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tv   Bloomberg Markets European Open  Bloomberg  March 24, 2021 3:00am-5:00am EDT

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anna: good morning. welcome to bloomberg markets. i am live in london. our market live managing editor joins us in singapore. the cash trade is less than an hour away. powell expects a bump in inflation but says it will not get out of hand. yields drop for a third day. powell and janet yellen had back to the hill today.
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the eu is said to tighten vaccine export rules. severe disruption to shipments may be on the way. a giant container ship blocks one of the world's largest trade groups -- trade routes. we will bring you the latest. a very good morning to you. 7:01 now in london. whatcom to the european market open. mark is with me from singapore. mark, what are the market saying? mark: good morning. it is a classic risk aversion day. we are seeing risk across all markets. we are seeing bonds higher. we are seeing risk aversion higher. the dollar and yen are higher, weakness in other currencies. a focus on asia risk aversion. anna: we will get into that shortly. let's get into breaking news out of london. cpi numbers breaking.
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consumer prices rising by 0.4% did --. we were expecting something stronger. bloomberg economics had been talking about 0.7%. this seems to be weak compared to what the market was expecting. until april, then in common with many other jurisdictions, we will see a pickup in inflation because of the energy prices being so weak that time last year. we will get that uplift as a result. higher unemployment levels, as we go towards the end of the year, what will they do to weigh on that dynamic as we get through that last year peak in oil prices, is that something to watch? to show you the pound there, just an hour away from the start of european equity trading session.
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u.k. inflation, it is as mark was saying pretty risk off. we will come to that conversation. we have that european dynamic today. that is around lockdowns, extended lockdown. this trait europe was weaker. the u.s. was weaker for similar reasons. today, the u.s. looks more mixed event european features, still to the downside. mark, what are you seeing in that gmm in terms of what the asian market is telling us? mark: that gmm tells us that we are seeing this brought risk aversion but not panic risk aversion. in the first column, the genuine -- the markets are down across the board. we are also seeing some weakness in some of the asian next currencies. also the chinese yuan is well. we are seeing fonts higher, yields down but not too drastic.
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none of the moves are too extreme. equities are steeper, bonds are stronger. anna: one of our colleagues pointing out that people do not want to sell bonds to central banks right now. that is how much they want to hold onto them today. that is part of the narrative in that new zealand session. you are not seeing classic risk aversion in stocks and bonds, you are also seeing in fx markets. mark: that is right. the dollar has been strengthening on this idea that the u.s. recovery is going amazingly, yields are higher, that is dragging the dollar higher. a world of positivity that has seen dollar strengthen. that means we have seen that yen weekend. that has been one of the best risk adjustments. in the last 24 hours, 40 eight hours, you have seen a shift. dollars have stayed wrong but we are seeing again strength. they are returning to those
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traders and currency dollars. perhaps most noticeable is the euro, that has been kind of slumbering for the last couple months right now, it started to break down this week. anna: we mentioned in our headlines about the canal, this something that could take days to clear. it has the potential to make a complicated supply-chain story even more complicated. also the attention -- the ability to move oil prices. they have been quite drastic in recent weeks. part of the story we have seen. mark: oil has been a canary in a coal mine. it is the first asset to react violently that there may be greater lockdowns in europe that the pilot -- that the virus containment was not going to well. oil continues to trade poorly.
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that is the canary in the coal mine. it is ironic that the last month we have been talking about and inflation scare but we are seeming to get a deflation scare. oil is falling fast. it is still looking happy. if the swiss canal -- suez canal drops bank prices, that would be bad. it would mean supply is destructed in it would increase negativity. we also know they are falling because there is no demand. at the moment, it is looking tough. anna: there are different strands to the concerns about the fight against the virus and how that is weighing on sentiments. the european lockdown narrative, the time it is taking for parts of europe to get vaccinated. there is also an agent dynamic to this, with vaccinations there being suspended in the short-term as they make investigations into their vaccine. is that wing on sentiment do you think in the asian section? mark: definitely.
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this idea that people are nervous that the vaccine is not just a europe story. hong kong is a great example. the jurisdiction has ample supply, the even lowered the noble who can access the vaccines age to 16. the problem is people will not take the vaccines. the holdup will increase the nervousness. this is the idea that hong kong may not get their population vaccinated for a long time despite the fact that they have the vaccine period they cannot convince people to receive them. anna: interesting developments. mark stays with us. you can get all that inside analysis. coming up on the program, a giant ship blocks one of the most busy waterways. vital to the movement of everything from oil to consumer goods. we bring you all the details.
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plus, the eu is set to tighten vaccine rules. we talk about it this week in this week's brussels addition. -- t dish and. up next, jay powell expects a bump in inflation. he says it will not get out of hand. we get the take from klaus baader, global chief economist at societe generale. this is bloomberg. ♪
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>> our best view is that the effect on inflation will be neither large nor persistent. >> we should be clear eyed. the country is still down nearly 10 million jobs from its pre-pandemic peak. >> indicators have turned up
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recently. household spending on goods has risen notably. so far this year, although spending on services remains low especially in sectors that require in person gatherings. >> confidence that people will reach the other side with the foundation that will be met by a growing economy. we may see a return to full employment by next year. anna: powell and janet yellen testifying before congress on inflation and the economic rebound. janet yellen's comments that we collected focusing on the extent to which the u.s. economy is still underwater compared to last year. comments from powell are interesting, not large and not persistent period nothing to see here in terms of inflation. mark: the message is very clear. they are not worried about the
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threat of inflation right now. you look at those u.k. inflation figures and it backs up the idea that inflation is not yet upon us. the more new its takeaway is that this is the theme that is going to ebb and flow for many months. we are not going to decide this in the next few months. everyone wanted to know whether it was over her not, the theme that it is going to ebb months ahead. anna: the inflation story driven by the current state of affairs and what is happening -- what was happening lester at this time. let's get to talk around it at this time. klaus baader joins us. the inflation numbers are looking lackluster. the u.s., fed not concerned. inflation will not be large nor persistent when we do see it pickup later this year period do you go along with that assessment? klaus: in the medium-term i do. i think we could see some
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eye-popping numbers. what is going to drive inflation numbers in the next two months is this massive swing in energy and oil. by the time we get to april, may, the change in the crude oil price will be something like 160%, north of 160% in europe. that will drive it up. it also tends to have a knock effect on prices. in the near term, there are a lot of tim -- things that .2 upside. in order to get that, what you really need to see is a labor market that allows for rapid wage increase. that is on the horizon. i wrote in our latest that inflation will be bucking like a
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bongo in 2021. that is still the way i feel today. mark: consensus growth forecast is 5.6%, 4.1% for 2022, are these mistake or can we do better than that? klaus: i think they are cautious. i think we can do better. it depends on what households are going to do with this, excess savings. households, -- you see, this has been unusual economic cycle in that it was not triggered by economic shock, it was triggered by, effectively, the large-scale shutdown, sudden stop of the economy. the same time government has supported incomes and cash flow, but incomes have been strongly supported by -- while households have spent money.
