tv Bloomberg Markets European Close Bloomberg October 29, 2021 11:00am-12:00pm EDT
alix: it's the yield spike, this puts the italian borrowing costs as an ecb rate hike could be in next october. euro prices reached 4%. growth cooled in germany, making the ecb job a lot harder. france warns of negative consequences. bottlenecks, labor shortages, run materials as the g20 meets. francine is over in london. guy johnson is still off today. it is the end of october. we got through a whole month.
what positioning will we see after this big selloff in the bond market? francine: it starts in europe overall, they are gaining about 4%. we are short one basis point. the ecb is not catching a break. you have 4% french. i think if the second time we've seen it in two decades. alix: an unbelievable move. income is starting to roll over a little bit after the help from d.c.. the incomes are going lower, the savings rate is pre-pandemic. how much juice is there left to spend? that's likely to change the inflation expectations. francine: it's an interesting month. it wasn't dull at all. this week feels like it was
three weeks all rolled into one. we had one hunter 50 companies reporting earnings. we don't exactly know what inflation will look like. it's pretty much flat, just moments ago it was down to 0.3%. apple and amazon are hitting some of the semi conductors in europe. overall, the german 10-year, it's interesting to see the differentials. if you look at financials, they are outperforming at the moment. shares are higher today. overall, we are still gaining. alix: you mentioned apple. they have broken down 7%. that's wiping out one hunted $60 billion in market value. amazon is going to be hurt by higher labor costs. we also learned from bloomberg there is a 20% stake amazon has
in review and. -- caribbean. apple is dealing with supply constraints like everybody else. you might have a demand for the iphone. the next part is what's happening in the bond market. a little bit of buy-in is coming from the backend. this is off the high of the session. what's interesting is as you have this rise in yields, you have lower yields in the breakeven world. yields are moving lower by four basis points. the reason is if you wind up having a more hawkish central bank, debbie were not going to get runaway inflation. that's what we are seeing in the breakeven markets.
the other question, europe is pivotal today. growth versus inflation. out of a play out? francine: if you look at the growth we sought, the third quarter following the suspension of most curbs with the highest level since 2008. this is an easy source of growth. this is largely exhausted. the question is not whether growth can sustain itself but what happens to inflation. the economy is relying on more traditional. joining us now is the european economist. what will support growth and inflation going forward if wants the economy has reopened, we need to go back to the economy like it was in 2019?
>> we don't need to be concerned about that at the moment. it seems like the perfect storm for inflation. every thing is rising rates up. there was one inflation scare almost every day. that is still driven by the shortages, supply chain issues and energy prices in europe. the increases is 24% year over year. for growth, we need to be more concerned. we saw the results today. we are looking ahead, it's still the driving force behind the recovery. the consumer is getting more concerned about inflation.
>> talked about the growth picture for a second. there was a two speed recovery. the extent of that surprised a lot of people. there is cooling growth in germany and spain. why the divergence? what does inflation do to that? >> the data that was released today, we have concerns that germany is no longer leaving the recovery rate in the euro zone. looking at the quarterly data, one milestone we look at is when economies are returning to precrisis gdp levels. belgium and austria have already passed that. we see that germany is not making so much progress anymore. italy seems to be catching up at this point with germany around 1% below precrisis levels. why is germany now falling
behind the neighboring countries? it has to do with supply chain issues that are hitting the economy. francine: overall, we see this play out in germany. if you have rising energy prices and that eventually could hit the consumer, is if the business surveys that are the best indicators of what will happen? >> i think it will be important to look at the business barriers. when we look at the consumer side, it suggests we are still in a boom. consumer sentiment is a. we don't have a huge issue. production cannot keep up with the demand. the demand for it is key at this point. that would give us a more complete picture. alix: the money markets are pricing 20 basis over in europe.
