are you moving? alix: maybe next week and on weekend after. guy: i get to see it tomorrow. i'm taking my eldest son and some of his friends as a birthday treat to see the bond movie. we are super excited about it. obviously it has been heavily delayed, so we have been waiting to see it. the last one, i have to say, i thought wasn't great, so i am excited to see the reviews
for this one are better. the pictures that come with my chart are so much better. you've got an aston martin. alix: what is your chart? you just played the trailer. [laughter] guy: all i got to do really, isn't it? this is basically the bond effect that is showing up in the markets. city world has been battered because people can't go to the movies, but the market is front running bond. i took a look at the anr function, but the average price target is $98, $77 now, with 30% upside on this stock. bond is potentially going to work its magic. alix: you went. -- you win. guy: we will get back to the energy story next. this is bloomberg. ♪ erg. ♪
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and alix steel. ♪ guy: friday the first, 30 minutes until the close. eurozone inflation hitting a 13 year high with industry warning supply chain problems last well into next year. european gas prices hit a record 100 euros of megawatt hours. russian gas flow into germany apparently down nearly 80%. french utilities and energy surge as paris takes action to shield consumers from this energy price hike. that feels like -- let's take a look at what this means for markets. equities on day one of the new corner, the new month down. we are down around .5%.