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the incidence of weak expenditure and a massive buildup of savings. we are talking about numbers that are stunning. in the u.s., up to january, a figure that is around 1.9 trillion. we are looking closer to 8%. what are consumers going to do, that is the question. not only do they go back to the savings rate that they were maintaining before the crisis, savings rate meaning out of income, they spent a lot of money of all that that they have built up, we could get a very strong recovery and a strong first of expenditure. for that, you need to open the economy. anna: i know you're seeing signs of what the people who have been vaccinated are about to spend money on. analysis suggested early signs of those who have been vaccinated may be happy now, or
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happier to go out and spent on credit cards or holidays and travel, where they are able to do so. are we getting any early signs of houses going to now -- early signs of how this is going to play out? klaus: yes. air travel is expected. it is not only the old people who have been vaccinated, there are many of them. they feel safe going on an airplane, going to restaurants and hotels and theaters and it house open. they feel perfectly safe to go back. i think there is potential for a rebound. let's not forget, a lot of young people are not afraid of the disease. they know that the chances for them to get really really sick is pretty low. we have locked down these
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economies in large parts, where we have locked them down to avoid our health systems becoming overwhelmed. anna: thank you very much for the insight so far. stay with us. klaus baader from societe generale. what to bring you lines from the canal. this comes from the sewage authorities they say efforts are ongoing to move the ship that is stuck there. navigation is normal in this old canal, according to the statement. the grounding happened due to bad weather. we will try to make sense of that and in the meantime get a first word update. laura: i giant shipping container is blocking the suez canal. withholding traffic from one of the busiest waterways. over 100 vessels go through. type boys are trying to move the vessel. -- tug trying to move the vessel
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deadlock in the election again. no clear path to forming a government. if the numbers are right, the two sides will look at possible and nine -- alliances. if that fails, israel could face a fifth election. they have suspended biontech's vaccine because of a defect. the manufacture is investigating in-state there is no reason to believe safety is a risk. no information on how long the suspension will last. global news, 24 hours a day, on-air and at bloomberg quicktake, powered by more than 2,700 journalists and analysts in more than 120 countries. this is bloomberg. anna: coming up on the program, i need for speed, they use slow vaccination program continues. what this at mean for the economic recovery? we talked to klaus baader from
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societe generale next. this is bloomberg. ♪
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>> there are signs of exuberance in certain areas of markets, sharp rises in volumes and inflows, i don't think we have a bubble. given the level of real rates, there is still likely to be brought into sectors versus bonds. anna: oppenheimer giving his view that things could be broadly supported for equities versus bonds. an interesting story that raises questions about the role of resale investors. will they continue to be so? one of our colleagues saying that the brigade is in retreat.
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suggesting we will see u.s. volumes slipping. that could be a sign of reduced rates and retail. wonder what you make of that. >> we know that the recovery was partially or largely driven by retail momentum. the fact that they are buying less options shows declining appetite to take that risk. there are maybe two facets to this. they could be sitting on losses. nasdaq has gone nowhere in the last three months did i think that is one part. they may be sitting on losses. as the economy opens up, are there going to be spending more savings on real economic activities like eating out, drinking out, going to the cinema, rather than this stocks online? anna: a conversation we will return to.
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as we see this stimulus checks arising, interesting to see how they are spent. this trip to europe, the vaccine rollout has been slow. the region has seen another wave of viruses. the netherlands is extending their lockdown. the move comes after infections rose. germany, france, and italy have also risen their curves. there is doubt about the progress at the global economic reopening. klaus baader societe generale from his -- is with us. our expectations have been challenged a little bit by some of the larger lockdown measures being imposed. klaus: absolutely. the prospect quarter are deteriorating every day as you mentioned, we have seen a variety of european economies pushing restrictions, really quite tight restrictions into
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april. they are not going to roll back the first quarter, but also at least the beginning of the second quarter. it is deteriorating. the question is, does that mean medium-term outlook is also deteriorating? to some extent, yes. the longer the economy remains in shutdown, the more people are going to lose their jobs and the more companies will shut their doors for good. i do not think that this derails the fundamental story. european leaders get their act together, both in terms of procurement of vaccines but also of rolling them out. we note that lots of countries are sitting on massive piles of astrazeneca and vaccines and are not administering them. mark: we are seeing this persistence in economic forecasting volatility carry-on, last year the result was incredible.
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the markets are on ending raising recovery, look like it was going well, you observed the second half forecast are being derailed. it seems like every quarter is volatile, design meet we will have persistent volatility on the market side as well or do we get bored of that ? klaus: i think it will be very much the order of the day. even greater volatility than in europe. later this week we are going to get the february numbers for household income and consumption in the u.s. and those will show a big decline after a very big increase in the previous months. the checks are already rolling out. it is likely that come march or the march data that we will see u.s. consumers again receiving lots of checks and rushing out to spend that money.
