tv Bloomberg Markets European Open Bloomberg December 10, 2021 3:00am-4:00am EST
from cpi, that discovered the rally we had in the last four days. we've gone to the fed. that could give us an indication what happens with interest rates. for the moment, the market grappling with better-than-expected vaccine results whilst looking at lockdowns and the impacts on the economy. european stoxx 50 futures down, similar the dax. we're just opening with equity indices opening as we speak, the ftse pretty much unchanged, a little bit of pressure on the downside. it will be interesting to see how markets settle. there is a lot on currencies because if you look at lockdowns, you could play it through currencies. for example, sterling 132.14. it's interesting the ibex is actually down .4%, so we are seeing not accelerating gains, but certainly that pressure,
markets saying i worry about the lockdowns. we're not 100% sure where the vaccines are, and the latest that omicron was transmitting 4.2 times quicker than delta. the other things and watching out for because we been talking about it all week, brent crude 7 2.05, iron ore, the huge surge currently at 108.55. it's always about u.s. futures to see where the momentum that was started in europe but continues in the s&p 500 futures, getting a touch, and, a couple of other things remember the -- written in the -- remim bi. let's get straight to the bloomberg business flash. here's angel feliciano. angel: elon musk continued selling tesla shares for a fifth straight week, coming closer to his pledge to offload 10% of his holdings. the billionaire founder sold
934,000 shares to close to $1 billion to pay for taxes of more than 2 million options, this according to regulatory filings submitted on thursday. they're crunchy, nutritious, and set to hit dinner plates and supermarket aisles. it hits -- grasshoppers have been certified as food for the european union. the bugs may not be the last to gain approval. they are weighing applications for nine other types of insects. and starbucks employees have one of two new york restaurants voted 9-8 in favor of unionization, the first union foothold on thousands of corporate run stores. the victory underscores the renewed strength of u.s. workers as they capitalize on a tight labor market to push for better pay and working conditions. and that your bloomberg business flash. francine? francine: thank you so much, angel feliciano in london. let's talk about market action.
joining us now is our markets live editor. he always demands we talk about bitcoin. thank you for coming on. first of all, it's unclear what the market is worried about today, whether the fact that omicron passes so much or whether they'e worried aboute -- they're worried about hospitalizations. >> there's so much to choose from to be worried about. i think the markets, as you say, omicron is still out there. it's still an unknown. we don't know how much this is going to affect markets. at the same time, supply chains are still disrupted. we don't know how this is going to play out. there's plenty to be worried about on that front. in the inflation debate, which we will get a lot of color on today, the inflation keeps heating up. will policymakers respond robustly? we don't know. there's a lot of unknowns. we had a good week so far this week.
i think markets are just taking stock. francine: we did have the rally, and it's always important to put that into context. one of the points you were making is that inflation features could be backwards looking since we had omicron. eddie: absolutely. i think the markets will look at this and say ok, well this is pre-omicron. now we're starting to see disruption again, places close down. how is that going to be feeling in the inflation rate? there's this argument that all of the data we get now is a bit like february of last year, where we knew there was a virus coming. we didn't know how much it was going to impact markets. at the same time, we haven't -- have had mentioned from policymakers post omicron, where they said look, inflation -- or rather, power said let's drop transitory. so, i don't think the debate has changed very much. francine: so we're going to see a lot of volatility, basically two data points away from
omicron, inflation today and next week. possibly a lot of volatility by the time we get to the fed? eddie: i think so. the market isn't struggling to pick a direction. we're sitting near record highs in the stock market. do we push on from there or do we go along at these levels? i think it's the latter because we have too much uncertainty going to the end of the year. francine: bitcoin, your favorite, it moved, knowing you were coming on. eddie: right. so bitcoin, it ties into the inflation debate. there's a lot of people who say i buy bitcoin because i'm worried about the devaluations of dollar. but it just doesn't bear out. when you see inflation heating up, you don't see bitcoin rallying. bitcoin is more in accordance with tech stocks. so if we see tighter policy and higher inflation, we are going to see lower bitcoin prices. bitcoin isn't that inflation
edge people hoped it would be. francine: my heart sank a little bit when you see cathie wood say she's doing soul-searching. do you see that impacting a lot of other funds? eddie: you know, some of the trades that have been so successful this year, there's a lot of investors that are going to say to themselves, can we keep on winning? is this going to continue forever? or is next you're going to be a little more difficult? francine: oil kind of moving sideways. eddie: oil is moving sideways and it feeds into the inflation debate. we see higher oil prices. i think opec has shown us, over the last, last meeting and someone, they've left themselves room to pump if we see strong rallies, and to take some oil off the table if we don't. so i think the market could just see a study oil price, which would at least bring some stability to the wider markets. francine:francine: eddie, thank
