tv Bloomberg Markets Americas Bloomberg October 28, 2021 10:00am-11:00am EDT
alix: it is 10:00 a.m. in new york, 3:00 p.m. in london, 30 minutes into the trading day in the u.s. in new york, i'm alix steel. francine lacqua is in london. guy johnson is still off. guy is missing a very exciting market week. christine lagarde did not push back enough, or at least markets didn't think she did, and we are seeing yields spiking pretty much everywhere. francine: i think christine lagarde really tried to push back. she said don't expect a rate height next year. this morning, there was a repricing. now there is a 20 basis point factored into the market for 2022. she said that inflation will continue going higher for may a bit longer, but we are expecting inflation numbers to get back in line in the second half of next
year, but you're right, the markets are pushing back against that and repricing a lot of yield we are seeing across the board. alix: but equities feel really calm. take a look at what is happening in my market board right now. equities behave, but yields don't. the s&p 500 is up 0.6 percent. you have utilities, real estate, health care leading the way higher. for the ecb, euro-dollar up by about 0.5%. that sort of moved during the press conference. the real unbelievable move is what is happening with italy. it is pretty much across the board anywhere you look in europe for you this is the real mover here -- for europe. the real mover here is btp's and bunds. it is inverted, the 20-30. why? i have no idea. is it technical? is something going on with the 20 year?
or is this portending something not so great within the economy? so keep your eye on that, francine. francine: we are also getting a little bit of data at this time of day because you can see at have an impact on lot of the yields. it goes back to inflation, the strength of the u.s. economy. because it is september, it is a little bit backward looking. however, they spawned 72 point sent -- 7.2% compared to the previous year. it is a little bit backward looking. we did see a bit of weakness for the month of august and september. u.s. mortgage rates also jumping to 3.1%. i know we will have a full breakdown with michael mckee. alix: this is usually when i say something like, yeah, i got my 30 year at 2.75%, and guy would make fun of me. we want to focus on d.c. president biden currently on
capitol hill, speaking to house democrats, poised to announce a framework of $1.75 trillion of a tax and spending package he believes will pass congress. some of those provisions include things look a 15% minimum tax on corporations and over $5 billion towards -- and over $500 billion towards climate initiatives. emily wilkins is on capitol hill. what are the chances he gets this done before he leaves for cop-26? emily: if done is getting moderate and progressive democrats to come forward and say we have a look at this framework and we can all agree to a bill that has this in it, that is possible by today. granted, there are a number of provisions that a been left out of this package that progressives were really pushing for. an expansion of medicare, drug pricing negotiation, hoping to lower drug prices that just aren't included.
but president biden is talking with progressives and other democrats right now, so we will see what happens after that meeting. as far as getting that social spending and tax bill passed, that is not looking very good at this point. still a lot of questions, and not a lot of time left. the other factor on the table is that bipartisan info structure bill, the one passed the senate. we have been waiting to see what the house will do with it. house leadership is indicating that they do want to try to pass that bill today, but progressives have said they will not back it until they are able to pass that social spending package as well. francine: emily, good morning. what is unclear is how far-reaching this package can be. what is the way forward? do they have to make it smaller, or just get people on side i promising certain things? emily: they have made it a lot smaller already. lots of things seem to be cut. the billionaire corporate rate
is out. the idea that seniors are going to be able to get vision and dental benefits through medicare, that is no longer on the table. paid family leave was going to be huge, 12 weeks of paid family leave. that seems to be out of the bill altogether. the white house has been working with manchin and synema to reduce this bill. are democrats going to be able to go with that? four progressives in the house, it only takes three of them saying we are not happy with this bill for it to no longer move forward. we will see what kind of muscle progressives flex. at this point, manchin and synema appeared to be on board. francine: thank. you so much less get back -- thank you so much. let's get back to that data.