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i think economic volatility is going to continue to remain fairly high for the new term. let me say one thing, what i don't think is being undermined it is the fundamental pattern. the fundamental pattern is that when you lockdown economies or tightened restrictions, you have indicators. soon as you loosen those, we see a very rapid rebound. if anything, running lockdowns. should be depressing economic activity less. we are getting better about dealing with that. anna: these are unusual recessions that have been self-inflicted by us, governments, on these economies. klaus baader global chief economist at societe generale. coming up, the budget today, we
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will be discussing the german economy. that conversation coming up next. this is bloomberg. ♪
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anna: welcome back to the market open. half an hour into the star of the european equity trading day. futures are pointing to the downside. the shipping company in connection with the vessel that is blocking the canal, no progress has been made. the cause of the vessel grounding was something called " blackouts." we will get more details. this is something that got the
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markets attention. it could have impact on various markets. mark: definitely. i heard it will take three days to clear, which will not be a big story, but it tends that there is a lot of uncertainty. i am worried about that. anna: let's get the conversation around more details. let's get a bloomberg business flash. laura: trading at robinhood says it has filed for an ipo it could go public soon as late in the second quarter sources tell us it is still early days and the timing could change. it has selected nasdaq is the venue. robinhood has not set up terms yet. a blow to cinemas, disney says two of its most anticipated new movies will be on disney plus the same day they had theaters. black widow and corel a will both be available to subscribers
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down 90% this year intel is spending billions of dollars to add manufacturing and invest in a company that makes chips. intel is spending an initial $20 billion on two new plants. we speak to the ceo layered. that is the business flash. anna: let's turn our attention to germany they are ramping up their borrowing this year. europe's largest economy aims to borrow more than 200 billion -- 240 billion euros. schulz will also present a draft of their spending plan and constitutional borrowing limits for a third street year. that is the country grapples with a fresh wave of the
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coronavirus which has led to an extension of the lockdown and harder measures over easter. we are joined with marcel fratzscher president of the diw german institute for research. jane -- thank you for joining us. looking like it is going to speak about the extension of the break. this the extension of the lockdown make that an easier decision? marcel: yes. the german economy is relatively resilient, thanks to strong industry. unlike the first lockdown in the second quarter last year where the germany economy contracted about 10%, now we expect in the third quarter only a very mild contraction of the german economy. it is very clear now to everyone in germany that the economy
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probably will not grow into the third wait is over, until many people have been vaccinated and that will most likely last until the summer. yes, the recovery is much lower in germany than elsewhere in the world. that means more fiscal stimulus and support is needed as well. mark: good morning. as we continue to extend these borrowing extensions in germany and with an election ahead, is there a chance that this is the start of a massive structural shift for germany and it may be a new era of fiscal spending ahead or do you think they will revert to the traditional method very soon? marcel: if you look at that united states and other countries, you would think an election campaign and a new government would increase spending to help the economy out of this crisis. germany is quite different, the mentality is different. they are coming out of 10 years
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of supporting a policy of the black zero, the former finance minister. people are proud of what is happening. the mentality is that people have to return quickly to a balanced budget to fulfill the german debt break. it means a balance structural budget. it is really about priorities and, unfortunately, the conservative party, the main government party and also the support of the public is very strong to put new debts in a higher priority into digital and into climate. this political campaign is about those priorities and my fear is the choice will be debt break is more important than investment to the future. anna: the focus on the black zero, the debt break, this
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conservative approach than in germany, how much is that going to be influenced by the outcome of the election? or on the ballot paper at the election if the cdu is no longer the largest party, is that going to change the dynamic around this at all? marcel: yes. the decisive issue in germany is investment. the green party, the second strongest party at the moment, has been rising fast over the last year-and-a-half. they have a very strong agenda of supporting investment in climate protection in digital infrastructure. they are quite pro-european and also seed more need -- see more need for investment in europe. in government they are moderate, the current finance minister is running for chancellor for democrats, also on in agenda of
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supporting public investment. at the moment, it is clear that the governing party, the biggest party, the cdu is still far ahead in the holes did -- far ahead in the polls. at the moment it looks like that fiscal hawks are certainly in the majority and new government with conservatives will see two planks returned to the debt break as quickly as possible and no tax increases. these are the two fundamental fiscal policy issues. they are getting quite strong support from the german population. mark: it seems like we are struggling to adjust to the fact that germany is back into another lockdown, it is not just a german-domestic bloom, its largest trading partner, the netherlands is also going into extended lockdown, are the forecast still too optimistic? is there much more growth downside that we envision for? marcel: the risk off is quite
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high. what we can do is basically describe scenarios. there are reasons for optimism. one lesson of the first wave of the pandemic last year was that the german economy and many other european economies have a very strong rebound once the crisis is over. continental europe, including germany, have a very strong welfare state. unemployment has not risen much compared to the u.k. or the united states or other economies. the chances are good. once the pandemic is under control, that there is a restart of the economy, rebounding quickly, as i said in the beginning one of germany's big strength is almost 40% of gdp our exports and they are doing well. industry has been very resilient the past few months.
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cal manufacturing, machinery, pharmaceuticals, that is the strength of german economy in the sectors are doing well. also thanks to the big rebound we see in asia and hopefully in the united states. anna: thank you for joining us. marcel fratzscher president of the diw german institute for research. thank you for spending time with us. coming up, back to that giant container that is blocking the canal. one of the world's biggest waterways. we will get the latest for you on that story. this is bloomberg. ♪
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anna: welcome back. 7:41, just 20 minutes to go until the start of the trading session. we see the markets looking weaker. we talked about lockdown measures and we will continue to
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do that. we will get an update on those shortly. i know you have been thinking about correlations that exist in markets, the rolet yields have been playing in writing other assets. the relationship with the dollar. what are your thinkings? mark: there is something big going on in markets that is subtle. the relationship between the dollar and yield it is reverting to wear was last year. the fed, we sought yields collapse in the u.s. and we sought the dollar weaken last year. the u.s. yields and dollar were positively correlated, both or weaken last year. a month ago, we started to get really excited by the u.s. recovery, the vaccines were rolling out well, we are getting stimulus, forecasts were being upgraded, we saw a shift in the relationship. we started seeing yields rise as the dollar rose. we went from negative
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correlation last year, i think i said that wrong, to a positive correlation. now as of monday this week, it looks like the relationship has peaked out and we are seeing the dollar continued to strengthen, but yields are coming down. we are reverting back to a classic risk-on, risk-off. people are piling in those havens, the treasuries. this is a slightly whirring sign, it shows that spirits are gone, people are not believing in the economic recovery like they were a month ago. anna: simpler to understand, but worry that we are seeing havens moving in the same direction. negative correlation, then positive, threatening to go negative again. one we will watch. two people who will be focused on treasuries in the dollar, let's have a look at what is going on today and a heads up on what to expect. fed chair jay powell and janet yellen back in action. thinking about their election to
