do you want to put money to work in europe right now? a lot of big asset managers are suggesting you should over the last few weeks but that is starting to change. we will talk to a representative from j.p. morgan asset to get his take on what is happening. the european closes coming up. this is bloomberg. ♪ this is bloomberg. ♪ alix: live from new york, i'm alix steel, guy johnson is in london and we are counting down to the european close. guy: the u.k. said the virus may no longer be spreading exponentially. boris johnson speaks in an hour from 10 downing street. activity in the euro zone and u.k. falling sharply. there was almost inevitable a double-dip recession. and we are on -- ominously told that change is coming for the city of london, this as new york emerges as a big brexit winner. let's talk about where we are seeing the data in europe today. we are down when it comes to stocks, we are singapore is a week for the dax and everything else, everything else is negative. the pound

guy: we are certainly seeing that here in europe. for more on this story surrounding global travel, glenn vogel, booking holdings president and ceo. looking holdings is the world's largest travel agency, really big here in europe. ask for your time today. everybody started to get really excited that we are going to be having a summer season here, that we are all going to go back to some semblance of normality. is that your expectation as well? glenn: thanks for having me. clearly, everyone is seeing some green shoots, and in the u.k., we called them out. we called them out in germany. every time there is some news that comes out, there is some hope that new vaccinations are possible, that we will learn about johnson & johnson being rolled out today, it is a great thing to hear. but this they race between the number of infections that are still spreading throughout the world and the vaccines. we just hope that governments and pharmaceutical companies together can work really fast, get those vaccines into people's arms as quickly as po

and europe. where do we put our money? crude up to a 2.5 year high despite opec-plus, the latest news is, will keep pumping oil into the market. demand really has to meet that. we get the manufacturing figures, dropping just now. michael mckee, correspondent, has it. >> better-than-expected. 61.2% for the month of may, up from 60 .7% in april as manufacturing continues. things are getting easier. companies reporting shortages of goods to make things and shortages of employees. new orders up to 67 from 64.3. that's because they cannot find enough people to fill jobs, not because they don't have the jobs. another we are watching closely is supplier delivery times because they are a sign of whether or not we are seeing bottlenecks. we are seeing bottlenecks. 78.8 in may. i think that's an all-time high. it is up from 75 as we see companies unable to meet the new orders. and the one that everybody wants to watch on a fed basis, prices paid, declining to 88 from 89.6, but still very elevated. prices are up, supply short, indust

it gives them a big footprint in europe, a bigger footprint in europe. and a large u.k. study shows vaccinated people can carry as

we are going to see an impact in europe. can europe afford that reaction if, for instance, btp's start moving up? is that going to be an issue? chris: first and foremost, i would say they may do. you never know. everything is on the table in that sense. but i think if they did signal it, but you would see as a temporary short-term flattening of the curve. so short dated yields up a bit, and longer dated off a bit. so the implication for btp's would be a similar kind of trade. i think the yields would fall slightly from where they are at the moment. so i don't think it is going to happen, but if it did, i think that would be the main implication, rather than yields taking off to the moon on the 10 year. i don't think that is a credible thing to expect at the moment, given where the economy is. i think that yield backed up aggressively on that announcement probably wouldn't happen, and i don't think the nouncement will happen anyway. ix: but if they say nothing and they don't get in the way of higher yields, what is going to t

europe is down hard. while u.s. equities have certainly moved down, europe has moved down even more. the other factor, the three witches certainly playing a part in this whole play. the scene is certainly set for volatility over the next hour or so. abigail doolittle is here to talk us through what we should expect from this triple witching and what we are seeing in the market right now. abigail: lots of volatility, not just today. here's a five-day chart of the s&p 500. on fed day, you can see the big move down and stocks as investors got use to that new idea that the fed could turn more hawkish than expected. then coming off of those lows, and then today on those comments, the idea that the fed is taking a natural tilt towards a more hawkish view. you see the violent reaction to the downside. investors not knowing quite what to make of this. mixed moves within the yield curve. then you add on the triple witching. we are setting up for some volatility. this goes back a number of years. where we have the yellow circ