how wrong is that? >> i think it's pretty wrong. clearly, the markets are not impressed by madame lagarde's dovish attempt to realign market expectations. either they did not hear the message or did not want to hear the message. the inflation data coming out, they are all moving up. in this environment, i do make we see the market. i think it will take until early next year for markets to come around and realign with the guidance. we're not going to see a rate hike before 2023. francine: this is because
inflation is transitory. transitory, is it on a timeline? does it eventually come down? this is what is confusing markets. >> we see various definitions of transitory at this point. what really matters is the medium-term outlook. what we look for in the december projections, it will be the outlook on inflation for 2023 and 2024. it could well be below the 2% mark. that will be crucial. the survey released by the ecb forecasts the expectations for
inflation to be below 2% but within a touch of 1.9. i think that could justify the ecb not hiking rates immediately. alix: i just want to touch on the bond markets. i'm wondering if you see the possibility of the german 10 year getting to zero. what does that mean? >> we already talked about a few weeks ago, we also saw the bond market at zero. that is clearly a possibility. it something that cannot be ruled out at this point. we can't forget the german bonds that the ucb is holding. alix: thank you so much.
the foreign secretary once the envoy to explain the disappointing and disproportionate threats made against the u.k. in the channel islands. francis threatening to disrupt trade over fishing rights. france and italy drove economic growth in the euro area in the third quarter. a surgeon consumer spending roosted french output. italy reported an expansion of 6.2 percent. germany and spain posted gdp figures that were weaker than expected. the euro area economy grew 2.2% in the third quarter. francis finance minister is looking at supply chain disrupted. he spoke to bloomberg from rome. >> we can address the issue and find concrete solutions to these bottlenecks. john: global news 24 hours a day , powered by 2700 journalists and analysts in more than one
hunt in 20 countries, this is bloomberg. francine? francine: thank you so much. it's interesting to hear from the french finance minister. you look at what's been achieved at the g20 level ahead of cop 26 on a climate change, not that much. we are waiting for big countries to come out with their plans ahead of glasgow. if you can't agree on climate change, i don't know what your can do with the supply chain issues. alix: without china, how do you make any progress on climate change at all? it doesn't really hold a lot of water if china and india are not a larger part of that conversation. francine: one hunt percent. president biden is set to hold a meeting with the french president at the g20 in rome. it's the first meeting after the major diplomatic dustup over submarines. this is the washington
correspondent on the ground for us. this needs to go well for emmanuel macron because he is in campaign mode. >> exactly. it needs to go well for the president. he wants to smooth over that dispute with the submarines. there have been a number of meetings in washington. this is an important one. this is the first in person meeting. they did have a phone call following the submarine spat. the french were very upset, publicly upset and recalling the ambassador. when i spoke to the ambassador, he said there are areas that need to be fixed. he is meeting the prime minister. he is clearly behind schedule after taking 90 minutes with the pope. he is a little bit behind schedule.
alix: and 80 car motorcade in rome? that's a traffic nightmare. i also wonder, there is a lot of chaos happening in d.c.. i'm wondering how any of that is plain into president biden's negotiating power in rome right now. >> the question is if he can't deliver at home with his own party, they have slim majorities in the house and senate. how can he deliver on a global stage when he is meeting with these world leaders. where this comes to focus is on climate. we are going into cop 26. he wants to be a climate president. he has all of these initiatives
with the heart infrastructure plan. right now, it's held up in congress. congress would not vote on the heart infrastructure plan. they voted on an extension on the transportation funding. the president is talking a big game with challenges ahead. he doesn't have the goods to deliver. that's what european leaders will be questioning. he said america is back. you have to think after the withdrawal, there are errors of the trump administration a lot of these leaders are questioning. francine: i can't get the picture out of my head out of 90 american cars in the streets of rome. of course, you have the
presidential state car. there are three or four decoys to make sure the president is safe. can the eu in france and the u.s. agree on how to deal with china? >> it's a great question. this is one of the divisions of the transatlantic relationship. europe wants to engage beijing and the united states wants to confront beijing. the biden administration in cornwall, they want this multilateral approach toward china. with trump, it was a unilateral approach. the problem is is europe going to get behind the united states when it comes to china? we should note that top of the agenda tomorrow to be the iran nuclear talks. the trump administration with through the united states. the united states is looking to