you so much. never adult when eddie van der walt talks about the markets. we have a wonderful block on the terminal and our website. daimler truck opening at 20 euros in frankfurt. we'll be speaking to the chief executive officer of the company. it's a good company -- conversation, unlocking value and, of course, feel. we hear from brian moynihan coming up. this is bloomberg. ♪
francine: welcome back to the open everyone, 10 minutes into the trading day and the focus is on how you deal with omicron. the focus is on inflation figures, although we had a great update by eddie van der walt, saying they will be back but they will give us a good indication on what the fed will think as we get on the fed meeting early next week. european stocks down. we have had a couple of days of rally. let's check in on some of the stocks. joining us now is bloomberg's dani burger. what do you have? dani: on a more or less soggy day, starting up with a story moving upwards, it seems like
every couple months, we get more stories about lawsuits against buyer on the roundup, the claim that it cancer. th first lost their first three cases. now they have won two in a row, the jury rejecting a claim by a woman that caused hers the civic case of cancer. but the biggest gainer today is swedish match, up nearly 6%. this is a company that makes cigarette type products. over in the u.s. last night is the democrats in congress try to hash back that build back better plan, take away the proposal of $9 billion of tax they were going to take from these companies. we are seeing a rally with the release of those tax proposals taken out of the bill. i have daimler up. you are going to see big losses in the stock. the reason for this is because
demo trucks have spun out of the companies so the stock has to readjust to no longer factor in the profit that businesses are going to have a market cap now. ip owing at 23 euros, trading -- listing, i should say. not exactly an ipo, listing at two point 5% higher. -- 2.5% higher. francine: dani burger, thank you so much. the latest has been on the mind of bank of america chief executive brian moynihan. >> we have inflation. that's actually not the debate. the average inflation of the last several quarters has higher than targets. the question is where do people think it's going to go next? that's what's on people's mind. what you're seeing is wage growth and these talented
people, what they're going to earn. that's why inflation is there. it's known that we have it. how do you spring it back in? if you think about the economy growing 5.5%, 6.5% next year, 2% in 2023? the goal is to glide into that growth rate without recession. monetary policy has to go on now. david: you have a particular viewpoint in the economy, particularly because you have a lot of small to medium-sized businesses. tell us about the effect of the supply chain on those companies and therefore, perhaps, on inflation. brian: as a bank, one of the effects we didn't like, they aren't putting up as much inventory and hiring as much people. people can forget shortages in labor now. it's not only good to manufacture them. when you talk to clients, it's messed up. it's easing forward.
it's been a problem for many months now. the beliefs that is related to virus is true, but there's also tremendous supply and demand in our economy. consumers are buying a lot of things. businesses are able to increase prices because there's only so much goods are sold. that leads to inflation. more importantly, they are starting to see a little help and starting to use their lines. it's a real concern with one of the risks in manufacturer for 2022. those things have got to straighten out and that's why you are seeing the administration bring other people to help and getting people together. it's been going on for 10 months now. david: i want to come back to the consumer question. for that, you say there's a little bit of improvement. how fast is the supply chain problem improving? do you have any sense on when we may be getting back to something approaching normal? brian: i think it's a smaller
fix, but each day is better. if you're a 10 and went on to two and now you're a three, it's an increase. do i have the stuff today and can i get it tomorrow? 's that's what starting to get better -- and that's what's starting to get better. they've learned to get some control there, import stream, for lack of a better term. it's something that's got to be reckoned with and done, and yet you're saying it slightly better. francine: does bank of america chair brian moynihan speaking with bloomberg. joining us is a chief investment officer to talk about the markets and inflation. thank you for coming on today. i don't know whether inflation for you is a little bit backward looking, and what you take about this pause in the market. is it just trend of figure out what happens with omicron? or is it pause after the rally we had? >> good morning, francine, from
snowy geneva. regarding your question on inflation, and if i focus on developed markets, i think it's mainly a u.s. and u.k. problem. we don't have a lot of inflation in other countries. and if we look at the situation in the u.s., a number are going to be released, but we expect inflation on the cpi level to be around 7%. current expectation is 6.8%. there is some reason why we are experiencing some high inflation, and its related to the supply side of the economy, disruption in the supply chain, problem in transportation, high cost of energy. if we are thinking about going forward, we think in flynn date -- inflation is going to go down in the u.s., 3% for the core cpi . and the reason behind that is mainly due to the fact that there's going to be a few taint -- few changes. people are going to move away from the goods and services.