let's bring in michael mckee, bloomberg international economics and policy correspondent. it looks like we could be heading towards higher inflation, lower growth. is this stagflation staring us in the eyes? michael: actually not, and i will explain in just a moment. but you're right, the numbers on growth were not good this quarter. the narrative was that we would have strong growth come up by the end, people accepted the fact that it would be low, and it is 2% so far on an annual rate, lower than the 2.3% average of the five years up until the pandemic. what happened? consumer spending, only 1.6%. 26% decline in durable goods purchases, led by a 70% decline in automobile purchases. can't get the cars, you can't buy them. same thing with other durable goods as supply chain problems lock in. the same supply chain problems hit business investment up only 1.8% in the second quarter. the good news today, 281,000 jobless claims, a post-pandemic
low. i will get back to that in just a moment. what's really influenced the numbers this time? inventories and trade. inventories declined for three straight quarters, and they rise surprisingly. we are not sure completely why, but probably because of imports. they add 2% to the gdp numbers, which pretty much accounts for all of it. look for net exports. the trade exports down 1.4%, so it could be supply chains again. we didn't see a lot of exports going out. inflation is the third item that hit the gdp numbers. you can see here that we have nominal gdp up way above the real gdp, as the pce inflation is almost three times what gdp was. the good news i will leave you, and this is the answer to the
stagflation debate, is that this point, we did kind of price and the idea of a real slowdown in gdp for the third quarter. the latest numbers, though, are getting better. the jobless claims show that. look at the citi economic surprise number. it has started going up since september. bottomed in september, and now is rising, and it looks like we are set for a fourth quarter rebound. francine: thank you so much, are michael mckee there. also looking very dapper with the pocket square. alix: i said the same thing. i'm liking the outfit. the shoes naturally well with the pink and the blue. francine: so handsome come our michael mckee. [laughter] leaders from the world's biggest economies are gathering in rome for their first in prison g20 summit since the pandemic. climate goals will likely dominate the agenda for spoke with the european commission president ursula von der leyen about where we stand on emission goals. >> much is on track from the
pairs agreement and the goals we set ourselves that are necessary to fight climate change. we see now ahead of cop-26 the commitment's by the different countries. we are not there yet. we are not on the right track. we have to be much more ambitious. we have to show more leadership really to transform our economy and the way we consume, and it is in our common interest because we know science is very clear on that. francine: annmarie hordern, or bloomberg washington correspondent, is on the ground in rome with the latest. just in terms of timeline, the leaders show up in rome for the g20, and a lot of them will make their way to glasgow for cop-26. they have to talk about energy. they talk about climate change and supply chains. what is the thing the u.s. wants to come over to fix? annmarie: they will have to balance the rising energy prices we are seeing, as well as their
climate goals. that is what jake sullivan said this week, the main national security advisor at the white house, saying he is laser focused on supply chains and rising energy prices. but of course, this comes ahead of cop-26. what the president would want to do is cajole world leaders, get everyone on board to make egg, bold investments in climate. he once to be a climate president. he campaigned on this. the problem is, at the moment, what emily wilkins on the hill outlined for us. his bill back better -- for us, his build back better agenda is at risk in congress. he risks looking into scotland with an empty hand in terms of what the u.s. can bring to the table to reach their climate goals, which is to cut emissions by the end of the decade. so this arena is really a final ditch effort for the biden administration and world leaders to come to an agreement on what are they going to do when they go to cop-26. alix: we were just looking at a live shot of president biden
after being on capitol hill with press democrats -- with house democrats. annmarie hordern, thank you so much. by the way, it is still earnings season. so far, year on year growth is really holding above estimates. abigail doolittle has the numbers. demand still holds up really nicely. abigail: demand is holding up very nicely. shares of ford particularly being rewarded, up about 10%, on pace for its best day since march of 2020. they blew it out of the park, beating top and bottom line estimates. sales and demand be by more than 5%. they restored the dividend. so the turnaround really is in place. caterpillar also very strong, up 3%. they beat both top and bottom line estimates. the ceo addressing the supply chain issue, saying they are not sure if the worst is over yet, but that it wouldn't take more than pundit percent of the backlog will take more than 12 months to fulfill, so perhaps a good signal there.
