tv Bloomberg Daybreak Europe Bloomberg October 19, 2021 1:00am-2:00am EDT
the world. manus: seeking a solution, force johnson vows to solve an impasse over northern ireland's post-brexit status. we bring you our exclusive conversation with u.k. prime minister. rates repricing. treasuries the narrowest gap in a number of years. the expectations the fed may hike as soon as next year. across the pond, the market sees a november rate hike from the boe. plus, apple dropped intel chips in its biggest overhaul of the macbook pro in years. next up, tech timetable. netflix earnings tonight. so the question is this -- is it the brits, the kiwis -- who is unsettling the rates market the most? we have a magnificent chart that
encapsulates the pain of the short end of the bond market. november 4 the bank of england, now the markets pricing in a rate hike all the way out into december of next year. it would be a grave error, a policy error my a terrible error is what someone is telling us. good morning. dani: you have to feel for the fed's army of phd's, you have the tail wagging the dog, while at the fed, they are saying chill out, we don't see inflation going above 2% next year and it doesn't seem to matter this morning. huge moves in the bond market. manus: i have this vision in my head of a 400 phd's telling the fed -- chill out. i'm not sure that's the way it goes. i'm going to interrupt everything -- i have sound all
over the place. a big red headline, erickson. the market was looking for 7.63 billion swedish krona. i think blackrock sees the inflation as transient. your take? dani: i think they are making an argument for risk markets. you have blackrock saying perhaps it runs out whereas a lot of edge is saying don't worry about stagflation. it's an argument we have heard many times on the show. manus: absolutely, we have blackrock, scott bailey wanting to be long on paper. i think the nuances about whether inflation tops out last year as of fed analysts are saying aren't in the market at all, the market does not price our view there will be a
moderation in inflation, it will be limited into the underlying inflation will materially step up. that plays to the let's get long of value and economically sensitive stocks. dani: can i play devils advocate? we've heard from some people saying consumer sentiment is really negative and because of that, they will not spend, and perhaps that is a reason not to get risky. we have s&p five futures are truly -- s&p 500 futures unchanged. you have some numbers out of for netflix, a bloomberg's group about how profitable good game is. 10 year yields in the asian session, buying the dip across the curve. finally, some dollar weakness. trading at about a three week low following some movement in the yields. a stronger yield this morning.
natural gas in new york trading below five dollars. this despite goldman upgrading their natural gas in europe. they are saying the russian market is tight and not as much supply will come online because of that. manus: yeah, you know what the other side of that is they ratchet it i 70%, and then they brought their first quarter numbers back given relief in the market. but you are right, we seem to be at the top of those at the moment. the u.k. prime minister says he doesn't want to turn away chinese investment despite concerns of some of his own lawmakers. johnson spoke exclusively to our editor-in-chief in a wide-ranging interview. they also discussed what actions the u.k. is seeking on climate change ahead of cop 26. >> when i was running london, i
went out several times to china and had fantastic trips. >> things have changed. >> well, investment in stuff that drives jobs and growth in this country, other in development -- whether in development, look at what is happening in greenwich. things have taken off because of chinese investment. so i am not going to tell you the u.k. government is going to pitchfork await every over tour from china. of course not. china is a gigantic part of our economic life and will be for our lifetimes. but that does not mean we should be naïve in the way we look at our critical natural infrastructure, nuclear power, you mentioned 5g technology.
those are legitimate concerns for any government, many governments around the world. but i have said this many times and it is worth repeating -- i am no sino phobe. john: do you think you are the last sinophile in the cabinet? pm johnson: no. john: would you let them buy offshore wind power? pm johnson: you would have to look at what you are defining as strategic or critical. but i certainly think having -- our trading relationship with china. in spite of all of the difficulties, in spite of all of the angry conversations or difficult conversations about the dalai lama or hong kong or uighurs, we will stick to our
views. but actually trade with china has continued to expand for a very long time and i think probably will continue to expand for the rest of our lives. that doesn't mean we should be cautious about how we handle our see ni -- cni and fdi from china. that's why we brought in the legislation we have. john: we were talking about china, obviously a huge deal in cop. xi jinping looks unlikely to come. what is your personal goal? pm johnson: i think it was always going to be extremely tough. we are hoping we get a good turnout in spite of the pandemic. what we want to focus on is the contributions in reducing co2, making hard pledges. plus, we want commitments on coal, cars, cash, and trees.