europe is catching up. we will have at least 70% of the adult population that will have their first vaccine by the end of june. close to 80% will be second dose by the end of july. so there is no evidence so far, there's no increase in hospitalizations, serious illness, and morbidity, and that is what we need to be managing. guy: if they don't announce on the 14th that they are going to reopen the economy and take the next step, how on earth will we be in a situation where we can reopen for travel? if you can't take that step, how do you take the step to allow travel at this stage? michael: i think it is all part of the mismanagement of this recovery by the johnson government. they put portugal on the green list, and then two weeks later, despite no increase in case numbers in portugal, they took portugal off the green list. malta, which should be on the green list, has a higher rate of vaccination and lower rate of case numbers than the u.k., but can't get on the green list. so the traffic light system is

and europe. germany, the u.s. and france. unemployment has taken a massive drop in the united states and a small drop in france and germany. part of that is it seems like the scheme in germany, u.k. have tight employers to employees -- tied employers to employees. in the ice age it is not the same way. they have been laid off. is the u.s. able to pivot more flexibly? last year we were applauding the europeans, now i am margaret whether these furlough schemes are the right way -- now i am wondering whether these further schemes are the right way? joseph: in the united states we hoped to keep workers better connected. it was not a philosophical difference, it was the result of our failure with the trump administration not being able to figure out a program. when they finally had a program, unable to administer it effectively. if it was a success, it was by accident. of a failure to design an appropriate program. it was important that we keep connection between workers and employers, because the united states needs more. -- need

we are looking at weaker equity markets in europe as well. to what degree is this just, ok, it is a global phenomenon, we are kind of worried about the economy, or what is very europe specific at looking at pepp flex ability creating some of the dour mood in both the fx and equity space? vincent: i think what investors are looking at is the ecb telling a tale. they really want to cut monetary stimulus, but they are not in a position to do so. look at what is going on in the economy and germany and how it is now plaguing europe. the labor secretary saying we need to get people back to work. i am not sure what data he is looking at. clearly what happens in europe comes within four to six weeks, and that is going to support the euro a little bit because we are going to be behind. i would not be throwing the baby out with the bathwater, but europe is any precarious situation, and i don't think they are in a position to back off monetary stimulus anytime soon. alix: i'm glad you said that. to that point, i am just wondering how far ahead the fed c

europe got off to a much slower start on vaccinations. the virus performance ha sn't been great, but we are seeing some signs of stabilization on infections, although some of the data is kind of noisy, so that is not a high confidence view. where i have more confidence is that europe is doing a lot better than they were a few weeks ago on vaccinations. the daily number of vaccinations has really increased a lot, and deliveries of vaccines to the european union are really picking up and have further to rise, so over time, that is going to enable the european economies to really open up in the service sector much more. it is pretty depressed in those areas. the level of gdp, especially in the service sector, is much below normal than the u.s.. so it's white a lot of room. i do think it is probably somewhat underappreciated. alix: does that room lead to anymore inflation than what the market is expecting right now? jan: i think it will be very slow for inflation to come back in europe. what happens to inflation really depends more on the lev

there's lng cargoes going into europe. you will also probably get some demand instruction in the process. a lot of the european industrial players have been trying to curtail their consumption pretty aggressively because of these prices. nothing really makes sense, and puts it at a competitive disadvantage. but europe still needs to get through the winter, so there is still concern. we have pretty low inventories, and when inventories are at these low levels, you get these extreme price moves. hopefully this last jump in prices will cure the challenges europe has faced and move us into a more stable price environment into the first quarter. sonali: open up your crystal ball and start to draw out what the conversation will look like over the next month or two. francisco: for the next month or two, we are still going to experience extremely high volatility in natural gas prices. the u.s. is different. in the u.s. we are getting a supply response, mainly from producers across the country. we have seen an increase in productio

has the potential to deliver all of this better than europe? this europe versus u.s. comparison at the moment, much was made of europe's hamiltonian moments. the next generation funds and this will be spent on a green revolution. when it comes down to it countries like italy had a very poor record of spending large amounts of money. the italian government is potentially about to fall apart over this very issue. do you think the u.s. has a greater capacity, a greater bureaucratic capacity to spend money? do you think the united states has a better capacity than europe? adam: the reality is hidden in the political system. they're hoping for a stable government. what money they get from europe. i 50 answer unfortunately still lives with emmanuel macron and angela merkel's successor. how it gets dispersed in gets viewed. maybe they will hold off. how that will be politically and financially. i think the u.s. will potentially outshine europe. i will come back with two points, even if you are behind here, it is still a better place that is smaller than it would've been with