mastercard beat, up 1.3%. altria down 5.2%. they missed, and they did take a $6.2 billion charge for their anheuser-busch stake. as for big tech, we got some big ones after the bell. ebay, those shares left on my checked lower. actually, i'm not sure about whether they missed, but the december quarter, that lookahead, not so strong. those shares really being punished right now, down 7.4 percent. amazon up 0.5% ahead of reporting after the bell. it is interesting, not huge expectations on that quarter. finally, facebook down just a little bit. they reported earlier this week, but the company right now against allegations that perhaps they are under scrutiny for allegations that they misled investors. shares down just slightly as the company is telling its employees to hold onto emails and other communications.
francine: abigail, thank you so much. coming up, ecb president christine lagarde pushing back against bets for an ecb rate hike. it is moving a little bit. on traders are staying pretty much on course during the press conference. we will speak with stephen schneider, deutsche bank chief economist, coming up next. this is bloomberg. ♪
alix: that was christine the guard speaking after the ecb decision to keep stimulus on track. joining us now is bloomberg's carolyn look. the bond market did not listen to what christine lagarde had to say. what were some of the biggest takeaways here? reporter: i think that lagarde really tried to tick all of the boxes she could on inflation. she said most of the price increases we have been seeing our supply driven, energy driven. she reiterated several times that inflation is expected to come down over the course of next year and below the ecb's to present gold in 2023, but she did leave a bit of a hawkish aftertaste with markets with a comment in which he said it is not for her to say whether the market is getting ahead of itself, and i think at the end of the day, what we are seeing is that the market perhaps doesn't really believe ecb guidance at this point, and at
the end of the day, that is what it comes down to, is who is right on inflation. francine: thank you so much, our carolynn look. stefan schneider joins us now, deutsche bank chief economist. is there anything else that the ecb can do to try to convince bond markets that actually, there is not going to be a hike next year? stefan: first of all, thank for having me per get the ecb is in a situation where we see inflation is surprising constantly on the upside. we see lagarde is correct in saying that it is to a large extent energy price driven, but of course, the market is getting suspicious whether this will really be just a base effect which will peter out sooner or later, or whether the underlying
inflation is picking up. i think ultimately, the verdict is still out. the ecb has been pointing out that the phillips curve models don't suggest that inflation and wage price inflation -- we just got a very important settlement from the construction sector, which points to a base increase in a sector which is red-hot. but for the time being, the ecb still has the evidence that we don't see those second-round effects arkansas concerned about. alix: our week -- effects markets are concerned about. alix: are we going to see those secondhand effects? markets did not listen to what christine lagarde was saying, and in some ways she was rather dismissive of the spike in bond yields we are seeing. are we going to see damage control done? stefan: a central banker should basically not pretend to know better than markets.
