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tv   Bloomberg Markets  Bloomberg  November 25, 2021 5:00am-11:00am EST

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> the question the fed is now managing is not do we have an overheating problem. the problem is how do you land this economy softly? >> cannot control stock price. we can control expectation. >> new records are being set in terms of the number of infections. >> this is "bloomberg surveillance: early edition." >> it is 10:00 a.m. in london, 5:00 a.m. in new york. our top stories today, the latest fed minutes show officials are open to removing policies at a faster pace to rein in inflation. germany's covid challenge. the you plans to bolster his travel rules. and damage control. jamie dimon walks back his china comments.
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it has just gone 10:00 in london. welcome to the program, a special edition of the "bloomberg surveillance: early edition" because it is thanksgiving. in terms of the other markets, away from the united states we are up and trading. european futures moved -- u.s. futures moved to the upside. we do not have u.s. equity trading today, but we have futures open and they point to the upside of the major markets, all modestly to the upside. we have the stoxx 600 up here in europe. it seems the positivity around the u.s. data picture and european earnings is overcoming our fears this morning. we are think the for the u.s. data -- thankful for the u.s. data. here in europe, we have had better earnings coming through.
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the euro is probably a dollar negative story, the dollar down after four days of strength. we do not have treasury markets open today, so we will see what happens when they reopen. i have put in here the hungarian currency. we have south korea hiking rates overnight. we have the hungarians increasing interest rates more than expected for the third time in two weeks, and underlying illustration of what kind of move we are seeing in terms of central banks' interest rates. it is taking other emerging markets in europe with it as well. let's take a look at the day ahead, plenty to talk about this morning. we have a few items on the agenda to keep in mind despite it being thanksgiving. the ecb legal conference begins.
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the ecb president is due to speak at 1:30 p.m. u.k. time and then the bank of england governor speaks at cambridge university and the you competitive counsel these in brussels. -- meets in brussels. the european union is recommending tightening travel rules. let's get back to our story around covid. the european union is saying it wants to set a nine month time limit for the validity of vaccinations for coming into the block. let's get to a reporter in rome. what details do we have on this policy announcements so far? >> we are getting the official announcement later today. we have seen a document which says part of the proposal, which these are proposals that go to all e.u. member states and have yet to be approved and a caveat
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given the patchwork of measures we have seen dealing with covid and travel, there is no guarantee it will be uniform. the news is there will be a proposal for nine-month validity for the vaccination. that suggests after those nine-month people would need boosters. the other is entry into the block. there is a switch of focus. until now, we have been focusing on countries of origin and how bad the situation is there. this which is focusing on people themselves and whether they are vaccinated given the increase in global vaccination. the e.u. exec of arm -- executive arm says this is to make things smoother, to have more clear rules. the aim is to harmonize what is happening on travel. bear in mind also that prioritizing travel means access would also be allowed for people with who approved vaccines.
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if those have not been approved by european authorities, they would also need a pcr. a new jumble of rules, but generally trying to uniform things. anna: within the you -- e.u. and for those visiting. we will see how far they go with the suggestions. after two months of negotiations, scholz has sealed a coalition deal to become the next german chancellor. at a press conference to announce the deal -- that is three parties coming together -- he vowed to position germany as a climate leader and steer it through the pandemic. our reporter joins us from frankfurt. one of the key points of the agenda that was mapped out by the next german government -- what do we know about their policy agenda?
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>> i think there are two points that set the tone yesterday. one, the political move to basically step up the fight against co2 emissions, accelerate the energy transition , cut carbon emissions from germany's industrial operations, but the other aspect which probably has bigger urgency is the fight against covid you just mentioned. we have seen record numbers here in germany over the past few days. last night we reached a threshold of 100,000 people who died related to covid-19 infections. the number of new cases is still rising, so the question is what the new government can take, concrete measures to bring the numbers down again and put relief for the hospitals in
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place. anna: we are used to german coalitions but not used to a trio of parties coming together. this is the new german experience and they are coming from different places. maybe covid gives their first chance to either demonstrate their ability to work together or to fall out. how do we think covid making decisions go from here? do they seem to be on the same page around fighting the virus? >> is going to be interesting to see. i think earlier on the program a colleague mentioned from a policy perspective the three parties involved in the coalition have been pursuing different policy approaches in the past. the liberal democrats have been more reluctant to impose strict measures, whereas others have been in favor of those. what is essential here is
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whatever they do they cannot afford to take much more time. if we learned one thing about the pandemic, it is the virus can spread quickly. whenever they agree upon the need to take action. anna: plenty of other conversations for later dates. jp morgan's jp dimon says he regrets his joke that his bank is's likely to outlast china's communist party. he said he was trying to emphasize the strength and longevity of the company that he runs. let's get more with bloomberg's asian government reporter. it is interesting. in his remarks that many people heard, he was talking about the long reach of china and now he seems to have succumbed to the
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long reach of china in the sense that he has walked back those comments, possibly fearful for repercussions for his china business. >> this is a tight rope that a lot of businesses in china have to walk. in hong kong as well now. we have seen these comments that came out. he was not on a trip to hong kong. he had recently done one. he had to walk these comments back. the interesting thing here actually is, partially because what he was addressing was so sensitive to beijing, basically talking about whether the communist party will continue to survive as a political entity, it looks like china is actually not wanting to come out and blast him over this. the other day the foreign ministry brushed aside questions about his comments. today they said they noticed the sincere reflection by him. we believe this is the right
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attitude and hope the media can stop typing this issue. jamie dimon probably wants to put this behind him. because of the sensitivity of the subject he was addressing, unlike taiwan where beijing is more likely to come out and blast whoever was talking about this, it looks like beijing also wants to put these come is behind them and try and not engage on this because highlighting those issues in china, foreigners doubting the ability of the communist party to survive, that does not do beijing much good. anna: i was watching yesterday expecting some kind of comment from the chinese government and it did not seem to be forthcoming. it is interesting with regards to what china does and does not want to speak out about. thanks very much to ian marlowe -- iain marlow.
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-- terrain in inflation. we will get where that leaves the fed tightening talks. plus, the turkish volatility curve is reminiscent of a similar period. this is bloomberg. ♪
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anna: this is this is -- this is "bloomberg surveillance: early edition." london promising azz remission
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network. bloomberg spoke with transport bosses and campaigners about the word -- road ahead for european cities. >> we are in north london at one of the largest electric bus charging facilities in europe. behind me, this bus is on its way to cop 26 in glasgow. a milestone on the road to net zero. let's take a look. fully electric buses like these are set to make up 10% of london's bus network by the end of next year. the mayor says the entire fleet will be zero emission by 2034. >> it is a big milestone. it takes away the whole mythology about buses and exhaust fumes. a multitude of things have to work together. it means partnerships with local authorities, governments. they are more expensive than
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hybrid or diesel vehicles and we need to find ways to make that transition. the biggest transition is to get more people on buses. once you get more people on buses, commercial dynamics start working better. that starts transforming the environment, transforms cities got transformed how we get about. that is the big thing. >> the switch to an electric fleet is a step toward carbon free commuting. it is one part of a plan to transform the way millions of londoners move. >> it is more than just the vehicles themselves. what is just as important is we encourage more people to leave their car at home. that is the route to decarbonization. the more we can encourage people out of their cars, the less congestion there will be on the roads. those who walk can do so in an environment with fewer vehicles and can get to the end of their
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journey faster. >> london has been one of the front runners in making changes toward climate action and reducing air pollution. the expanded emission zone will do even more to clean the air coming to fight climate change, and reduce the overall number of polluting cars. we need to do even more. >> campaigners are pressuring authorities across europe to get by 2030. they say major system changes are underway. >> we surveyed urbanites including people from london. the majority of people want more
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space for walking, more space recycling, more promotions for public transport and better public transport. they are crying out for more green space. a range of solutions is available. by 2030, there will be no more diesel cars allowed in brussels. by 2035, all petrol and gas cards will be phased out as well. there are a number of initiatives in paris. the inner part of the city will become a low traffic zone next year. this will limit the through traffic of about 180 thousand cars each day. copenhagen has committed to pick current -- procuring only zero emission buses. we need to commit to creating zero emissions in cities by 2030 and we need to make sure this transition is as fair as it can be. there is no time to waste. ♪ anna: the efforts there of some european cities to speed up the carbonized and of bus fleets. let's get back to the market conversation now hearing a day after data from the united states and fed minutes, resetting some expectations around fed policy, a strategist
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joins us live in london. we have the minutes, which seemed to give comfort that the fed is thinking it could bring forward tapering if conditions should warrant that. where does that leave you with your thinking about what the fed does from here? >> we are on a steeper, faster path toward higher rates. the economy has enough strength to withstand a series of rate hikes from the fed. the market pricing reflects that because the market was expecting maybe two rate hikes by the end of next year before the fed minutes. now we see they have brought it forward. anna: the height expectations,
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we are seeing more and more of them being priced in. do we wait until june? ven: maybe we will have to wait for june because they will need to finish the taper first. i think there is enough within the fed for a faster pace of taper. i think they will get through taper before raising rates, which puts us back in june. anna: i am looking at the turkish lira and seeing where we are on that. we have seen a weakening, a real emerging market focus. then we have seen that move. what are your latest thoughts's -- thoughts? ven: there has been a moderation, but i do not know if there is a next shoe waiting to drop. that is telling us something significant. the volatility curve suggests
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shorter data options are more expensive than longer data options, which does not happen every day. the longer you hold an option, the more you will want to pay up. that is not happening in turkey. that suggests what may come next. the problem here is negative real rates. they are not addressing that. as long as they do not address that, that is going to be a problem. the gap is pretty huge, so they need to do something about it. we saw that play out in 2018 where there was a similar situation and they resorted to emergency rate hikes of about 500 basis points. anna: inflation running where it is in turkey. elsewhere, we are talking about rate hikes. we saw korean authorities hiking rates overnight. we saw the hungarian authorities doing it the third time in two weeks. you have and looking into more dovish commentary coming through
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about the permanence of quantitative easing. where does this come from? why is it a focus for you? ven: is a significant thing. -- it is a significant thing. we heard from the ecb yesterday. we'll put it in a waiting room, so to speak. that says we will deploy those measures at the drop of a hat. that is disturbing because you are basically saying we are going to have public key on tap. you are saying the markets will be supported forever and ever. not a great idea. anna: anybody who has been in the markets less than 10 years might have assumed that because they have always known qe being a tool of monetary policy. ven: when ben bernanke introduced it, it was something
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that was very much necessary. it has become part of a standard tool kit, and that is going to set us up for financial bubbles down the road. anna: thank you so much. for more analysis, there is a function on your terminal. this is bloomberg. ♪
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anna: let's get to the first word news. prime minister boris johnson has lashed out at france after a deadly boat accident on the english channel. 27 people died when a boat filled with migrants sunk. johnson is accusing france of not doing enough to stop migrants. he is under political pressure to stop a boat crossings. singapore is confident it can avoid a resurgence of coronavirus infections. it has one of the highest vaccination rates in the world and growing natural immunity. this is bloomberg. anna: more next on germany. this is bloomberg. ♪
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anna: this is "bloomberg
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surveillance: early edition." matt miller and kailey leinz are enjoying a thanksgiving break. olaf scholz said his new german government will do everything to fight the pandemic. he added the current situation is serious, with some hospital intensive care units already reaching capacity. >> day after day, new records are being set in terms of the number of infections. even though many cases have become milder as a result of vaccination cannot more and more infected people are being admitted to hospitals. intensive care units are reaching the limits of their capacity in some places. the situation is serious. anna: let's get some analysis now. good to get your perspective. we heard the chancellor and
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waiting talking about that. what are your expectations for what kind of measures come forward from the driven -- german government and what impact that will have on the german economy? when you are doing something for the third time, it might not have the same effect as the first time around. >> absolutely. for now, the key objective is to avoid national lockdown. what we will see is increasingly stricter measures will be taken in various states. we already see them in moving toward lockdown. clearly the economy got used to lock down degree. we are going to go back into hibernation in 2021, 2022. for now, not a setback or even
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recession as we had it last year. anna: that is what you are working into the numbers. give me your response to the coalition details we have had so far. as well as dealing with covid, this new administration is coming together for the first time. that could pull in different directions. what is your big unanswered question about how the coalition is going to work? >> differently three coalition partners who are uneasy bedfellows having to work together on a national basis and now there are three of them in the bed together. the coalition agreement -- we all worked through last night, showing it is possible to build bridges meant to be pragmatic, but it also shows there is still
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a lot of compromise. you have the minister from the party that is usually in favor of going back to debt levels who now will have to accept there will be shadow balances -- shadow budgets. let's see how that works in practice. in particular with regards to german fiscal policy, the proof of the putting -- putting -- pudding will be in the eating of it. anna: is this because they want to comply with the debt break, to mobilize private capital? is that what you are referencing or something different? >> i think it is something different. the government will go back to
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the debt break by 2023. at the same time, it will also allow agencies and deutsche bank to raise funds and invest them. that will not be counted toward the debt rate. in addition, the most important aspect is unspent funds from the 2021 budget left around 60 to $70 billion to be put in a separate fund to be spent on climate and transformation of the german economy over the next couple years. that will also be excluded from the debt break. it remains to be seen if additional funds will also be raised in the 2022 budget. that could be 100 billion euros for next year, so this could add
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up to a sizable cost. anna: thank you for explaining it to me. let me ask about the environmental policies and the green party, part of this coalition. germany has a bold nuclear ambitions and that has been a long-standing policy. is it clear now how germany makes this add up and with the energy mix looks like for germany into the future? >> among the major economies, it is probably the most ambitious green tradition that is out there. at the same time, if you put these big green targets -- we need to be realistic that we are not going to make it with measures that have been announced. in particular what is worrying
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is we will need to see a higher carbon price. what is currently proposed we think is too low to really reach the target. that is just one example. it is good to have these ambitions. it is necessary for the german economy to transform, but it remains to be seen if there will be questions at the end. anna: where do you think the carbon price should be? >> we think it is more likely will have to be around 100 euros, quite a bit higher. we also need to think but how to compensate for low income households, that there will still be acceptance for the change here. i do not think we are there yet when we look at the coalition. anna: briefly and finally, does
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the coalition still face any headwinds to fully forming? i know each party has to go through its own process to make sure it is happy with what is being proposed here. are there difficulties ahead or is this a done deal? >> i think it is a done deal. there could be tweaks here and there, but overall the individual parties will accept and we should have by the first week of december a new government in place with all of schwartz -- olaf scholz as the new chancellor. anna: thank you for joining us. coming up on the program, a managing director will talk about crypto. we will ask more on crypto and
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how thankful we are for them this thanksgiving. this is bloomberg. ♪
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anna: this is "bloomberg surveillance: early edition." it has been a choppy. -- a choppy period for crypto. joining us now is the cofounder and managing director of a london-based crypto. it is thanksgiving. how thankful are you for gains in crypto this year? what kind of your has it been?
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>> it has been an incredible year and i am thankful for it. the chinese curse, may you live in interesting times, some incredible results. anna: is the bull market in crypto over? what do you base your thinking around here? >> it is easy to forget just in july we had dipped below $30,000 for bitcoin. 10 days ago we were at 69,000, another all-time high. a 20% drop would bring us to bear territory but in crypto this is just before the other leg up. in terms of why i believe the bull market is going to persevere, it is the fundamental.
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it is the characteristics of bitcoin, the scarcity and it being 2.0. anna: it is not a bear market, just a rest when it comes to crypto. you mentioned the printing machine. it has been much talked about, that perhaps the rising crypto has been driven by liquidity available in markets. do you think -- where is the vulnerability as we see central? banks dial back generosity? -- central banks dial back generosity? >> once you are in it, it matters what you are actually holding. i would recommend for people just starting out to hold some of the blue chips, the equivalent of the blue chips, which will be bitcoin, theory him -- etherum, some of the more established coins. if you want to put a tiny portion into meme coins which
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have the potential for asymmetric returns, feel free. just be mindful that it might crash rather aggressively as well. anna: that would be your recommendation. what about regulation? in all parts of the crypto universe, this must be something people still acknowledge could come at any time and could be a difficulty. yesterday we saw headlines around india, news of the government preparing a bill to regulate crypto. it might allow trading in some areas to promote the underlying technology but they basically prohibit private crypto and want a central banking coin instead. is this something you expect other jurisdictions to echo? antoni: i do not think we are going to see a crackdown on crypto as such like they had in the 1930's in the united states
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where they prohibited ownership of gold. allowing banks to hold custody and paypal coming in and now etf's, even though it is based on futures rather than the spot of bitcoin, but it comes down to crypto being regulated within the frameworks of the existing legislation rather than outright banning it. the jurisdictions that go the more aggressive round i think will automatically pay the price because more people are coming in on a regular basis. incredible companies and new virtual realities are being built out. whoever sticks their head in the ground remains oblivious to what is happening. will be on the short side. anna: is there a democratic vacuum when it comes to crypto?