guy: one cannot diverge europe from the other. in the short-term europe faces a number of different challenges. france still relies and imports a lot of russian gas. france and germany imports even more. what is that leave europe and european security? france has made a huge bet on nuclear, tumor and he walked away from that -- germany walked away from that there is a patchwork in terms of energy need and demand. particularity if you are putting a green light over that parent europe relies on russia. tough place to be. alix: takes the reins? macron is trying to do that to some extent but elections are coming up that will prove difficult. germany working on their government with merkel stepping back. who is going to be that person to unite and lead? can macron and schultz do that together? what if he does not win? there are political relays that are going to make things more complicated to get something cohesive done. guy: there is a name you are missing which is mario draghi out of italy. he is not elected. does that change the na

they've got a pretty positive call on europe as well. peter oppenheimer, goldman sachs chief equity strategist, joining us now. great to see you. people are looking into next year, trying to figure out exact aware stocks will go. you guys a read 5100 for the s&p. what gets us to 5100 by year-end 2022? peter: i think there are a couple of things that are still supporting a positive view on equities. one of them is that the economic cycle is still intact. it is slimming from the pace this year globally. gdp this year was around 6%. we are expecting 4.5% in 2022, so still not above the long-term trend growth rate. even at around 3.5%, it is 2023. so as long as the economic cycle continues to expand, we will expect profits to be growing, and that is the printable driver of returns in equities. but the other important point is that inflation is picking up. policy rates remain at all-time record lows. real interest rates are negative. that is pushing investors understandably into real assets. bear in mind that the dividend yield on equities is

but with europe as the biggest trading partner. the rest of the world slows down and it hit confidence. the idea that the delta variant is moving fast and having that impact has hit what we have seen in our economic data so far for the month of august, the university of michigan number on friday was a big role over. also -- rollover. also, consumers and businesses worried about what's happening. alix: thank you very much, bloomberg's michael mckee. the s&p retreating after finishing the 48th record since the end of 2020. ritika: kara murphy kara murphy -- --kara murphy will be joining us next. this is bloomberg. ♪ alix: u.n. security council started emergency session on afghanistan. you are looking at the secretary general speaking. he is calling on the taliban to exercise restraint. afghan females need to remain and we must act together and use all tools at our disposal. the question mark is what western countries can do. the story of the markets, we look forward to jay powell and sell retail earnings as well paired abigail dool

what do you need to know out of europe? european stocks hitting fresh record highs earlier in the session. investors very much betting on the fed and the view that inflation will be transitory. europe's largest m&a deal of the year sees a shaking up. we will hear from the german finance minister on how the deal could see more regulation to control rent. the skies over belarus empty as european leaders tell airlines to avoid the country's airspace. we will have the latest from the eu summit in brussels in just a moment. first up, let's get back to the markets. the stoxx 600 fading

europe is starting to get back together. -- to get its act together. i appreciate we have a short-term issue with the pipeline, but nevertheless, driving is coming forward. people are flying. jet fuel demand is going to start picking up. the demand story is certainly beginning to line up pretty sharply now. alix: that demand story picking up because of supply issues in brazil. goldman sachs has an $80 call on brent, and $1100 now for copper. what is interesting about that call is they don't see that as a china led sorry. different from what we are used to seeing. that is -- china led story. that is not what we are going to see this time. guy: you're starting to see china substitution. that is already starting to come into the story, too. alix: another part of the oil and gas world's consolidation. the latest example is today, bonanza creek energy announced they will merge to form the biggest pure play in commodities. joining us now is been -- is ben dell, kimmeridge energy co-founder, who will now serve as the exec it of director. tell us about how thi

with that non-us, a lot of it in our thinking is europe. i do think it is a interesting call because europe is the ultimate value trade. it has better valuations. but at the end of the day, the virus backdrop is better in the u.s. at the moment, and we are at the center of the reopening trade right now. i can see a reason to shift to europe later on, but for now i think it is tough to let go of the u.s. i have spent a lot of time talking to international investors, people based in the u.s., but do invest in the u.s. stock market, and they have actually come of the number one question i would say is corporate taxes, but the number two question has been the sustainability of the shift out of growth and into value. if the u.s. can continue to lead a bit longer -- the u.s. can continue to lead a bit longer if they are willing to sell those tech stocks. i think it is tough to say in an absolute number. one of the things we look at his nasdaq positioning in the futures market, and that would suggest we are sort of middle innings of the rotation a

