tv Bloomberg Markets European Open Bloomberg December 24, 2021 3:00am-4:00am EST
as prices -- gas prices plunge. and the spike in covid cases upends travel plans. united and delta can sell about 200 flights. i hope everyone is gotten to where they need to be. let's head a look at futures. as we set up for the cash equity market trade. not all the futures markets are open. both ftse 100 and check 40 down 0.1 percent. the euro is slightly stronger than the dollar. pretty much flat start to the open for the ftse 100. when you look across asset as we wait for the other markets to open, you will feel a tinge of risk off. not too many cues we can take
from that. it was a negative session when it came to chinese equities but some of that may be windowdressing after u.s. stocks closed at all-time highs yesterday taking risk off the table. there are hopes for the santa claus rally. here is across asset look. the euro slightly stronger than the dollar. a weaker dollar after the stellar day yesterday. one of the most interesting assets today not taking any christmas break from the craziness we have seen our natural gas futures. down some 16.5 percent. the biggest three day declines if this holds out. lng ships from the u.s. instead
of going to asia are heading to the european continent because of the prices there. in terms of other risk assets, looking at weaker oil off the back of gains. one we love to read a lot into is bitcoin from above again $51,000 for the first time since the start of the month. 0.3% gain. a great indicator. we were speaking with alan higgins earlier. this is a great inter--- indicator of risk assessment. let's get to the bloomberg business flash. here is angel in london. >> getting home for christmas just got a little bit harder. united and delta have canceled around 200 christmassy flights. united said a jump in omicron cases is affecting the ability -- is affecting the availability of crew.
delta added the potential for bad weather. bitcoin touching the highest level in more than two weeks. it is returning from a risk to risk appetite. it is on course for a third year of gains. morgan stanley says staff that have to be in the office in the first two weeks of january will have to wear masks when not at their desks. it applies to all occasions even for those that are fully vaccinated. citi and jeffries are revising their plans to return to the office. dani: european markets opening flat on thin trading. this comes amid market optimism that the economic recovery will shake off the omicron variant. let's get more from kristine
aquino. we are also joined by stephen isaacs from alvine capital. the all-time highs we saw in u.s. equities yesterday, how much of that can we attribute to some of the data points we got out, a huge sum of data before the christmas break started? >> i would not attach too much meaning to what we saw yesterday in u.s. price action. we are in the thick of holiday trading. volume is then as is -- thin as is liquidity. this is probably a function of the good news we have seen in the omicron situation both in terms of the risk of hospitalizations as well as more positive news in terms of the efficacy of boosters. there is not a lot of people in the markets right now as people are making their way home for
the holidays. it remains to be seen whether this rally overnight in the u.s. stock market, whether that can continue into next week and even 2022. dani: the run-up to the all-time high had been extremely volatile with gains and losses of more than 1%. when you're looking at that kind of market chop, how do you distinguish between dips you want to buy and those that would lead to more pain? stephen: i think we try to stand back a little bit. i think they are essentially inflation which has gone way above transitory. [indiscernible] anyone can see that inflation is not just a number on the screen. the second question is what is happening to monetary policy?
monetary policy is the key driver to markets. although we have had a pivot from powell, monetary policy is going to tighten at a glacier pace. i still see the fed and the ecb an ongoing and historic stimulus. volatility, it is easy to get whipsawed when we were down but where is the external factor that is going to change this? that is my question to you. dani: the trend is your friend. powell pivot. in terms of central bank hawkish in us, heading into the new year, have they set themselves
up to continue on the path or is it as the market says, that they will not be able to deliver on this hawkish messaging? >> that is right. i think markets are very skeptical at this stage as to whether chart -- central banks that have charted a more hawkish policy course will actually be able to deliver. that is the case in u.s. where we saw jay powell last week indicating the fed is ready to raise rates three times next year markets have not responded in terms of pricing but in. interesting things happening when it comes to the bank of england pricing on the other hand. this week we have seen markets ramp up the bets to see the bank of england rates ending next year but given the situation developing in the u.k. at the moment, i think there is also room for that to be scaled back
especially when we get into the new year and get more clarity was on the omicron situation as well as inflation and other factors will be important for the bank of england. dani: that is a great point when we look at the boe, the first to act a step ahead of the fed. the u.k. economy is still feeling some of the effects of omicron especially if we get another lock down after christmas. stephen: tightening 15 basis points, in my day you would go 0.5% when inflation is above the mandate. it is a tiny baby step. this time next year we could be at 75-100 basis points. these are minor headwinds. let's talk about fiscal policy for a second. we note in the u.s. that
building back better is being held in its tracks. i believe they will get something through. in europe, yesterday, we had a letter written to the financial times by the prime minister of italy and president macron. we have a new administration in germany. they are looking at more creative ways of breaking germany's historic resistance to fiscal spending. and all of this is in the system. the money is being put to work stimulating the economy. that is changing the dynamics. dani: that is a great point. it is something we have witnessed in the u.s., the market's or specifically, the goldman sachs fear if fiscal
stimulus does not continue in the u.s. and what that will due to the economy. is this priced into the markets? >> not necessarily and that is probably one of the potential inflection points that could trigger some differences in markets next week, how investors wrap their heads around the fiscal situation in the u.s. stephen is right. we have seen where it comes down to the line and things get sorted out in the senate and the u.s. congress eventually but markets will always try to get ahead of the situation. they are not always right in terms of predicting the eventual outcome but we know markets will tend to price worst case scenario so there is a lot of potential risk coming from that space in 2022 for sure. dani: definitely a lot to look forward to or to fear perhaps. that is bloomberg's kristine aquino.