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-- about their relation to the dollar and treasuries. germany's cabinet sign off on their 21 and 2022 financing plan as well as midterm budget outlook. germany is set to take on just over 60 billion euros extra debt this year. we talked a lot about that in our last conversation marcel fratzscher with from the diw. lots to watch out for today. of course, we are keeping a check on tensions when it comes to vexing politics. we are seeing the eu set to release new rules that could disrupt shipments to the rest of the world. let's get more from our reporter in brussels. good morning. are we heading for more restrictions in the near? they brought in new rules weeks ago in europe, and had a lot of
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exemptions, now it looks like those exemptions will be done away with. maria: yes. that is the basis, to remove some of those restrictions and include some of the new ones. i would say not restrictions but exemptions. the commission is expected to put the document out today where they will say they want more rep rock -- they want more rep rossi. you can see tighter restrictions when it comes to export and vaccines but also the ingredients to make a vaccine. this goes back to the core of the european argument which is that they believe they do not get a fair deal from the pharma companies. overall, you look at a move that could potentially impact 90 countries. the global supply chain for a vaccine is very global, very complicated. and every time you escalate, it could backfire. the message that they are sending is clear, this is more pressure on companies to deliver and deliver on the contract in
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the european union. the one area it will there would not be changes is covax, the assistance to countries who have not been able to obtain their own vaccines. this is coming at a time which the european union and united kingdom are fighting over production of a dutch coronavirus vaccine. it is coming a day before european leaders meet here in brussels to decide whether they want to offer tougher restrictions. anna: we know prime minister boris johnson has been hitting the phones ahead of that meeting. thank you so much. maria tadeo and blessed -- maria tadeo in brussels. the ship has become wedged length ways, leaving 100 vessels gridlocked. it has jammed a trading route vital to everything from oil to consumer goods. let's get more from one of our
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bloomberg reporter's who has been falling this. how important is this for sewage and energy markets? we have seen a rebound, is this link to what is happening there? >> yes. this is a crucial route for global trade. and energy. we have about eight million barrels they go through the canal and much of the world. oil is up today, reversing some of the heavier losses from yesterday. definitely seems as if the blocking of the canal is causing clinches in the oil market. at the moment, i think this will get cleared up quite quickly, in the next 24 hours. there is any hint it will carry on for longer, several days,
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than that could cause serious headaches for global shipping and energy markets. mark: good morning, paul, i know you're seeing 24 hours, i heard three days this morning. it does not seem like they made much progress yet when are we expecting the next update and has this happened before? paul: just on timing, we have not got anything official. the suez canal authorities put out a statement about 15 minutes ago, but did not give any hint on timing to resolve this. if it goes on for several days, we are in unchartered territory. you almost have to go all the way back to the late 1960's and 1970's for a period when the canal was blocked. back then it was due to regional wars, since 1975, it has not
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been shut down any length of time read about five years ago there were a few incidents of container ships running underground, and close for a few hours, but nothing that has seen it shut for several days, let alone weeks. that would be unprecedented. anna: paul, think you very much. really interesting story, we will continue to watch developments and bring you pictures. bloomberg's paul wallace with the latest going on in the canal. coming up, we are looking at stocks to watch including carrefour as they agree to buy a resilient retailer for $1.3 billion. this is bloomberg. ♪
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anna: welcome back. we are about a and a half minutes until the start of the training session.
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lockdown measures and the toll that takes on european equity markets. another session of broad risk aversion perhaps globally, a global feature two things today. european equity markets expected to trade to the downside. let's get to dani burger who has been pouring over details for us. carrefour has been shopping in brazil. dani: they have been shopping a lot in general. they spent $1.3 billion buying one of the big resilient food group stores. they are buying it from advent and walmart. it used to be a walmart subsidiary. carrefour will add annual earnings, look for a booth there. mark: with the canal news, what is happening with that major shipping companies? dani: shipping companies did take a hit, given the blockage in the suez canal.
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100 vessels stranded or not able to move. that will perhaps tumble, some exposure to the oil majors as well as refineries in today's session. anna: what is happening with chip cells? we have heard from intel, where they plan to build out, what specifically they plan to do with the capacity, this is something that could have an impact on european chip names read -- chip names. dani:: points out that 50% comes from intel. of course it has an impact from some of these other shocks. some already moving higher. volume is somewhat light, but they are up in the trade. we could also see other stops move as well. anna: thank you. dani burger keeping us updated.
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we will keep those in focus. mark, a few minutes ago until the open of the trading day. global seems to be the theme. we have had the last couple of sessions focused on european lockdowns, extended lockdowns, growing lockdowns in some cases, but today's selloff has more of a global feel to it. mark: yes, i think that is fair. the nervousness around lockdowns is focusing europe. there is concern, in asian markets again today. one of things to now, the price action is poor. rice action is one of those words that raises scorn from animals who have never treated. -- analysts who have never traded. the bulls are the ones who seem to be jittery. it has hinted overall it is not the king like a great week.
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-- looking like a great week. bonds are strong and equities are weak. a rush to haven. a broad theme across markets. anna: i will leave the trading to you, mark. what have we lost in terms of trading? tech stocks, nasdaq futures are higher. mark: that is right. we are reverting to lester's trading. that might be what is with us in the next few days. temporarily we are shifting back to lester's playbook. anna: it is all looking a bit 2020. mark, thank you very much for spending the last half-hour. i will be back with the open. futures are pointing to the downside. u.s. futures have been more mixed as we have gone to the session. eu futures are flat. nasdaq futures are up.
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plenty to watch out for in terms of yellen and powell. we are also keeping an eye on the latest developments on the suez canal. we will bring you more from that region when we learn more. this is bloomberg. ♪
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anna: welcome back. one minute until the start of cash equities trading. jay powell expects a bump in inflation but says it will not get out of hand. yields drop for a third day. the eu is set to say the vaccine export rules. we will get the latest from brussels. the giant container ship blocks one of the world's busiest trade routes vital to the movement of everything. we bring you all the latest. good morning everybody. welcome back.
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40 seconds to go until the start -- until the start of the european equity trading session. we have them on the back foot in terms of futures. we are expecting to see weakness. how will tech stocks react to the news out of intel spending billions to revive its manufacturing. how will the european textbased respond to all of that? some of that -- tech base respond to that? we are keeping an eye on travel and leisure stocks. increasingly concerned on an ongoing basis about the extension of lockdowns and of the delayed rollout of vaccinations in europe. that is certainly a narrative that has gripped the market this week and we see it playing out. we've got the ftse down by a
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similar margin in the spanish i'd ask down by 8/10 of 1%. the european equity markets opening down, only technology stocks in positive territory so far. travel and leisure once again to the downside. let's start with global themes. with this pullback, let's think about where we are on the inflation narrative. jerome powell seen prices rise. play down the risk that would spur unwanted inflation. he testified along with janet yellin on the government's response to the pandemic. >> our best view is that the effect on inflation will be neither particularly large nor persistent. >> we have seen signs of recovery, we should be clear i'd at the hole we are digging out of. the country is still 10 million jobs from its pre-pandemic peak.