is likely to be in 2022 and where europe is, much favoring to europe. alix: does that lead to any central bank differentials? catherine: this is a good question because between now and then, according to the model that we have on the fiscal impetus currently in the market and so forth, and on projections, we still have inflation rates really very moderate for both economies. so there are going to be some interesting questions about where energy prices and commodity prices might pass through relatively more in europe than in the united states because of the tax structures being different, but also how much firms have pricing power. i talked about that in the last segment. i thing it is a very important question, whether or not firms might have more pricing power in europe than in the united states. that is going to make for an inflation differential as well. guy: always great to catch up. thank you for your time today. we really appreciate it. catherine mann, citi's so you're a small business, or a big one. you were thriving, but then... oh. ah. okay. pl

do you go, 6924 as we head towards the closing europe. what i think is interesting is that the bond market is sending quite different signals. o.a.t.'s in france, bdp's starting to generate cigna for can volatility. do these two things go hand-in-hand? alix: it is bananas. the two things very much diverse. let's get some more on that. alberto gallo with algebris investments. good to see you. help me understand how we can have this bond market volatility , but equities taking it on the chin and keep rising to record highs. alberto: what the market is realizing is paper assets are not good. you are going to lose money with paper assets. if inflation realizes at the levels suggested by breakevens over a 10 year period, and the u.k. you are going to lose 1/4 of your principal to inflation, and in the u.s. you lose 20% over a 10 year period. so why hold straight bonds? you can lose money slowly against inflation or lose money quickly if these reprice, so investors know that equities are connected to real assets, real cash flows, and the real e

then it is in europe. how do you think about allocating regionally, given the divergence we have seen in the way that program is going? liz ann: it is not only because of vaccine. in fact, i would suggest it is maybe a small part of it. we went to an overweight non-us, or international stocks, at the beginning of this year. the offset to that from a tactical perspective was a downgrade of u.s. large caps. so we now favor small caps in the u.s. a bit more than large caps, but broadly in terms of global equities, we have a bias towards developed international equities. the primary reason, in addition to things like vaccine and more reasonable valuations, is that we believe when you exit one full cycle, a psycho inclusive of a bear market and a recession, you tend to see a shift in leadership patterns. you tend to go to eight to 10 year periods where you flip u.s. to non-us in terms of equities. we think we are at the beginning of another trend that at least means diversification outside of just u.s. large ca

is that only going to hasten the idea that we get a carbon border tax in europe? let's talk about the markets. stocks are down pretty hard. the tax in particular is

rate market into what is happening in europe. do you think the ecb has got the kind of time it seems to suggest it has? vineer: it depends on what your view is, how long they can actually hang onto negative yielding bonds. right now they are globally at $25 trillion, $30 trillion. you can go to $50 trillion or $100 trillion. the question is can they keep, in the face of reflecting, can they keep buying it? since i'm an option trader, for me i am getting paid basically to short these bonds, so my horizon is much longer then the politician who either gets reelected or nominated something like that. i think they are trying to narrow the dissonance between europe and the u.s.. i don't think it is going to work in the long run. i think all yield curves globally will normalize to what is a natural level. alix: when is that going to hurt? as you have real yields moving at some point less negative and higher rates, that is going to hurt growth. that is the trade we saw for a day last week. vineer: that's right, and what happened last wee

what are you hoping for from europe? what are you expecting from europe? how will this summer compare with the united states and compare with pre-pandemic? peter: in europe, we think definitely the summer will be more muted. we've already seen the vacation rental business relatively has been stronger, and domestic travel has been stronger because of course, in many cases, people have not been sure whether we can leave the country. as that changes, i am certain we will see more and more bookings for international within europe, and i know some countries are very keen to make sure that happens and that they accept visitors. but i think it is going to be bumpier for europe. i think we are seeing it now with lockdowns in germany. not every country is in the same position, sadly, but vaccines are rolling out, and they will come faster and faster. as the u.s. finishes being vaccinated, more vaccine will be freed up for the rest of the globe i hope, and i think that will all start to accelerate. we think europe this summer will be bumpier for sure, but there will

in europe and japan. on the crude side you have a lot of west african cargo that has not been sold. saudi arabia bringing back over one million barrels bowl day -- barrels per day. even though we have seen a drop in inventories on the crew decide, the refined product levels were high. especially southeast asia. the demand has been weak. this could be more muted, losing 40% of u.s. production. guy: are there long-term effects from texas? javier: one that has shocked many consumers outside of the united states was the declaration of the governor banning the sale of natural gas outside the state. not only for exports on the international market but even in neighboring states. texas gas was available -- was labeled as freedom gas. we have a crisis and thank asked for short period of time, we will see where that ends in a court filing most likely. the governor of texas tried to prevent the export of gas. that is going to confound some purchasers. alix: it raises the question of how do you stock for inventory?