stephen isaacs from alvine capital will stay with us. we are keeping a nice on the european markets ahead of the christmas break and we are looking at ever so slight losses and coming up later, we look at the pain facing anyone trying to get on a flight this holiday. that is next. this is bloomberg. ♪
dani: welcome back to the open. we are 15 minutes into the european trading day. a variety of markets are closed including the u.s. and the dax. as what is -- as for what is open, the ftse 100 just turning green as we get closer to the end of the year. and the cac is down 0.1%. light trading. stephen isaacs, chairman of alvine capital is still with us. how much risk at the moment are you seeing from omicron when it comes to the impact on the economy? stephen: i think we have to talk about covid. it is a horrible disease. 150,000 deaths in this country. but i do believe that we are
close to the end. if you look historically at pandemics come about two years is when they tend to play out and the public's acceptance of unbelievably strong restrictions is nearly over. there is a variety of a smorgasbord of restrictions. getting into the middle of january, the voltage of omicron being so infectious, 90000 and france yesterday. it is a rather ugly process but it is going to happen. human nature is the same pure you saw it in the west end --
human nature is the same. you saw it in the west and. people want to shop and eat out so hospitality businesses, you need to see you through this crisis. it is almost at the end. it is my recommendation. i also like budget airlines. a premium air, british airways and others, that is a more complicated picture. i am here in my kitchen. my christmas lights are on, i hope you can see them twinkling in the background. in terms of the simple matter of tourism, that is going to come by card so i like those businesses. -- that is going to come back hard so i like those businesses. dani: people who have liked value for so long have said, we are going to get a change in the cycle.
where do you see those factors playing out next year? stephen: we are in a debasement era. it is difficult to get to bearish. people are drawing a line in the sand. i would leave those alone. the value trade is interesting. interest rates are trending higher. i see those creeping higher through next year. we may be at 2% in the treasuries which puts some fire in financials. where i really like financials is in europe. some national champions have emerged. bnp paribas, unicredit, santander and even the venerable deutsche bank. these are companies we hold at negative rates but as they start to normalize and their business models go to derivatives.
