tv Bloomberg Markets European Open Bloomberg May 20, 2021 2:00am-4:00am EDT
turn with bitcoin rallying after plunging in the same day. and the biden administration changes its tone on nord stream 2 saying it will -- saying stopping it is a long shot. the state department also wei ghs sanctions. welcome to the european market open. what did the market say to you? matt: it is a confused day in markets but it seems like traders are on the back foot. still in all of the volatility -- in awe of the volatility we saw in the crypto space. bitcoin has bounced back, but many cryptocurrencies are down massively. volumes in asia a little bit lower, more reluctant. we don't have a strong reaction yet -- direction yet.
anna: we will get back to the big story in a moment. breaking news in london. we are getting numbers from u.k. corporates and easyjet is one of those headlines. pretax loss, 701 million pounds. that is less than had been expected. they are not providing further financial guidance for 2021. they are giving guidance on capacity levels. the first half, they are set to fly around 15% of their 2019 capacity levels. putting all of that together, you get some sense of just how reduced and operation easyjet is. shares bounceback 80% the past year, regaining half of what they lost in march 2020 around the pandemic. let's just -- we going to be
speaking very shortly to the ceo of easyjet. we will discuss the news flow, plenty of it. let's get back to the broader market picture. we need to check the futures. given the amount of volatility in many asset classes, was at all driven by crypto? we add the recovery we saw late in the day in u.s. stocks and things look divergent across the atlantic. this is the picture for european futures. we expect to see is something of a rebound. not making up for the 1% we lost on many european markets yesterday. we did see a late recovery stateside in equities even given what we heard from the fed. how does that all add up to
something to trade off on the gmm in asia? mark: the gmm is giving a singular -- a similar picture. i think probably one of the easy ways to say it is yesterday when i went to the gmm page, australia was the top of the session for loss, today is top of the session for gains. it is only gaining half of what it lost. we have seen a little bit of dollar strength, little asian currency weakness, and we are seeing a mixed commodities picture, but a general theme of commodities on the back foot. industrial metals suffering from the rhetorical clampdown in china in the commodities space. anna: we will be back to the commodities space shortly.
let's get back to the top story around corporate earnings. easyjet, headline pretax loss, 701 million pounds, a little brighter than the loss anticipated. let's speak to the ceo of easyjet. a very good morning. you are not providing any further financial guidance and there is a lot of uncertainty. i wonder whether you think or when you think you might be in a place to provide that guidance? >> it is fair to say we are now in the phase of recovery. europe is now opening up for travel without restrictions. that is the vaccination problem. we are ready to pick up the demand. to your point it is still limited visibility beyond the q3 we are in.
we only expect to fly about 16% of 2019 capacity. but the trend is there. there is huge pent-up demand for people to travel. mark: you say you expect to use that 15% of 2019 capacity. how volatile is that number? what has been the passive that number and how much volatility could you expect? >> it is really down to things like the daily news flow. patterns are reacting fast to the government and restrictions being placed. we are seeing a surge in those markets where there are lesser restrictions. at the same time also there
remains uncertainty particularly in the u.k. were the government is adopting a very different approach than what we saw across the u.k.. there is volatility. we know one thing for certain. people can't wait to get on to travel to reunite with family members, to go on business trips, and take that hard earned holiday. anna: let me talk about that 50% of the business in the u.k.. we have this traffic light system. red, amber, and green countries. the u.k. prime minister said yesterday these are not places you should go, amber countries come on holiday -- amber countries, on holiday.
insurance often not valid in these countries. and yet you are selling flights to people who i imagine are going on holiday. is that responsible at this point? >> you should know that many of the countries we are talking about are low risk countries. scientific data supports you could open up travel to those places without any restrictions. the government in the u.k. is dismantling the framework they set up themselves. we can use the data that is available to allow travels take place -- travel to take place to these destinations and that is what we are seeing in europe. that is down to the success of the vaccination program. there are places you should not travel. now we are in a situation where
there are still lots of restrictions in the green category and you have cases were amber -- the government is saying you should not travel to these places unless you have a necessity to do so. that is very much up to the individual. we will fly where it is legal to do so and we see there is demand, but i would like to point out easyjet is the largest operator to the green countries in europe. we see that is an advantage but we urge the government to look at the latest data that is available. that states very clearly you could open up travel to a number of these amber destinations. anna: are you saying it is ok to offer flights to amber countries because you believe they should be green? >> it is not only we believe that. there framework allows you to apply to these countries. what we are saying is there are another -- a number of countries
in that category that should be categorized as green. that is what the latest data tells you. because of the data on various concerns. we are looking forward to the government to do that. that is what is going on in europe. we urge the government to look at the data available and make travel available. mark: i hope you are right. when will easyjet next take delivery of airbus airplanes? do you expect to defer any more orders? >> we have tremendous flexibility. we are taking no delivery of aircraft for the first time in the company's history in 2021. we will keep making sure we can
adapt to the levels of demand we see. the level of flexibility that we have negotiated is unprecedented. that is going to fit very well. anna: on the balance sheet, do you anticipate having to raise further cash? is that something on the radar, you would not take it off the table? collect since the start of the pandemic, we acted very swiftly. we got access to liquidity at the end of the half. we have to continue to make sure we review the options that are available and at any point in time we can have the liquidity we need. we have taken the same approach at the start of this journey and that is what we continue to do.