that's what is in the program for europe. in contrast, for the u.s., we do have a super boom right now. the real question is, as the american rescue plan fades in terms of expenditures, is it then buoyed up by the next set of plans currently being discussed? in terms of thinking about u.s. versus eu growth going into 2022, it is really about whether the next set of plans gets financed or not for the u.s. alix: so where does the exceptionalism lie? if we get a $2 trillion in research or plan, is it in the u.s.? if we don't, is it europe? is it that binary? catherine: it is never that binary, but if there is an infrastructure plan in the u.s., it becomes a handoff from the rescue plan to this set of infrastructure plans under consideration. if you don't get that handoff, then you end up with essentially a fiscal retrenchment in the united states. the timing of that will be when the european fiscal programs start to really take hold. guy: but europe is much more exposed to the global economy. the u.s. is a much more insular econ

how does europe, u.k., and the u.s. battle china? this is bloomberg. ♪ (announcer) do you want to reduce stress? shed pounds? do you want to flatten your stomach? do all that and more in just 10 minutes a day with aerotrainer, the total body fitness solution that uses its revolutionary ergonomic design to help you to maintain comfortable, correct form. that means better results in less time. you can do an uncomfortable, old-fashioned crunch or an aerotrainer super crunch. turn regular planks into turbo planks without getting down on the floor. and there are over 20 exercises to choose from. incredible for improving flexibility and perfect for enhancing yoga and pilates. and safe for all fitness levels. get gym results at home in just 10 minutes a day. no expensive machines, no expensive memberships. get off the floor with aerotrainer. go to aerotrainer.com to get yours now. ♪ guy: live from the g7 in cornwall, i'm guy johnson. alix steel over in new york. this is "bloomberg markets." we are awaiting this art of this bilateral mee

and europe is that the u.s. is more a domestic market then europe is, and all of these countries have different agendas, and they impose different restrictions. the u.s. has taken a leap forward in terms of reopening the market. it is not happening in europe at the moment. my expectation is that we are going to be seeing domestic travel is moving before international travel in europe, but in europe, the domestic market is much smaller than the u.s.. i think we will continue to struggle given all of these government impositions, and given the nature of this process, i think it is hard to predict exactly what expectations for the summer are. i'm not sure it is going to be as good as in the u.s.. guy: the ceo of wizz air speaking to me at the world aviation festival a little earlier on today. a real difference between the u.s. carriers in the european carriers. alix: and then when you add india into the mix, it is a whole new level of travel restrictions. it faces a huge coronavirus surge that is really overwhelmin

it was going into northwest europe and from there throughout western europe. it is everything. dishwashers, furniture, computer chips. clothes. a wide array of products. you will see inventory levels already relatively low from the explosion. guy: we already have a chip shortage that is shuttering auto plants. are we going to see problems, similar problems in other areas? randy: exactly. automated factories and others saying if we do not have the supply of goods, we have to shut down these factories and manufacturing plants. that is why it is a hard balance. you hope the suez canal gets reopened in a few days or do you say we will not risk it, we are going around south africa and we will take the extra 15 days? it'll be interesting to see how these importers go about it. kailey: you mentioned something earlier. this situation is happening on top of what was already a very tight market. we are already facing a freight crisis. even once the situation is resolved, what does the picture look like going forward? how long will the market stay this tight? randy: that is a great questi

i guess that puts all the onus on europe. your -- europe is burning through gas quickly. it needs russian gas. shoving the gas off from europe will have a huge impact -- shutting the gas off from europe will have a huge impact. i don't know how they would stop it. that would be interesting. apparently, there will be an allied response as well, so maybe europe is on board with this. that is a lot of weight on europe, which is having a number of other issues to deal with. for instance, italy, the number of cases doubling in 24 hours. that is a little concerning. alix: that is an amazing statistic. as of today, over 15,000 new cases of coronavirus in italy versus 9500 before. deaths are relatively calm, 99. but when see that close the gap? guy: that is how you would expect to see it in two or three weeks. cases getting serious after a week if they get more serious and then they progress from there. these are alarming numbers starting to be produced in europe. alix: coming up in the markets here, with energy outperforming along with tech today, after releasing a 2020 two budg