reengage on those talks. that is going to be high on the agenda tomorrow and the president meets with boris johnson and angela merkel. alix: before we go, are we going to see a family photo? back in the summer, it was really about president macron and president biden hugging and the connection. that was frayed by the submarine issue. who are going to be the leaders on the connectors and that? what's that going to be? particularly when merkel is out of a job soon? >> it's a great question. she is exiting stage left. macron is up against a hard election front. all european leaders are dealing with backlash with the spike in
energy prices. this is why the president wants the sit down with mario draghi when he sees the u.k. president crucial to making sure he passes allies in front. what's going to be interesting about this picture is who is not in it. vladimir putin and xi jinping are joining virtually this year. alix: good luck. you've got a long couple of weeks ahead of you. this is bloomberg. ♪
same store shales -- sales missed estimates. volvo is trading at stockholm after raising $2.3 billion. investors are buying into the turnaround. volvo is owned by a chinese automaker. according to dow jones, the scottish eddie has 15,000 hotel rooms and expects 25,000 guests. airbnb is offering bonuses for those who list their homes during the summit. two cruise ships can accommodate several thousand people. it was bad enough when bars were closed for months. more bad news. the favorite drink may be more expensive. the ceo said the company must become more aggressive on prices going forward. they are feeling the heat of higher logistic costs. that your bloomberg is this flash. alix: i would be interested to
see the price impact. if you are a can party lever, i can't imagine you would be upset by higher prices. demand is still going to be there. francine: we spoke to the chief executive earlier on. you been drinking at home moderately. then they say that across the drinks they have, they are going to increase prices. it's interesting that he did not pinpoint what he will increase prices on. maybe you will be spared. it's a more expensive third-year scotch that will increase in price. they tend to be not so price-sensitive. i think chanel put up prices by 30% and we still had record sales. alix: this reminds me of the u.k. budget. the taxes are going to come down for sparkling rose. the high alcoholic stuff, taxes
will go up. they say it's for your health. i don't know if that's going to make a difference if you are a heavy alcohol lover. francine: when you talk to a lot of the drink ceos, if it's going to local alcohol and you prefer your things they brew, alix: we can talk about this for the next few hours. we will be talking with eric join us about the supply chain disruptions and what it's doing to the bottom line. this is bloomberg. ♪
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we have a little bit of a mixed picture. the ftse is down 0.1%. young series -- luxury stocks, the focus is on inflationary pressures. companies are holding onto margins as they pass on the inflationary pressure to consumers. the dax is down 0.1%. we have some gdp figures. that 4% inflation figure is for europe. the market does not leave it when she says she will not increase rates next year. this is the breakdown of the markets. i want to show you what europe has been doing. we are almost at a record. focuses on what we saw in the last couple of days. there are about 1% from the record high after 4% in october.
i know in terms of the industry groups, we have some of the other ones. we have insurers, zero point 5%. insurance and banks, you will see technology stocks. this is on the back of amazon and apple. we thought this might grow under pressure because they do some of the things that are used in some of these big technology companies. this is a big bank here in the u.k.. they came out same they were disappointed on the fee income. they are worried about some of their markets and how they will perform in the future. the other when we are watching out for is -- they came out with some encouraging figures. this is the maker of ray-ban. i don't know if we will buy sonny's to go anywhere because of covid.
they think demand is picking up. a lot of the semi conductor companies are under pressure because of the technology story with amazon and apple disappointing in the u.s.. alix: are they called sonny's in the u.k.? i've never heard them be called sonny's. when it comes to ernie's, adco is pretty much flat after reporting earnings yesterday. it is very high demand. you have farmers with good money, the supply chain crunch is forcing the company to re-do its outlook. abigail: it's all about the outlook at this point. we will start off with a more challenging news. they have lowered the full-year guide for sales. roughly around $11 billion. the prior had been close to
$11.3 billion. you can see that consensus is $11.4 billion. one of the reasons, it's not a demand issue. it has to do with the supply constraints. third quarter sales are up 9.1%. tractor sales are up 17%. overall sales are up 20%. you know this company, most of their revenue comes from europe. we are going to see up high. there was some weakness. we thought it could have to do with the slower vaccine rollout. there is a silver lining here. there could be some pull forward a what happened in 2021. i like the chart.