we want to move away from coal by 2040, 2034 further developed nations. we want to make sure everybody stops using hydrocarbon fueled combustion engine cars. that the u.k. is in the lead. we said we would stop that 2030. we want a big package for the developing world to help countries that have not been historic emitters to cut their carbon. we need that hundred billion dollars. lastly, we want to make sure we plant millions and millions of trees to help fix carbon and restore the balance of nature. we need a nationally determined contribution and we need to keep 1.5 alive. we need to restrict the growth in temperatures to 1.5 degrees by the end of the century. we think with the commitments we are seeing, we could do it, but we need to see some real action
from the participants in glasgow. dani: u.k. prime minister boris johnson speaking to the bloomberg editor-in-chief. we will hear more of that interview later in the program. johnson also addresses the impact of exit on london. i wanted to go back to the lines from erickson. -- ericcson. a miss, because it was expected to be 58, but the beat is on the growth margin, coming in at 44% and the estimate was 42.2%. we've been talking about the earnings season and the importance of pricing power and margins for companies. manus: they are able to pass the prices on at the moment, can they do that going forward? some lines coming through on china. expecting a reduction in their mainland china business in the third quarter. they expected sales reduction in
mainland china. supply chain restrictions impacted them. they will resize their sales and delivery organization in china. is this the beginning of a much acre -- bigger global move in terms of on china delivery and dependence on china? we can do with that -- and deal with that later in the day because we have the ceo joining bloomberg programming. the earnings are out. he will join the team. that conversation at 9:30 a.m.. what have we got? dani: coming up, we will get around of the news you need to know this morning, everything from signals that aging is dialing back its overhaul to a crypto futures etf about to launch in the u.s. that is all the buzz. this is bloomberg. ♪
dani: welcome back to "bloomberg daybreak: europe," i am dani burger in london with manus cranny in dubai. there are signs that china is weaving back its regulatory overhaul as they take a hit. ever grand is trying to -- evergrande plans to sell one of its units has reportedly hit a snag. stephen engle, give us the latest on the ever evolving evergrande situation. stephen: there are a lot of stresses in the chinese economy and it looks like evergrande is not able to sell this 51%, reported 51% stake in its properties management unit, also
listed in hong kong and suspended since earlier this month when reports surfaced another developer with a much more healthy cash situation was going to buy that at a 28% discount, reportedly. we are hearing from other reports that that has been shelved, allegedly, because the local government has not necessarily signed off on it. another blow to evergrande's efforts to raise much-needed cash and selling those assets to get not out of its financial program -- financial problems but to temporarily alleviate some cash and nonpayment pressures. you mentioned that another bill is due today. manus: thank you very much, stephen engle with the latest on evergrande. we haven't downgrades growth. is it -- we have downgrades of growth. is it weighing on the market or is attack -- is it tech? juliette: i want to start with
natural gas. we've seen it going back above five dollars after three sessions of declines, down about 20% from its seven-year peak we saw earlier in the month. it is a mild start to the u.s. winter. you mentioned the tech players, certainly leading the region, the hang seng tech index passing the 50 day moving average. and the oil rally, a little more flat in the energy space. we had rba minutes from october suggesting they will continue with very accommodative monetary policy, and you've seen the yield on the three year dip by as much as six basis points and now down one. downgrades are coming thick and fast after china's third-quarter gdp miss. you have barclays, ubs, all adding to downgrades to china's
growth, around 8%. but a stronger offshore you on -- yuan. dani: juliette saly, thank you so much. let's get over to bitcoin, which may be is a little more reliable in its price move it is climbing toward an all-time high as the first bitcoin futures etf is set to launch later today. joanna, how is the crypto market reacting from the etf news and doesn't have further to go from here -- does it have further to go from here? joanna: a lot of people are talking about the record level, less than $2000 off from the high. 64,900 is the record. we are not too far for a volatile asset like it going, that there are people who think it could drop after this is over because it going tends to do that, like the coinbase listing