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central banks are maybe not as accountable to democratic electorates as many would like them to be but they are at least appointed by democratically elected officials and democracies. in the crypto world, there is not that control. is that something crypto the easiest think about? -- enthusiasts think about? antoni: certainly. the beauty of crypto to me, that it is relatively free and the sense that market forces get to play out, there is no central entity who has such a hard sway over the markets like in traditional markets where central banks such as the fed, the ecb -- you have these gargantuan players who determine direction. crypto is relatively free compared to that, so market forces can play out. and there is the resilience of
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the space. in terms of governance, as it has grown to almost a $3 trillion industry, that is why we have seen regulators come in. our approach is let's organize and self regulate so other outside players do not do it for us. anna: that is interesting. i know that in fts -- nft's get a lot of our attention. you have been spending money on one of these, $1.3 million. he perhaps did not fancy the paintings on show that day. what does that add to your business? antoni: we purchased it as a company, so that is not my personal purchase. we have big plans because we believe the non-fungible tokens are going to be the foundation
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of the metaverse which is being built out. facebook is renaming to meta-. if you think you are outside of metaverse, check your screen time on your phone. most people are halfway there. what we bought, they have a ranking system in terms of scarcity, which creates value in the minds of crypto enthusiasts. there is an increasing number of them among us. to me, these are the monuments of the world and played out. last week or 10 days ago, there was the option for a working version of the constitution. who in the 18th century would have believed this would now auction for $40 million? to me, in fts are the new version of the reeve new world around the corner. -- brave new world around the
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corner. anna: thank you very much. good to speak to you today around crypto. next, american households are about to eat their costliest thanksgiving meal ever if they can even find a turkey. we look at factors driving up the pricing. this is bloomberg. ♪
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anna: -- >> let's get to the first word news. the price of oil, steady today after a cordon aided release of reserves may make a crude surplus next year even larger. the cartel and its allies meet next week. some opec delegates warned that releasing strategic reserves may lead to the alliance to hold back oil supply in january. in germany, the number of deaths from coronavirus has gone over 100,000. the country passed a grim milestone at a time with the latest wave of the pandemic has led to a record taste of infections. -- peso infections.
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in china, tough covid policies are in the way of a full recovery for the shipping industry. an attempt to keep the virus out -- china has continued to block crew changes for foreign sailors and chinese crew returning to port face seven weeks in quarantine. that has added up to the global supply chain crisis. a new government review has a warning for financial chaos -- for english football. says there will be financial chaos. the report says english football teams have ended up in -- 62 times in the past three decades. 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.
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anna: thank you. let me get to the breaking news across the bloomberg terminal. we are focused on any clampdown on technology in china and the china state run firms are going to limit the use of a messaging app. it cited security concerns. i mention this because this comes after we saw some of our reporting suggesting china was freezing new apps and updates for data privacy review. there seems to be further legs to the concerns around technology crackdowns in china. it is thanksgiving, but the impact of rising inflation on americans' turkey dinner might dampen the mood. joining us, ed ludlow is looking forward to his own turkey dinner on the weekend.
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>> it typifies the global story. the turkey, you think about the dinner table, it is going to be 14% gains across the meal but the turkey is the centerpiece. 24% inflation from last year. it is subject to all kinds of things as an industry where they cannot get enough workers. the supply is limited. you see workers dipping into frozen industry because fresh production is not there. as has been the case all year and the food industry here and in the united states, retailers do not hesitate to pass on those costs to consumers cut different from big-box. it is an interesting dynamic. anna: so looking at the thanksgiving table gives us a sense of where we have come on the food story. what's talk about european food supply and supply constraints generally. ed: that price was -- in europe
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it has been more muted. the main driver has been rising costs of fertilizer impacting agriculture largely because of natural gas crunches because it is an energy intensive exercise. what is worrying from an economic perspective is the supply constraints in europe are not improving. they are in europe. covid restrictions impact the way people work. the number of hours they can work, the proximity they can work to each other. the fed is worried about inflation. we got those minutes where they boosted their inflation outlook even before we got the october data. the ecb has a worrying covid case count. policymakers are not hesitating. that is the worry for our food supply chain. anna: the narrative from our colleagues is we are seeing some improvement around the u.s. but
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maybe not here in europe. thank you very much, ed ludlow. if you are celebrate thanksgiving come out we hope you have a good day, turkey or not. we are just coming up to 11:00 here in london. a few hours into our european trading session, we are up by .2% on the stoxx 600. the cac around -- cac 40 is up. u.s. futures are to the upside. we will talk more about these markets when we return. this is bloomberg. ♪
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>> from london for audience worldwide, this is "bloomberg markets. officials are open to removing -- a faster pace to remove inflation. the incoming chancellor of germany finds a way to lead through the pandemic. jamie dimon walks back his china comments, another example of beijing's power in getting businesses to regulate their speech. welcome to the program. 11:00 in london. u.s. equity markets are closed as well as treasuries. we do not have that volume but if you're celebrating wherever you are and we appreciate a good day. the stoxx 600 up by 2/10 of 1%
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in europe. the asian market higher. u.s. futures higher. a little bit of what we've heard from the fed is providing some comfort for market allowing them to overcome some concerns for inflation. let's get to that fed conversation. the latest minutes show officials open to removing policy support at a faster pace to keep u.s. inflation in check even before data shows price pressures are accelerating. joining us is the senior macro strategist. really great to speak to you. there's a sense the fed is willing to go faster with the taper. what does that mean for you. >> it means they are recognizing they have a contract between the government and the people and they played around with these rules without the public really
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understanding it and what they are realizing is a lost control. do that this process should continue and they are doing it not because they think inflation is transitory, you've seen some evidence that the fed might be right, but because they are losing the social contract, the element of if you are printing a lot of money it's probably not a good idea when inflation is high and i don't believe you is the better so incredible. it probably means they taper faster in the next few weeks. probably we end up in the march end of taper, probably get the rate hikes in june. and then basically reduction in the balance sheet. they are doing what they need to do. they are far behind the curve
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and they lost control through cryptocurrencies and a new type of alternative asset. anna: you draw a link between the rising cryptocurrencies and the extent to which we've seen support for central banks. is that because you think money has flown into crypto because there is a confidence on the value of fiat currencies. our coat with a look at the beginning of cryptocurrencies it starts 10 years ago there capital control people trying to invade it in the way they did was cryptocurrency. bitcoin again gained, and the very early days, 100 or $200 and it's moved on as capital control fear that money is not exactly what it is supposed to be is becoming an issue. he saw that in europe and china
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and it continues to propagate, they were doing the right thing. but cryptocurrencies would never have been allowed 30 or 60 years ago it was a breach of the social contract. anna: are they allowed now or have authorities not taken action to regulate them yet? sebastien: they have started to in the united states. in the early days of cryptocurrency they began to set the rules and the changes. we saw in china the effort to push a cryptocurrency. we will see that another countries. it will probably appear in other countries like russia. in the united states and europe it is a private enterprise and therefore there is nothing to be said about it, it's a question of what people value in what
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they think is important. people within the crypto space do not assign a large credibility. >> we've seen efforts to clampdown in china and we were reporting on those as well. it might be more mound -- around consumer protection. if crypto is vulnerable to a roll back in central bank markets and asset broadly, how accurate are the stock levels? >> it's basically look at growth inflation of growth is going well. of course covid is slightly an issue so you might get a slowdown. broadly speaking we have a deceleration but is going ok. inflation has been rising and should eventually fade. the entire supply chain as the economy moves very fast.
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that slowly should come in. they must believe growth is going to be good for a long time. it's a great environment for stocks but a question of level and valuation. it is completely impossible. you can have 20 apples going forward. we know this is nonsense to trade on nonsense and belong on nonsense versus giving an amount of time. they hit the quality side very hard. a lot of it such as climate and innovations becoming more important in the coming decades because it will be an environment of relatively low growth. that means innovation has to be strong. anna: if everyone believes in
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it. i want to talk about your notes ahead of the conversation, by year-end 2022 they should go through the eye of the needle. do you suggest we will be through all of the supply chain disruptions and back to a more normal environment or what you expecting to see by that point. >> i think the realities is very nice. at one point she comes with a baseball bat and hurts us. we live in that fairytale which will reach it to end. -- it's end. the question is what happened afterwards because everybody has been waiting for that. it does eventually happen. also a huge opportunity because many people will be waiting for that moment to buy on the cheap, things related to new technologies. anything linked to climate
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efficacy is increasing strongly and for people in the business of looking at balance sheets and knowing what they own, it's been a frustrating time. things by -- people buy things without necessarily understanding them. you'll see managers be able to pick within credit and high yield and equities and make the right decisions. an enormous opportunity, we are living in a daydream, some of it is completely fictitious and eventually reality will set in. anna: i'm not sure i like the baseball and that ash analogy. sebastien: it's the functional liquidity -- that analogy. sebastien: long term we know companies like apple can innovate and get better and do things better than everyone else.
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they will develop new things and they will push out in mature sectors and companies. on the others regulations will come in and hurt them badly, that should decrease. but it's also the fact they are not so many apples and we know there can be so many apples print there are pears, bananas and things which are deeply on edible and we will recognize that going forward. if you own apple and you know, you want to salad. anna: thank you very much for joining us and good to see you today. breaking news line and want to bring to your attention, goldman sachs sees the fed hiking rates in june, september and december. in terms of broad market expectations we have high
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expectations being brought forward and that has continued in the wake of these last night. we will watch as that one develops. we will watch how treasury markets react. face -- this thanksgiving let's get an update. >> prime minister boris johnson has lashed out at france after a deadly boat accident in the english channel. 27 people died when a vote -- when a boat -- was accused not doing enough. more than 25,000 people arrived in the u.k. this year, about three times as many. the european union is coming out with updated proposals for travel. the time limit of covid vaccinations or travel, that suggest boo shots.
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travelers get priority. you governments are switching with rules to help safeguard the ability to travel. the price of oil was steady today after opec said a release of reserves, cooed -- may make crude demand larger. tomorrow pick delegates releasing strategic reserves to hold back oil supply in january. the first female prime minister in sweden couldn't have gotten a start to her tenure. she was forced to resign just hours after a stork appoint mint. the social democrats left the government after losing a budget vote in order to get another chance, there could be a new vote as soon as tomorrow. a new -- has a warning, there will be more financial chaos
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unless -- the report says the sport is at a crossroads. they've ended up in administration 62 times in the past three decades. 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 laura wright bloomberg. anna: let's look at your day ahead for this thanksgiving. markets are closed stateside. in terms of the rest of the world, the ecb legal conference on constant -- continuity christine lagarde. at five clock u.k. time, andrew bailey on the december meeting and the eu competitiveness for ourselves with services topping the agenda.
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the stoxx 600 up by 2/10 of 1%. the asian equity session finished by a similar margin. cash trading is not open in the united states because it is thanksgiving. we will give you -- we still have the future markets giving you some sense of direction. we have the euro at 1.1221, but it is really a dollar negative story. through the asia session as well , that's taking some of the focus for fx trade this morning and we have the oil price. we talk u.k. france relations and accusations over who is to blame for the death of at least 27 migrants in the channel. this is bloomberg. ♪
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anna: welcome back to the
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program. chinese electric car makers are gaining an edge with local drivers by tailoring cars to domestic needs. they are allowing chinese consumers to live their digital life at home and on the road. for some that means in car karaoke. ♪ >> may that's enough. -- maybe that's enough. >> china is the world's most important car market today. there is some 25 million cars sold, far more than any other market in the world. big global brands like volkswagen, bmw, the same time it's becoming clear that in some significant ways they are starting to fall behind some local competition.
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one thing is the connected car. you have a cohort of up-and-coming chinese companies that are increasingly allowing chinese consumers to live their lives at home and on the road. that means in the car they could have their social media, there gaining and things like karaoke. it's not your usual road trip, it is big business for companies who are at the forefront of this trend. offering models with karaoke microphones. they're showing us some of the functionality in the car. you can scan the qr code and it will go directly to your account. >> we are here.
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this car by default, the entertainment functions of the karaoke, the gaming, the movies are not able to work when you are driving so they are by default turned off. >> after the car has been purchased the owner can change the settings. for many chinese drivers the car is more than just a way to get from a to b, it's a place when parked where they can enjoy time with friends for a bit of karaoke or eat a picnic. the electric car makers in china are focusing on what happens inside the cabin. >> [speaking foreign language] ♪ >> a cars digital technology is key to luring chinese consumers. if you're shopping for a car, how important are these functions, these digital
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functions on your decision on what to buy? >> [speaking foreign language] >> electric vehicle sales have surged in china and have more than doubled from 1.37 in 2020. >> ♪ some things are meant to be ♪ anna: a very brave john there on innovation and chinese electrical market. -- on chinese electrical -- electric innovation. stateside we have no trading at
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all today. no treasuries or cash market. we do here in europe though and the stoxx 600 is up by 8% or so. the ftse on par with that. when you look at the breakdown, the biggest gaining sectors giving us a sense of how much risk appetite or not we are seeing great the oil prices nearly flat. a little bit higher than it was before the strategic reserve releases. we have this from opec and that announcement from consumer countries. an update on a tragic story in europe. britain and france hurl accusations over who is to blame in the death of 27 migrants. a boat capsized in the channel yesterday. they are at a sensitive time in their post-brexit relationship. let's get more from a government perspective, our government reporter based in paris.
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the u.k. has accused france of not doing enough to stop migrants. we reached a bit of a low point here when it comes to the relationship between the u.k. and france. what is the french response to this? >> it's interesting to note the initial reaction was relatively soft. the internal minister initially blamed human traffickers and that became much harsher. there urgent boris johnson to stop using this for political purpose and now saying what he calls the labor market makes it unattractive. this is all happening at a sensitive moment for president macron who is under pressure to solve a spat with the u.k.. then there is also the presidential campaign slowly
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warming up. he will probably seek a competitive term in a very -- competitive -- a second term in a very competitive race. anna: if it were more of a requirement to carry cards than that might change things old bit , of the u.k. cabinet minister is pushing back on that. what is france planning to do? what is the next step? >> france has called for the european union support of force, macron has requested an emergency meeting of the eu ministers in charge of migration. he is under pressure to show he is in charge and is handling the situation in the best possible way. the overall challenge is to show he can be sympathetic to human
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suffering and tough on immigration. anna: is there any sense the two countries could work together at this time? any sense the countries could work together to find some sort of solution for this challenge? samy: that is hard to predict. relations between the countries are in a terrible situation. leaders from both countries have been talking to each other. macron has been talking with boris johnson, but still some sort of magical solution or magical outcome and unexpected chemistry. >> i should just know manual macron -- emmanuel macron is speaking of the press conference.
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coming up on this program, the deputy chief will talk about the ongoing fight against covid. what that is doing to the prospects of the eurozone economy. this is bloomberg. ♪
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anna: from london for our audience worldwide, good morning. after nearly two months of negotiations, olaf scholz has sealed a deal to become the next german chancellor as europe's largest economy faces a surge in covert outbreaks. a press conference to announce the deal, three parties coming together. he vowed to position germany as a climate leader and steer it through the pandemic. patrick joins us from berlin. we've had a little bit of time to digest some details from this trio of parties that make up the coalition. what our hopes like that these three parties can work together?
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patrick: germany has a stable political system and all the difference is these three parties have have had a lot since election day and before election day have been hashed out over the past two months and so i would not expect -- i would expect them to govern for four years because if you look at the green party, a lot of what it demanded in terms of fairly ambitious climate agenda if you look at the free democrats, they got the finance ministry and a commitment not to raise taxes. a lot of these items in both parties, all three parties are in their. so i think you will probably have tension, but olaf scholz is chancellor should be able to go through. >> you mentioned how the liberals got the finance ministry and there's some interesting novel thinking about
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how to get around the debt break. take us through what we need to know there. patrick: a lot of political discussion on the debt break, of constitutional limit set on debt in germany has resolved around how to get around this. a lot of the discussion in the language is about the flexibility of the debt break. when they demanded that the debt break not be loosened or removed constitutionally in germany, given that was a way of conceding the point but at the same time it's not calling for example the cdu's strict discipline. if you step back and make a demand these constitutional debt break and constitutional restrictions with their flexibility, that's a way to offer some flexibility on financing. anna: thank you so much, good to
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get your views. joining us there with the latest from berlin. let me start where i left off their in that last conversation around the debt break and what we learned here because i want to talk about covid and the german economy, of the three parties coming together more broadly. specifically around this question because going in there something the markets thought about a lot. what do you make of the way they managed to get this? christian: it's a coalition of three parties where two of them are very closely aligned. one completely sticks out which is the ftp. the smallest party i think on the most of the macro issues including on the debt break. the debt break, there is some
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talk about circumventing it or loosening it in the agreement. given the ftp got the finance ministry and will be a guardian of the debt break, there are close limits to the creativity you may see. anna: so we shouldn't make too much of the creativity being talked about or the way around it. what are your expectations more broadly in germany around this three-way coalition. they do represent different parts of the political spectrum. germany has a long history of coalitions and compromise on that front. how do you think this position politically is within germany? christian: the trio already exists at the state level and has for a long time. if you look at the performance of that kind of government it is a centrist kind of government
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usually stable, not deviating from the grand coalition arrangement. on the macro fund we've already talked of the debt break. the one thing they've agreed is an increase in the minimum wage by 20% probably already next year in the context of high inflation rates. otherwise i think on the macro front it there's really not much . where it's interesting is on the micro front, getting planning permissions done quicker, giving -- getting the government digitalized, how to get businesses involved in that, that's where interesting things could happen. it's going to be difficult to actually enforce what they agreed along the way. anna: we heard olaf scholz talk about investments and how this will open up investment in the german economy on a number of affronts. my colleagues saying they are
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hamstrung by an investment slump. what will make the difference in the german investment story from here? >> that is a good question because the agreement itself doesn't really say how they are going to promote. there's the green agenda which they hope will promote investment and make it easier to invest in companies. this even appreciation for those which will reduce tax burden, so there are some incentives. the whole green transition you have to keep in mind what they are doing here is substituting the supply of energy production at the moment with a new kind of energy production. they are not actually increasing the supply side of the economy. demand in the meantime will stay the same and that will be more inflation and higher price on top of the increase of co2 prices. from a macro front this is a
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government which is not going to change much but there could be some real challenges for markets and committing to central banks here. anna: taking this more european, what you said about the higher minimum wage in germany, is that going to be echoed in other parts of europe? that narrative will go down post-pandemic. christian: hopefully. what we are faced with at the moment is a big negative shock to household purchasing power from these energy prices. some of that could be compensated by higher wages, that would be a short-term fix and in the longer run it would hopefully lead to more stable inflation environment and the concept of the last 10 years in a good scenario it even drags along productivity growth.