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>> household spending on goods has risen notably. although spending on services remains low, especially in sectors that require in person gatherings. >> with the passage of the rescue plan i'm confident people will reach the other side of this pandemic. with the foundations of their lives intact and i believe they will be met there a growing economy. in fact we may see a return to full employment next year. >> joining us now is newton investment manager portfolio manager. good to speak to you. we have jerome powell testifying saying he expected bump in inflation but it won't be large and won't be sustained. do you think markets aren't getting the message or believing the fed? do you think they agree that there is nothing to see here when it comes to inflation.
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>> i think marketer tomorrow -- markets are more worried about the message we are getting. but i think that is natural. given the phenomenal amount of stimulus we've seen, inflation is seen as a natural result of that and we have not seen inflation alone on that. there's a worry that if that happens, what will we do about that? i think the market is more worried, but i think that worry is not can it go away and we will see the short-term spike, but i do believe powell is saying sensible comments in terms of it will be transitory. anna: so you go along with that view. one of the drivers of the transitory nature of inflation we saw in lester's volatility in
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inflation, where do you see oil prices heading from here? we are back toward $70 a barrel on brent. where do you see the oil narrative heading? louise: i think oil could go up in the short-term, i think as we see it recover, i think the recovery will progress through this year and i think oil will do well on the back of that. the question is really more longer-term in this response we see to that and i think we can expect -- we can expect to see oil volatile in terms of how we see demand developing and how the recovery goes beyond that. i don't expect there will be as much volatility as we've seen, clearly last year was really quite exceptional. that makes this recovery seem
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especially strong while oil could do well and be a bit volatile around certainly short-term worries about demand. ultimately will be a -- it will be a more stable range. anna: where european equity markets are now, the comments from the fed and treasury also thinking about the latest news for oil price move. more impressing room -- we see the stories around technology coming to the floor. talking about intel and its investments in the chip space, where it's going to invest but also a pivot back away from the opening trade. we see that in u.s. futures. are we back to the 2020 trade really here? louise: i think that we are
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seeing is one of what will probably be quite a number of verbal jitters. i love it we've come a long way in terms of recovery. i think with technology specifically it will naturally i think lag as we see is cyclical recovery. the thing to remember there is the structural element behind technology haven't gone away. if anything it has accelerated. i think -- i don't think is mutually exclusive but we see recovery at the cyclical end and
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technology companies doing well. anna: thanks very much. stay with us. we will get more of a u.k. focus to our next conversation with louise. the u.k. inflation conversation. more of that next. this is bloomberg. ♪
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anna: just coming up to 10 minutes since the european trading session and weakness is a theme. we make a move to this -- moves to the downside apart from technology will receive the intel news lifting in that sector. in hong kong, the index lighting 10% from its february 17 peak. down by 10%'s now entering correction territory. the latest headlines taking the edge of the hong kong market around a pause in their vaccination rollout while they investigate. let's get a look at some of these stocks on the move. dani: you mention the technology sector was the only one gaining, you can see how well some of the chip stocks are doing. that intel news spending big on a business.
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they have a 15% of the industry capex. looking at german utility company eon move up in today's trading. not too much of an impact from the coronavirus as it continues to have europe. also spending more on dividends. a lot of cyclical industries is what's taking a hit today. concerns about the chip shortage. let me show you what the macro picture looks like because we still see the stoxx 600 as a whole dipping lower. the cyclical sectors are hurting it. it's -- sort of in line with that idea we don't have the reopening trade being put on is the u.s. 10 year yield also moving lower today. people going in and buying bonds for a third straight day. crude also getting a bump, perhaps that blockage in the suez canal helping with oil prices. anna: we see banking is now the
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biggest stalling sector on the european equity market. plenty of those banks in the red today. let's go to laura. >> -- says it's filed for an ipo and could go public as soon as late in the second quarter. the timing could change but it has selected the venue. robinhood is not set up the terms for the opening yet. disney says two of its most anticipated new movies will be on disney plus the same data hit theaters. "black widow"\ and -- "black widow" and "cruella" will be available for $30. intel is spending $1 billion to revive its manufacturing.
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it's investing in new factories in the foundry business to make chips. it wants to regain its lead against the world's most advanced chipmaker. intel had an additional $20 billion for two new plants in arizona. anna: quick headline in connection with leonardo, the defense company. shares dropping after the company postponed its ipo of one of its units. this -- leonardo operating as a technology defense company providing its services to aerospace defense and security sectors globally. also tracking the inflation narrative. u.k. inflation slowed unexpectedly. footwear prices fell. a more -- in more than 30 years. louise is still with us. we talked about global
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inflation, a little bit more emphasis on the u.s.. but here in the u.k. we've got this weaker than had been anticipated and may be discounting is behind that. but really helping us to keep in check our expectations of inflation i suppose. when we do have unemployment at elevated levels in certain economies. certainly the u.k. is or will be one of those. what are your expectations for the u.k.? louise: it's important not to read too much into the numbers because we have been in lockdown in place. i don't think the numbers are necessarily representative of anything we should expect going forward. i think in the u.k., of the overall dynamic is very similar to the u.s. in terms of there will be inflation short-term, of comparable effect from last year but there are enough deflationary pressures that will
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keep inflation in check and there's been many a time over the past decade or two that there have been stalls on inflation fraid not to happen. inflation is a material risk right now. it is a possibility, but i don't think that's the base case. anna: i'll return to the u.k. conversation a moment. breaking numbers from france. the french march manufacturing number, 58.8. the services number for march, 47.8. the services sector under 50 suggesting contraction. manufacturing above 50 suggesting the sector has continued to evolve its modes of operating to be able to operate through a pandemic. that something we might see.