[laughter] so i think if you read carefully between the lines or listen between the lines, you could hear that the ecb is concerned about inflation, and as long as the ecb believes in its own inflation forecast, and it has no reason not to do that, there's no reason for the ecb to acknowledge that markets are correct because the terms have to be cleared for a rate hike. they are not there, according to the ecb forecast. so the ecb is arguing in a consistent way, maybe in six months we will see that although some of the base effects have petered out, we still have more underlying inflation momentum. then i think the ecb will draw a different line and we will talk differently. but for the time being, the ecb has to be consistent, and it is said they will look through this
volatility, and in the ways they change their forward guidance, the actually wanted to get out of the trap to trace the market and short-term inflation volatility, so they have to stick with that. francine: talk to us a little bit about what part of the inflation is actually sticky. if you give someone a raise, it is very difficult to say we are now going to give you a pay cut. but if it is supply chain issues the ecb asked x to readjust and second half of 2022, which means we could see stabilization of inflationary pressures. stefan: that is the question of these input prices and the issues we have there feeding through the system. if you look at the different levels of deflation which we can still see that we have huge impulses from import prices feeding through, and the passing on basically to the consumer. that might not have completely happened. so you might argue that is also
temporary, and this might take much longer than we initially thought. then you also have to point that a lot of companies basically saw their profits squeezed during the pandemic, and they might take the opportunity if demand is there, if there is a supply shortage, to increase prices. alix: before we let you go, i want to understand the economic impact you think we are going to see from these higher rates. you are looking at the 10 year in germany at -12 basis points at this point. you are looking at a huge re-rating for btp's. what is the economic impact? stefan: i think one has to be very cautious there. as you were pointing out, we are still talking negative rates. i think they are all basically derived from the same kind of environment, where we are talking positive rates in the 3% to 5% range, that might not
really apply here. i think the problem is not the level of rates. the problem is can the ecb keep under control the concern in the markets, which we seem that we might be in for a tricky it -- a trickier interest-rate reversal than we thought? as the ecb said, they have lots of instruments available to calm down markets, so i think that we shouldn't overestimate the recent move in bond markets. alix: thank you so much. really appreciate the analysis. stefan schneider, deutsche bank chief economist, thank you very much. coming up, are we saying goodbye to facebook? there are reports facebook plans to unveil a new name added event this afternoon. we will be live from their headquarters next. this is bloomberg. ♪
event at its headquarters, where it will unveil future plans. bloomberg's ed ludlow is there, and menlo park, california. if this facebook's alphabet moment here? ed: it could be. it is reported that facebook plans a rebrand and a restructuring, a la alphabet. what we do expect is details about virtual reality and augmented reality progress. that segment grew by wonder 95% year on year, but only 2% to 3% of overall revenue. mark zuckerberg says that the meta-verse is the future. it is not going to be a moneymaking business until the end of the decade, he says, but they are plowing money into this to the tune of operating incomes being down $10 billion in full year fiscal 2021. if you look at their commitment for this year, the coming year,
and 2022, they are really ramping up their efforts. that is what we want to hear about, the hardware side with oculus, but also, what does it look like? details about the horizon platform which is similar to roadblocks -- to "roblox" and other games your kids might be playing. francine: ed ludlow, the hardest working man on tv, well done. ed ludlow will be following this story closely. coming up, david kostin, goldman sachs chief equity strategist, joins us. we will talk about inflation and we will talk about earnings. this is bloomberg. ♪
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we should see an increase of semiconductor supply basically quarter after quarter. >> we have seen recovery from the impact in q3 from some of our supply base that caused a little bit deeper impact, so i am optimistic that we are through the worst of it. >> there's no objection when it comes to the short and mean term. we have a fully aligned supply chain when it comes to 2022 and 2023. >> our supply chain team has come through when it comes to semiconductors. we have been able to secure semiconductors for our entire business globally and keep all our installations globally, which we do almost 10,000 everyday, all on track. francine: those are some of the chief executives on bloomberg tv. earnings season well underway. any companies are focused on inflation and supply chain. we have been tracking the fallout of the global supply chain crunch, everything from logistic companies to cell