and futures coming online, it does drop significantly. we will see if it drops off after the etf gets started. manus: joanna, to the moon. we are waiting for it to come through. i can just see the wave of tweets. thank you very much with the latest on it going. coming up, the global economy supply crunch propelling inflation at such a fast pace that central bankers may be forced to respond earlier than expected. we discussed the great rate debate. this is bloomberg. ♪
>> central banks are -- for the first time in a long time facing strains on policy. -- constraints on policy. >> the fed needs to redefine what they think of as an acceptable employment level or they will stay to lose too long. -- too loose too long. >> anytime they say they might tighten, we see the worry increase. >> the question is whether the economy can function without the central bank? i think the answer is we don't know. >> they may make a policy mistake hereby waiting too long. -- here by waiting too long. manus: another day, another set of opinions on the fed, the experts discussing central-bank
moves. surging prices around the world triggering interest rate hikes. jp morgan and credit suisse bringing their latest forecast forward on the bank of england and when they might hike. this comes after more signals from andrew bailey may be on the need to curb inflation. let's see whether our guest is living in fear and peril. the biggest repricing since 2005, bonds have lost 3.4%. are you living in fear? good morning. >> good morning. what a line to open the show. in fear is probably a bit of an exaggeration but of course we are watching very carefully all of the points that are coming in, and the market is taking note that inflationary price pressures are broadening. we expect most of the earlier
debate is transitory. this is taking a lot longer and the supply chain disruptions and labor market tightening are clearly having an impact on price pressures, anybody would take no. it has stoked of debate on when the wrist -- the first rate hike will be. dani: given the pressures and readjustments of attitudes, you -- attitudes, have you adjusted your view? sonja: that's a debate we started some time ago, we think if you look at global bond markets and credit and where government bond yields are, i think it jumped to the market a while ago. clearly -- there is simply risk locked her -- a risk factor.
if we are looking at the state of the bond market, it would be flat. credit suisse does not provide much expectation. you take away the hedging used to get from your bond portfolio. we believe you had to change -- you had a change in market some time ago. increasingly what we hear is how do we replace our fixed income portfolio and what are we looking at to find similar characteristics? manus: well, tell us. where are you replacing your classic bonds, your classic treasury exposure -- where are you replacing that? sonja: another very important question because clearly, if you look at the liquidity profile of
government bonds in particular, we know straightaway it is not a one fix all replacement. we are looking tactically at smaller bond markets where you still have yield left. private credit in particular has been -- in order to replace bond markets. we still see lines being generally pushed out the race curve, -- risk curve. that's an uncomfortable position because there is no one other asset class that will help you deliver those characteristics. it has to be done in an allocation context. dani: like scott teal from blackrock told us yesterday, it is upon pickers market. moving up the risk curve, does it present a danger as these assets get more rich in valuation? how does it end? sonja: that is something i think
we have been watching for the past 10 year. ever since we have had the unanimous support from central banks for the past 10 years, it obviously has been a big question in the making. with some valuations where they are, of course investors have to prepare for the risk of disruption. and someone said i wouldn't be able to live without absolute monetary policy and central banks. obviously we don't know, but it is a buyers market in terms of selecting the right areas, and there's a lot of structural change underway linked to the pandemic and the focus on climate change, a greener recovery. there is a lot to choose from. it's not all about this downside risk. there are opportunities but we are clearly at an inflection
point and it is important to understand if this risk return offsets, opportunities are a more difficult to find. manus: let me throw something completely out of left field. i live in dubai and i talk a lot about saudi bonds. aramco bonds, 20.70 gives me a deal -- yield at the moment of 3.7. would you take something as radical as an aramco piece of paper or qatari piece of paper? would you get yield? sonja: in economy -- any consideration has to be distance. they will they sit on the attractiveness of the business model. maturity that far out, obviously