there's also going to be some elements of, i would say, transition in the sense that the support from government is going to be a little bit less. and that's positive for us for the markets. francine: what does that mean for a possible central-bank mistake? is there misinterpretation that markets are making what we're living through right now, that could lead to central banks being something they shouldn't? stephane: i think as far as the central bank is concerned, our expectation is that market expectation, the tapering is going to accelerate and be announced next week. so we expect most of the tapering to be finished by the end of the first quarter, and we are currently expecting rate hikes, two rate hikes of 45 basis points in 2022. that's our expectation. it's quite in line with market expectation. where we differ is that we think
this cycle is going to be longer, and we do expect that, in 2023 or early 2024, the short-term rates will be more around 2.5%. and that's where we may differ from the consensus. francine: what is your prediction right now? stephane: so we have five main convictions. the first main conviction is where we are in the economic cycle. we went from easy recovery to the midcycle phrase now, and therefore, the going is going to be more difficult for risky assets. and therefore, we recommend to increase the cash book in the portfolio. the second conviction has to do with, where do we find this increase in cash? and it's mainly from high-quality government bonds or investment big -- investment grade trading. we remain overweight on equities. we have preferences for european equities, but also with a preference for value and cyclical stars.
we don't really like gold because we think that the u.s. is finally going to go up. and this is not good for gold. if you want to own commodities to protect yourself from inflation, we think industrial materials are much better. and then last but not least on the currency side, we believe in the strong dollar, especially versus the euro. francine: stephane, thank you so much. we'll come back to him. he stays with us. we'll talk more about his convictions. coming up, talking tesla is elon musk trade his stake for a fifth straight week. this is bloomberg. ♪
francine: welcome back to the open, everyone, 22 minutes into the european trading day, accelerating the losses of the dax and ftse, down between .2% and .4%. we need to understand the linkage between vaccines and omicron. in the markets had three to five days where we saw a rally. there is profit-taking ahead of u.s. inflation data and the fed next week. elon musk has carried on sharing tesla shares for fifth straight week. he also tweeted this week that he was thinking, actually this morning, that he was thinking of
quitting his job and becoming an influencer. i think that was tweeted at 6:00 a.m. london time. try to think of what is going on exactly with elon musk is our globalstar. do you have special alert every time he tweets? >> i get every tweet. it's a crowded inbox, yes. francine: i had to take a double take. a million questions. is he resigning? is this tongue-in-cheek? do regulators get this? >> i think it's pretty clear from some of his replies, he sends some lasting emojis. he is having a little fun here. had he continued doing some of the things he was doing in 2018 when he jumped tesla had gone groped when he said he was taking tesla private and the price that he used was sort of a marijuana job and it showed up in the sec lawsuit that was in part decided because he thought it would be funny and would be a
little joke that his girlfriend at the time would enjoy, if he had continued in doing that and tesla continued to struggle, the sec would not continue to allow this. i think the fact that tesla has been so successful, sort of got out of the rut it was in 2018 allowed him to be cut some slack here. francine: every time i read a tweet, i wish i thought of that. , maybe some love-hatred. that's all we have time for but we will get you back. let's get back to stephane. we're just checking around, joking, but also a new story. he goes to technology stocks that may be overvalued. i don't know how you play technology right now, whether there's still money to be made. stephane: so, first, technology
is a very good sector for the long run. maybe we are more defensive on technology currency. we prefer value and cyclical stocks at this venture. but when we talk about technology, you have to differentiate different sectors. the software sector is the one where we are more positive in the sense that it is going to continue. the cloud is an important element and cybersecurity is also very important. we are more hesitant on the harbor side of things, which may be the hardware for the cloud. in terms of semiconductors, it's been very much affected by the situation on the supply chain. i think the situation will stay complicated until the end of 2022 for that sector. francine: de have any exposure through bitcoin or anything like that? it's risky, but declines ask about it?