phones to automakers taking a hit. that as alix is filtering some of through the -- filtering through some of the inflationary. that i think is the part that central bank's around the world think will be transitory. alix: it feels like the conversation was evolving to transitory may longer than we think, but now with some of the auto makers saying we see some of the worst over with the chip shortage, may be transitory actually is just a few months. that is of easily going to have a big impact on earnings, as well as margins. joining us now is david kostin, goldman sachs chief u.s. equity strategist. you way in -- you weigh in. are we in a turns a tory inflationary environment? -- a transitory inflationary environment? how do we invest for that? david: the market does not wait before focusing on the future. the reason i make that point is because the equity market is
near all-time highs, and the earnings season has been excellent, so the gdp numbers came in this morning quite week. lots of focus on the supply chain issues. but really, what investors are focusing on is the fact that revenues in the quarter were 2% above expectations, and earnings were 8% above expectations, indicating that margins actually expanded more then was anticipated coming into the earnings season, and we saw that consistently across so many of the conference calls. we are now 50% of the way through the earnings season for the s&p 500. you have had generally speaking a very positive set of results, and the commentary has been all positive about how they have been passing through their input costs through to the consumer in terms of raising prices, or using technology very efficiently to try to maintain
their operating leverage. of course, not every company has done this. there are some that have had challenges. but broadly speaking, that is the take away from earnings season. francine: overall, does it mean you could raise your price targets for the s&p 500? david: i think the way to think about that is yes, and why would that be the case? because in our forecast for 2022, we are assuming that tax hikes were going to take place at the corporate level, so the u.s., federal, statutory rates would go higher. it is a fluid game in washington, d.c. every day there is a different proposal that is floated or negotiated, and it seems right now that the outcome may be less onerous, may be less of an increase in corporate tax rates than we have been assuming, so if that was to transpire and come to pass, we would end up
having slightly higher earnings estimates. right now we are expect and around 2% earnings growth from this year into next year, and if you didn't have any tax reform at all, you would have around 7% , so between 2% growth and 7% growth, and you are probably going to be higher than 80% level. we will have to see what the final legislation is. alix: totally. the things that we do know, at least in this round, is that there will potentially be a stock buyback tax and a 15% corporate minimum tax. buybacks have been such a strong part of supporting the s&p, and you have been quite bullish on the outlook for buybacks. do you feel like a tax, what does that do to the thesis? david: about $900 billion of authorizations for companies to repurchase shares already this year, so those are likely to get executed.
if you look out into next year, i suppose there will be a modest headwind. i would think probably relatively slight because profit margins are so wide. we are looking at around 12% net margins, around 25% for technology. record high levels today, likely to be around these levels into 2022, which means it is a high-quality problem. what you do with all the cash? there's only so much capex, so much r&d, so much m&a. ultimately, there is money for buybacks. so yes, it will be a drag on the margins, but there will so be plenty of dollars devoted to buybacks, in my opinion. francine: where are you on the reflation trade, reflation versus deflation? david: the issue is that you have the idea of higher input costs, which are inflationary, of course, but you also have
technology that is a deflationary impact. my colleague who is an analyst at goldman the policy software companies has really been highlighted as a key aspectthatt for higher inflation or goods prices, of labor -- in the corley results just coming through. so if we look at what does it mean from a strategy point of view, what to be owning, what to focus on, investors today are paying a greater premium, ascribing more importance to long-term growth and margins. so those two combinations are more important variables in explaining share price valuations today, so it is the profitable tech companies that are beneficiaries of where investors are focusing. the idea of winning on the order flow, as well as helping other
companies compensate for higher input costs, that is really the area of focus right now. it is likely to also be the story moving into 2022. alix: before we let you go, what has led so much of the rally with tech, that has reversed a bit. energy has really been in the lead, and there's questions as to what really takes hold in this next leg, if margins continue to do really well, if there is some kind of fiscal stimulus. what leads right now? david: i would say it is a barbell type strategy. we are looking for companies on long-term growth, which tends to benefit more technology, and companies with high and stable growth margins. the energy stocks have done well. as you know, cali jeff currie talked about we are pretty bullish on the outcome and outlook for energy, broadly speaking. the oil price only $90 by the