dani: good morning from bloomberg's european headquarters, it has just gone 6:30 a.m. in london. i am dani burger alongside manus cranny into boy -- in dubai. >> is there a problem with the northern irish protocol? yes, but we will fix that. it is not the end of the world. dani: boris johnson vows to
solve an impasse over northern ireland's post-brexit status. we bring you our exclusive conversation. rate repricing. cap between five and 30 year yield treasuries narrows but -- among expectations the fed could hike as soon as next year. also, some think november hike for the boe. next up on the tech earnings timetable, netflix tonight. manus, you have to forgive me, i want to kick off the hour with being a negative nancy. we have the likes of blackrock, jp morgan saying inflation, it is not stagflation. at rbc, they point to the fact that it doesn't matter what the market expects of inflation, it matters what the consumer expects. consumers expect high inflation and therefore they are less
willing to buy. that is the chart i have for us, these opposing lines. highest levels of inflation and willingness to buy. manus: you are not a negative nancy, i think you're just a pragmatic bookworm that leads a dutch that reads a great deal in your car at 3:30 in the morning. you are saber rattling demand, i think that is possibly the next thing we will debate. we will debate negative feedback loops. will it cap inflation? that's what we have to ask. what is the quality of inflation you are going to get? that's the question from greater minds than me. at jp morgan, they said you are not going to get stagflation, we are all wrong. in all, the market does not price our view that the moderation inflation will be limited. the underlying inflation will step up and that's where he
wants to shift into bargain stocks, economically sensitive companies should continue to rise. my sense is he wants to continue to buy value, reopening value trades, but you are not going to get stagflation, which is high unemployment, low growth and high inflation. we need to go back and understand what is stagflation? dani: if you want to ignore the fundamentals, one thing you can pay attention to his price good the spread between value and momentum stocks is bigger than it was during the dot-com bubble, so if you believe him, there is a bargain to be had. manus: you need in excess strategy. the problem of my life is that i don't know where the exit door is. [laughter] we have stocks moving, euro-dollar moving. let's give you a quick synopsis of where we are. as we know, some want you to buy more economically sensitive
stocks, we have a rate redux from the brits and the kiwis. the market thinks there will be a rate hike. natural gas, you are right negative nancy, it did go up by 50% yesterday but then it rolled down as apparently it will not be as cold in north america as we all think. nancy, good morning. dani: i am so happy it is below five dollars. i mentioned it earlier, it threw me off when it moved up again. i want to bring you quickly a breaking line crossing the terminal. delivery here, which is a listed company in the u.k. -- or germany, rather, it is investing in a startup. economies of scale are important here. let's stick with the u.k. story, the prime minister says the city of london will prosper outside the eu, noting job losses and
disruptions to capital flow have been lower than feared with brexit. in an interview, he told our editor-in-chief that far fewer bankers have been moved out of the financial hub than predicted. pm johnson: the long-term reasons why the u.k. remain attractive, and the short and medium-term reasons are all of the fundamentals remain the same. the time zone, the language, the rule of law, the deep pools of liquidity in the city of london, the attractions of having some of the best universities in the world. but this is also the moment. we've got a series of things coming together. the u.k. is deciding to make a big bet on green technology. the government is going in, setting the regulatory framework
to encourage the private sector to come in the way they are. we are making a big bet on a wind power, hydrogen, electric vehicles, gigafactory's, carbon capture, all these things. but you're also seeing a government that is creating the bedrock as it were, for investment across the whole of the u.k.. so we are investing in huge quantities of new infrastructure , which we have long needed in this country to address our productivity gap, so we are putting about 640 billion pounds into infrastructure of all kinds. into technology and skills. and that is different, the approach we are taking. john: you have a blackrock,