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it justifies these wage increases. therefore it forces the ecb to increase interest rates. i think i see right now the positive in these wage increases. anna: more broadly around the ecb and expectations there, you will notice ahead of the conversation you talk about how the deposit rate might not change for two years and might remain through 22 and 23, is that justified given how we are now seeing a number of banks bringing forward education -- bringing forward expectations. christian: i think we have a consensus, we take the guidance the ecb adopted in july and we don't think conditions for rate hikes will be fulfilled for quite some time, at least 2024 is probably the earliest we see. that's not to say the governing
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council won't act. the action will be on the asset purchases in particular. we can see with perhaps the exception yesterday that they are moving away, they are relegating asset purchases. what we expect is what they will decide in december, the asset purchases will be phased out. we will see at the end of next year. there will be a long pause until they can actually hike. the big risk as they are changing guidance because we see hawkish speculators saying we should look -- we should not pay too much attention to these forecasts. inflation expectations haven't gone at all. anna: what you think of the comments that were made throwing a curveball in perhaps look -- earlier talking about the quantitative easing program. suggesting we are heading
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towards quantitative easing. saying it will be parked and then brought more back. is that going to be just the run of things? it's been around for 13 or 14 years. christian: that's a very interesting comment. on a range of levels. this big discussions in the market where the ecb will effectively change the sequencing and hike the interest rate. that scenario is unlikely. what's more likely is in the back of their mind they have that option of returning to asset purchases. that's important when you talk about spread controls, keeping italy in the markets. that backstop, i think the key question be under what condition will they be willing to redeploy asset purchases once they finish them.
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our impression is the bar for restart in asset purchases after the end of next year will be quite high. anna: good to speak to you. thank you very much for joining us. let's get a quick check on the markets. we will go to one of the themes of the market that's been another rate hike at the hungarian central bank. that sent on gary and assets higher. i mention this more broadly for emerging markets as we see a number of them hiking rates. this is putting upward pressure on some upward emerging markets at easing europe. we also see stocks through the asia session, it wasn't quite as much as that was anticipated. let's get a first word news update. >> a warning to silicon valley.
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the information commissioners that are working to rein in advertising techniques plus an old tracking practices. the executive director says many of the new proposals are positive but they don't fix some fundamental issues. singapore can stop a surge to help the minister give credit to one of the highest vaccination rates in the world and growing national immunity. china appears to have accepted an apology by jp morgan ceo jamie dimon a day after he jokes his bank without last china's communist party. he said he regretted making the remark and should not have made it. china's foreign ministry says it was the right attitude. jp morgan has a most $20 billion of exposure in china.
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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 laura wright, this is bloomberg. anna: a bit of breaking news from france, across the european union, the french health minister. the fifth covid way will be stronger. but we won't have a new lockdown or curfew that is going to watch that story. american households are about to eat the costliest thanksgiving meal ever prayed we look at some of the factors driving up prices of turkey and many other things that make their way onto the typical thanksgiving table. this is bloomberg. ♪
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anna: this is bloomberg markets.
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just coming up to 1:00 in the afternoon in paris or berlin. breaking news that takes in paris and berlin, the eu drug regulator has clears the pfizer bion tech shot for ages five to 11 years old. it follows similar moves by u.s. regulators. they cite the effectiveness and studies with how quickly that can be rolled out to other age -- younger age groups. the u.k. has not approved it for that age group. getting a news line from the ecb. set to confirm new limits on the riskier leverage the loans. we will expect details on this story as it comes through. the ecb is weighing curves on the riskiest part of bank lending to companies.
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it fears a potential blow open the market according to people familiar with these deliberations pay the ecb held high leverage loans and said people are reluctant about the loans. let's get to one of the corporate stories we are tracking. this is around the drinks business in paris. the stock up 11%. the ceo says inflation is a factor and thinks it will remain for the coming year. they discussed inflation, supply chains plus the company's outlook in an exclusive interview with bloomberg. >> inflation is a fact. neutral alcohol is fluttering today. but it's been increasing a lot as well. demand is potentially stronger.
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price increases starting earlier than this. i think it will last for the coming year for sure. difficult to project myself there but we see inflation currency. we secured a lot of our contracts for the year. it will have an impact but at the same time we believe it is manageable on the high-end. there are things we can do on the prices but it is relative. >> do the margins tell us you are passing this cost on the consumer. a passing this to the consumer and can you preserve your margins. >> we do not necessarily work out pricing directly related to that but it's a consequence.
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we have a price positioning plan for the years to come related to inflation. the price increases we have planned this year which are driven by the strong development have help us compensate. inflation has helped compound this. it's driven by many more factors. the bulk of the margin is coming in mostly on our overhead and costs. across margin related issues in the context of very strong increase in bonds. >> what about supply chain? are you seeing any evidence they are starting to ease, how long do you think these constraints will be with you? >> easing in a sense it's easier
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than last summer. this made it very difficult this summer, now it's not particularly easy from a macro perspective. of course it has a huge impact on the cost of logistics but the cost of logistics is not so big so it's not so impactful even though it is a sharp increase. i think it will remain high. it's probably more on the time it takes to ship goods. we see our sales related to the shipments and i would say this is probably -- we do not like to have the shelves empty. anna: eric on inflation, supply
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chain in the company outlook. the eight-day outbreak -- outbreak of covid in provincetown massachusetts was one of the first examples of the delta variant in a highly populated -- high population prayed -- population. bloomberg quicktake's rosalie reports. >> if you are vaccinated and get a breakthrough infection it looks like you will have a robust antibody response and t cell response. >> a breakthrough infection is one the tested positive for covid after being vaccinated. there was a large number of breakthrough infections in provincetown in july. >> it included over 1000 infections in a highly vaccinated population.
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there were over 1000 breakthrough infections, almost all of the delta variant. it was one of the first large well described clusters of large numbers of breakthrough infections in a highly vaccinated population and it also showed a number of interesting and important features such as the fact that vaccinated people with breakthrough infections have -- contributed to the cdc decision to reinstitute indoor mask -- masking as well as other things. >> vaccinated people who get breakthrough infections generally have a mild course of disease and the vast -- in the vast majority of cases. they have a rapid onset of antibody and just response that likely controls the virus. our data provides a different perspective. initially it was viewed as evidence of vaccine failures.
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i would argue it's evidence of vaccine success. these are doing what they are intending to do. in many cases vaccines will not completely prevent infection with what they will do is have immune responders waiting so if there is exposure to the virus they will kick into high gear, they will expand and have high response will rapidly and laminate the pathogens. these people probably have high amounts of immunity for a long time. anna: really interesting report on breakthrough infections, many of us can think of many. let's take a look at what's going on in the markets. the stoxx 600 up. u.s. equity markets closed for the thanksgiving holiday. here we have some slight moves to the outside. the lack of risk appetite and markets today, utility the biggest gaining sector in europe.
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could be due to the policy in germany. coming up, chief marcus -- chief market strategist will talk about whether his view has changed or not based on the fed minutes and the suggestion they could taper more quickly. this is bloomberg. ♪
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anna: the eu will recommend a nine month time limit for covid vaccines for travel. fed minutes show officials are open to removing policy support in a faster pace to rein in inflation even for data shows price pressures accelerating. thanksgiving surprise, inflation and supply chain struggles make today's dinner more challenging and usual. more expensive than usual. good morning, this is bloomberg markets live on bloomberg tv and on bloomberg radio. i'm anna edwards. a happy thanksgiving to all who are celebrating wherever you are. let's check the markets for you and in terms of what we are
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seeing on the european equity markets, u.s. markets are closed broadly speaking on this thanksgiving holiday. there is a sense of a lack of risk appetite. utilities of the biggest gaining sector. travel and leisure the biggest losing sector. so we have the stocks moving to the outside but not by an enormous amount paid that's the european equity market picture. european equities market are higher. u.s. futures also higher. we don't have the cash trading. futures a nasdaq futures up by around 2/10 of 1%, we have the german bund in their, reacting a bit or not too much to what we've seen over and germany. more on that through the next couple of hours. brent crude fairly flat at that level above $80 a barrel. europe is once again the
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epicenter of the covid pandemic. new infections are still rising. countries have been adding new measures on the continent. we've learned e.u. is set to recommend a nine month limit on covid vaccine validity for travel. let's dig in to some of this with our farther suit -- with our pharmaceutical analyst. also interesting in the last hour we heard about the european approval for the pfizer vaccine for the ages of five to 11 years old. for parents i can imagine how important this is in the fight against covid-19? >> of course at that age range,
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the risks to children are low in terms of the variety of things we worry about with hospitalizations and severe disease, but they are not zero. it is important to have this vaccination available to them and their reaction seems to be millions have been vaccinated in the u.s.. we have not heard much until we get an update soon. that will help a lot. of course you've got all the other stuff going on in europe. anna: how bad is the situation in europe. describing how tough things are in france. how bad are things there for europe at this point? >> they're very easy to follow.
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they are all going up to much everywhere. at a relatively high level. in terms of a number of people going to getting hospitalized, some of the countries that been talking about germany for example, it still over the -- it's bad for germany because it's never been as high as this. the one that looks worse is belgium. france, etc. at the lower levels. hopefully they will be able to bring this down with the shots,
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but certainly with masking. anna: looking at the case rates doesn't tell the full story. even the hospitalizations are not necessarily the full story because we have different reactions to some of this across europe. >> i think it will depend on country by country. the u.k. hospitalization rate is on the down friend -- downtrend. if we still manage to keep it below 1000, inside the government and the u.k. is comfortable with that. so that depends on how quickly these icus fill and you seen the reaction in austria, they've gone to a lockdown. i'm hope -- they've gone into a
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lockdown. i'm hoping they will avoid those sort of outcomes across europe. anna: thank you so much sam for joining us. let's look at some of this from an economic and markets perspective. the ceo and chief market strategist at longview economics, a thank you for joining us. going into the winter, we think mostly about the humanitarian crisis of all of this and how far we've come in treating covid , let's focus our conversation on the economics and what this will have. we talk about the different functions. when thinking about what economic impact there will be from the covid fight. >> i think that is key. talking of the markets being the worst hit sectors in the moment.
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and the reaction of the different sectors. we will have different reactions and significant parts of gdp in europe. in the other situation deteriorates. i agree with your last guests talking about the health situations. i think it still clear looking at german data, austrian data or belgian data. a significant break between infection levels. you need to deal with these, you're getting lockdowns. some sort of infections coming in, but it's not to be across the hall. a bit of a wobble in growth. we get what these countries need
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to do is get vaccination rates higher. interesting if you look at someone in austria the really pickup. in the medium-term we will move through this. and start looking into next year. >> we've been hearing for the french finance minister through this morning. one of the things he was saying was ruling out any kind of lockdown. will there be different responses -- will there be strain based on the different responses? >> travel and leisure sort of long shots between lockdown countries. the market prices these in pretty quickly.
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i think maybe some of that will show up. there is certainly something on -- anna: a whole day luge of data on the u.s. -- deluge of data suggesting even before we got more on inflation, fed officials were thinking about if they need to taper or quickly. where has that left you with where the fed declines. -- unwinds. a lot -- >> is a lot of chatter about rate hikes in the states. as we get into the first quarter
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of next year will quiet down. in q2 we will have a softer inflation and that will ease the pressure in terms of accelerating that pace of tapering and accelerating that first rate hike. if you look at it is how well the stock market has absorbed all of this. we've managed to taper the tantrum. we had a very strong stock market in october. in the last couple of weeks and indeed equities globally, of markets tracked sideways. it's a very impressive market. even if we pick up the pace of tapering i'm not convinced this will cause too much of a problem. anna: maybe not in the u.s. or developed markets , but maybe in emerging markets -- but maybe in emerging markets? >> that is a very valid point. this is potentially causing a
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little bit of tension. we see that in turkey and that is a concern. but having said that we will probably get easing out of china in the next few months. if you look at the dollar and a technical basis, it is quite overboard at the moment. the other side of this, it's been a weak euro, a week emerging market currency. we all know there's a bit of a wave going on in terms of covid in the price. i expect the dollar strength is nearing an exhaustion point, but if it keeps on going on it will start causing more problems in emerging markets. anna: that's where we look if we were to get a tantrum. thank you for joining us. now we do first word news update, here's laura wright. >> boris johnson lashed out at france after a deadly boat
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accident in the english channel. 27 people died when a boat filled with migrants sank. he accused france of not doing enough to stop migrants trying to get to the u.k. from the north of france. around three times as many people arrived as in 2020. at their last meeting, federal policymakers were open to adjusting the table of asset purchases and raising interest rates sooner than expected. all that according to minutes released yesterday. the price of oil steady after opec said it would coordinate the release of reserves may make a surplus even larger next year. some opec delegates said strategic reserves may lead the alliance you old back in january. 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. -- may lead the alliance to hold
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back in january. 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 laura wright, this is bloomberg. anna: germany passes 100,000 covid-19 deaths, a mounting challenge for the new coalition government. we will have the latest from berlin next, this is bloomberg. ♪
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anna: welcome back to bloomberg
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markets. the stock markets in europe opened. we have the stoxx 600 up by 2/10 of 1%. the dax is a little bit higher. companies in paris lifting the french market spirits and the ftse 100 up by 2/10 of a percent. utilities the biggest gaining sector, travel and leisure moving to the downside. let's focus in on the global supply chain process. the drag on raw materials and the congestion of ports are likely to be resolved by the middle of 2022. the head of the italian energy company spoke to francine and tom. >> there is tension on raw materials and ports, so there is clearly an inflationary trend. this is not the first time in
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this business we have in the solar business in particular. difficulties resolved. i think this will drag until mid-22, but we don't expect any more tensions, and technology is working the other way around so is pushing costs and making technologies more and more efficient and we see this trend to continue in the next 10 years. it is a blip, it is not the reversing of a trend. what does this mean, they're going to be people suffering in this predicament for the next 12 months, but a lot of companies like us just push it. >> give us a sense in your expansion plan how much of that is organic and how much is that you going out there and doing m&a.
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>> this money we set aside is all organic growth. the other 45% is renewables and the rest is a little bit on technologies. so most of that is organic. we have some m&a, particularly acquisitions during this period where we are talking about opportunistic deals. when i say midsize i mean in the range of five, no more. anna: let's take a look at some commodities for you. the oil price moving a touch to the downside to $82.20 on brent. some of the latest commentary
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looking at substantial reaction around the release from reserves . the u.s., the in -- india and the u.k., all of those in the mix in that story. this could add to oversupply in 2022 as we head towards opec meeting next week. germany's latest covid surge has taken its total death toll death toll passed 100,000 since the start of the pandemic just as olaf scholz repairs to succeed angela merkel as chancellor. let's go to our german reporter. what is the government proposing to do to contain covid, three different parties coming together. are they all on the same page when it comes to covid? >> we have seen they haven't been on the same page. olaf scholz was primarily concerned with getting this government together. they are under massive pressure
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to do something. he said they will set up a crisis management team but the question is how fast will they get that and what kind of measures they will be able to bring. we know the liberals are standing somewhat on the break -- brake, they are criticizing long reaching lockdown measures and have also seen too much interference into people's life so they are a bit reluctant to introduce mandatory vaccinations print >> we will see -- vaccinations. >> we will see how things develop their. what is the wider program from this new government. climate was going to be center stage. germany has its own challenge when it comes to the energy transition. >> definitely they really underestimate germany is a high
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energy export industry. and really the targets have been out, germany wants to become climate neutral. but what is missing and what everyone is looking for is what will this government do and it has somewhat short expectations. without a strong commitment to actions. they do not say how they want to finance that and how they want to get there. anna: what's the new foreign looking like? relationship with russia and the nord stream 2 pipeline at the center of that. only to the sense angela merkel has may be let china germany
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relations in a precarious situation. -- have let china germany relations be in a precarious situation. >> really a bit of a surprise. anna lena from the greens is set to become the foreign minister. she is a known critic of china in terms of human rights as well as an open critic of nord stream 2 in relation to russia. so it is quite a daring nomination. but on the other hand one has to keep in mind she will be tied into this coalition with partners and olaf scholz is following the more pragmatic line of the past year. >> thank you for the update on german politics.
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the policies we know about when to come to climate change and foreign policy there but also thinking about the covid fight and how they get set up by the government. we are also hearing a big morning from the dish a warning from the health minister, it's been going on a little while this morning. he's talked about how this covid way will be stronger and longer. he's talking about how boosters will be open to all adults after five months and france putting in place a booster program as it tries to tackle this for covid wave. also talking about the use of one of the medicines, that will get a mention from the health minister. we're also hearing from the european union, the commission talking about urging boosters as soon as possible after six months.
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britain and france swap accusations over who is to blame for the death of at least 27 people after a migrant boat sinks in the english channel. more on that story next. this is bloomberg. ♪ is bloomberg. ♪
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utilities sector and travel and leisure still the worst performing sector. the euro against the dollar, $1.22. there had been a lot of news lines around that and how health authorities across europe,
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certainly we've heard from the german chancellor and waiting around that. we've also heard from the french health minister in the last couple of hours around the fight in france as well. so there's a lot of new slow about the euro making gains. brent crude trades flat to negative this morning. let's turn to cross train oh tensions. britain and france have swapped accusations over who's to blame for the deaths of at least 27 people after a migrant boat sank near calais. that you are already at a sensitive point in the post-brexit relationship. bloomberg's joe mays joins us. what more can be done about this issue to prevent further crossings? we have seen the government suggesting that the other do more. joe: really, there is no silver bullet. there's no easy fix for crossings. there were discussions last night between boris johnson and emmanuel macron about putting
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more personnel on the beaches, but also creating more safe routes that migrants and asylum-seekers could use if they did want to come through to prevent them from taking these dangerous journeys across the channel. essentially reducing the pool socket. this has become a real slick political problem for us johnson . for his core voter base, there's a real desire to fix this issue of immigration and control of borders. anna: people who make it to the french coast heading for the u.k., they have been through a number of countries to get there. france says the lure of the u.k.'s lack of id cards. the u.k. pushes back against that, saying we don't need id cards.