end of this year, lack of investment, etc., so there's generally tailwinds for these company's. from a social point of view, said they are sort of viewed as a pariah with all of the esg emphasis. so that is probably more in line with the rest of the market, as opposed to technology, and i think some of the more income oriented areas probably lag as well. francine: thank you so much, david kostin of the goldman sachs. we will have plenty more on the markets and the reflationary trade, coming up. see you at the movies, or not. imax on track to be one of the top 10 months in its history. i next executive richard gelfand joins us next. i bet alix steel is a nymex fan -- is an imax fan. alix: i do, but i get a little
>> this is bloomberg. ♪ let's check in on the bloomberg first word news. i'm john hyland. it is seen as a potential breakthrough for president biden's economic agenda. the president is set to announce a framework for a $1.75 trillion tax and spending packets that has a adminstration believes will pass congress. he went to capitol hill today to drum up support. the proposal includes a minimum tax on corporations, stock buybacks, and new taxes on
incomes over $1 billion. gdp expanded at a 2% annualized rate, following a 6.7% rate in the second quarter. a surge in coronavirus cases and supply chain disruptions put a hole in spending and investment. the president of taiwan says she has faith the u.s. would come to their defense if china tried to invade. she says the threat from china is increasing every day, and confirms the presence of u.s. troops in taiwan. cnn says there are fewer than 300 service member's there. 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 john hyland. this is bloomberg. francine: thanks so much. imax is out with results this morning. shares popping higher. let's get straight to abigail doolittle with the details. abigail: they certainly did put up a good quarter. they put up a much narrower loss
than expect it. revenues basically in line, and very encouraging is the idea that guidance is modeled to put out a gain in the fourth quarter. the fourth quarter expected to put up a profit of about $0.08. the company is also seeing this october could be one of their best quarters ever. it would take a look at a chart going back to the beginning of 2020, we see the pandemic slide, and then reaching highs out of the pandemic. august was down, perhaps on delta fears, but now higher, and october could be one of the best months on record. this company does rely on some of the bigger hits such as the james bond movie, and imax is becoming a bigger force overall in the box office. as we took a look over the last couple of years, their contribution, here is the contribution relative to the number of movies that help out
imax. 90% relative to the average theater. imax's contribution to the box office overall, we are going to see a very positive trend here. climbing, climbing, year-to-date eight point 3%. so imax becoming a bigger force, especially as there is pent-up demand coming out of the pandemic. alix: such a great point. thanks for that. joining us now for more is richard gill fund, imax -- richard gelfand, imax ceo. you are gaining bigger share at the box office. what kind of movies are they watching? richard: everyone is going to the movies right now. millennials are going to the movies. gen x r. older people are going to the movies. they're watching a pretty broad array of movies. the turnaround really started in earnest with "shang-chi," which was a disney blockbuster. last weekend, "dune," which
crosses a lot of lines, big sci-fi, imax did over 20% of the u.s. box office on less than 1% of the screens. bond, more older people, an older demographic went to bond, then went to the last bond. so i think it is pretty much across the board. francine: richard, are these kinda viewership's here to stay? richard: remember, imax is in the blockbuster business, so it depends on your definition of what the right film is. over the last decade, every year aside from the pandemic, box office has been going higher and higher on a global basis. so i think there's no such and that there is sustained demand for block esters. if you look at blockbusters as the percentage of overall box office, these big movies keep
capturing more and more market share, so i think people go to imax because they want a spectacle. they want something different. want to feel like they are inside the movie. alix: something that it feels like everyone is trying to work out is how long do movies stay in the theater before they are released on streaming. "dune," for example, released simultaneously. james bond has a lag. do you have an idea of what that window is going to eventually look like? richard: sure, and i think the industry does as well. during the pandemic, a lot of experimentation went on because obviously, people for a lot of reasons couldn't leave their homes. there were different models. there was one where "f9" from universal went directly to theaters and had a window. warner bros. released a lot of its slate simultaneously on hbo max. other places like sony or paramount said we are going to
wait until the world is safer. but since the pandemic has significantly slowed down and people are learning to live with it, almost every studio now has a 45 day window. so "internals -- so "eternals" has a 45 day window. spider-man for sony has a 45 day window. so that has pretty much become the standard now. for imax, that is fine. we typically play movies for only one or two weeks, so a 45 day window works very well. lisa: -- francine: how much market share are you expect them to take versus the larger, more traditional theaters? richard: that is a difficult question in the post-pandemic. leading up to this, our market share has gone up.