goldman sachs, j.p. morgan all coming to the conference and they would all say the same thing yes, they like the city of london but they are also hedging their bets, putting some jobs in paris and amsterdam. behind all of it, they would say look, we are in industry, we bring in 160 billion pounds per year for the british economy. they would rather argue with the french about fishing rather than talk about finance. pm johnson: on the contrary, in 2008 and 2009, there was literally only one politician that spoke up repeatedly for the city of london bankers and that was me. i know the city of london is crucial not just for our country but for the whole of europe. and for this hemisphere. for the world. and that's why you think it is
profoundly in the interest of our partners to ensure we do have good rates and continue to see proper flow of capital and services between london and the other parts of europe. i am sure that will continue. you want to raise money around europe, if you want to finance your merger or whatever it is, london is still the place to come and always will be paid john: -- and always will be. john: that's what the captains of industry will say, you are stuck in the arguments with france about fishing. they are the people as you know who are blocking the city of london's ability to trade with the rest of europe or get a deal on that. is it time to fix those squabbles? pm johnson: look, i've got great relations with the french government and will continue to
ensure the u.k. and france have a close -- john: you were so close. pm johnson: i would not dream of sharing a private conversation. if you look at what we do together around the world, we are very close partners, we are friends, and it is vital. it is the deep will of our populations that should remain the case and we will continue to do great things together. is there a problem the northern irish protocol? yes, there is, but we will fix that and i don't think that is the end of the world. manus: the u.k. prime minister speaking exclusively to our bloomberg editor-in-chief. he is hosting the global
investment forum taking place later today. we will be speaking exclusively to some of the attendees, 7:30 a.m. u.k.. a: 15, we will speak to the ceo of barclays. then, david solomon at 11:45 a.m. let's get the first word news, juliette saly's with the team in singapore. juliette: the fda is reportedly planning to allow a mix-and-match approach for covid booster shots. they could act as soon as this week. it is likely to not recommend one vaccine over another but may say it is preferable to use the same vaccine when possible. the modernist ceo told us the company expects a decision soon. >> the authorization of a booster, there is a cdc meeting
scheduled this week. i am hopeful that by the end of the week, everything is wrapped up, and by next week, americans will be able to get a booster. juliette: -- free funding to member states failing to adhere to democratic standards. the mechanism could be used against hungary and poland. hungary would forfeit 7.2 billion euros and poland 36 billion. the eu justice commissioner says the legal order could be deployed within days. >> we are trying to build the most possible -- we need to pay attention to offending of policies and the rule of law. if we are not doing it at home like we try to do now with poland, it's going to be difficult to be credible when we are speaking to all of europe about the same principle.
juliette: global news 24 hours a day on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. dani: thank you. juliette saly in singapore. coming up, apples macbook revamp, the tech giant taking its most aggressive step to strip intel chips from its computers. and we will look ahead and netflix earnings, due out today. how many times will squid game be mentioned? this is bloomberg. ♪
our business. >> if you're thinking of buying tech, some of these growth names, first ask yourself, what is my exit strategy? >> they end the drivers of the home market and i think we are seeing some -- emerged there are better places to spend your money. manus: there are a few of the various bloomberg tv guests on where they are investing their money in the tech sector. apple has taken the most aggressive step yet to strip intel chips from their computers, announcing a revamp of the mac pro laptop computers. also, a little bit of netflix earnings, "squid game."
apple unleashed, what was the unleashed emotion in you when you saw the news flow from apple? joe: it's one of those things where you know it is coming and then it happens and you are still surprised. they have been with intel for 15 years. we knew that apple was transitioning to its new chip, but these new chips -- if you are going to do this, you have to be better, they have to make sure they produce a chip that is better than intel and it is impressive so far what they are saying they can do. the video time, battery life. this is pretty impressive. dani: i personally am more excited about netflix, maybe because i have seen "squid game" and liked it a lot. we have third-quarter earnings due out today.