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if that being talked about at all? they are a real political hot potato in the u.k. joe: that is something the conservative party has long resisted, so that is something they will probably not want to do. the french interior minister was blaming the attractiveness of the u.k. labor market and the way in which there is not strict enforcement on right to work and so on that encourages people to come to the u.k.. it speaks to the wider tension between the u.k. and france since brexit. in the call last night between macron and johnson, johnson was really pushing for u.k. personnel to be allowed to come to the shores of northern france to help prevent this problem, but macron resisting that on the grounds of french sovereignty. there's out of this agreement -- there's lots of disagreement over this issue. anna: obviously the aftermath of
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brexit and the way that is still ongoing clearly not adding to the working relationship. joe, think you very much for joining us. bloomberg's joe mayes on the latest in that disaster in the channel yesterday. let's get back to the u.k. economy. the u.k. has set a net 94,000 european nationals left the country last year as overall migration levels plummeted during the pandemic, contribute into the struggles some companies have faced in recruiting workers. let's get an economic perspective on the u.k. and get into the u.k. labor market and economy was josie dent, managing economist at the center for economics and business research. let me ask about the labor market in the u.k. and ask how stressed it is right now. the u.k. shares some things in common with other countries facing labor shortages, but there are some things specific to the u.k., so how tense is the labor market? josie: i think a key figure that
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shows how stressed the u.k. labor market is is the fact that in the three months to october, there were 1.2 million vacancies , the highest on record. of course, brexit will be a contribute in factor to this, so that is the u.k. specific issue, but we are seeing this tight labor market across the world in the eu and in the u.s., so there are a few different factors playing into this. but it does appear that eu nationals who left the u.k. and 2020, some of them might not have come back, and that is a key reason for the struggles to recruit. they appear to be across a range of industries, but in particular, industries like hospitality which was shut down for a long period in the last 12 months that are struggling to recruit, and therefore they might be facing a busy upcoming christmas season if they can't
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operate at full capacity because they can't hire workers. it is definitely limiting the economic outlook of these businesses. so the tight labor market is a key issue. anna: from an economics perspective, what kind of -- how long can an economy exist with a really tight labor market like that, or what would be the effects? josie: i suppose how long it is this tight is a key question because hopefully, if perhaps wages rise to attract more workers, perhaps those vacancies will fall and businesses will be able to hire the right amount of workers. if it is a longer-term issue, the government might have to look at things like relaxing visa policies. but i think it partly might be a pandemic issue. we are seeing lots of frictions as economies open up from lockdowns. we are seeing supply chain issues worldwide which are expected to resolve themselves
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as economies slowly build back from a period of very low economic activity. so other reasons for this tight labor market are that people have retired, but perhaps adding the economic activity rate backup from people who perhaps could afford to not work during a pandemic and so haven't been working be willing to come back into the labor market for the right wage. it will be interesting to see over the coming months. anna: let's pivot from the u.k. to the eurozone economy and thing about where lockdowns in various parts of central and eastern europe will -- how disruptive are you a speck in these lockdowns to become?
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josie: it will be interesting to see how many other countries do see research and's rise as their case numbers rise because big economies like germany, we know there's plenty of evidence to show that lockdown equals a contraction in economic activity , so austria is very likely to face gdp contraction in q4 with this lockdown after one of the fastest growth rates in the euro zone in q3. now cases arising, it is likely we will see weaker economic activity anyway because even if these countries don't look down, the rising case numbers will lead to consumer uncertainty and cautiousness among consumers to go out and spend, so it is likely we are looking at a weaker q4 then q3. anna: we do see a lot of
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personal measures being adopted away from what is actually legislated or ruled by governments. i am just getting lines coming through on the ecb accounts, so just delving into those and thinking about where the inflation story goes in the euro zone, we are seeing in the ecb accounts inflation was expected to rise more and fall in 2022. we are also seeing that philip lane, the chief economist, saw inflation below 2% in the medium-term, so perhaps the ecb accounts giving a suggestion of the downside risks to inflation that may be exist after the short term peak has been overcome. does that fit with your view at all? josie: yes, we do recognize that there are a lot of factors driving up inflation right now, and they are likely to ease next year. we do expect them to carry on into next year with inflation in
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2022 looking to be higher than the ecb would ideally like of around 2%, but they should eventually ease away such that in 2023, perhaps naturally, the inflation rate will return back to more ideal levels, and so i think perhaps it is practically a given that we will see very high inflation in q4, and probably in q1 2022, but after that it is likely to ease. i think the ecb is being very cautious in terms of its approach to monetary policy compared to other central banks like the bank of england and especially the federal reserve and the u.s. -- reserve in the u.s., so perhaps far less willing to tighten monetary policy, especially given the view that inflation might fall naturally next year. anna: thank you very much, josie
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dent at the centre for economics and business research. the market rate bets may show ecb guidance is not understood, so addressing that imbalance between the view to the ecb, the guidance being given, and what markets are expecting. coming up later this morning, we will speak to the deutsche bundesbank vice president on the bank's financial stability review. all of that really interesting in the context of where the leadership story at the bundesbank goes. don't miss that interview, to a clock p.m. -- that interview, 2:00 p.m. london time. >> the eu will recommend a nine month time limit for the validity of covid vaccinations for travel into the bloc. that suggests booster shots will be needed. it will also propose that vaccinated travelers get priority. eu governments are pushing to
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smooth out differences in rules to help safeguard the ability to travel. china has slammed the u.s. decision to add a number of companies to a trade blacklist read the government says it violates an understanding between the leaders of the two countries. the u.s. commerce department added around a dozen chinese firms to the blacklist for what was called engaging in activities contrary to national security or foreign policy interests. a warning for silicon valley from the u.k.'s top data protection watchdog. the office says that google, apple, and others are working to rein in tracking practices. the director says many of the new proposals are privacy positive, but says they don't fix some fundamental issues. a new government review has a warning for english soccer. it says there will be more financial chaos and less money -- chaos unless money filters
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down. endless soccer teams have ended up in administration 62 times in the past three decades. 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 laura wright. this is bloomberg. anna: thanks very much. european equity market making modest gains this thanksgiving. we see that the u.s. equity markets are closed today because it is thanksgiving, so up next, we will linger on that theme. american households are about to eat the costliest thanksgiving meal ever if they can even find a turkey. we look at some of the factors driving up the price of thanksgiving dinner. this is bloomberg. ♪
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>> i think both u.s. and china
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have tremendous strengths in ai. the commercial companies in the commercial areas, i think the u.s. tends to be much stronger in bread applications -- in applications, and china tends to be strong in robotics for warehousing, and both are developing in autonomous vehicles and internet, but largely come of those companies don't compete against each other due to the current geopolitical tendencies, so i think both countries are seeing tremendous ai companies leveraging the strengths of each country. in the case of u.s., enterprise software. in the case of china, manufacturing. so i hope ai will end up making companies in both countries winners. >> and china, our chinese
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companies looking to have more of an influence domestically rather than internationally, or will that change over time? >> i think right now, most of the chinese ai companies are focused domestically, and should they go abroad, they are more likely to go to countries that have a strong commercial relationship with china, and no limitations on technologies, so perhaps southeast asia, the middle east, africa be more likely. maybe south america, whereas i think the u.s. will tend to have more influence on the traditional areas english-speaking countries, europe and japan. so i think each country will naturally go to the regions where it has some advantage or has fewer limitations. >> what does the world look like in 40 years? is it going to be like "the
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terminator?" what is your vision on where we end up? >> i think it is two very different possible outcomes. i wrote the book "ai 24 the one -- "ai 2041." either we get our act together and figure out how countries can collaborate and finally realize there are many issues we can work together on like climate and health care, and that technology problems are overcome, and we reach it world where all of these technologies will basically eradicate poverty and hunger and positive uses will make us live healthier. that is one outcome. the other is that technologies
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can be misused by people. i don't think technologies will become evil itself like a terminator or dystopia like that , but i do think they provide very powerful weapons to bad people. terrorists, for example, or countries that choose to use them in a very damaging way to the rest of the world, because i think technology amplifiers, people whose capabilities, take autonomous weapons, as an example, is something that could wipe out lots of people. anna: that was the former google china president speaking with bloomberg's francine lacqua. you can watch their full conversation on "leaders with look while -- "leaders with lacqua."
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the impact of rising inflation on americans' turkey dinner might just dampen the mood. we are joined by bloomberg's ed ludlow to talk us through the rising cost of this annual event. talk us through the rising price of not just the turkey, but the whole thanksgiving spread. ed: what really comes down to is americans will be paying 14% more across the meal than they did last year. the centerpiece, the turkey. 10% to 20% more extensive the nastier -- expensive than last year. we had those ecb notes, the fed minutes in the last 24 hours. there's this idea or discussion about how transitory inflation actually is in all regions, and people are looking really closely at food price inflation. nomura said if you look at cpi, food price inflation is such a
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big contributor, more so than energy in many respects. if we bring up a chart that looks at how inflation is playing out in the u.s. and europe, you see the white line -- actually, that is inventories. let's go back to this one. basically, there's a lack of supply of turkeys. so what retailers are doing in the month of october, they are using cold storage. food inflation in america is getting out of hand at a much higher pace than in europe. the question is why. here's the chart. what is it? why is that food price growth in europe more subdued? that is the question economist are looking at, especially with lockdowns we are seeing in mainland europe. anna: make no apologies for lingering on the subject of turkeys. mark cudmore writing about how food will grab attention in 2022 in the way that energy has now. you have mentioned a little bit of the european angle here, but what is the latest on the supply constraints in europe? that is a very important part of the inflation story.
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ed: in the u.s., the situation is improving. in europe it is not. this is the euro area supply constraint indicator, a custom gauge that bloomberg economics puts together to look at things like retail inventory levels, prices out the gate of factories, things like that. if it is a positive number, we are in a supply deficit, and we are heading further and further into positive territory. it is a question of what is happening in the euro area. the covid situation isn't getting hugely better, especially when it comes to the number of unvaccinated and those lockdown numbers taking place. a lot of the supply constraints we see stem from lockdown, from restrictions tied to covid. when we think about food price inflation, we want to see some progress on the supply bottlenecks as well. anna: thank you very much. important conversation for thanksgiving. let's take a look at the european equity markets because we are without her u.s. friends today because they are eating
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turkey and doing other things that are traditional on thanksgiving. we have the european equity markets making gains, up by 0.25%. u.s. futures are open and do point to the upside, so we get a little indicator of sentiment as we head through the european trading day. halfway through, in fact. european equity markets making moves to the upside. u.s. futures higher. the asian equity session was probably positive. we are seeing the euro up by 0.2%. a dollar weakness story, perhaps. we have seen rate hikes part of the narrative when it comes to the ages has an and the eastern european session. that is may be putting the dollar on the back foot just a little bit. see the euro is resurgent this morning, up by 0.2%. oil prices, $82 31 cents, so still above the $82 mark despite the release from those strategic reserves by the u.s. and other consumer nations. opec has commented little bit on this, saying this could add to what it sees as a surplus in
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early 2022. we will get back to our markets conversation next. vincent juvyns, jp morgan asset management, joins us. this is bloomberg. ♪
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♪ anna: the fourth wave hits europe. berg has learned the eu will recommend a nine-month time amid on covid vaccine validity for travel. fed minutes show officials are open to removing policy support at a faster pace to rein in inflation even before data showed recently price pressures accelerating. thanksgiving surprise. inflation and supply chain struggles make today's dinner more expensive then usual.
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from london, for our audience worldwide, good morning. this is "bloomberg markets," live on bloomberg tv and bloomberg radio. i'm anna edwards here in london. happy thanksgiving to anyone seller biting today, wherever you are in the world. here in europe, we have european equity market open as usual, so let's get some guidance around risk appetite. we are up a around 0.25% this one. same on the ftse 100. the cac 40 on par with that. if we look at a sector breakdown, utilities are the best gaining sector across europe, so that gives us a sense of may be a lack of risk appetite as we are more than halfway through this european session. travel and leisure down by one put 3%, but still very much in the red. this is connected with the rules and regulation's around covid vaccine that have been proposed by the european commission. we will come to those in just a moment. that is the pen european equities story. of course, it is thanksgiving. it means that u.s. equity markets are closed, but u.s.
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futures are open, and s&p futures up i 0.2%. the euro-dollar up by 0.2%. and crude is fairly flat. we've got the german bund there as well. the filing of the traffic light coalition of three parties, we know a little bit about what they plan to do when it comes to governing journey. -- governing germany. the number of coronavirus deaths in germany now stands above 100,000. new infections are still rising and hospitals in some cities are becoming overwhelmed. countries have been adding new measures to face this fourth wave on the continent. germany is considering vaccine mandates, and we have learned the eu is set to recommend a nine-month limit on covid vaccine validity for travel. let's get more with our bloomberg intelligence senior pharmaceutical analyst sam fazeli. give us a sense of how bad things are in europe because the case rate doesn't tell the whole
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story. baby we need to look at boosters, the timing of boosters. how difficult are things now in central europe? sam: thanks for having me on, and happy thanksgiving to whoever is tuned in from the u.s. and north america. i would say that the situation clearly is a lot worse than it was a few weeks ago, a lot of it to do with the continued ravaging being unleashed by the delta variant. there's a lot to do with that because it is highly infectious and it passes on really quickly. and then you layer on top of that everything else that is going on. population density, attitudes to nonpharmaceutical interventions, vaccination rates, previous infection rates, and you just get a very complex set of
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drivers. you have hospitalization rates that are completely different, too. let's hope the vaccines keep those in check at the -- in check as the winter unfolds. anna: how strict to using measures across europe need to become to fight this stream of the virus? how tough do measures need to become? vincent: i think the critical -- sam: i think the critical thing here is the use of masks, and good masks. not cloth bandanas that probably do very little. that is the element that i think is critical here. closing down and keeping people apart is going to make a difference because the virus needs to be close to someone
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else to pass it on, but i think countries are going to try very hard to avoid that, and if you keep the hospitalization rates and icus empty, i think they can continue to do that. anna: what about the headline story that we broke earlier on, this nine-month limit that the eu is recommending to member states for vaccine validity when it comes to international travel or perhaps other areas of life? what is the thinking behind that ? sam: i think it is a way of trying to reduce the transmission of the virus because if you just had a booster shot, your risk of actually catching the virus and passing it on to somebody else is going to be meaningfully, significantly reduced. but on top of that, what we have to think about here is that different countries have got different rules. in the u.k. they are administering booster doses above 40. in france, i think they are doing above 65.
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what does that mean? does everybody have to start vaccinating above the age of 18? what happens to that group? so a lot of questions to be answered and a lot of countries still to respond to this directive. anna: i think we have had some news around those boosters just today from the french health minister, saying boosters will be open to all adults after five months, so the policy is evolving all the time. sam fazeli, thank you so much. let's get into what all of this means for markets. joining us now is vincent juvyns , global market strategist at jp morgan asset management. our thoughts are overwhelmingly on this unitarian crisis that has been with us for more than a year and a half now, but in terms of thinking about what this does economically to various parts of europe and asset management decisions that bounce off that, how closely are you watching what is going on in europe at this point? vincent: very closely, and
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speaking out of amsterdam today, where the country has imposed a soft lockdown since a couple of days. i can tell you that after 8:00 here in the evening, nothing happened anymore in the streets. clearly the situation that we just addressed is a risk for the european economies. many companies are against meeting in person even for december or january, or there will be an economic cost. if i look at the european market in the month of november, i see clearly markets were meaning behind what we have seen in the u.s., so this clearly shows that investors are probably a bit more nervous towards europe than the u.s. we see also that fixed income markets in sovereign bond markets in europe have seen decreasing yields. so there's a bit more of a risk,
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and today is definitely more of a positive day since most indexes are in the green today, but it is more difficult ahead of us. but this doesn't mean we don't stay interested in european stock. utilities, for instance, show that this sector is may be a safe bet on the european market, but also a way to capture interesting themes as we go into 2022. the climate change theme, we all know that europe is particularly well-positioned to benefit from this theme, thanks also to the announcement made in the u.s. of massive investment in the sector. i believe many european companies are going to benefit from that, and that obviously has nothing to do with the situation in europe. that is a global phenomenon. anna: in terms of where the covid fight goes in europe, it
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is the way it rubs up against other policy measures. clearly, governments are taking actions or not taking actions as they see fit, but what about the european central bank? we just got the note from the accounts a little earlier on today, and we've had a lot of commentary from various european officials in weeks and months gone past about expectations of tighter policy in the euro zone that have-nots has comfortably with ecb governing councilmembers who thought that didn't really equate to the messaging they were trying to get across. do we see any link between the covid wave coming back and what the ecb might do as we go into next year? vincent: it is probable that given the intervention they are and plummeting right now, i would expect it kind of soft lockdown like we have in the netherlands at the moment to be implied -- to be applied. i know france is considering a similar move as well, so not a
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full lockdown like in austria at the moment, but at least limiting the movement of people from entering restaurants and these aspects, especially during the christmas season. so it is going to have an impact on the economy. it will slow the economy, so from a pure monetary policy perspective, this probably is something which will strengthen the doves within the ecb ranks. obviously, growth may recede somewhat next year, which would probably also help to absorb a bit of the inflation that we have seen recently. we should also add that it is premature to discuss any tightening in europe. yes, inflation is high at the moment, but when we look at a driver of this inflation, a lot has to do with energy prices, we know, and with the supply bottleneck, and we know that these are temporary by nature. so at the moment, we are still looking at an ecb on hold for
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2022. anna: what about the supply chain issues that you mentioned? do you think these are going to start to eat more into european companies' margins? we have seen at the aggregate level, business is quite successful in passing those on which is partly why we have the inflation issue we are talking about. do continuing to be the case -- do you see that continuing to be the case? vincent: we believe that margins at companies should be able to pass on the increase in prices they are facing in their cost base. that is one of the items that we addressed in our 2022 outlook which will be published at the end of the week. we believe that since demand is so strong that companies will be able to pass on these price increases, we discussed the cost of the thanksgiving meal at the moment that shows that even for consumer staples, price is
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already passed on to the consumer, so as long as demand remains strong, we are not too concerned about margin entering into next year. this said, we need to be aware that next year will be less supportive from an earnings growth perspective, so active management will be key to navigate this environment. i would expect lower return from equities generally speaking and probably more interest from investors towards lowly valued stock, like the value factor in europe, the dividend stock which, given the relatively high dividend yields, are probably going to perform a bit better. so margins should be relatively fine next year. anna: vincent, thank you very much. thank you for joining us. european equity markets just slightly to the upside this morning. we have a little bit of strength coming through, but the fact that we've got utilities as the biggest gaining sector perhaps
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doesn't signify all that much in terms of risk appetite. u.s. equity market futures do also point higher, although they seem to have pared some of their gains over the last couple of hours, so not quite so positive, if we show you those u.s. futures. we also have the euro therefore you, and the german bund and the brent crude price, dropping now. 82 lowers $.10 -- $82.10 is where retrade on the brand price. jp morgan ceo jamie dimon says he regrets his comment about the chinese coming as party. the details next. this is bloomberg. ♪
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anna: anna edwards here in london.