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we will look out for the german numbers around 15 minutes time. let's go to the conversation now then. let me ask you about your expectations for continental european equities. a lot of people were talking about buying those in 2021 in connection with the reopening narrative heavily weighted toward cyclicals. and now people are asking questions about that as we see prolonged shutdowns and lockdowns of various kinds and european economies. how do you play european stocks at this point? >> we are seeing europe in a different stage in terms of implementing more lockdowns, but i think all that means is delaying the recovery and markets have been good at looking through short-term and focusing on long-term recovery. i think while europe is behind,
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i don't think we should reflect that negatively long-term. anna: you think this is just a temporary delay but they will get to a similar place and get there relatively quickly. a month or two month delay? louise: it depends on the vaccine rollout and a host of other factors we all have to worry about in terms of how the virus response to the vaccine. at the moment i would expect europe would be maybe two or three months delayed behind other regions. the whole situation is so dynamic is probably dangerous to put too specific a timeframe on things. >> in terms of the u.k. assets, i know health care and homebuilders which with the sectors. what were the ways you want to play those themes? louise: health care has been
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left behind in this rally. you look at the businesses, we've got thriving health care sector. two of our largest businesses are health care companies. it's not a coincidence one of the leading global vaccines has come from the u.k.. so we've got a really vibrant sector and the demand for health care in the long-term is increasing if you look at on the demographic trends in the businesses themselves are in a good stage. pharmaceutical and health care can be very long cycle in terms of expiring. we don't have any major in the near term. these look really quite attractive. so i think it's been -- i think at the moment is an opportune time for those. anna: thank you for joining us.
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a bit of breaking news this morning. some comments from commerce bank on what they plan and what they are hoping to achieve in 2021. i think they are targeting profit at the operating level. the real headline, they see a 2021 net loss on restructuring expenses. on the net line they are expecting to post a loss for 2021. banking stocks doing well -- not doing well. commerzbank is in good company trading in the red. intel takes on tsmc. the -- plenty of money going into european tech today. this is bloomberg. ♪
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anna: welcome back. 22 minutes into the european equities session. european equity markets making their way to the downside. turning to another corner of the market. reddit fueled traders got a dose of reality. gamestop fell short of analyst estimates and shares fell more than 15% post market.
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other popular trades by retail investors are in retreat. joining us now is dani burger once again. our retail traders throwing in the towel? louise: -- dani: gamestop fundamentally that picture doesn't tell. we have seen it fall about 14% in the premarket trade. options have been a retailer -- a fan of retail traders. short dated call options. they hit a peak earlier in the year but we've seen levels start to back off. the question is why didn't we see those types of trades pick up when stimulus checks were issued? there is a strong correlation between stimulus checks being sent out in these types of trades going on. you can look at things like google searches of flights have been strong. maybe people are spending their money on the real economy. regardless we are starting to see this type of trade not have
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as big an impact as it did in january or early february. anna: there are other things to do in the united states. even if we are seeing some of these trades backing off we are still hearing warnings from regulators that the risk associated with retail traders. is that backward looking? we have probably seen a structural shift in participation. we have seen increasingly easy access they have through various apps. dani: it makes sense for regulators just to look at this even if you don't have this insane number of options, just as a baseline you have more immersed people who are involved in trading stocks. that ultimately is a good thing. however it becomes not a good thing when it's very risky products people are getting tempted into. so they issued a warning.
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that base is picking up as they said so they are warning about things like cryptocurrencies and affects, a foreign exchange trader being a retail trader sounds risky. of the survey, two thirds said they lost a significant amount of money on these trades it would fundamentally change their lifestyle. they think that shows there is this younger population investing in risk tolerances but does not fit their profile. anna: thanks very much. continuing to watch the retail investor story. intel spent $20 billion on new factories in a bid for supremacy in the chipmaking business. the tech giant aims to create a foundry business that will make chips for other countries, putting them in direct competition with tsmc. joining us is amy. good morning from london. why does intel want to enter the foundry business?
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amy: with the ceo wants to do is certify the intel of a decade ago when it was offering new manufacturing capabilities that it's competitors could not match. you had pc makers basing your entire cycle around it. as the shortages ongoing -- shortage is ongoing, the industry is reliant on asia and a lot of people are seeing opportunities for capacity in other regions. the current model is keeping their designs and production in-house does not make a lot of sense now the chip technology is becoming more modular. they are made in different places using different technologies to fit customer's needs. it makes sense to diversify. anna: what has been the reaction from tsmc and samsung? amy: the losses weren't extreme
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and i think they paired it back. the thinking is it won't be much of a threat right away. they've been spending a lot upgrading their capacity and technology. tsmc will spend $20 billion in 2021. you've also got big foundry clients like apple and and who intel and may not want to shift their business. they are trying to head off their frenemy problem by making it more independent, breaking it off into its own unit. you've also seen customers like qualcomm endorsed the new plan. it remains to be seen how successful they will be. anna: thanks very much amy. thanks for bringing the update on that story. telling us what we need to know about intel and the impact it has had on other businesses it is competing with. don't miss our conversation with the intel ceo. they will be joining the
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bloomberg technology feed at 5:00 p.m. london time. we have already seen a comment from the irish government with regards to what's happening with regards to what intel is doing in ireland. space x is launching startling satellites from its base of the cape canaveral space force station in florida. we are bringing you these live pictures from the kennedy space center in florida. this is going to be the launch of 60 startling satellites from this space launch complex. we were just listening and there for the reports on the weather. 90% favorable for lift off we heard. we are counting down now to that lift off. happening in just five seconds or so.