dani: to give our viewers some behind the scenes magic, you do send your team your thoughts before the show. i want to read a line. buy when there is blood on the streets, turkey. what are your thoughts? stephen: it was attributed to one of the rothschild dynasties and there is certainly a lot of blood on the streets in turkey for investments. i am genuinely bullish and looking to find assets or markets that a been left behind. turkey fits the bill. this is a country that has access to single market come unfettered access. something we hear in the u.k. are still struggling with. the whole experiment are trying
to cut rates in an inflationary era has been disastrous but i think lessons are learned in this surprisingly sophisticated economy. i would be talking a bit of money there. i generally like emerging markets. they have been overly hurt by the fear of fed tightening. but commodity prices, i think there is a raft of emerging markets. it is christmas tomorrow. you need turkey for tomorrow and next year and that is my horrible pun. dani: we need a pun on the last day before christmas and a fantastic little christmas tree you have there. i don't know if our viewers can see that. we have to get in the spirit. happy holidays to you and your
dani: welcome back to the open. we are 23 minutes into the european trading day and we are seeing some improvement in their prices. ftse 100 up 0.1%. euro stoxx 600 flat. the dax is closed today. not a lot of trading today. some shifting around of portfolios. maybe taking risk off the tables. the santa rally does happen leading into the new year. shifting to the u.s. and united and delta expected to cancel 200 christmas eve flights because of staff shortages linked to covid. a blow to carriers still trying to recover from the pandemic. let's bring in bloomberg's laura wright. this must be unwelcome news for those hoping to get home. >> really disappointing news
this holiday season. for united, the primary reason was covid cases meaning it cannot pull enough crew together. for delta, it is a mixture of covid cases and weather. against the backdrop of a strong domestic recovery in the u.s. tsa weekly data almost back to pre-pandemic levels. seat capacity data shows a real the virgins between u.s. carriers and their european counterparts. this week compared to the same week in 2019. american airlines down just 8% in that period whereas british airways is down 30%. u.s. carriers benefiting from intrastate travel. dani: what about european destinations? >> europe is still far from a recovery. the seat data i was referring to
earlier and the dominant theme is double digit declines. greece is the outlier. down just 3% comparing this week to this thing week in 2019. u.k. is down 30%. the u.k. is still facing travel bans from germany and france which also supports the underperformance. that said, this was still the best week year to date prissy capacity but with further news from omicron, it seems there is more downside ahead. dani: downside there but what is priced in? how have markets responded to this turbulence? >> markets -- a month ago when we learned of omicron, there was a huge selloff in the airline sector. after a preliminary study says just did omicron cases are less severe, the sector had positive
reaction. the picture is more mixed. yesterday, i spoke with director at jail less and -- at jls and he explained this is a really difficult time at airlines facing cancellations. typically, holidays are when families get together and airlines rely on that foreword booking for the holidays and bookings. and with more negative news flow, it looks like airlines will face a third summer of disruption. dani: goodness, i know everyone wants to get to somewhere sunny. laura wright, thank you. i want to give you a quick check on markets. when it comes to equities, volumes are low. euro stoxx 50, volumes are 94% lower than they are during the 20 day average. in the meantime, one of the
biggest moves we are seeing across the board is cast futures. that is dutch, the second asset, biggest three day decline on record as more lng shipments going into europe. coming up, we will look at how the u.k. exit from the eu changed the job market and what we can expect next year. this is bloomberg. ♪ this is bloomberg. ♪
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carrying u.s. lng race to the continent to offset brush and supply. covid cases upends travel plans. united and delta canceled 200 flights. let's take a look at sectors on the move. we have much less equity trading than usual. the dax is closed and volumes are thin. leading the way is travel and leisure. this kind of looks like the polar opposite of what has happened year to date. here today, this is a worst performing sector. some portfolio adjustments. we did have some negative travel news but that is mostly in the u.s. with positive covid cases in delta and united meaning they had to cancel flights. elsewhere, we are seeing retail and ensures leading the charge higher.
more sectors in the green despite the fact it is a flat market so far today. worst performers, food, beverage, and tobacco. personal care products down 0.1 percent. the rest of the board is little changed. it makes sense you would not see anything crazy today considering not only is the flow a little light but we are coming off the back of all-time highs in the u.s. market. let's get to the bloomberg first word. >> u.k. prime minister boris johnson is urging britons to take care at christmas considering whether to tighten pandemic rules week. nearly 120,000 new infections were reported yesterday. omicron appears to be less severe but more contagious than any other covid-19 variant to date which is the conclusion of a u.k. government study adding
to the existing body of research showing a lower rate of hospitalizations from the strain. people with omicron are 50%-70% to go to hospital. moscow needs to de-escalate tensions on the ukraine border according to the u.s. as a key have says russia and troops continue to build out. the comments followed president putin's annual press conference. he warned western nations. in the u.s., president biden has signed a law banning goods from a chinese region unless companies can prove the products are not made with forced labor. china urged the u.s. to correct the mistake immediately saying the bill was in disregard of facts and truth. global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries.