the same level at the heart of europe. so yes, it is a very tough entry for most of the rest of the world. alix: guy always says this to me. you guys are fine. you are going to be energy independent. but we are not actually producing it. so why do you think that price signal is so broken? ed: it is partly broken. it is not fully broken. it is the discipline of the publicly traded companies, the privately owned companies are really ramping up their drilling activity, and i don't know what the production number was from the eiea today. we are getting the return of everything shut down from hurricane ida, and we are well above the low point. so i think we are about to see a year ahead which is going to look more like 2019 than 2020 or 2021. we are going to see an order of magnitude of u.s. production growth if you include ngl's, along with crude oil. so i think the drilling has kept up enough that it is going to continue to increase, and we will soon see the public companies adding to what we have already seen from the privat

and europe to a certain extent, the u.k. certainly feel like there's light at the end of the tunnel. i'm hearing that phrase a lot at the moment. boris johnson has just canceled a trip to india. the case counter there is accelerating massively. they've got variants starting to emerge, a series of them. in terms of your assessment of where we are and the perception in the united states and the u.k. that there is light at the end of the tunnel, are we getting ahead of ourselves? robert: i think it is tricky and relentless, and it is a fast mutating virus, and there's been a tendency to want to's kind of -- want to kinda declare that we are at some kind of magic moment where it is almost over. i think the better way to think about it is that we are in a much better position then we were a few months ago with these powerful vaccines. but this is going to be a long and complicated road of gradual improvement. that is probably the better way to think about it. if you look at past major viruses, smallpox is one of the only ones tha

hikes while the counterparts in europe are not doing so. i think structurally the dollar is weaker and going weaker, but over the course of the next year, there are some countervailing wins to that -- winds to that theory and that is what the fed is doing it with the central banks are doing. guy: where specifically are you looking? you talk about emerging markets as if they are in one bucket. how do i separate them? kathryn: latin america presents interesting opportunities. we had a shock election in chile and peru and some surprises. next year will be a tumultuous year because we have additional elections that could jolt the markets. there are opportunities in brazil and mexico in fixed income and equity spaces. there are energy based names we find attractive in the fixed income space because they have a juicy yield and in the equity space. within china, we like chinese consumer discretionary. china has been beaten up over the past couple of months, so we see some opportunities there. all e.m. are not created equal, but we see opportunitie

is europe really ready? i've been doing this a long time , and i've seen 70 false da wns when it comes to europe. i'm wondering whether this is really the moment. victoria: you saw when the u.s. started to open up, we had a quick rebound, and things started to pull back as people anticipated peak reopening and things started to slowly shift back to where there's maybe going to be the new status quo or the new normal, even though i don't like to use that term. i think we will see the same thing happening in europe. we are starting to see vaccinations pickup. i think there will be a complementary action in europe where they get the big reopening, people start to go out, we see spending, and then perhaps a pullback. is it a short-term trade? maybe short to medium-term trade, but i do think, especially when you are looking at financials, some of the european financials are doing better over the long term, so there could be some long-term plays. but i think the quick rebound we are talking about will be a more sh

these are the two leading nations within europe. the incidence rate in france is currently three times higher than in germany, and the pressure that is now being piled on france to take more action because they have yet to introduce a national lockdown under emmanuel macron is growing pretty fast. that is a huge blow between the two key driving nations within europe at the moment. we will see what the follow-up is from the french. the u.k. is looking at something similar potentially as well. this as france really struggles to control what is going on with the virus in that country. taylor: and the frustration over the vaccine rollout, i think we know what we are going to be discussing. in the meantime, let me just pivot quickly back to arie. as we think about all of these headlines, the difference between the frustration in europe and the relative calm and the attempted reopening in the u.s. has never been starker. as using about -- as you think about it, are you relatively up to mystic on the future growth, the health of the consum

that includes europe as well. so as far as the stock market is concerned, it is looking forward, and it sees a better year through next year. i would say no matter what anybody is worried about, there's two things that trump everything. one is that for the united states consumer, there's still over $2 trillion in excess savings that can be spent. at least 1/4 of americans today say they are very worried about covid which means there's pent-up demand to the extent that they see that, fingers crossed, we get through this without having a dark winter for covid and the variants, and used will have a very easy fed. i would not fight the fed, and i would not fight all of that money sloshing around out there. guy: how high do rates have to go before we need to start questioning current valuations? say we push north of 2% on the u.s. 10 year. when do you think there will be a point when the market, the equity markets start to revisit current valuations based on superlow rates? linda: of course, interest rates are moving u