this is the lowest level since february. he looks as though there might be some wobbly action ahead. they did put up a great quarter. francine: thank you so much with the latest. that's get more insight. thank you so much for joining us on bloomberg today. how much pressure do we see on the margins? eric: on margins, i think we will be fine. the demand is extremely strong. farmers are enjoying profitability. that's following a few years where they had some restricting buying behavior. if farmers want to buy new equipment, demand is strong. we've been able to have some pricing power in the market as well. alix: it's good to see you. as we pointed out, you get the majority of your revenue from
europe. you've got a great global view of everything. where is the biggest supply chain issue? eric: unfortunately, it's pretty universal. it's around the world. it is hitting us in europe. that's where some of our largest facilities are. it's not just us in the company. semi conductor chips are a problem. we are working night and day. our team is proud of how hard they are working. francine: where is your hardest area. i know you can be creative. our most problematic issue is
semi conductor chips. we have a lot of these issues. we have 43 computers that control different things. each of those has multiple chips in them. that is our biggest problem at the moment. it is forecast to be with us for many quarters to come. well into 2022. alix: i'm sure you use different semi's, some of the carmakers said they think we are past the worst point. do you see that issue persisting for the next year? when do you think we hit the bottom? >> we hope we are hopeful in the worst now. we thought we would be clearing the worst of it by now. we see issues to some degree through the first half of next
year. just because of the older -- overall issue from so many sources, it's not just the supply. it's also the transport. 20% of ships are waiting to be unloaded. a typical load is sitting 14 days. it's the supply and the creation of the components and then getting them to the right place in an efficient manner. francine: does that get better? there is huge demand for secondhand tractors and other agricultural equipment. do those prices go up because of the supply chain issues? eric: yes. to some degree we've had to raise prices a little bit. prices are up a little. relative to profitability right now, prices for corn and wheat
are high on relative terms. that is a demand issue on its own. prices are relatively high. farmer profitability is strong. our order bank is the strongest. it's not only a supply and demand thing, it is turbocharged by the position and. demand is strong. but we've put into the market is digestible by the market. alix: we are looking at farmers dealing with rising costs of their own. what's the impact for you guys? eric: farmers are under pressure. we are the most former focused company in the industry. we taught -- try to spend a lot of time speaking to our customers.
there are issues for them on many fronts. we've talked about equipment. fertilizer is a commodity the use when they plant their crops. that's tied to energy prices. energy prices are up. especially in europe. seed prices are up. there is a general restriction in the supply. a lot of farmers are pulling forward those purchases to make sure they've got what they need to plant in the spring. alix: thanks a lot. we really appreciate it. coming up, modernity announcing they will supply millions of doses of the vaccine. the ceo will join us exclusively next. don't miss that conversation. this is bloomberg. ♪
john: ian bremmer at the 12:30 p.m. in new york. this is bloomberg. ♪ let's check in on first word news. president biden visited pope francis at the vatican. the meeting was closed to u.s. reporters traveling with joe biden. they met for 75 but it's, talking about climate change and the pandemic. biden is the second catholic president. british workers are facing three years of fairly rising living standards. new projections say after adjustment for prices, earnings will be a little higher at the end of 2024 and they are now. many went a decade without a pay
raise following the financial crisis. today is the deadline for all miscible employees to receive at least their first covid vaccine shot. nearly one third of police officers unvaccinated. 10,000 of the 35,000 uniformed cops of not gotten shot. the mayor said those who refuse will face unpaid leave. the union is fighting the mandate in court. powered by more than 2700 journalists and 120 countries, this is bloomberg. alix: let's see what that vaccine news, maternal will provide them in the second quarter of next year. the dharna is seeking approval to vaccinate children. they are planning to submit data to global regulators. join us for next elusive interview is the ceo of modernity. it's always a pleasure to catch up with you. i do want to start with the booster conversation.