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let's get back to one of our big stories of this week. jamie dimon says he regrets his joke that his bank is likely to outlast china's communist party. dimon said he was trying to emphasize the strength and longevity of the company. it is the latest in a string of provocative remarks he has been forced to walk back from. let's bring in our bloomberg opinion columnist here with me in london. we talked about this yesterday, the extent to which this was, from a business that wants to do a lot of work in china, a bit of a misstep. how much was this a misstep from jamie dimon, and how unsurprised are you that he's had to walk it back? reporter: dgp morgan ceo made the worst possible joke on china. we have all heard about president xi jinping's common prosperity drive, and a lot of it is because the chinese communist party feels that it's reign over china is not so secure. a lot of chinese feel like the society is going the wrong way.
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economic growth has slowed. the wealth gap has widened. the common prosperity drive is to broaden the middle class, to bring in the blue-collar workers , the elderly, so on and so forth, and he really made the worst joke possible. anna: so that is why it did not go down well in beijing. could he face any repercussions? one of our colleagues pointing out that the chinese government has not openly and loudly pushed back against this, perhaps because of the sensitive nature of the topic being discussed here. reporter: absolutely. they don't really talk about, oh, we are going to outlast jp morgan. they have it on record, unfortunately. the way that china retaliates, they don't just come out and say that the foreign ministry says jp morgan is doing a horrible job in china. they are going to do it very slowly and quietly. so you are now going to see a public backlash right now. anna: what does this say about
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the risk for businesses in many sectors? this is the banking sector trying to push into wealth management across china and being given more access to china. we have seen this in other sectors that have tried to speak out whilst in western settings, perhaps, round cotton production and treatment of certain ethnic groups within china, and then they have faced criticism from chinese authorities. this is a really difficult line for europeans and other global businesses. reporter: yes, especially for foreign banks. as we have seen with alibaba and so on and so forth, the chinese financial industry is getting more heavily regulated. what the foreign banks want to do is find china's new richest to bank with them and help them grow even richer. jp morgan's wealth management clients can borrow more cheaply and with a higher leverage than the chinese banks can offer. what does it mean for the common prosperity? another thing is everyone knows the u.s. market is the best.
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the chinese market is not happening right now. chinese rich people also want to join the robinhood crowd. they want to be able to buy nvidia and salesforce, and banks like jp morgan can facilitate that. but then we are talking about moving capital out of china. they want to have their rich in china, to have their people in china, and possibly donate money to charity. i think the western banks have to walk a very fine line. anna: it is amazing how so much of the east-west rivalry, so much of the geopolitical tension came to the fore in just these comments we heard from the ceo of to be organ -- of jp morgan. thank you very much, shuli ren a bloomberg intelligence. we are without our u.s. friends, and probably without a little bit of the volume that comes with that, but we have european equity market open.
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we are up by 0.2% on the stoxx 600. little bit of a risk off to what is happening in the markets, but the euro managing to shake off any vulnerability around the spread of covid-19. that has certainly been part of the story, so the euro a little bit stronger this morning at $1.1223. let's show you the sector breakdown. we have travel and leisure stocks doing pretty badly this morning, and that continues to be the case. we have utilities doing pretty well. one of the utilities that has been dating this morning, part of that could be due to the joe -- the german coalition talks and the climate policy that could evolve. so we see some german utilities moving to the upside. quick check on u.s. futures because even if we are without the cash markets, we do have futures for you. dow futures and nasdaq futures higher, but not by as much as they were. it is thanksgiving, but the impact of rising inflation on americans' turkey dinner might
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dampen the mood a little bit. here's what bank of america has to say about higher prices. >> you have seen food and beverage companies begin raising prices at a level that you haven't really seen in over 20 years. and having to come back with multiple rounds of price increases. anna: that is the broader price increase conversation. we are joined now by bloomberg's ed ludlow, who has been all over this story. ed must be making you hungry talking about all of this food today. i don't know how long you have to wait for your thanksgiving meal. let me ask about the rising prices of this thanksgiving meal because it isn't just the turkey, even though that is the centerpiece. ed: food price inflation has not snuck up on us. it felt like when we got the october cpi print, everyone was like, oh, but food prices have been rising. the differences in the equity market story, corporates have been prepared to pass those
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costs onto the consumer. the turkey is up 20% to 24%. the other thing that happens at thanksgiving time is black friday. when it comes to big box retail, they have not passed on that cost to consumer. they have been happy to take a hit to the bottom line, which wall street has been unhappy about in this earnings season, so it is a very broad inflation story playing out in different ways for the consumer. anna: if everyone is recovering from not just overeating, but also the overspending they have had to do on thanksgiving, where does that leave us for black friday? are we going to see a black friday like no other, or very usual? ed: that is the expectation. on thanksgiving itself, brick-and-mortars close in america. online shopping is highlighted anyway. the worry, supply chain constraints. will anything you want to buy actually be in stock? the messages saying out of stock is up more than 250% versus the
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same period in 2019. anna: i am still looking for a holiday present from last christmas, so that tells you a lot. but briefly, where are we on the european supply chain shortages? ed: it is a little worrying. the bloomberg economic gains of supply chain constraints is deepening, if not at the same pace, and it all relates a lot to virus lockdowns. anna: so the virus fight very much front and center still. we will see if we management of a gate fourth lockdowns than we did the early ones. thanks very much, ed ludlow talking to us about supply chain disruption, which of course is part of the conversation when it comes to higher prices. coming up on the program, much more on the markets people -- on the markets. jeremy stretch, head of g10 fx strategy at cibc, will join us. does he take anything away from the strength in the fed minutes?
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we are in the heat of covid claim downs in europe. we will talk more about that. this is bloomberg. ♪
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anna: welcome back to bloomberg markets. i am in edwards in london. the bloomberg dollar index is fairly that. the dxy down .2%. the dollar index fairly flat. we have the euro a touch stronger, actually up around point when he 5%. -- up around .25%. the lack of liquidity and higher volatility, those are the overriding teams for the foreseeable future in the fx market according to our next guest jeremy stretch who is with me in the studio, which is lovely after more than a year of you not being here. jeremy: definitely more than a
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year. lovely to be back. anna: it seems like for a period we were doing a lot of that in bond markets, now this has moved into the fx arena. what are you watching for in that story? jeremy: it has been a situation where there has been a dearth of volatility in the fx market. there is a situation where people say is that the end of volatility. i think now as we move toward the end of 2021 and into 2022, we are seeing central-bank policy direction start to diverge in certain respects. we are starting to see debate about the timing cycle, the pace of monetary tightening in different central banks. that is creating issues where we are starting to see volatility deviations between individual pairs. anna: when we think about that volatility, let me ask you about the dollar side. we have the fed out with minutes. then the fed out with minutes.
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we seem to acknowledge maybe there'll be a need for a faster taper. is that adding to your view? jeremy: we were leaning in that direction. we have been progressively revising up our dollar forecast. back in the middle of the summer we started to ramp up our dollar bias even beyond what we already had. we moved our euro-dollar forecast to 1.10. that looks like this year's forecast rather than next year's. it was predicated on the presumption the fit -- the fed did looking to being pressured to act earlier. anna: it does seem as if we have a lot of positioning for a stronger dollar. does that continue? is that your expectation we will see the strength of the dollar? jeremy: i think that is true. vertically when you look at the dollar versus the other g3 currencies where you have the boj and the ecb in a different
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orbit in terms of what we are seeing with the fed, we can debate how quickly the fed will taper and how early they start to hike. in the context of the boj and the ecb it seems bothell be buying bonds and maintaining monetary policy. there are question marks about the degree of positioning. i think overall the stronger dollar bias remains in plate and still has plenty of latitude to run through 2022. anna: can we do this without any kind of tantrum? would it be more of an emerging-market story? jeremy: we see you have this -- when you see u.s. interest rates moving up and pressures in the emerging-market narratives, those that have dollar-denominated debt, i think there'll inevitably be paid in em nations. in terms of the broader taper narrative, thus far the fed are being able to play that communication game to temper market fears about the taper
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bias. it seems there is a distinction between what jay powell said at the november fomc press meet and what the minutes have told us. that deviation could be a source of contention as we move forward to the december fomc. anna: what is the lack of joined up thinking? what is the difference between what powell is saying and what the minutes were saying? jeremy: the minutes were ramping up the debate about tapering, and that was not the narrative powell was trying to portray. there was also a perception of how transitory are the nation pressures going to be? is it going to be more attractive -- that was a slightly different message from mr. powell's testimony. the nomination is out-of-the-way. perhaps that will liberate chair powell to be more communicative with the market as it moves forward to the december fomc, particularly if we go to that meeting on the back of strong payrolls and high patient.
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anna: i was taken by a substantial move in the hungarian, not specifically around hungary because it attacks the zeitgeist about higher interest rates. you've see the third interest -- you see the third increase in just two weeks. this -- is this a story globally getting momentum or are received lots of countries trying to support their currencies in this way? is that what part of this is? jeremy: we are seeing the broader dollar appreciation. it is creating uncertainties for other jurisdictions. vertically when you look at those that have heavy levels of dollar liability, it does create uncertainties moving forward. when you start to think about global commodity prices, which are generally dollarized, you do see fairly important ramifications of monetary policy and many other jurisdictions away from the traditional market. anna: we got ecb minutes and
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some of that seems to be pointing to this disconnect between the guidance the ecb is giving and what the markets are pricing in. where does that go? the ecb is saying maybe markets are misunderstanding what we are trying to say? jeremy: we have to remember the ecb policy guidance is driven by madame lagarde and philip lane. they are heavily leading onto that inflation is transitory narrative and pushing back on any notion of policy tightening. beyond that as we transition out of the pepp process i think the ecb will continue to look at bond buying under the asset purchase program. that does suggest the market is still overambitious in terms of thinking the ecb will be doing anything other than maintaining an exceptionally easy stance, the question is when will the ecb hike rates?
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for a market governed by where we are this week, next week, that seems to be almost another lifetime. anna: it is very much about interest rate differentials. a lot of our conversation has been around where monetary policy goes. as we head toward the end of this year what is your top call across fx markets, the one you have the most conviction around? jeremy: it does relate to that. interest rates and monetary policy are a reflection of the growth trajectory. we maintain the positive u.s. dollar bias. it is looking at ways to play that. we've been recommending euro-dollar shorts for some time. the dollar swissie moves up substantially. in terms of the growth trajectory into 2022, if you're thinking about a weaker euro perhaps you are looking at satellites that may well outperform things like the swedish krona which may outperform and provide opportunities. anna: jeremy, thank you very much for joining us. jeremy stretched with cibc in
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the studio in london. now let's turn to london and the challenge of fighting global warming is changing not only finance but also culture. a new documentary examines the life of jack to stoke -- jacques cousteau. bloomberg's sarah rappaport dives into the undersea world of the man warning about oceans before climate change dominated headlines. dick: the world's resources being used up any of seen it year after year. apparently a lot of people that should have to not. is there anything you want to say? jacques: i was already involved in standing the possibilities of extracting energy from the sea.
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this was a choice i made many years ago. what i was shot by is the speed -- what i was shocked by his the speed and the shamelessness with which the industrial enterprises have thrown in the wastebasket all of the measures that have been put in place. >> that was jacques cousteau. a new documentary looks at his journey from an explorer of the underwater world to his crusade to protect it. the director spoke about the process of making the documentary and how film can change the world. >> it is through storytelling and connecting people that we can talk about larger issues. this is a film about jacques c ousteau, but it is about how we are going to experience and protect the environment.
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that speaks to the zeitgeist of what we are talking about today. >> once one of the most famous people in the world, becoming cousteau looks to introduce him to a new audience. >> with the cop summit his message is more important than ever. we have forgotten that he was sounding the alarm 50 years ago. to have that historic understanding that we were talking about before climate change and before talking about greenhouse gas was part of our lexicon. putting it into perspective, we cannot wait any longer. >> what did you find surprising in learning more about him? >> i found it surprising that he invented the aqualung, which is the precursor to scuba. he was an inventor. he was in the french navy. my knowledge of him started when he was a television celebrity. >> from a tv show he gave
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deplatform that he later used to speak up -- he gained a platform he later used to speak up about climate change. >> resources are depleted to alarming levels. above all, the melting of ice caps leading to the rise of the ocean level has already begun. >> that was at the earth summit in 1992. 30 years later his message is more relevant than ever. i am sarah rappaport. anna: that was bloomberg's sarah rappaport reporting on a new documentary. it interesting to hear that from the early 1990's and how they resume today. let's get a first word news update. laura: the eu drug regulator has cleared the use of the pfizer covid vaccine for five to 11-year-old. the shots have already been
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approved for use of adult and children ages 12 and up. a final decision on the vaccine is up to the european commission. in germany the number of deaths from coronavirus has gone over 100,000. the country past the print milestone at a time when the latest -- babbling the virus will dominate the early stages of germany's new government. the price of oil is steady after opec set a release of reserves may make crude -- even larger. the cartel and its allies meet next week. some warn releasing strategic reserve may force the alliance to hold back supply in january. in southern california high winds led the largest utility to cut powers to more customers because of the french -- the fresh wildfires. at her sitter international cut power to 32,000 homes and businesses. 222,000 customers could lose
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service around los angeles and san diego. a series of deadly wildfires caused by power companies and their equipment the last few years. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i am laura wright. this is bloomberg. anna: thank you very much. remi cointreau's desire to party impresses analysts. ♪
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anna: welcome back to bloomberg markets. i am in edwards life in london
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this thank -- i am in edwards in lunt -- i am anna edwards in london. if you are celebrating thanksgiving we wish you well. remy cointreau, the ceo of the company said inflation is a fact and will continue for the coming year. the head discussed the company's outlook with bloomberg's tom mackenzie. >> inflation is a fact. we see it happening while even neutral alcohol is plateauing. does not do for us. demand is potentially stronger than the offer so we have seen all of these price increases earlier than this. we have seen it is a fact and it will last for the coming year. it is difficult to project myself further but we see strong inflation currently.
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we have secured a lot of our contracts. it is going to hurt us next year for sure. it will have an impact, but at the same time we believe it is manageable. when you're at the high end, there are things we can do on the prices. tom: we saw the margins increased to 33%? does that say you are passing the cost onto the consumer? can you preserve your margins? eric: we do not work are pricing prickly to inflation. pricing is more the consequence of everything we do. we have a price positioning plan for years, which is not purely related to inflation. of course, the price increases we have plant this year, which are driven by the strong desirability of our brand have
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helped us compensate inflation. it is driven by minimal factors than the purely inflation. the growth of the margin is coming mostly from the growth of our sales and our overhead. it is not of gross margin inflation related issue, it is also the context of a strong increase of turnover. tom: the importance of cost control. what about supply chains? are you seeing any evidence they are starting to ease? along do you think supply chain constraints will be with you? eric: easing in the sense it is easier than last summer when our channels were empty so we had to stop again which made it very difficult. now it is not particularly easing from a macro perspective
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until 2023. it has a huge impact on the cost of logistic, but the cost of logistic is not so big or so impactful, even though it is a sharp increase. it will remain high, but for us it is probably more. we see depletion in our sales. related to the shipments. i would say this is even more critical for the shelves are empty. tom: remy cointreau ceo eric vallat. let's stay on the subject of inflation and supply chain issues. my next guest is the boss of scarlet: brands, consumer -- of starco brands. the hiring inflation and supply
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chain disruption. let's talk -- let's talk to the starco ceo. from the west coast, we thank you for getting up early to talk to us this thanksgiving. it is appropriate on thanksgiving to talk to a company so exposed to u.s. consumers. let me ask you about supply chain issues. we were just hearing from the boss of remi quinto on that front -- remy cointreau on that front. how does that impact starco? >> we have a large manufacturing conglomerate in chemical food and beverage and there is no question there has been deep impact. the thing to remember is there a confluence of events that have caused this. definite headwinds regarding raw materials, chemicals, components , especially the chemical sectors. we do think there is some easing.