the situation in europe, there's not one europe. different countries will be affected in different ways. guy: and the economies are going to be affected in different ways as well. scott, thank you. scott marcus from bruegel, where he is a senior fellow. we will take a look at the implications of all of this from an economic point of view. george buckley, chief u.k. and euro area economist at nomura, will be joining us. this is bloomberg. ♪ ♪ ms. lagarde: what we are responding to is a yield increase that will get ahead of the expected economic recovery. that is what it is. and while we believe that 2021 will be the year of recovery, we don't see it happening until the second half of 2021. guy: that was ecb president christine lagarde speaking to lawmakers on inflation and inflation expert patient a little earlier on. george buckley is the chief u.k. and euro area economist at nomura. how big a problem do you think christine lagarde has here? we are seeing a u.s. economy that is roaring ahead. you heard from powell. yields are sh

we saw that in europe. so far, the u.s. is behind. i think you are leslie to see what i've called a jailbreak, once we get past all of this. i think people want to travel. they are tired of being home. the u.s. has been saturated all summer long with travelers. i think the international markets are next, especially europe. i think people want to go back. so we expect that to happen. i frankly don't understand why the u.s. hasn't reopened to travelers at this point. if they are making it tough to come back into the country, they should just open it up. we traveled last week outside the country. we tested, we came back. it was fine. kailey: do you expect any changes in terms of capacity? that has been getting ramped back up, and it has been difficult for the airlines to do so, to get their pilots back in planes, for example. if they cut it again, what does that mean? helane: i am hoping we don't cut it again. i think this whole thing has gotten really out of hand. i think the government needs to think about what is going on here. they a

and we haven't heard anything about europe is going -- about what europe is going to wind up doing. guy: it is everybody's problem, but everyone for themselves at the moment. the shortages are really substantial, and it is all based in taiwan as well. you throw in the geopolitical risk around that, i think the analogy of comparing it to the oil shock is a really smart way of looking at it. as david says, they are moving to electric. everyone is going to have to have enough capacity. it is going to be rare earths, chips. if you want your industry to do well, if you want your industry to be globally competitive, you've got to make this stuff. alix: but good luck, mary barra, stockpiling cobalt. i know you need it for your cars. [laughter] david: i actually asked her about other shortages maybe in other supply chains as she ramps up dramatically, and she said a lot of the emphasis is on r&d to use less cobalt, to use writ less -- to use less of those rare-earth. i think she admits right now there's not enough production to support the ev's they are projecting. alix: i wonder what they

we have just been hearing about the pmi's in europe. really strong growth numbers, good momentum, but at the same time, superstrong inflation in that mix as well. how do i manage one with the other? karen: that is the tight rope we have to walk as investors, managing that grows expectation with the fear of inflation eating into returns. that is why we would favor investing in things like tips, bank loans, things that don't have the volatility associated with the energy sector and can have a more consistent return. but i think those are great returns -- great tools for investors to hedge themselves in inflationary environments. alix: where does that leave consumer stocks? look at best buy, a huge gap down. there were some obvious idiosyncratic issues, but the margins story is some thing we saw with target and walmart that weighed on their overall rosy outlook. what you do with those kind of names? karen: i think partly, we believe inflation is transitory -- if we look through prices are transitory, those challenges are going to abate ove

what you need to know out of europe? boris johnson raising taxes for workers and investors to pay for post-pandemic social care. the prime minister rutte speaking in and in person press conference at downing street. the world's largest -- slamming working from home, saying it hampers risk-taking. are we all going back to the office? if so when? we are going to be live in berlin with the details of that.

what you need to know out of europe? there was a fired shot between a key cable between english -- england and france. soaring gas prices. european utilities dropping sharply. also under pressure, beijing is putting restrictions on casino operators in macau. all down. opec and its rivals are struggling. we will break down those numbers,

europe has been perceived as the cyclical play. is that where you are going to get the biggest bank for your buck? tobias: you will get it in certain em areas as well, emerging markets that have significant commodity exposures. so latam, emerging markets in asia. keep in mind, the s&p 500 orchid cap is comprised of secular growers. think about technology, entertainment, and digital retail. that is a pretty big chunk of the u.s. market. you don't have that in europe. it is much more financials, etc. that is kind of the divide when using about composition. 30% of the s&p 500 were those secular growers, and 30% of the market cap was in favor of sector growers. arguably, other parts of the world are far more a college trade. guy: thank you very -- a cyclicality trade. guy: thank you very much for your time. what have we got coming up for you? kathy woods selling chinese tech stocks. more on the changes she's making. we are talking about her flagship fund. we will focus on that next. this is bloomberg. ♪ ritika: it is time for the blo