what do you think the take-up is going to be? what is your expectation? >> it's a pleasure to be back. we are pleased when the u.s. fda authorized the booster. the numbers we have are more than one million people have gotten the booster. there is a lot of -- it is being used in pharmacies. a lot of people have already gotten their booster. francine: hello from london. how often do you think we will need a booster? >> it's a great question. i think it will depend on your age. if we look at another coronavirus, it's around the russian flu.
if you look at it, people 50 years of age get it every year. i can see a world where people are in that bracket. younger, maybe once every two years. we don't know yet. where we are working to make lives easier is the covid booster in a single dose. alix: you've been saying that. i wonder how close you would be to creating something like that? that all in one seasonal booster. >> the flu is -- we're getting the data very soon.
within this, we will combine it. the best case scenario would be a 24 timeframe. i expect some countries will be quick to approve it. some countries might be more cautious. we are going to work hard to make it available everywhere else. francine: how safety you think the vaccine for 5-11 years old? >> the data is very strong. we think the vaccine is safe. it will be shared with the fda. we think it's not going to be an issue. alix: you can talk about the
announcement today? you are sending shots to covax. the baidu ministration has criticized you guys for not sending enough doses to africa. is this part of that response? is there more you can send? >> people should not forget when the pandemic started, we were on the -- we never sold product. we had no industrial experience. we set the goal to make $1 billion this year. that was an extraordinary number. the entire market across many large companies is $500 million. we had made less than $100,000. at the time we made those decisions, it was either in march of 2020 at the beginning
of the pandemic. as we know, they were -- we did not know this would be the highest efficacy and duration. if we had known, we would have tried to make more. you are going to see more partnership. francine: do you think we will have sufficient doses to distribute to africa to get vaccinations for 2022? what level do you think we will get? >> i think this is something where we are today. as of this morning, 5.2 billion adults are on the planet. if you have two doses, that is 3
billion doses. over the last 30 days, no projection, the industry as a whole has shifted $1.3 billion. i think we are in a position where we have enough vaccines. we need to do more. we are getting vaccines in arms. the world was getting $40 million every day. 40 million. in the last few weeks, it's been more around 50 million. it's come down. how do we help them?
look in the year -- in europe. this is where we need to be. alix: infrastructure is part of it. for we let you go, i want to ask about the use of the vaccine. i am wondering, would you consider using a lower dose on teenagers and kids? and do you expect the fda to approve it? >> it's been approved in most countries around the world. in northern europe, it was in very small number of cases. it's a few people getting the vaccine. they don't have a lot of people. this morning, the european agency posted a report looking at the swedish data.
france was furious over that. this is the first time they've met since that spat. this is the presidential palace, we don't want to say the wrong thing. you can see a number of reporters are there with resident biden and president macron as they give an impromptu press conference on how the meeting went. alix: this is really interesting. president biden says what we did was clumsy and not done with grace. he thought france had been informed long before. it's the first time we've heard him say that. he talks about how france is a loyal and old partner. i'm surprised to hear that. he thought france had been informed long before. francine: i'm surprised we heard this only now. i guess there was a lot of hope going into the meeting after the contentious submarine deal.
the u.s. is calculating the only way of getting away from this is a me a call put. we thought we had notified you and we will do better next time. alix: president macron said there does seem to be more areas of cooperation. it looks like they were able to put that behind them potentially. it doesn't seem as friendly as it did in cornwall, when they had the g7. thank you so much for joining us for the last two days. i know you are heading out on sunday. it's going to be an amazing week ahead. coming up, you've got eric adams joining balance of power with david westin. this is bloomberg. ♪
david: from bloomberg world headquarters in new york to our television and radio audiences, welcome to "balance of power." president biden is in for meetings but he leaves behind the framework for the build back better package that has some work to be done. joining us is emily wilkins. give us a sense, are the progressives calling the shots? emily: to a certain extent, yes. the margins are so slim in congress that a couple people have a lot of power. the progressive caucus in the house, it is easy for them to block things from passing. yesterday, what progressives were really looking for was