this is bloomberg. dani: angel feliciano in london. it is been almost a year since the u.k. technically severed ties with the eu and today we look at the impact of brexit on the market. how has brexit affected jobs in the u.k.? >> it has exacerbated the labor crunch in britain. for industries that were historically reliant on u.k. labor, like retail, that means empty shelves. and gas stations was because of trucker shortfall. in those industries, employers had to dangle bigger salaries to lure workers which meant they had to hike prices. adding to the inflation headaches from the bank of
england squeezing financial -- squeezing households' budgets is the cost of living crisis that will bite boris johnson which is ironic. brexit has been such a big part of this government's mantra. dani: and adding to all of these headaches is covid. how does that factor in? >> that are -- it was definitely one of the reasons that so many nationals left in 2020. and after the u.k. left the single market customs union, they found the drawbridge had been lifted. i mentioned the 200,000 figure, about 375,000 people became economically inactive in the u.k., people who were unemployed or not looking for work.
that is people that wanted to be students for longer, declared themselves retired or long-term sick. the impact of covid on the market is bigger than brexit. dani: that is our very own u.k. reporter, lizzie borden. israel says its decision to offer a fourth vaccine dose to some citizens was prompted by new data which showed that without the extra shot, people would be left without protection from the new strain. we spoke with chris breyer. -- chris beyrer. >> vaccine immunity wanes over time and you get a tremendous rejuvenation with this booster. they compared those with two doses of messenger rna with
those that had a third. that showed a 90% reduction in mortality. that is just really significant and dramatic. the astrazeneca data is also important because even though any countries are not using it, many used astrazeneca early on but the fact is now the who has been working carefully on this and many countries are going to have later doses that are different either with the protein subunit vaccine that is coming along or with mrna. this is what happened in south africa. they started with astrazeneca, and then j&j and now mrna. that mix and match strategy is very good. >> that is the booster and its rollout. talk about how long immunity lasts when we get a vaccine. is this unusual that the
immunity lasts as little time as it seems to or fades as quickly as it seems to? is there a chance that science produces something that does not wane quite so quickly? >> this is the biology of coronaviruses. with the coronavirus a that causes the common cold, you won't get it again that season but you will the following year. it is not surprising. what it means probably is that we are going to have to have more regular boosting to keep the immunity up as long as the virus is still circulating. it is true that the big challenge that we face is that so much of the world still has not seen its first dose and that we have to fix. it is looking likely that we will have enough vaccine to immunize everyone by may or
june. and then it will be a logistical operational challenge to immunize the rest of the world in low income countries. anna: in thinking about the omicron variant, how encouraged are you from these early studies pointing to lower hospitalization rates? that is a relief but it still spreads fast. how comforted are you buy that data? >> it is encouraging. since you have data from different populations suggesting the same lower risk of hospitalizations from severe disease, that is encouraging. the data from south africa is the most compelling showing a two third reduction in hospitalization but that is a population that had a high rate of just having recovered from a
serious surge of delta so there is a lot of pre-existing immunity in that population. we will have to see how it looks in other populations. we are worried in the u.s. because we have a percentage of the population that is not immune a -- that is not immunized at all. what we are seeing is that that is not working. and part of the reason why omicron is so infectious is because it is able to infect people that have already had covid and recovered. dani: [indiscernible] let's get you a check on where natural gas futures stand at the moment.
>> it is not us threatening them. we did not come to the border of the united states or the united kingdom. they came to our border and now they are saying, we want ukraine to be part of us as well. and you want guarantees from us, no, you are owing us guarantees now without any delay. not in decades. dani: russian president vladimir putin lashing out during has national -- annual press conference where he also praised the u.s. response to his demand for guarantees. european natural gas prices plunging again today after this year's stellar rally. that will help offset. at least 10 u.s. vessels heading to europe and another 20 that
appeared to be crossing the atlantic. we cover our and renewables. how should we be interpreting this third day of plunging natural gas prices? >> we are seeing an increased number of tankers heading to europe. we have also seen your virgins from asia. ships making u-turns mid ocean. coupled with that, we have seen an increase of cargoes heading from russia and africa. europe is the most attractive model now for lng. dani: what did we make of president putin yesterday saying this is the fault of europe, clients not asking for contracts? not russia not wanting to give
the supply. what do we hear about what accounts for the lack of supply for russia? is it just that the clients have not been asking for it and did not have contracts in place? >> european clients do have contracts in place. they are long-term. they set an amount of gas that has to be taken. there is a preagreed price that would make the price cheaper. a lot of europeans would take the gas. they don't need extra gas. they are not requesting additional gas. russia says, we need to see orders from the europeans in order to use our pipelines. dani: what are we expecting in terms of this winter when it comes to these issues?