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2022 will be a challenge. in the context of launching a new technology, the plan has to be right and innovation has to be side-by-side -- anna: you are about to launch a new product. you clearly think you have the pricing power to deal with a fast changing pricing environment. ross: the largest hedge against an asian is innovation. -- the largest hedge against inflation is innovation. in other moments of financial prices we find that in distressed times, sometimes the best time to push forward with innovation. for this product specifically, if i may, from starco brands which is a publicly traded company, is ivanka infused whipped cream -- is a vodka infused whipped cream.
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our core competency in manufacturing is in the aerosol world. this is a very unique innovation in spirits that is a perfect accrued tremont to any other beverage and is a lot of fun. we are launching this product with an entertainer extraordinaire, cardi b, who is very innovative herself, and watching this product with her will be fun. anna: it is going to be a ton of fun if she is involved. it has taken you four years of research. what will be the big channel for mastering this -- for marketing this? when you have someone like party be involved -- someone like cardi b involved, what is the
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best way to market that? ross: when we think about innovation we do not think about it in terms of the product. we think about our customers and our community. cardi's has a wonderful community and a tremendous reach. the products demographic can be very wide. college kids all the way to people that are old that want to have some fun or put it on top of their coffee or whatnot. the motive of distribution -- we are launching the product december 1. people will be able to get it in the united states, and that is an innovative way to launch a spirit. that is the novation for distribution. anna: thank you ray much for getting up so early on this thanksgiving to join us. the ceo of starco talking about
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launching a product at a time of disruption. from consumer products to something front and center in europe, that is the fight against covid. angela merkel saying the pandemic is serious, setting up a task force from the transition to the new chancellor. a lot of lines taken. we will continue to monitor this. this is bloomberg. ♪
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guy: thursday, november 25, 2:00 in london, 9:00 in new york. it is thanksgiving. the american markets are closed. nevertheless there is plenty to talk about. airline stocks fall as the eu recommends a nine month limit on vaccine passports. france is pushing boosters for all of those over 18. apparently we also have a new covid variant which has a huge number of mutations. we will get an update on that in just a moment. in corporate news remy rises to a record as sales of luxury liquor boom with bars and restaurants reopening for now. goldman sachs chief economist jan hatzius says the firm -- doubling the pace for reductions to for -- to $30 billion a month
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with a rate hike coming in june. the markets pricing a 30% possibility we get a march height out of the fed. it is 2:00 in london, it is 9:00 in new york, i am guy johnson. welcome to bloomberg markets. this is a picture. light volume, the u.s. is closed, wall street is out. the stoxx 600 recouping ground. positive data out of the united states yesterday. the sector that is suffering in europe at the moment is travel and leisure. covid cases climbing and further restrictions being put on even the vaccinated ability to travel. you only have a nine month duration for the euro covid past which allows you to travel around the region. once again, europe is the epicenter of the pandemic.
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50% of current mortality is in germany -- is in europe. german hospitals becoming overwhelmed. countries have been adding new wagers -- adding new measures. and we have learned the eu is set to recommend the nine month limit for the covid vaccine passports. five-year-olds and up will soon be getting their shots with the eu. we are joined by bloomberg's sam fazeli to give us an update on all of this. the other piece of news i've not mentioned is the news out of south africa, which is where i want to start. within the last hour we see a lot of interest in what is a new variant, a variant with huge numbers of mutations. walk me through what we are looking at. sam: thanks for having me back. it is an area that was identified in a few cases starting a few days ago.
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now taking shape of its own. numbers from accounts i have done looks like 32 mutations in the spike region and 15 mutations in other parts of the virus. they are all over the place. how bad this would be in terms of abating immunity would probably be up there, which is probably the worst, the question is has this cost the virus ability to infect? that is what we need more data on and i think we get that in the next few weeks. guy: europe and the world are now bleeding heavily on the vaccination program to try to be back this fourth wave we are seeing in europe.
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france will allow everybody over the age of 18 to get a booster shot. talk to me about the impact boosters are having. the u.k. seems to be managing the situation and does seem the boosters and the level of population that it been inoculated seems to be a critical factor right now. sam: let's not forget we need to look at the booster and the specific population of people who are receiving it. in israel and the u.k. you are seeing a significant effect on the number of infections, certainly on the reduction in hospitalizations. what happens now with regard to expanding that in different countries, say the u.k., will they announce it will go down to 18, will be driven by how serious different countries take
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this requirement for a booster to be able to travel. if that becomes a meaningful requirement, that will happen everywhere. the pressure on travel stocks is likely to get worse if this variant we just talked about leads to new restrictions, which we had all hoped we had behind us. guy: i look at the vaccination rates in the united states. they look comparable with much of eastern europe. eastern europe is suffering huge spikes in covid cases. my regular cohost alix steel always worries we are in the united states six weeks behind europe. are we about to see the same thing play out again? sam: i think alix is not wrong to be worried. it will depend on state-by-state. there are states such as california or cities like san
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francisco where the vaccination rates are into the 80% for the whole population. similar to some countries in europe. it will vary state-by-state. on top of that is where people are with regards to the date for vaccinations time since the second dose. that is what we need to keep an ion. it will be a bit of a mess trying to follow it from a statewide perspective but i think that is a worry that is fair. guy: always a pleasure. thanks for the update. bloomberg sam fazeli, director of research for bloomberg intelligence. michael metcalf,'s state street global head joining me on set. michael, sam talking us through what is happening with covid, the numbers are accelerating in europe, they may accelerate in the united states.
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the market does not seem to be paying a great deal of attention. you think that it -- do think that changes? michael: i think it does if we start getting deeper lockdowns. i think the market has been looking through covid and assuming the vaccinations are doing their jobs. if we start to doubt that, whether because of a new variant or because the vaccinations are expiring, are we going back to lockdowns and impacting activity , but it will be sector specific, i suspect. we will have tech outperformance , travel and hospitality and leisure, you see bits of that in the market. generally the market will look through until things like the u.s. start to pick up a little bit. guy: one thing covid has caused his problems with the supply chain.
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it is something that impacts all kinds of different regions in different ways. net-net, it does seem to be causing problems. covid does seem to be having an impact. if we are going to see further covid outbreaks, can i assume the bottlenecks we are suffering with now may be blocked? michael: i think covid is one of the things that is contributing to the supply bottleneck, it is not the only thing. part of it is excess demand. you need to look at the u.s. trade numbers last week to get a hint of that. almost $100 billion on the month. we know this is an unfortunate combination of supply constraint and excess demand. i do think, and this is may a fuller one to this pump if we do go back into lockdown it could be more inflationary. guy: that is where i am going. michael: central banks will have a real dilemma because they will
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have a lot of growth for higher inflation. guy: in terms of what you're looking at right now to understand how are you managing this from a data point of view, which data source are you looking at to get an idea whether or not the covid story we are now watching so carefully, china, europe, how do i see the impact of that in terms of the inflationary data? michael: we are obviously looking at the covid cases very closely. what we are also capturing his online price data, which measures inflation in real time. we think the theme through this year is goods price inflation has shown no signs of normalizing. we already got a good look at november and it is still strong. electronics prices have come down. things like the price of household goods are still at decade highs.
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the other thing, in terms of shortages we are looking at, before you have the ceo talking about the shortage of supply chain. we are looking at corporate communications and the kind of shortages your mentioning. the chip shortages comes up an awful lot. labor shortage is another way covid feeds the story. guy: how does this progress? you have labor shortages, increasing amount about food inflation. you get those prior factors that fetid to food inflation, basically because farmers need labor, they need energy, a lot of it, they need fertilizer, which comes from natural gas, as a result of which all of their input costs are rising from as result of which while this year has been about goods inflation and labor inflation, next year is about food price inflation. michael: to be fair with food price inflation, we've already seen fits in emerging markets.
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we've already seen central banks trying to respond to that. i would imagine they are hoping people have done enough. given the story we have just described, maybe they have not. that is definitely a potential problem. guy: apparently will cause all kinds of problems. michael metcalf will stay with us, states deep -- state street global head of microstrategy. futures are rising, a sign of a solid recovery in the economy. the data yesterday was good. there is a story surrounding whether or not that think which leads to a faster fed taper. we will talk about that next. that is what is coming up. this is bloomberg. ♪
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max let's check it on the: bloomberg first word news. boris johnson has lashed out at france after a deadly boat accident in the english channel. 27 people died when a boat filled with migrants out -- a boat filled with migrants sank. johnson accused of -- johnson accused france of not doing enough to stop migrants. the price of oil has steady today after opec said it coordinated reserves may maker crude surplus next year even larger. the cartel and its allies meet next week.
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it may lead the alliance to hold back oil supply in january. in southern california high winds have led the region's yard just -- largest utility to cut power to customers because of the threat of wildfire. edison international cut power to homes and businesses. almost 220,000 customers could lose service around los angeles and san diego. a series of deadly wildfires were caused by company equipment. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i am max ramsey. this is bloomberg. guy: let's turn our attention to the latest news from the fomc. this is three weeks ago. the minutes showed officials were open to removing policy support at a faster pace to keep the u.s. inflation story in check. faster taper is what we are talking about. subsequent to that, pce number super strong, even the core
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number super strong. goldman sachs jan hatzius out saying he thinks they will double the rate of taper up to around $30 billion a month and that will lead to the possibility of an earlier hike from the fed. the market pricing in a 30% chance. still with us, michael metcalf, state street global head of microstrategy. where are you in this? michael: i think the fed needs to do something about inflation. that is pretty clear now. it has been clear for a while. i think the market maybe got ahead of itself a little bit in march and feels like they would have to act quickly. it may well be june as a starting point might be ok. clearly they have to get the narrative back. transitory is gone and arguably inflation was never transitory. it is a much stiff your problem but they will start to act.
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the interest rate market has priced in the equity market has survived. i imagine they will be looking at that this is ok. guy: what does it mean if we are good to see this accelerated pace from the equity market? how does that get priced in? michael: i think the equity market will be taking its cue from the long end and it seems to be, and maybe this is because there is so much there, this idea that if you rate hikes will be enough to rein in inflation. that is the key and sumption that gets challenged next -- that is the key assumption that gets challenged next year, but it is difficult to get it challenged until rate start going up and legend does not fall back. i think for the moment the markets assume it will be a shallow rate hike, and if it is a shallow cycle and 10-year gilts stay contained, i think -- and 10 year yields stay
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contained, i think equities do ok. guy: they decision coming up from the ecb, not only with their economic projections, but also what they will do with pepp. the danger with the ecb, covid cases ranging in december, at which point -- but pepp does not finish, at which point we could find his way over and nation re-accelerating. what does the ecb need to do? it is a tricky story. michael: it is easier for the ecb than the fed because the shape of the stimulate is different than europe. in europe you do not have the evidence of wage growth you have the states. it is easier for the ecb to say this is supply driven inflation, this is not domestically driven. it also helps to have an inflation target or you forecast
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out rather than an average catch up. what a worst time to have an ai target. they are over at. i think the ecb can look through it. especially if growth in europe is crimped by the return of the virus. guy: michael metcalf from state street, thank you ray much for stopping by in person. michael metcalf. plenty more still to come. we need to talk about what is happening with the ecb regulatory point of view. in interesting story around high-yield credit. it is thanksgiving in the united states. the macy's parade a feature, though it has been downgraded over last couple of years. live pictures from new york. we are back in full force. this is bloomberg. ♪
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>> take a walk around the city of london and you will see it looks different to how it did just a few months ago. the streets are busy with around 70% of workers returned to the office. for many one thing has not come with them, their suits. after a year of zoom calls and people eating and dressing from the waist up, smart casual is the new normal. between standout blazers and the once dreaded brown shoe, the clothing industry is adapting fast. >> a lot of our clients come almost 100% of them, are veering towards casual clothing. they may have been wearing suits for the last 30 years, but now there's a distinct need for them
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to get smart and up. casual wear, whether that is genes or chinos or even bomber jackets, it has been a real shift in terms of the demand. >> traditional tailors have had mixed fortunes during the pandemic. hawks, one of sample roles -- one of savile row's oldest institutions is seeking a buyer, and now a company only has stores in china. those that survived are embracing the change towards casual. it is not just clothes these stores offer comet's help navigating the age-old mystery of what is smart casual? >> not everyone knows what they should wear or what they should wear for each occasion. what people might where smart casually to the office might differ what they where smart
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casually if they're going to a client meeting were going on a plane or even if they are meeting in a social setting in a bar or a sporting event. that is where we come into play by giving the customer exactly what they want. >> while there has been no official changes in dress policy at major banks, evidence of the shift to casual is all around. comfort, flexibility, hybrid dressing, these are the buzzwords of the dress for your day era. even so it seems unlikely we will see trapeze on the trading floor anytime soon. the high street staples, the belief is firmly that the suit is not dead yet. >> i do not think enough people give credence to how well they dress. there are 70 subliminal messages you can give off by the way you dress, whether it is your shoes, your tie, the type of shirt you wear, the fit of the blazer jacket. it is not to be underestimated,
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but a lot of people do. guy: i am now feeling very self-conscious. brown shoes? not sure about that. the changing tastes in the city of london. let's talk about what is happening today in the markets. stocks obviously adrift without their wall street friends. the stoxx 600 retaking 480, we are up nearly eight point, .2%. we are also seeing europe coming back at 1.11. yesterday 1.12, now we are bid .2%. travel and leisure down 1.2%. the eu recommending that you travel passports should have vaccine duration restricted to nine months. after that you have to get a booster. we will see a lot more people getting those if that will be implemented.
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that means the travel sector is under pressure. one of the big names is ryanair trading a little firmer, up 1.4%. the rest of the sector is weakening. devolution down 14% today. the company has come under pressure from its peers for accepting clients in areas that are under sanction cover, and today we had a conference call to try to sort that out. the market learned little. the star of the day is remy cointreau, up 11.4%. luxury liver is roaring back. -- luxury liquor is roaring back. coming up, germany passing 100,000 covid debts. more on what is happening on the continent. this is bloomberg. ♪
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guy: welcome back.
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i am guy johnson in london. europe is the epicenter of the covid pandemic. another wave of infection hits the continent. germany is considering vaccine mandates as the number of coronavirus debts there surpasses 100,000, and we have learned the eu is recommending a nine-month limit on vaccine validity for travel. the real issue is the rate of change. the u.k. has had a slope or -- a slow burn on this with relatively high levels of covid. what we are seeing on the continent is a much higher level of pickup. we are joined by kellen pickering to talk about this. what will be the economic impact of this? what does this mean for the data out of the euro zone? >> the data was in december or november and january. let's see how long the restrictions last.
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two things worth keeping in mind. the first is that based on economic trends, the lockdowns have a smaller impact each time they happened. restrictions during winter last year were less bad than expected and much less bad than spring. that gives hope things will not be so bad this time around. the second thing is we have learned -- production and construction -- i think that is the reason why the market is not patching through expectations we will get through this. the european economy is fundamentally strong. michael: -- guy: what does that mean for the ecb? you've laid this out and some research notes. they may deliver their expectations for this year and the year beyond they have to
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decide what to do with pepp. the problem is they are looking at a situation that is deteriorating in europe because of the covid wave. the wave will not last that long. as a result of which when we get to spring next year, we may find ourselves in a situation the economy is reaccelerating. kallum: that is exactly right. the scale of the stimulus and response to this covid -- from the monetary policy side -- to help incomes and balance sheets. the line between monetary policy and the real economy is so long that it may be impossible for the ecb to do anything now that could have an effect in the coming weeks. what the ecb should be watching is the bond market and equity markets and there is a tightening of financial conditions and a reason to find liquidity somewhere.
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i'm not sure asset purchases are the way to do that. guy: you think the cheaper euro we have at the moment, we had 1.11 yesterday, we have 1.12 today, if you think that will augment inflationary impulse we have in the euro zone? it looks like the u.s. inflationary impulse has the potential to fade. i am wondering whether or not europe has yet to hit its peak and i'm wondering whether the cheaper currency they be a factor in that as well? kallum: a weaker euro would amplify the inflation. the big difference between the u.s. and the euro zone is that in the euro zone demand is robust, but the major drivers of inflation are supply. hence the base effect easing next year from inflation last year and the supply-side issues start easing. inflation stood rollover.
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u.s. is a different story. demand is exceptionally strong in the u.s. and it is up against the supply chain issues. even when the supply chain issues fade, u.s. inflation is likely to remain above the 2% rate, whereas in the euro zone we go back below 2% for a while. guy: you think lockdowns will delay that moment happening? you think the fact we will see parts of the industrial sector potentially having to slow down as a result of this comment you think that will further exacerbate some of the shortages we are seeing at the moment kallum:? kallum: it is a good question and hard to know precisely what the impact will be. it may depend on how consumers behave. if consumers decide we will buy everything online, that would put pressure on producers,
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especially when you start to see new restrictions or frictions as a result of this covid wave. we've already seen in asia what happens to ports when you have covid issues affecting the passing of goods. guy: you can see the data today, the consumers are responding. a fairly weak picture being generated from the data. kallum: -- guy: when you try to figure out what next year will look like, how big of a part will the new german government play in that process? we have a three-way coalition forming in germany that has mixed economic impulses from different parts of the government. what is your base case in terms of what germany will deliver next year in terms of this hole spending, in terms of being a stabilizing worse -- a stabilizing force? kallum: the big effect comes
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from the fact there was no negative surprise from the german -- they managed to achieve a coalition smoothly. uncertainty is off the table and will probably benefit euro economy. there'll be a push towards digital, there will be no harsh breaking on any of the -- germany will be a moderately positive force for the euro zone. look at the fundamentals across europe. record net worth in the euro zone. robust markets in france and germany. business investment is strong. we have the makings of a genuine business cycle. labor markets are strong. this is still a lot of excess savings the needs to be spent on the consumer side. we should get a year of growth next year, which will probably
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happen around the turn of the year. guy: we will leave it there. thanks for the input. always appreciate it. kallum pickering joining us there. coming up, remy cointreau soaring after a big earnings beat. our interview with the ceo is coming up next. this is bloomberg. ♪
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max let's check: on the bloomberg first word news. in germany the number of deaths from coronavirus has gone over 100,000. the latest wave of the pandemic has led to a record pace of infections. the coronavirus will dominate the early stages of germany's new government. china has plan to add another -- a number of companies to a trade black wrist -- blacklist. u.s. commerce department edited doesn't chinese firms to the blacklist for what was called engaging in activities contrary to national security. in brazil, consumer prices rose faster than expected in mid-november. annual inflation rates more than 10.7% despite the central banks aggressive interest rate in raises. the world's biggest tightening cycle. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries.