internally, we saw that they had a lot of profits off of "squid game." giles: there's a lot of pressure because they have to keep the content up. they've been having some wrist success in asia right now. -- real success in asia right now. in the asia-pacific region, the uptake isn't as high as other regions. did this help them get more subscribers in the region? dani: all right, thank you very much. giles turner there. manus, do you want the noise canceling airpods or cannick of first-generation? -- or can i go first-generation? manus: i am product agnostic.
have you watched "squid game" yet? dani: i have, i really liked it. have you? manus: i watched the trailer. dani: oh, manus. manus: it is the hunger games with masks, isn't it? dani: it has this big societal commentary and it is very deep, deeper than i would say the hunger games. manus: ok, maybe that tells you a little about my intellectual level that i did not quite get to those highs. what else have we got? dani: maybe netflix will mention that in their earnings, one key viewer they are missing out on. next, the closest thing to a risk-free bet that has emerged in the cryptocurrency market as traders await the launch of the first coin etf.
>> we expect this week potentially the authorization of a booster. a cdc meeting is scheduled this week to make a recommendation. i am hopeful by the end of the week, everything is wrapped up and by next week, americans with the moderna vaccine can get a booster. last friday, dr. fauci and his team shared that vaccines can be mixed safely and that is very good for people who want a booster, because it is a higher
dose. it is longer protection. emily: that was my next question, do you consider a moderna booster if you have pfizer or j&j, given the efficacy data and what do you see -- and what do you want from regulators as far as tacit permission to mix-and-match doses? >> that will happen this week. but the data last week from the hospitals in the u.s. that did that work is clear that you can mix and match the vaccine, which is not surprising. if you think about it. i think the data was very strong. it showed the moderna vaccine provided very strong protection. it is the highest development of antibodies over time.
i am hopeful the regulators will allow americans that desire to get a higher dose of booster for their protection to get the moderna vaccine. emily: why has your u.s. authorization for teenagers taken so long? how worried are regulators about heart risk? >> what happened is our application was submitted after the adult vaccine. by the time it was submitted, there were a few cases. the incidence is very rare and those cases are manageable by clinicians, by doctors. they look very similar. the regulators took a cautious
stance to ensure the protection of the american people. i am very happy that the regulators do so very thoughtfully and thoroughly to ensure that americans get a vaccine that is safe. dani: the moderna ceo speaking to emily chang. let's turn to the crypto space, where traders are equally awaiting the launch of a fierce -- the first bitcoin futures etf later today. according to one firm, the spread offers the widest annualized return in five months. we are joined again by joanna lawson your. -- joanna. let's start with the etf itself, it is just futures. why is it a big deal for the crypto industry? joanna: it is exciting because they have been waiting for years to get something like this and it does make it easier for regular investors in the u.s.,
people who invest in the u.s. much to get access to something that is related to bitcoin. people are thinking this could really help adoption for people who might be nervous about just buying bitcoin itself, for instance. manus: joanna, what are the concerns about these etf's? joanna: manus, one of them is if you have an etf based on futures, the futures market can get a little crazy sometimes, and we saw that for instance with oil when futures went negative. that is obviously a very rare scenario. but you do have some unpredictable behavior around the futures in some scenarios, and especially with something like crypto where it is still a fairly new asset class. you also have issues or you can have roles that are somewhat
expensive for investors if they needed to roll to the next month if the etf resets. that could cause people to lose money over time if they buy and hold. manus: can i give you the biggest contrarian indicator available on a global basis anywhere in the world? i would love to ring up and say can we have a little bit of a coin in the pension fund and that is an indicator for the whole world. i leave you with that thought. [laughter] i hope not, for everybody that is long. i am not always contrarian. thank you for being with us. dani, you can get me for christmas a little bit of going -- bitcoin, a little santa sack, and then i will leave you here on your own. dani: better than the sovereign bonds.
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♪ >> good morning. welcome to bloomberg markets europe. i'm anna edwards live in london. mark joins us to take us through all of the market action this hour from here in london. the cash trade is just an hour away. here are your headlines. boris johnson says the u.k. does not want to turn away from investment. apple