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>> ignition down range. chamber pressure is level. power and telemetry nominal. >> falcon-9 has successfully lifted off from pad 48 cape
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canaveral, carrying payloads into orbit. we should be getting max q. anna: successful liftoff come as we hear there. spacex launching 60 sterling satellites from cape canaveral in florida. -- 60 starling satellites from cape canaveral in florida. interesting to see that reuse taking place, retrieved on a drone ship after it is used. we're just getting economics use -- economics news. german marsh manufacturing pmi coming in at 66.6 -- march manufacturing pmi coming in at 66.6. the manufacturing story in germany, of course this very much pre-extension lockdown measures, but testimony to the ability of the manufacturing
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sector to continue to operate through difficult times. services at 50.8, so even the services sector in expansion territory, both of those numbers coming in above estimates, very much above expectations when it comes to the german economy. i was just checking to see if we got any reaction on the euro, and there it is on the screen. euro-dollar spiking higher on that strong number coming through. let's get to the corporate news flow today. a bloomberg first word news update from laura wright. laura: moving to a different form of transport, a giant container ship is blocking the suez canal. it ran aground yesterday, affecting over 100 vessels. attempts to re-float the ship, but no report from its operator. an deadlock again, according to early results, neither prime
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minister benjamin netanyahu nor his opponents have a clear path. if the two sides are right, the two sides will -- president emmanual macron is saying turkey has plans to try to sway the upcoming french election. the comments come as a time relations between the two nations have been tense over a range of issues. macro added that an ongoing dialogue with turkey is still necessary. global news 24 hours a day, on air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries, this is bloomberg. anna? anna: thanks very much, laura wright in london. this technology giant internet media and services business, let me give you the numbers coming through. fourth-quarter net income,
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tencent, 59.3 billion you one, far off the estimate of 32.80 9 billion. -- 32.89 billion. the operating profit number looks to be above. we also see that -- in fact, we are getting sharepoint reaction to this process in the netherlands, they own a share of this business, that stock ticking up a fraction as they get those numbers. up .3%, and the tencent share price in hong kong closed at this point. we will look at the tension -- the tencent share price itself. the chinese government is dictating things when it comes to big tech in china, having it say right now. now to an asset class that has
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seen a recent surgeon popularly. an international ceo spoke inclusively with bloomberg about the recent nse art sale by people. and how the art market reached more collectors. >> there is a market for crypto art or digital art. this market existed for many years, but it was very, you know, confidential, very small. that has changed completely thanks to the block change technology because today with a block change technology, you can collect your own proof that the work is authentic and unique. and this digital art market -- on our market, you know, authenticity drives value. if you can prove them, and we assure clients about this, you
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transfer the value to market. that is the blockchain technology, and that is why you have seen that we saw for $69 million the crypto artwork, using the -- links to block teen technology. -- blockchain technology. it is astonishing, and opening a new dimension, just like discovering a new continent or reaching a new frontier for the art market, and it is just a beginning. >> in 9071, -- in 1971, they drew lines. >> absolutely. digital art is not something new. artificial intelligence is not something new. what has changed now is the
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non-fungible and the blockchain technology. you create the rarity and the uniqueness and you perfect them for your clients. therefore, the value changes completely because our clients in the traditional art market, or in the digital art market, are looking for the same thing. exclusivity of their work. that is what is done now with the blockchain technology in the digital art market. anna: guillaume cerutti speaking with bloomberg. a giant container ship is blocking the suez canal. we brought you these amazing pictures throughout the money. this is one of the world's -- throughout the morning. this is one of the world's biggest trade routes. dani burger has details. dani: this is the map on your terminal, a satellite picture,
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and this is the route, the shipping container that has gotten stuck. it is one of the biggest in the world. it takes off from a chinese port late february and over the next month travels through singapore having no issues. but then we get over here, and this is the journey where you cross from the red sea into the mediterranean. to give you an idea of how big this vessel is -- if you were to turn the eiffel tower on its side, the ship would be longer than that. in the suez canal it gets turned sideways, goes lengthwise. the charter says it was due to weather incidents that turned it off course. all these little blue dots you see here -- it usually does not look like this. they are vessels. when anything gets stuck, that means over 100 vessels are waiting to cross this port. when you talk about what it's doing to the energy industry, this gives you a good visual of the cluster that is going on over here. that is nearly 100 vessels being
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blocked, making the same journey it was attempting to do from the red sea to the mediterranean. anna: fascinating graphics to look at when it comes to the blockages and the disruption that this is causing. bloomberg's dani burger. paul wallace joins us. how important is the suez for energy flows in the oil market? this is one area in which we are seeing the market react to the story. paul: yes, this canal is extremely important for -- what we are seeing happen at the moment, but also for energy, and particularly gas, natural gas and oil, about a million barrels a day of oil passes through the canal, and much of its energy does, too. arkansas already -- -- markets
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have already -- anna: let's persist, we might have a problem with paul's line. paul, has this happened before? how often does this happen? this is devastating with the international shipping industry is dealing with all kinds of complications, recovering from the height of the pandemic disruption we saw last year. how often do we see this kind of thing happening? paul: it happens very rarely. a container ship goes aground and the canal is blocked for a few hours, but very rarely does something like this happen where it looks as if it could be at least a day if not a few days. when we are talking a few days of the canal being closed, we are pretty much into uncharted territory, and that is going to be a big headache, to say the least, for shipping and energy markets. anna: writing -- riding something that is longer than
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the eiffel tower. paul wallace joining us there on the latest of element in the suez canal. coming up, european banks -- commerzbank shares are falling amid a net loss this year. but is a broad retreat across the european bank space? we will get more of what is driving european equity markets. this is bloomberg. ♪
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anna: will back to the european market open. two minutes into wednesday's session, european equity markets in retreat, getting losses done by .7%. the banking sector under a bit of pressure. joining us now, laura cooper -- the banking sector under a bit of pressure. maybe we don't have the same steepening of the yield curve to compensate for weakness in tech stocks. things developing fast on this european equity market. less focus on the banking thing. laura: i do think we have seen this run up on this inflation trade. now that we are seeing some negative news in terms of those virus restrictions, that is feeding into risk sentiment. we do have the dollar bid, we do have bond bids. that is flattening the yield curve, which in turn does feedthrough to banks, but i would caution against kind of
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abandoning the reflation narrative at this point. it is likely that we are going to see roadblocks to that recovery trade, but ultimately i do still expect that the growth conditions are intact. eventually economies will reopen, so that rotation trade supporting european banks and financials should continue to persist after a pause. anna: so today what we are seeing is a pause in our 2021 trades. if i look at tto 600 come i can see that the banks are under pressure commode down 1.4%. i can also see that technology is the only sector -- technology is certainly moving to the upside, and quite substantially. mark and the last hour was mentioning to me, it all seems a bit 2020, doesn't it? just one day, when hour's worth of trade. -- one hour's worth of trade. our code that is being supported by the fact that yields are on
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the back foot. so that could potentially be supported by this downturn that we are seeing in commodity prices. we are seeing that kind of feedthrough to those inflation expectations that have been bolstered quite high on the back of just exceptional accommodations. so really at this point, i do still expect that that rotation trade will take hold. but given how quickly we have seen the run up in yield so far this year, certainly a period of consolidation is due, so that should in turn provide some relief to those haven like tech stocks, notably with risk sentiment on the back foot. anna: what do you make of the latest data out of europe this morning. -- out of europe this morning? the french pmi numbers look better than forecast, german numbers look better than forecast, some of the really strong, temporarily lifting the euro but not in a sustained fashion. laura: there are two things to watch.