during "dune, it was incredible, 23% of the united states. now, that is a special movie and a special time. for the blockbusters, the movies we play, we historically have done around 10% of the box office. this year so far, and we are a global company, and 85 countries. we have had an increasing percentage of the box office. it just depends on people's habits. i think it is going to go up for a while because i think if people want to leave the home, you want something really different than the couch you have been changed to for the last year and a half, and imax provides it. alix: tell me about the expansion plans for china and japan as we are moving out of the pandemic. that affect the plans at all, especially china, which seems like a zero tolerance policy when it comes to covid cases? richard: in fact, china was our largest market in the world
during the pandemic because even though they had zero tolerance, it was floating. we have 800 screens in china. during most of the time, the vast majority were open. so there might be 20 closing at one time, 40 closing at one time, but the way is geared up, they open extremely rapidly. so just this last weekend on "dune," we did 20% of the chinese box office on 1% of the screens. there were some theaters closed, but yes, the results were extremely impressive. so they just deal with it differently then we deal with it here. small closures for short periods of time. francine: it should, thank you so much for the update there. richard gelfand, the imax chief executive officer. you are looking at a live shot as we await house speaker nancy pelosi. she said she wants an inference structure bill passed.
john: it is time for the bloomberg business flash. i'm john hyland. airbus has increased its earnings and cash flow targets for the second time this year. the european airplane maker's banking money recovery and air travel. airbus is hoping to rally suppliers and customers to support a sniff it can increase in production. major tech companies are banding together to push new diversity
efforts. it is called to catalyzed tech coalition. the goal is to hold numbers accountable for strengthening the pipeline of underrepresented workers in silicon valley. shell responded to external pressures by setting more ambitious targets for greenhouse gas emissions. activist and lester -- activist investor dan loeb is pushing for a breakup. the comely reported third-quarter profits that fell short of expectations. that is your bloomberg business flash. alix: thanks so much. this comes as all the oil majors are reporting earnings, and as they are headed into cop-26. so shall today actually increased their co2 reduction target. they are now looking to decrease by about 50% for the one into emissions by 2030, but many say this is just not enough because the total overall emissions is a problem there. that is obviously going to be a
big issue they are all going to face when they are dealing with those emissions reductions. you are looking at a live shot of congress and the oil ceos. francine: what is interesting here in europe, it is one of the only industry groups were receipt shareholder activism. we just had dan loeb yesterday taking a pretty big hunk, saying they need to be broken up because they would and if it from turning the marking business into a standalone company, and that will heavily come up with a lot of other companies. alix: how would you value the upstream operations for those big guys when we are not really sure how to value what is in the ground because we don't know how oil demand and oil prices will pan out in the energy transition? the other interesting point, if the large oil majors are going to make the argument they need all of this stuff because they have the infrastructure, they are only going to be successful in the energy transition because they do all the things.
francine: i think this is exact with the management were trying to argue in the call today, but you have a number of analysts saying they should use this activist investor pushed to break up the company as may be a way forward, even if it is quite difficult to do. alix: you have to do something. you're clearly not valued correctly. coming up come -- coming up, we will stay in europe. it is the european close. we continue to see this really solid moves in bond yields right now. btp's up nine basis points, so off the highs, but nonetheless, a chunky move after the bond market does not seem to want to believe christine lagarde and her outlook on inflation. we will break it down. this is bloomberg. ♪
johnson and alix steel. ♪ alix: happy thursday, everybody. here's everything you need to know from europe at this hour. inflation, hot, hot, hot. inflation in germany surging to 4.6%, the highest since 1992. lagarde, no calm for the bond market. rates continue to selloff on the front end as ecb present christine lagarde reiterates that higher prices won't last forever. maybe just a little while longer. and carmakers double down on transitory. europe's biggest automakers join ford and gm and saying they are past the worst of the chip crunch. francine lacqua is in for guy johnson, over in london. i am continually amazed by the moves in the bond market here as we sort of ignore what christine lagarde said. we are