and when it comes to prices? do we expect an upward trajectory to continue? >> we could see bearishness early in january because of the lng coming and a mild forecast for early january but there are still plenty of bullish factors remaining including uncertainty. we don't know what will happen later in the winter in terms of weather. and also, we still have uncertainty on the russian gas supplies. 21% of capacity was booked for a key pipeline from russia to germany for january at the moment and we also have in france a lot to see. and we still have rapidly depleting european storage sites at only 58% level at the moment and we will see higher rates of
depletion in the cold. dani: thank you for your insights. let's get to the bloomberg business flash. here is angel. >> getting home for christmas got a little harder. united and delta have canceled about two hundred christmassy flights. united said the jump in omicron cases is affecting the availability of crew. delta blamed that and the potential for bad weather. bitcoin has jumped to about $51,000, the highest people in two weeks. it is benefiting from a return in risk appetite. the digital coin is up around 76% so far this year and is on course for a third year of gains. morgan stanley said staff that has to be in the office in the first two weeks in january will have to be wearing masks when not at their desks as well as in
large meetings. other banks including jeffries are also revising their return to office plans. that is your bloomberg business flash. dani: coming up, sustainable debt financing has hit a record high this year. we look back at a pivotal year in the fight against climate change. at his next. this is bloomberg. -- that is next, this is bloomberg. ♪
dani: welcome back to the open. we are just over 50 minutes to the european trading day and we are looking at markets slipping into the green but the caveat is that volumes are very light. gains of as much as 0.2% per ftse 100. futures, u.k. equities also outperforming. the cac 40 is little changed. but us get a view of what is trading. futures, cash equity in crypto futures closed but bitcoin is open and trading. in the u.k., stocks close early at 12:30 p.m. local. gilt futures close to 30 p.m. u.k. time. france is also closing early. turkey is in normal trading.
a volatile market and we will continue to see prices plunge. you can trade that until re-30 p.m. -- until 3:30 p.m. climate change. one of the highlights was the cop 26. the planet continues to warm. thank two recent natural disasters in the u.s. and the philippines. the reality is the world is likely to remain dependent on fossil fuels for some time to come. joining us is bloomberg green reporter. thank you for joining us. a huge push to debt issuance. what was driving that? >> both physics and politics. as we know, the planet is
warming and it will keep warming for years to come. we already how forecast for 2022, one of the warmest years to come. and the politics are changing as we saw at the cop 26 meeting. politicians agreed to support net zero. they did not go far enough but they did send a clear signal. i think the signal has been taken by business because they see climate impacts affecting their business today and they see politicians being serious about acting on climate change which means that regulations are coming. one way they can make changes is through changing how they finance activities within their own businesses. that is why we are seeing a record in debt issuance for green bonds and green debt in
general. we should be clear though because with anything that has hype, as we see an exponential curve, there is room for a lot of greenwashing and we have to be careful of the numbers that we are seeing. dani: it is not only financing that has taken off but it is also ev sales. what is leading that trend? >> but is the good news story and climate change if there is one is that green technologies are getting cheaper and getting cheaper more quickly than predicted. ev sales have reached records across regions. this is not just an asian story anymore. it is europe, the americas. europe has the highest sales of electric vehicles. and we will see those numbers
going up because battery prices, which are the most expensive part of electric vehicles are falling and falling quickly. the inflationary pressures that have come through this year because supply chains have been disrupted and metal prices are going up and those have slowed down their trends a little bit but if you compare those two fossil fuel technologies, green technologies are cheaper. dani: thank you so much as always. that is our bloomberg green reporter. one of the assets trading until 3:30 p.m. u.k. time and has been moving is a europe gas. we are looking at declines at about 17% so far today. this is a large plunge down some 40%, a biggest -- the biggest three day fall on record. this comes with skyhigh prices
due to the colder weather. u.s. lng tankers coming to the continent to fill some of the gap. that has allowed prices to fall. there is the question how long this can be sustained and we will keep our eye on those prices for you throughout the rest of the show. that is it for bloomberg european market open what you are not done with me yet. surveillance: early edition is next and i'm sticking around for that. this is bloomberg. ♪
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surveillance: early edition." dani: good morning a welcome to "bloomberg surveillance: early edition." i'm dani burger in london standing in for francine lacqua. santa rallied, u.s. stocks hit an all-time high on omicron optimism and that it will not hamper the recovery. markets steady. a spike in covid cases upends travel plans, united and delta cancel 200 christmas