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i am max ramsey. this is bloomberg. guy: thanks very much. remy cointreau ceo's eric vallat says inflation is a fact and he thinks it will remain for the coming year. the french distiller discussed inflation supply chains plus the company's very positive outlook and exclusive interview with bloomberg's tom mackenzie. eric: inflation is a fact. we see it happening on all dry goods, even neutral alcohol is plateauing today. it has been increasing a lot as well. it is not new. demand is potentially stronger than the offer. we have seen policy increases starting earlier than this. now we see it is a fact. i think it will last for the coming year for sure. i am not a macro economist so it
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is difficult to project myself, but we see strong inflation currently. it is not an impact for this year as we have secured a lot of our contracts for the year. it will impact us next year for sure. it will have an impact but at the same time when you're on the high end -- there are things we can do. it is a reality. tom: we saw the margins increased to 33%. does that tell us you are passing the cost on to the consumer? are you passing all the input costs on? can you preserve your margins? eric: we do not work out pricing directly link to inflation. pricing is the impact of everything we do. we have the price positioning platform which is not solely related to inflation, but the price increases we have planned
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this year have helped us compensate inflation. for sure it has helped us compensate and is driven by many more factors than purely inflation. now with the growth of the margin it is driving mostly from the growth of our sales and control of our overhead. we've been spending more on communication. it is not solely a gross margin inflation related issue, it is also the context of the strong increase of our turnover. tom: the importance of cost control. what about supply chains? are you seeing any evidence they are starting to ease? how long you think supply chain constraints will be with you? eric: easing in a sense it is probably easier than last summer. channels were empty so we have to start again.
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it is not particularly easy from a macro perspective we see it lasting as well until 2023. it has a huge impact on logistics. the cost of logistics is not so big as the scale of our gross margins or so impactful, even though in relative value is a sharp increase. the ability ought to remain high but for us the impact is more on the time it takes to ship the goods. we see our sales related to the shipments, and i would say this is not critical today. guy: remy cointreau ceo eric vallat speaking to tom mackenzie. the stock is up. you read the analyst reports this morning. they did not get much better than this. the analyst community loves what it got from remy.
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the outlook is positive. joining us to talk about this is duncan fox with bloomberg intelligence. duncan: excellent numbers. they had kept guidance a bit low. clearly it is working because very strong and the price is excellent. guy: is it stable? duncan: it should be. it will not be as fantastic as it has because coming into stronger comparables into the staff this year on. what they're trying to do is trade the price curves. it would certainly do volume growth 2% or 3%, which is what they were trying to do before. provided they could keep costs other control they're doing a very good job of that bar increased advertising, they will still get great numbers. guy: in terms of what is selling
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where, there were making the point that four is doing business, aside from that what is working? duncan: pretty much everything. cognac is doing exceptionally well in china and the u.s., and those are the key markets. quanto is getting a benefit from cocktails becoming the fashion. it is the made spirit that goes into things like cosmopolitans. it just has its marketing right and is talking is in divine cocktails. guy: i'm not sure cocktails ever went out of fashion. is there read across into other businesses? duncan: i think you've already seen the numbers in the last month. we seem to be going towards spirits.
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they are basically buying better quality alcohol, probably consuming last. volume up overall for alcohol consumption does seem to be rising, basically paying to enjoy ourselves. guy: there is maybe a reason behind that. thank you very much. duncan fox on remy's numbers. inflation taking some of the joy out of this year's thanksgiving. we will talk about the hit to the traditional turkey dinner. this is bloomberg. ♪
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max: time for the bloomberg business flash, look at some of the biggest business stories in the news. the european central bank is considering -- bloomberg has learned the supervisory board has discussed capping newly originated leveraged loans at a certain share of individual bank balance sheets. that could be a blow up in the market. a warning for silicon valley from the u.k. top data watchdog. the information's commission offices says google and others working to rein in intrusive advertising technique must end all tracking practices. the ipo's executive director said many of the new proposals are privacy positive but says they do not think some fundamental issue. china appears to have it exacted an apology by jp morgan ceo jamie dimon a day after jamie dimon said the bank would
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outlast china's communist party, he said he regretted making the remark and said he should not have made it. china's foreign ministry said it noted jamie dimon's sincere retraction. that is your bloomberg business flash. guy: it is thanksgiving in the united states. the impact of rising inflation on the turkey dinner has dampened the mood a little. ed ludlow normally in san francisco, he is with us today and has all of the data. ed: turkey is the hearts of the discussion around global inflation and supply chain. the meal will cost americans 14% more. turkey inflation we are looking at 20% to 24% depending on the size of the turkey. this is a perfect supply chain story. labor shortages down.
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agriculture has been heard by the weather, the brain that feeds the turkeys, the natural gas prices in europe, and a big knock on effect. consumer demand is so robust. guy: consumers are willing to suck it up. we have not had a proper thanksgiving for a while. as a result it will be more expensive but you will still do it. ed: there is a tolerance limit and there a lot of folks on food prices. we have a chart that shows food price inflation in europe versus united states. in europe it is quite muted but in the united states it is high, led by food, meat in particular. we had tomorrow sounding a warning saying if you look at cpi food is a big contributor, and a column saying food inflation could be the 2022 crisis. we think about pricing
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constraints and whether they will fix themselves, that is the read across into food inflation. we will want that coming down. guy: every cost to food inflation seems to be going up. all of these are coming together to see high food costs. we have la niña next year. ed: china reacting to that. guy: a whole range of factors. my next question is all of this going to affect our food? we are not having thanksgiving today. we have to wait until the next one. ed: food prices have been rising double digits for months. retail has not been afraid to pass on that cost to consumers. think about holiday spending season which is largely gifts. i smile because i will not be buying any toys this holiday season. retailers like walmart have resisted the urge to pass on the cost to consumer.
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wall street and investors in london and europe are not happy about that. as a demand is a robust consumers can stomach that can pass on the cost. it is an interesting dynamic. this runaway inflation could take the hit. guy: looks like it will be an expensive christmas over here. ed ludlow on the cost of increasingly expensive turkey. if we look at the markets and figure out where we are, you have light volume in europe. it is usually a fairly -- the u.s. is out. stoxx 600 481. the euro is stabilizing a little bit. 1.12. travel and leisure down. the last couple of hours the travel area has, after this morning. it is the leisure side of the travel and leisure sector that is under pressure, particularly evolution. the swedish gaming company had a conference call earlier on i did
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not satisfied concerns of investors and as result of which that stock has tanked. the sector as a result is also down 1.25%. the airline stocks are stranded comeback. ryanair of 1.2%. there's evolution down 15%. we are seeing rising food prices and certainly seeing rising the per prices, particularly higher liquor prices. remy cointreau up 11.3%. apparently cocktails are back in fashion. it is a good note to end on. this is bloomberg. ♪
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>> from the financial centers of the world, this is "bloomberg markets," with alix steel and
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guy johnson. guy: thursday the 25th of november. it is tonight like a.m. in new york, which is celebrating thanksgiving today. that is where alix steel is. hope she is enjoying herself. she's done a lot of baking, i know, to get ready for all of this. let's talk about the headlines you need to know about. the eu recommending a nine-month limit for vaccine passports. france pushing boosters for all of those over 18. the ema also approving pfizer shots for those as young as five. remi rising to a record sales of luxury. the company flagging a veritable craze of cointreau in the united states. parent a that has to do with every buddy winning to drink
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cocktails. and goldman sachs' chief economist jan hatzius says the fed will taper much faster than forecast, doubling the pace of the reduction to $30 billion a month with a rate hike coming in june. 3:00 p.m. in london, 10:00 a.m. in new york. i'm guy johnson. this is "bloomberg markets." the u.s. is out for thanksgiving, as a result of which, we are seeing a bit of a week session like volume. 481.61, european stocks gaining a little bit of traction, although we have been around for 90 recently -- around 490 recently. we are starting maybe to get a little bit traction. the united states out of the picture. euro-dollar, $1.1216. travel and leisure under pressure today. that is the weakest performing sector. it's got less to do with the travel and more to do with the leisure side. the overarching story around all
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this is what is happening with covid. europe once again becoming the epicenter of the pandemic. germany passing 100,000 coronavirus deaths with new infections still rising. hospitals and some cities becoming overwhelmed. countries have been adding new measures to face down this fourth wave. germany is considering vaccine mandates and we have learned the eu is set to recommend a nine-month limit for covid vaccine validity for travel. >> we advise the coordinated approach on movement during dependent. this needs to take into account this volatile situation. >> we propose a standard validity period of nine months for the first full vaccination. tom: that was the justice commissioner speaking -- guy: that was the justice commissioner speaking earlier now. we are joined by bloomberg's john follain.
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i'm assuming that this is a recognition that we are seeing waning immunity, and as a result of which, they need to encourage booster shots. john: yes, they want to encourage the boosters, but also harmonize what is currently a patchwork of measures we are seeing across the eu. some countries going for more restrictions, lockdowns, masks, all sorts of different things, and that is also playing into the whole travel sector. so basically, these are proposals from the european commission, the eu's executive arm. they have to go to the european council and make recommendations for member states. there is no guarantee that everybody will fall into line and adopt the same measures. guy: how would you rate the chances of success here? john: there have been several countries which have been urging
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harmonization, but some countries want them on their own terms. i think it is probably easier to agree on travel into the eu, so we've had a set of proposals on that which are roughly similar to the ones in size. it is interesting is they are shifting the focus. before it was based on countries with high infection rates. now they want to go more based on individuals because the number of vaccinations have gone up, so they are looking more at whether somebody has been vaccinated or not, and it is interesting that there are no specific time frames for the boosters because so far, different countries are seeing different things. the commissioner you just heard, but he recommended was that we should have booster shots as soon as possible after the first six months of the first vaccination period. guy: we will leave it there.
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thank you very much, indeed. bloomberg's john follain updating us on the line being taken by the european commission. the overarching story is that we are seeing case counts climbing relatively quickly and europe. hospitalizations are rising as a result at an alarming level. we are seeing a patchwork of new measures being incorporated across the continent. we are joined by bnp paribas' chief market strategist, daniel morris. the question i keep asking everybody is do we have our arms around getting an understanding of what economic impact all of this is going to have? daniel: the one thing we should be able to say with some certainty is that it will be less than last year, and surely we are in a much different sickle relation -- for and situation thanks to the vaccine. the countries in europe are trying to do whatever they can to avoid lockdowns. we have had some exceptions, and this could change if the
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situation deteriorates, but number one, certainly countries want to avoid that. number two, they are going to want to nonetheless memorize the economic impact by trying to maximize the benefits on the health care side, but without question on the margin, this is a negative that is going to weigh on the markets. i think you have seen that already in terms of the relative performance between europe and the u.s. in a time with real rates rising in the u.s. and growth stocks consequently underperforming. he would spec to see europe outperform, and you haven't. i think one explanation for that is simply markets now focusing on the near-term hit to growth because of the rising level of restrictions. guy: in terms of how long this is going to last, markets have been very quick in the past two price in the recovery. as soon as we got the pfizer news, we were off to the races. it seems like a long time ago, but in reality, it wasn't. you think the market, do you
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think investors are going to say we have a bad wave, we knew it was going to be quite a difficult story, but we probably know that that is going to fade, and as a result of which, going into next year, we are going to likely still pickup that very strong woman coming europe? -- strong momentum in europe? when do investors look through and price the more benign positive environment in that we will get next year? daniel: i think the smart money will be looking at it already. he mentioned the sector that is down the most already is travel and leisure. it certainly could continue come about the same time, as you have already seen with the u.s., demand for travel certainly is there. i think the position would be wait and see if there is a further selloff and then try to take advantage of what unfortunately is a new opportunity to perhaps go back into those sectors that suffer
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because of lockdowns, but then we see as they ease or you get some good vaccine news, they bounce back quite quickly, so i think it is a bit of latency, but given the patterns since we have been through this a few times, we know there's going to be an opportunity ahead. guy: the impact of all of this has probably been felt most clearly with rising real rates in the states, the dollar rising. the euro has come under a consider what amount of pressure. do you think that gets sustained? because the performance impact has been massive. if i am a u.s. dollar investor, i have made 22%, 23% and the nasdaq this year. if i'm a euro investor, i've made 33%, 34% in the nasdaq this year. do you think the weak euro is going to be sustained? daniel: as you point out, what has happened over the last six months may well be what different -- may well be quite
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different to what happens in the next six. i think the recent outperformance has been on one hand -- remember several weeks ago, we had rate expectations in the euro zone jump significantly and markets were suddenly pricing and hikes from the ecb next year which i thought was rather misplaced in the ecb, and you have seen those expeditions fall. in contrast, you have much less pushback from the fed, and if anything, exploitation is continuing to rise, so that differential is certainly behind the strength we have seen in the dollar. how much further that can continue from here, probably a bit more skeptical. markets are already pricing in three rate hikes from the fed next year, and we certainly wouldn't dissipate more than that. if anything at this point, it might be more explication from policy tightening would will cover in the euro zone. so from here, certainly not so bullish as the dollar -- bullish on the dollar as we would have been prior to this. guy: daniel, stick around.
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we will talk more about the fed. he fed minutes yesterday really showed even three weeks ago that officials were open to the idea of tapering at a faster rate. where are we in that process? is it reaching a conclusion? certainly, goldman sachs' j -- goldman sachs' jan hatzius believes we will get a faster taper. we will talk more about that next. this is bloomberg. ♪
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♪ >> let's check in on the bloomberg first word news. i'm max ramsey. british prime minister boris
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johnson has lashed out at france after a deadly boat accident in the english channel. 27 people died when a boat filled with migrants sank. johnson accused france of not doing enough to stop migrants trying to get to the u.k. from northern france. more than 25,000 people arrived in the u.k. this year, about three times as many as in 2020. in seven california, high winds have led to the region's largest utility to cut power to more customers because of the threat of wildfires. edison international cut power to 32,000 homes and businesses. almost 220 thousand customers could lose service around los angeles and san diego. the last few years, a series of deadly wildfires are by power companies' equipment. china has slammed the u.s. decision to add in number of companies to a trade blacklist. that he had violates the understanding between the two leaders. the u.s. commerce department added about a dozen chinese firms to the blacklist for what was called engaging in
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activities contrary to national security or foreign policy interests. 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 max ramsey. this is bloomberg. guy: thanks very much, indeed. the latest minutes from the fomc show officials were open even three weeks ago to removing policy support at a faster pace to keep u.s. inflation in check. since then, the data is superstrong, particularly the pce data we saw yesterday. still with us, daniel morris, bnp paribas chief market strategist. using this is already in the price -- do you think this is already in the price? the market has been bringing forward the data of the first rate hike from the fed quite aggressively. i thing we've now got a 30% chance of a march hike priced in. does that seem reasonable to you? daniel: that is certainly not our call. we are looking for something
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more for june and then in september, but what the fed, we are waiting to see what happens with inflation. there is just so much uncertainty around how inflation is going to evolve from here, what is going to be the reaction in terms of wages, and that is going to determine what the fed's reaction ultimately is. we had the dot plot in september, the white dispersion from the fomc themselves about what policy rates were going to be like in the future, and that rick likes the fact that, as with so many things over the last 15 years, a lot of this is uncharted territory, and we really don't know how inflation is going to evolve. guy: do you think the focus is now inflation? i listened to the comments from fed chair jay powell when we got the renomination news, also from potentially lael brainard coming in as fed deputy. the sense seems to be that inflation rather than the labor market is now the focus. the labor market data yesterday,
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the claims number, a level we haven't seen since 1969. are we nearly at the point where we can say the labor market has healed? daniel: the fed may need to say that because if they suggest that it hasn't, given how high inflation is, it would suggest we wait even longer, and that is not something that would please the markets. at the current rate of job creation, we should be back to the level of civilian employment that we had prior to the pandemic in about six months. it has been a quite quick pace of job recovery, even though there has been a lot of frustration about the number of jobs that seem to be unfilled. there's been a huge recovery, especially when you take into account how massive the collapse was during the lockdowns. so we do think that is actually progressing quite well. we think we are on track to get back to a level that the fed has had, and given the lags that monetary policy operates with, it makes sense that they have
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already begun to begin tapering in december. so at this point we don't necessarily see that is the key issue. it really just comes down to whether they feel they need to accelerate the taper. guy: if we bring forward the taper, if we accelerate the taper and we have earlier rate hikes, does that mean the terminal rate is going to be? ? likely lower or are we -- going to be likely lower? or are we finding ourselves in a situation where we don't know how far the rates are going to push higher in order to check inflation. where you sit on the right cycle and how far we need to go? daniel: in a sense, you have already seen that over the last several weeks as we have gone towards these three hikes next year. we have seen that the terminal rate, if anything, has come down. i think that does reflect a view that the market is anticipating that the fed will react to bring down inflation, so that is going to lower the level of policy rates that you need in the future, in addition to the effect that is going to have on
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growth, so already that dynamic seems to be there. i think what is going to be crucial is what happens in december. on one hand, since we have the markets already at three hikes, if we get a couple more hikes on the dot plot in december, on one hand that really shouldn't be a surprise, but that is exact what happened last june. the fed really just got to where the market was, but it was still considered a hawkish meeting, so it is that type of uncertainty. we know what the market expects for rates, but that is somewhat different and what we think the fed is going to say about its own expectations for rates. it is as much that dynamic now that is going to drive the market reaction post the meeting. guy: thank you very much for your time today. daniel morris, bnp paribas chief market strategist. coming up, we will hear from the bundesbank vice president on the financial stability review. there is concern about what is happening in the credit markets. don't miss that interview. it is coming up next. this is bloomberg.