stephane: you are right, francine. it's very risky, actually. right now, the volatility of bitcoin is about 80%. if you want to include this in your allocation, it means that you will have to expect a return of roughly 40% to achieve a 0.5 information ratio, which is quite unusual for an asset class. for the current level of 40 something -- $40,000 or something, you will need to go to $1.5 million in 2031 on bitcoin. if you have this belief, you can invest in bitcoin. we think that bitcoin is going to be very affected by volatility as long as that's not very user-friendly. this is not the case right now. and probably many governments would prevent this from becoming a widespread payment. that's the reason why we are not
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francine: welcome back to the open, everyone, 30 minutes into the drawing day. here are your top stories. the risk rally takes a pause. omicron concerns rattle global markets. down the trucks is the biggest maker of commercial vehicles. we will be speaking to the chief executive shortly. delivering for christmas, we're live from the automated warehouse for the latest on the supply chain krach. good morning, everyone. happy friday. it's been a long week and it's going to be a longer afternoon, cpi data out of the u.s. overall, the picture is on a lot
of questions about omicron. equity markets are declining in europe, u.s. contracts changed. we did have a rally among discretionary rally. a couple of things we need to watch of four. first of all, in the chinese markets, not only in europe but the u.s. they officially defaulted on dollar debt. watch out for, i don't know whether it's a systemic, but any fallout elsewhere. the other thing we need to watch out for is investors amid the omicron strain, whether it would crimp the economic outlook. i don't know whether we have sectors on the move, but it would be a good idea to show them what's on the move. basically, real estate underweight, the only sectors getting a touch. now, after more than a century, a private company that makes
mercedes-benz cars, danlar started sharing earlier this hour -- daimler started sharing earlier this hour. they're suffering from a shortage of converter chips -- computer chips. joining us now is daimler trucks chief executive. thank you so much for joining us. a lot of challenges but a lot of opportunities for down the trucks. congratulations on your listing today. what will be your biggest challenge over the next two years? >> first of all, certainly today is a great day, the company going 100 years parallel in a very good way and being, having the first trading day is like having the first day of a marathon. but we are in the other race. we are in the race of ending the year, starting 2022 where we have a monster demand from the markets, but have to establish
shortages in the supply industry, and certainly the transformation to zero emissions in the next 10-15 years ahead of us. francine: so, talk to me a bit about the challenges ahead in terms of what the share price will do. everything will depend on whether you are able to deliver financials. what makes you confident that you will be able to deliver these efforts with a lot more success than has been had in the last 10 years? martin: i mean first of all, we are a rocksolid company still. and we have a lot of outlook potential. on the base, we thought it's not a restructuring case. it's about solid case. we started about two years ago with a lot of ais. we see that the first results already here in 2021 with a lot of upside potential for the years to come. and having all the capital market days in november, i think
the markets share that confidence that we are able to deliver what we announced. and we do that with unparalleled transparency in the future, so everything is fine in that area. francine: what are the main milestones to reduce your dependence on the markets? martin: can you repeat the question? difficult with the audio. francine: i was asking, how do you reduce dependence in north america? what are the team milestones you are expecting their? martin: number one is the european business to their brand , which is one of the most distinguished brands. they can deliver, 2019 kind of a low point since then. big strides forward and we will continue that. i am sure that soon, mercedes-benz will be at a similar level in north america,
and then we have two very strong bases, and then the rest is our international business. francine: deal expect consolidation in the industry, given the transformation with the fuel-cell trucks, but also battery-powered trucks? martin: no, i see the industry is pretty much already consolidated. we are basically four global groups, daimler by far the largest one. i'm very confident we'll see those competitors on the conventional powertrain, as well on the battery electric. francine: when are you expecting their first fully autonomous daimler truck on the road? martin: good question. stay tuned. we are pretty much jazzed up. somewhere by the middle of this decade. the big question is when we have them on the road. we have engineers sitting nearby
and watching. we are driving pretty big miles in the southern states of the united states already. francine: can you give us a little bit of color on this historic spinoff? who came up with this idea? how did it pan out? martin: basically a 20 year journey. we realized over and over that luxurious passenger cars are very common in the way how you market those products. we had sales dedication at the beginning of the decade. about four years ago, we started to split, legally, the companies , which was quite an undertaking because we were going 100 years in one single company. there are a lot of things needed , which had to be resolved. and then about a year ago, we had the idea in february, our
supervisor got the green light and the marathon started in february today after nearly 10 months of intense work of hundreds of people to make everything possible and happening. francine: thank you so much, martin, the chief exam peter -- chief executive of down the truck. -- daimler truck. he was hearing with the two branches and helps rebuild this country. you can send in your questions on ib+tv . this is bloomberg. ♪
francine: welcome back to the open, everyone, 40 minutes into the trading day and the focus is on the virus, the vaccines, and whether the economy will take a hit and more countries seem to be thinking they could be -- there could be lockdowns to make sure people aren't affected because it's more infectious than delta. we have cpi off in delta today. onto another subject, and libya is two weeks away from its first ever presidential election. the opec member now has a unified parliament. there's a lot at stake.