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one, we did not see -- it is confirming what we have seen across the continent, and that is these two speed recoveries. manufacturing continues to outperform, and unsurprisingly, services are struggling amid these restrictions. so i think ultimately at this point, the euro is coming under pressure, largely on account of the dollar trade. the dollar is being supported because we are seeing the haven bids with this risk aversion coming back in the markets, so certainly given the fact that we don't have that positive catalyst coming from european data points, potentially any time soon given the virus restrictions, that does tend debt that does potentially -- that does potentially signal further euro weakness. anna: laura cooper, thank you for joining us here. 46 minutes into our wednesday trading session. coming up on the program, you is -- de you is set to site vaccine
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export rules today. we speak with a member of the committee on economic and monetary affairs. maria tadeo joins us with that next. this is bloomberg. ♪
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anna: welcome back to the european market open. 49 minutes into our wednesday trading session, equity markets leaning to the downside. exports could face -- vaccine
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exports could face disruptions over tougher rules, the e.u. threatening to block shipments to the u.k. unless it can reach agreement on sharing outputs of the new class in the netherlands. maria tadeo is standing by in brussels. maria: good morning. let's go straight with our guest, philippe lamberts, a member of the european parliament. this is a very delicate issue, and i want to get your take on it. the european union -- excuse my language -- seems to be freaking out and out overcompensating on restrictions. would you agree with those accusations of nationalism coming into play here? philippe: absolutely not, and "freaking out," that is some word indeed. could we maybe talk about the problem? the problem that we have this with one company, astrazeneca,
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having a consistent track record of overpromising, undelivered -- under delivering. that is the problem we are facing, so it has nothing to do with global vaccine supply. by all factors, things are working well. we have only one problem with one supplier that apparently treats the european union very differently from its other customers. very recently, including the british government. after seneca has -- astrazeneca has -- the question is, why is this company treating european union customers very differently from other customers? that is the problem that we have
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come and there are no other problems. there are problems, but they have nothing to do with astrazeneca. maria: and you make it clear that the way you see it, the european union is the damaged party here. but when you look at astrazeneca in particular, i know this is a delicate westin, but do you fear that perhaps the issue here is that production -- question, but do you fear that perhaps the issue here is that production, some of the vaccines may have been double booked, one for the united kingdom and for the european union? but we are talking about the same production? philippe: they over promised the sense that they committed both to the united kingdom and the european union, then realized they could not deliver. what i don't understand is why they have been treating customers differently. you have to expect to hit snags in revenue and production. it is to be expected. but then you talk with your
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customers and you meet them in a way that is fair. the problem is that they are treating them in a totally unfair way. delivery promises to other customers but not to the european union. plans in the european union, which have been crossed, i would say. maria: there is one thing, however, that the ceo of astrazeneca has said, that this is a huge effort and glitches like this can happen. and at times the vaccine, the efficiency has been questioned. do you feel that astrazeneca does make a fair point on that front? philippe: absolutely, that is what i'm saying. ramping up massive prospects -- products with a new vaccine is bound to hit snags come and i recognize it. and i would not be harsh with
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the ceo of astrazeneca. if he treated it correctly. but he didn't. i don't know why he wants to keep his commitments to the british customers. while deciding that the european union is a different variable. by the way, when i look at how the same company has bundled up clinical test data, and now in the u.s., all the indications are pointing that it is an unreliable company. maria: as a final question, of course this is coming in the aftermath of brexit. one of the ideas floating around is that this is seen as a victory for brexit, that this shows there is a dividend when you do it alone and you have one regulator and one single health authority. is that to some extent a factor here making this a much bigger deal?
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philippe: i would say that i would not expect the british government to perform equally well if it is a member of the european union. i would recognize that their performance in ruling out -- we are talking about deliveries, but the rolling out of the vaccine, which is an important thing to do, frankly outshines -- it has nothing to do with -- the fact is that the rollout in the u.s. 90 king and -- in the united kingdom is different than on the rest of the continent. maria: mr. lamberts, thank you for joining us on bloomberg television. that was philippe lamberts from the european parliament, talking with us about the vaccine from astrazeneca. anna: a very interesting conversation. we heard about funding given to the astrazeneca oxford project, that is something that the u.k.
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government falls back on with these conversations. we know that dialogue has been taking place subsequent to those comments being made, with oris johnson talking with e.u. leaders, and we will see what comes out of the summit at the end of this week when it comes to the sharing of vaccines across europe. that is it for the european market open. we are some 55 minutes into our european equity trading session, and it does look a bit 2020, doesn't it, rather than 2021. looking at technology stocks, once again we are preoccupied by the narrative of ongoing lockdowns. and the delayed rollout for vaccines certainly after that narrative. that said, european equity markets are now all flows, so we are seeing technology coming out of banks -- off the lows, so we are seeing technology coming out of banks. maybe that extreme position, reducing just a little bit as european equity markets make some recovery. we certainly saw some very strong manufacturing and services pmi data lifting out of
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germany. perhaps that time -- that helps after -- out of the market taking away some of that negativity. bloomberg surveillance early edition is up next. this is bloomberg. ♪
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it's moving day. and while her friends are doing the heavy lifting, jess is busy moving her xfinity internet and tv services. it only takes about a minute. wait, a minute? but what have you been doing for the last two hours?
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...delegating? oh, good one. move your xfinity services without breaking a sweat. xfinity makes moving easy. go online to transfer your services in about a minute. get started today. >> best view is that the effect on inflation, particular -- will
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be not particularly large or persistent. >> keeping real rates where they are, it is still likely to be in support of brexit. >> there might be room for the fed to start -- i mean, to normalize rates. announcer: this is "bloomberg surveillance: early edition," with francine lacqua, matt miller, and kailey leinz. francine: good morning from london, berlin, and new york. top stories today. traffic jam at the suez canal, blocked when a giant container ship runs aground. jay powell promises inflation will not get out of hand. gamestop looks to make good on the comeback plan, how the company has become the year's hottest stock. i'm kind of upset with the canal story, kailey. as world trade goes up and down. there are 100

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