europe is recovering, but there are many parts of europe that are still in lockdown. obviously, the u.k. ended some of their lockdown. so until they get to a little bit better place from a vaccination point of view and catch up with the u.s., i think it is going to be behind, but in the environment where they are still in various stages of lockdown, it is starting to recover at a decent pace. but i would suggest if we get to the second half of this year in the u.s., you are going to have a big rebound. i think it will take a little longer. at the end of this year, beginning of next year for europe. alix: chris, thanks a lot. and congratulations on the hotel as well. the hilton ceo joining us there. guy, when you talk to the airline ceos, do they see that one to two quarter lag behind the u.s. in terms of reopening? guy: i think they don't even want to look at the states because there has been a huge domestic recovery there. there's a business there that is basically back to where it was before, and i think they are just green with envy to see what is happening there.

what do you need to know out of europe. is coming down sharply in europe today. but soaring gas prices were singing two u.k. fertilizer plant to close temporarily. stocks also sliding. france is furious as australia ditches multibillion dollar submarine deal in failure of a new u.s., u.k., australia strategic packed. the eu's lack of geopolitical influence. we will talk about this later in the program. ryanair stock surgi

we have a problem here in europe . so i am staring myself on the google morbidity data and on the vaccination data. i am optimistic that the european countries get their act together, but it has been disappointing so far. alix: how much does growth leg behind, but also inflation forecast? erik: on growth we are having a 3% growth average this year. i think that looks ok, even though the first half of the year is a little worse than expected. but in the fourth quarter last year, the fourth quarter probably turned out a little bit better than we thought. a little bit higher, but the average is still about 3, right? so that is really where it comes from, and once growth comes, in the spring or summer, then the ecb -- growth numbers are not healthy in my opinion. that is when the market will have that conversation. guy: can the ecb continued to buy at the current rate if there is fiscal stimulus in rome? we have avoided elections at this point. say it flares up and there is a significant problem in rome and the government

europe a little bit more mixed right

europe probably will as well. scott: yeah, the rollout, which, you know, a as we saw in the u.s., it's bumpy in the beginning most of the member states will solve some of those prox the supply question be likely not be solved until later in the spring. ultimately, that probably puts many european union countries a couple of months behind the u.k., probably the u.s. in terms of reaching this less disruptive new normal. that could be midsummer. but ultimately, i think they will put the pieces together to vaccinate enough people to really drive downs transmission but it will be slower than their peers and there will be political and economic implications as many countries right now are dealing with a challenging potential third wave. alix: yeah. let's end on that. and this may be an unfair question, but i wonder when you look at the economic forecast and then the corresponding market reaction, is that factored in? do you feel like investors have come to the fact that europe is going to be months behind because of thi

there some in europe? pieter: there are couple of spacs listed in my home country of the netherlands. i know they are loosening the regulations to allow some spacs there. it is not very well constructed in europe. for u.s. spacs to focus on european markets, particularly smaller companies, it is difficult to build the kinds of relationships especially that we have in the market cap range. there will be an attempt but i think it will be difficult for people to execute. vonnie: are you raising money in this environment? what is your experience with what is happening with institutions? it is a zero interest rate environment. it seems like everyone is raising money. pieter: based on our experience in other areas, if we do see opportunities, it is definitely in the acquisition arena. europe is still quite conservative in terms of capital allocation, so there is a lot of room for improvement. if we were to start a new strategy, long short strategy, if we were to start another strategy, it could have an activist

but europe is interesting. listening to some of our conversations not just today, but over the last few days, bridgewater the latest to be talking about what is happening in europe, seen as potentially a better way to play this narrative, and certainly the data in europe looks like it is getting better and better. there's even a debate over here about what is happening with potentially an ecb taper. we will talk about all of that. william de vijlder, bnp pariba'' chief economist, will be joining us next. this is bloomberg. ♪ >> the countdown is on in europe. this is "bloomberg surveillance: europe -- this is "bloomberg markets: european close," with guy johnson and alix steel. ♪ guy: 30 minutes to the close. this is what is happening in europe. the european commission says the euro zone will grow significantly more quickly than previously forecast as vaccines and fiscal spending kick in. rates moving higher, mainly on the back of the u.s. inflation print. italian yields pushing back above 1%, refocusing att