there poised to invest billions of dollars in the huge oil and gas reserves. it could be a future export power exporter. redefining libya's monetary policy has been a key challenge and i'm delighted to be joined by the governor of the central bank of libya. thank you so much for joining us on bloomberg today. give me a sense of what these elections mean, elections on december 24. what does it mean for the economy? >> it means a lot for the libyans and the libyan people. in the direction, in any way, the central bank, we'll lead with the election anyway. francine: talk to me a little bit about oil. i think you mentioned you think libya should increase the amount of oil it puts on the markets to be on the safer side of the budget.
has this been discussed? saddek: the oil has been very important for us, as you know, so far, so keeping oil on, the production export will help us moving ahead. francine: are authorities behind it? they're still talking about a budget crisis and its needs for more funding to boost production. saddek: no, we did tons of them and their negotiation with the government to increase their niche. francine: what are you expecting in terms of total revenue from oil have the fluctuation we saw in the price of oil? saddek: so far, so good. the impact on us, no deficit on the budget and no deficit on the balance agreement. especially with the higher prices in oil the last month francine:, it's good for us. how do you see -- last month,
it's good for us. francine: how do you see the price of oil evolving? saddek: we, until we diversify our economy and it's important for us to keep the $60 per barrel, which has been important for us. francine: governor, in general, talking about omicron, what kind of economies will be doing this? what is your main concern at this juncture in the economy? saddek: the corona, it's affected us all during the war and after the war. it's a big concern for us for the government, as well, how to deal with it. so far, the government managed
to vaccinate most of the libyans , which is very good news so far. francine: governor, we're also talking about the reunification of the central bank. this was an important step. when do you think it will happen? saddek: for us, it's good news for libya and the libyan people. we asked to be an advisor for unification. we expect in six months time, we will recoup with this reunification process. francine: and what are the main benefits for this? saddek: we can consolidate monetary policy. we can consolidate funding to the government. we can consolidate the follow-up and monetary exchange rate and also, you know, we -- funding from the government, as well.
so it's very, very, very important, and also important for our relationship with the international community, as well. francine: can you give me a precise figure for the net or in reserves that you have? saddek: not many we can discuss in public because it has vision backed. francine: but it's something because it fluctuates? saddek: we managed so far, since the split and the war in 2014, we, our concern was sustainability of the country. so we managed well. francine: do you have any plans for external borrowing? saddek: what is that? francine: borrowing. saddek: no. so far, no. francine: why not? saddek: maybe. it depends on the vision of the government, whether you've got the feature investment medium and long-term. but it can be, you know. but to fund, you know, public
expenditure without development, is not recommended. francine: i was looking at some of the figures, total debt. i think of 270% of gdp. how do you plan to take it down? saddek: subject to, of course, cannot deal with that. it has to be in a low government , cooperation between the government and the parliament. we are ready to help and support in that regard. francine: oil is the main earner for libya. had you think the countries will need to diversify as we get into the next couple of decades? saddek: you see the problem of libya, the distortion of the economy. a used to contribute 80% for gdp. then he nationalized everything.