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guy: live from london, i'm guy johnson. this is "bloomberg markets." happy thanksgiving. germany's bundesbank has warned that a remarkably low number of bills in us -- of business failures during the covid-19 pendant should not be seen as a guide for future risks. we caught up with the central bank's vice president about its latest financial stability review and the inflationary risks that exist around it. claudia: what is pretty clear in all of our forecasts is that there is a strong temporary component. nobody knows how long the temporary effect will be and what is the long-term evolution of inflation. certainly there's higher upside risks and that is something that monetary policy has to take care of, so that is not the issue we are discussing in this report. but what we are saying is that
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obviously, monetary policy needs to act, but also we have to make sure that the financial sector can deal with future contingencies, and one of the things is an increase in inflation that is higher interest rates, and if this increase comes, this is something the financial sector can deal with. if the increased rate comes more abruptly, we have some weaknesses in several parts of the financial sector, and that potential abrupt increase in interest rates certainly can also be a market increase, so risk premia can change. this is something we are very much aware of and we are making sure that the financial sector, everybody manages interest-rate risks very well. maria: i imagine that is so hard at this point because there is this debate of whether this is one-off or permanent. just from a policy
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perspective, how are you able to prep for both scenarios? because it does seem the debate is not settled. claudia: it is hard for everybody to attach probabilities to one scenario. if you can't exactly attach probabilities, that is a situation where you have a lot of uncertainty. from a regulatory perspective, from a financial stability perspective, what are the measures you take if there's a lot of uncertainty? you need higher buffers in the system tubes or potential losses. this is why we are saying this is the time now to take precautionary measures to increase the capital buffer that can fluctuate over the cycle, and that is the measure you have to take in order to protect defendant will system against whatever the future contingencies will be. maria: of course, we are here with the german central bank. president is going to leave. there is so much discussion of what it will mean for change of
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the central bank. i wonder, what message do you want to send about the face instant -- the faith in the institution, even if the names change? claudia: obviously, i don't comment on these decisions. i think we are in the good hands of the politicians. i think what is really important is that we have a very stability oriented culture, so the bundesbank has an extremely important role in making sure that prices are stable. we also have a very important mandate when it comes to financial stability, so financial stability is really the backbone for price stability and for all of the other policies to work as intended. maria: and that means, and this is always the image, the number one focus is inflation. this is, for you, what is really your core mission and where all
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of the efforts go to maintain that price stability. claudia: take the example of climate policy. for all of the climate policies to work, we need stable prices because in the end, what is climate policy? to change relative prices and try to steer the economy towards a greener production of goods and services. so for that to happen, we need stable prices, so this is why it is always important, but even more important these days. maria: so whoever gets it, that is still very much the message at the german central bank, is price stability should be front and center. claudia: absolutely. guy: a quick check on where we are in the markets. the u.s. is closed. it is thanksgiving. as a result of which, we are seeing like volumes. stoxx 600 up by around 0.4%. we have retaken 480. a little bit of strength coming
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back into euro-dollar as well. some very positive data coming out of the united states yesterday. nevertheless, it increasingly seems this idea of a faster taper from the fed's price. we are up by 0.1%. travel and leisure is the weakest performing sector. it is the leisure rather than a travel that seems to be causing the problems right now. individual stocks, ryanair is trading higher. evolution is doing the damage, the gaming business having a call earlier on to try to do with some of their fears. that is not having much of an impact. the thanksgiving parade underway , the macy's parade in new york. a giant pikachu i thought earlier. maybe yoda as well -- baby yoda as well. as well.
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guy: live from london, i'm guy johnson. this is "bloomberg markets."
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nearly two months of negotiations have resulted in olaf scholz being able to seal a coalition deal. he will become the next german chancellor. this is europe's largest economy faces a surging covert outbreak. at a press conference to announce the deal yesterday, he vowed to position germany as a climate leader and steer it through the pandemic. that's go to berlin now. our german government reporter joining us now. that was yesterday's story. when do we start to get the true size of the new coalition revealed? who is going to be in some of the key ministries that have not been announced thus far? how long will this process take? birgit: we are waiting today for the green announcement of who is going to be in this. i think we already have a fair idea of who will be. the green party co-chair is
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pegged to become the foreign minister. the other part is they are holding out after the party convention has approved the coalition agreement. i think they did not want to give the impression that it is all about posts. guy: do we understand yet he was going to be handling the health story? this new coalition is facing a very difficult winter and spring. who is going to be in charge of that process? birgit: the spd you -- the spd is going to be in charge, and they are and they were a very strict regulation. we are on the forefront of
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lockdown calls of any kind of mandatory vaccination, but it is not clear because he is also a bit of a rebel and his party, and we know that scholz is not exactly keen on having such a rebel in the list of ministers. so we have to wait and see. in the end, it is not the minister who is going to determine the course of this government on corona. it will be to coalition that will be set up, the crisis corona cabinet meeting of the chiefs, and they will determine the course. tom: -- guy: thank you very much for the update. birgit jennen joining us from berlin. decembers german consumer confidence report released earlier this morning, coming in at negative one point 6% versus an estimated -1%. consumers in germany concerned about what is happening with the covid numbers. they are also concerned about
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the inflation numbers that they are seeing at the grocery, at the gas tank. there are plenty of reasons to be concerned. the bundesbank believes we could see german inflation spiking up to around 6%. this talk about how the markets should think about all of this in terms of the economic recovery that germany and the eurozone have been experiencing. and lately, he tore a -- ben laidler, etoro global market strategist, joining us now. how do you think about this from a market point of view? ben: i think markets are pretty resilient. we are more and more resilient to it. more of us are getting vaccinated. i think you are seeing this in the numbers. we had european pmi yesterday 56. i think that is a very resilient number. i think this dampens a recovery. i'm not sure it derails the recovery. corporate's are showing us time
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and time again how resilient they are. margins, despite the cost pressures, despite the supply chain issues, despite the sort of fourth wave run right now, corporate margins, all-time high , and europe just reported six to percent profit growth for the third quarter. guy: do i favor the united states while europe is going through this? ben: probably in the very short-term, but i think the u.s. is just following on from behind her get the u.s. is seeing this huge react seller a and growth expectations. the atlanta fed says you will get something like 9% gdp growth in the fourth quarter from 2% last quarter, so that is the upside surprise, but i think cases arising in the u.s. and they will continue to do so over the winter. that will dampen it a little bit. i think the impact is going to be travel stocks, reopening stocks that are going to
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struggle here. but i think the broader market is going to be fine. corporates, consumers have really shown how resilient they can be. guy: do you think the fourth round of covid could be inflationary? we have seen the supply chain issues. some of that is down to other factors, but some of it is down to the grit that covid has put in the gears of the global economy. ben: i actually think inflation expectations have been very well behaved. they are not too far from central-bank targets right now, and some elements with supply chain, we have a supply chain pain index which is up to hundred percent this year, but well off its peak -- up to hundred percent this year, but well off its peak. i think the inflation genie is a little but out of the bottle, and what you're seeing now is the more concerning, stickier
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inflation components, housing, wages, really beginning to move, and it is going to take a slowing economy and higher interest rates to record that bottle, and a fourth wave of covid is absently not going to help. guy: let me take you back to that data you are referencing a moment to go in terms of where we stand in this process of supply chains and the problems they are causing. are we seeing it easing globally? is it just easing in the united states? i can certainly see evidence of that. i am wondering whether it is easing in europe, too. ben: i think it is global. we are looking at prices which are global, global container rates, european natural gas prices. so it is easing, but we are still up 200% this year, so i guess the broader point is it is not getting worse. i don't think anyone is celebrate at this point. the cost pressures are still there. the point would just be supply
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chains are gradually adjusting, and i would expect that to only continue from here. guy: great to catch up. thanks for your time today. really appreciate it. ben laidler, etoro global market strategist. the latest victims of rapid rising gas prices we have seen over recent months. we will dig into that story next. this is bloomberg. ♪
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♪ max: let's check in on the bloomberg first word news. the european union's drug regulator has cleared the use of the father biontech covid vaccine for five to allete -- the pfizer/biontech covid vaccine for five to 11-year-olds. a final decision on the vaccine is up to the european commission. in germany, the number of deaths from coronavirus has now gone over 100,000. the country past the grim milestone at a time when the latest wave of the pandemic has led to a record pace of infections. battling the virus will dominate the early stages of germany's new government. in brazil, consumer prices rose faster than expected in mid-november. annual inflation rose to more than 10.7% despite the central bank's aggressive interest rate increases. it is the world's biggest tightening cycle. global news 24 hours a day, on
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air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm max ramsey. this is bloomberg. guy: thanks, max. let's turn our attention to what is happening with the global supply chain crisis. nl's ceo says the drag -- enel's ceo says the drag on supply chains is likely to resolve by the middle of 2022. he spoke to bloomberg's francine lacqua and tom mackenzie. >> there is attention on raw materials. there is attention on congestion on ports. the logistics are entangled. so there's clearly an inflationary trend. this is not the first time in this business, we have in the solar business in particular, have faced this phenomenon. typically it is resolved in about 12 months. i think this will probably drag until mid 2022, but after that
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we don't expect any more tensions, and technology actually is working the other way around, so it is pushing down costs and making these technologies more and more efficient, and we see this trend to continue probably in the next 10 years. so it is a blip. it is not the reversing of a trend. what does this mean? probably there's going to be people suffering in this predicament for the next 12 months, but large companies like us will just push it. >> give us a sense of your expansion plan, how much of that is organic and how much is it you actually going out there doing m&a, and how much do you have to spend on that. >> this money that was set aside is all organic growth, so it is basically networks, roughly put 5%, and another 45% renewables, and the rest is a little bit on
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other technologies. so most of that is organic. we will have some m&a, particularly acquisitions during the period, but we are toppling about, when i say midsize, i mean in the range of $5 billion, $10 billion, no more. guy: the enel ceo talking a little earlier on. the u.k. and other energy suppliers collapsing today into administration. they have become the latest victims of the rapid rise in gas prices we have seen over recent months. joining us now is bloomberg energy reporter rachel morrison. it is turning into a very long list. how many more companies will we see fail? how close to the end of this are we? rachel: it seems to be one or two every week, and it is easy
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to think is another small one, but it is 23. they are really starting to rack up. we have some energy bosses suggesting that by april, they expect there to only be five or six of the very largest and most well-capitalized companies left, so there should still be more to come if they are correct, and even still, the governments are suggesting that there will be more failures. tom: -- guy: let's assume that there are more failures. how are the going to handle that? we saw it for one of the largest companies in the market. will the government also support some of the other companies as well? rachel: yes, bold what -- yes, bulb was deemed too big to fail, and that is why they went into the special administer ration
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process. that got underway yesterday by order of a judge. the size is really the reason why the government has stepped in to enact that special process. the smaller companies will still go through the same process where their customers are handed to another company to supply them. it was thought that the 1.7 million customers would just be too difficult for a company to absorb, would create too much chaos, and it was safer for market stability for the government to step in. it is unprecedented, and from some of the argument yesterday, it looks like when getting -- we can expect the government to be involved until possibly april of next year, at which point they hope that the market will have calmed down, market will have gone down a bit, and it will be easier for another supplier to take on the customers, but the government is going to have to put up 1.7 billion pounds in working capital to enable this to happen. there was an urgent question in
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parliament yesterday, and the business secretary is still saying all of the tools are working, but some of the mps, some of the lawmakers are finding it more difficult to believe that everything is ok. guy: just one final quick question. if we end up with just five or six suppliers in the u.k., is that going to be a competitive market? or are we going to have to see a wholesale rewriting of the rules in the way that demand and supply is balanced? rachel: we used to have only a handful of companies, and the push for competition and to open up the market which created all of these smaller suppliers was because people thought that a small number of large companies could take advantage and all work together to give consumers a bad deal, so it really shows that that experiment into liberalization has totally failed, and we are just back where we started, so calls are
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starting to mount for a total overhaul of the retail market, and it is trying to get that balance of making sure that good companies come into the market and behave responsively, but also not making it so difficult that only the very biggest can do it. guy: a fine balancing act. rachel, thank you very much, indeed. coming up, inflation is taking some of the joy out of this year's thanksgiving. we are going to calculate the hit to the traditional turkey dinner and find out how much americans are spending as they go online this thanksgiving. this is bloomberg. ♪ ♪
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max: it is time for the bloomberg business flash a look at some of the biggest business stories in the new right now -- in the news right now. i'm max ramsey. a warning for silicon valley from the u.k.'s tech
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watchdog. they say they must end all tracking practices. executive director says many of the new proposals are privacy positive, but says they don't fix some fundamental issues. a new government review has a warning for english soccer. it says there will be financial chaos unless money filters down from the premier league or evenly to teams in the lower levels. a report says the sport is at a crossroads despite the wealth and the premier league. english teams have ended up in administration 63 times in the last decade. the slump in disney's cable tv business is getting worse. basis is drivers -- they say subscribers tumbled in the last year. its flagship espn sports network fell from 84 million subscribers to 76 million. china appears to have accepted an apology by jp morgan ceo
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jamie dimon. a day after diamond -- jamie dimon i day after he joked that jp morgan without last china's communist party. he says he regretted making the mark and should not have make it -- the remark and should not have made it. they said it was the right attitude. jp morgan has almost $20 billion of exposure in china. they european central bank is considering whether to put limits on the riskiest parts of banks lending to indebted companies. bloomberg has learned the ecb supervisory board has discussed capping newly originated leveraged loans at a certain share of ended -- of individual banks' balance sheets. that is your bloomberg business flash. guy: great stuff. thank you very much, indeed. it is thanksgiving in the united states, but the impact of rising inflation on americans' turkey dinner may take the edge off a bit. we will talk about that was ed
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ludlow, who joins me now onset. jan hatzius published a note to little earlier on i goldman sachs talking about the need for a faster taper. he's talking about may be seeing a doubling of the current pace that is expected. as jay powell sits down for his thanksgiving dinner, he is going to be looking at that. maybe the president will be thinking the same thing as well. ed: it will cost 13% more for their thanksgiving meal, 20% to 24% more for the turkey. it was interesting to see in the fed minutes then specifically cite food twice. it has been a concern for weeks that higher food prices, food inflation is a really serious input specifically to cpi. tomorrow sounded this warning that it is really contributory, but it is not new. we spoke to a bank of america
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analyst who summed it pretty perfect a. have a listen -- perfectly. have a listen. >> really since the beginning of the year -- since the middle of the year, you have seen food producers raising prices, and having to come back with multiple rounds of price increases. ed: the funny part of the equation, consumers are willing to spend, and it is hard to see that changing. guy: i think it is hard to see that changing right now. if you haven't been able to gather with your family, it was a much more pared down thanksgiving. we have been showing pitchers of the macy's parade in new york. that did not happen last year in the same way as this year. america wants a thanksgiving, and it is prepared to pay up for it. but after thanksgiving, these prices are still going to be there, and they are going to be sticky, and food price place and is really progressive. ed: in -- really regressive. ed: we have seen food price inflation in europe temper, grow
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at a slower rate than the united states. it is hard to understand why because they've had the same can supply chain constraints. at the end of the day, this is a tight labor market, growing wages, energy. guy: all of the things we have been talking about. ed: the difference in europe is they are dealing in a very different way in covid in a way we have not seen in the united states, which is lockdowns. guy: this year has been about the primary inputs. we have focused on the labor market. we have really focused on what has been happening in the energy markets. we have seen the gas price spike that rachel morrison was just talking about. all of that has been the narrative for this year. food prices have been kind of in the background, but are now starting to really come through, so while 2021 might have been about physical inflation, physical goods inflation, now we will see food price inflation taking over, but from a consumer point of view, that is a much bigger factor. so if the president think he's
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got a problem now with inflation , gas prices are up, so that is a big problem. wait until you've got gas prices up and food up. ed: in his speeches over the course of the last 10 days, he positioned the info structure bill as deflationary. guy: i think that is a stretch. ed: exactly. guy: it may be down the road, and i understand the argument around making america more progressive, but not now. ed: and the fears of a dovish fed when we had dr. lael brainard saying i will deal with inflation. it is the focus. guy: it is nice to see you here. you are missing out on your thanksgiving dinner over in san francisco. ed ludlow, thank you very much, indeed. we will be counting you down to the close in europe. that is next. this is bloomberg. ♪
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guy: thursday the 25th of november. european stocks are higher, but led by defensive sectors like food and beverage and utilities.
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we will talk more about why. the countdown to the close starts right now. >> the countdown is on in europe. this is "bloomberg markets: european close," with guy johnson and alix steel. ♪ guy: a is off todaylix -- alix is off today, enjoying thanksgiving. like volume here in europe. our equity markets are open. they are off the earlier lows. for a 1.65 is where we are trading on the stoxx 600. europe is migrating to more defensive sectors, so utilities are trading higher today. retail is trading higher today. food and beverage is higher today.


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