it's very important for us and for the libyans had to pave the way for the private sector to grow. it will lead us to diversify our economy. francine: thank you so much for coming on. saddek: thank you very much. francine: that was the governor of the central bank of libya. coming up supply chain bottlenecks continue to wreak have it. -- havoc. guy johnson is at the center. guy: this is industrial automation and gesso is using it to deliver christmas to the u.k. while global supply chains are now nestle products arrived in this facility are sorted and dispatched, also without ever touching human hands. there aren't many l's, but there are robots and scanners. at the heart of this facility is this monorail that runs the
francine: welcome back to the open, everyone, 50 minutes into the trading day. you can see we're settling some of the losses, again, we have cpi data and onto the fed next week, the focus on markets. and traders today is on omicron, whether it has an impact on the economy. we did have three nice days of gains, so there could be a bit of profit-taking.let's get straight to the bloomberg first word news. here's angel feliciano. angel: president biden underscored ukraine in a standoff with president volodymyr zelensky, which lasted more than an hour. they reaffirmed russian aggression would be met with economic penalties. he also pledged not to hold talks about ukraine without the country present. in singapore, two residents may have caught the omicron variant after receiving covid-19 booster shots. the positive tests were the first of the variance in the
city state. china has reported 37 locally transmitted cases after the country of a survey is slated outbreak persists. u.s. secretary gina raimondo says legislation for a chip manufacturer leads to ensure dish needs to ensure funds don't go towards production in china. she urged congress to pass a bill as soon as possible. >> if it can't be done before christmas, it has to be done in january because the consequences of not fixing this program -- problem in the long run are quite upsetting to our economy and national security. angel: they're crunchy, nutritious, and set to hit dinner plates and supermarket aisles. three types of insects, crickets, mealworms worms, and grasshoppers have just been certified as food for the human conception by the european union. the bugs may not be the last to gain approval. the commission says they're
weighing applications for nine other types of insects. global news, 24 hours a day on air and on bloomberg quicktake, powered by more than 2,700 journalists and analysts in more than 120 countries. this is bloomberg. francine? francine: angel, i don't know about that. i have two boys. you would have to pay me or they would have to be really good for your microbiota. angel: yeah, i mean i haven't tried insects before. francine: maybe we do it for january, 2022, angel. that's our goal. covid and labor shortages lead to global supply chains. the country's automated warehouse is working flat out to tackle peak holiday demand. guy johnson is at the nestle's tradition center in derby. good morning. how does this place compared to your average employment center? guy: i think first thing to say, francine, is there is no bugs here.
there's no bugs few -- food here. there is a lot of nestle chocolate. there's a lot of of noodles. this facility can hold 115,000 pallets worth of food. you'll be revealed relieved to hear that -- relieved to hear that. it is incredibly in vance -- advanced. we have pallets of food being unloaded. it's then sorted, stored, and distributed throughout the site. and it then comes back down on the monorail, and then sent back out again. i've been watching this. it's mesmerizing to watch, i have to say. this comes in and never touches human hands. in terms of logistics, this is a big step forward. it's relatively easy to do with pallets of food, less easy with apparel. when you're dealing with
clothes, it's more difficult. but this is definitely the future in how the logistics industry sets up and deals with the supply chain crunchers that we are seeing all the way around the world. francine? francine: inflation numbers out later in the u.s., supply chain bottlenecks are key drivers. what is the state of the sector overall? guy: clearly, as we've been through covid, the pandemic, the supply chain crunch as a result, both in supply chain story and demand story, there is clearly huge amounts of interest in people shopping from home. e-commerce is absolutely booming at the moment. as we go left and we have more stuff delivered at home, you're going to see more sites like this stepping up. i drove up the m1 to get here. it is wall-to-wall distribution sites. as we watch the inflation story develop, automation is both help deal with that side of the
story, and also, just in terms of labor market efficiency, much more efficient here, around a third of the staff of previous sites. hopefully is going to speed things up and remove some of the friction we are seeing in the supply chain, which hopefully will reduce inflationary pressure we are seeing and will see later with the number. francine: thank you so much, guy johnson in derby. i could listen to him all day talking about automation of some of the cool things he is saying. he will be there all day with interviews from those on the front line of supply chain. also with nestle u.k. head of logistics. that will be on bloomberg surveillance. that's it for the european market open. "surveillance: early edition" is up next. if you look at the market, the focus on the downside. this is because of the pressure we are seeing from omicron, whether vaccines really work against this. then we have cpi in the u.s.