talking about tapering. it is not tapering yet. i don't expect that to be a june outcome, but something that will happen between july and september. >> you are going to get volatility throughout the summer. we are going to be guessing about the specific meaning of those words for the next several months. anna: reaction to the fed's april minutes which revealed some members were open to a debate about scaling back bond purchases. we are talking about a number of participants suggesting it might be appropriate at some point in upcoming meetings to begin discussing a plan for tapering. are we back to wondering how many is a few? how many is a number? to get a sense of how many on the fomc share this view. mark: it is more what stage we are in the process.
they are talking about thinking about talking about talking about tapering. that might mean we are several meetings away. i agree with susan, the last speaker, that this is more volatility ahead. the data is saying there is upward pressure on markets. the fed are acknowledging this. now we are getting volatility and the growth surge has ended even as the inflation surge continues. this is a crucial time for policy. it continues the next few months. anna: let's get another view on what we heard from the fed. the deputy head of global macro research at bnp paribas joins us. how surprised were you to see this early talk of talking about talking about tapering? how surprised are you to see it in this month's set of minutes? >> good morning.
the hawks are circling. the doves are still ascendant. let me make two points. the first is on what might a number mean. it could mean as many as five to seven participants. we saw from the march fomc dots that four participants expect the fed to hike rates next year. those data points tell us there are four members who think the fed should be having the tapering discussion. the change from what we knew before to a number could be quite marginal. perhaps one or two additional members. the second point is data that has come since the april meeting makes this information somewhat stale. crucially, we have a downside surprise to the jobs numbers. that is what the fed has been
very clear about. information since the meeting likely skews the committee dovish. mark: i think it is a good analysis of where the fed is. what i'm curious is where you are at? do you think it's going to be sustained inflation? >> thanks for the question. as our chief global economist likes to say, if you strip out the subcomponents that went up, the index has to go down. we acknowledge there are a number of idiosyncratic transitory factors. we think what is occurring -- three key points. we are seeing supply demand imbalances in the information. we are seeing higher expectations. central banks are still very dovish. we think this inflation, the
reflation narrative has further to run. with respect to the market, a lot is in the price. we think there is further to run. we recently extended our target on five-year inflation breakevens in the u.s. higher by about 25 basis points. we think they can go above 270 basis points. we expect that to feed through to europe. we think the one year inflation expectations could adjust to the similar magnitude. anna: where does that leave yields? you talk about inflation expectations but we think central banks are sounding dovish. 1.66 is the handle. we raise this to 1.69 and we have drop down. -- dropped down. where do you see that heading?
>> we think 2% over the coming months. in europe we think we are in a situation of high yields. particularly as we head into the ecb meeting in june. much is already in the price. we think expectations for the ecb are beginning to taper -- across eurozone sovereign markets. mark: do you see 2% as the high print? or that is where it will end the year? >> we think it will go beyond 2%. the target we have is to 20 basis points -- 220 basis points. i would interpret the consistent reaction it has. it enables the terminal value to be a little bit higher.
it reduces the probability of a destabilizing very sharp ri se if you like the hard tapering scenario which derails risk sentiment, derails the risk environment, and prevents the fed from normalizing. anna: thanks for joining us. sam lynton-brown at bnp paribas. coming up, the crypto yo-yo. bitcoin loses 31% of its value before surging 33% in the afternoon. what is next for the virtual currency and its rivals? ♪
>> back in april you told dow jones it could go to $500,000. do you still think that is where we are headed? >> we do, i do. our crypto analyst -- we go through soul-searching times like this. our conviction is as high. anna: cathie wood still believes , if belief is the right way to describe what she sees in crypto, she still has that very lofty target for bitcoin. we will play more of that later on. it is pretty easy to pick a number and decide bitcoin might or might not get there. mark: absolutely. i daresay belief was the most appropriate word to use. ultimately these are arbitrary numbers.
it is the same on the downside. there is no anchor valuation. somebody saying it is going to go to $10,000 is equally valid. they are arbitrary levels. there is not an anchor valuation. some people talk about, evaluate based on, every company in the world wants to put 10% of their value into bitcoin. that is quite a big assumption. it also assumes static holdings, lack of awareness of what else might go on in the world. that is also a big leap. probably the biggest thing to be aware of is companies have been dominated by ehc along with crypto. companies will not be putting all of their value into an asset which is terrible for the environment. anna: the fed's bostick says
crypto has no systemic and put occasions. i wonder if we learn more about the relationship. we saw a lot of volatility. we were worried about other things also. inflation for example. >> i was shocked we did not see more spillover. enough of this is now owned by the retail market. they are the ones getting hurt. it is not a systemic risk it is not great for the economy, but ultimately it is not systemic risk. this is not bringing down institutions which provide liquidity for the market. i still think there will be risk aversion when we see volatility like we saw yesterday. anna: plenty to say on crypto. coming up, a long shot. that is what the u.s. government calls efforts to stop the nord
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anna: half an hour until the start of the european equity trading session. futures point to the upside. we lost more than 1% during yesterday's session. looking to claw back a little bit of that. let's talk about something has been on the move. commodity prices and specifically oil. i have been drawn to comments by the pboc and others in china talking about being concerned about commodity prices generally , but specifically oil.
there was a lot of news flow on iran yesterday. a geopolitical front as well as the more usual demand story. 6692 is where we sit on brent. where do you see that heading? mark: what is most a -- most amazing as oil was not talked about more yesterday. this is one of the world's most important assets. there is more delivered in physical oil markets than all crypto markets put together. no matter how ambitious you are on the environmental side, it fuels every way of life all around the world at the moment. normally any eruptions have an impact. we have seen large dips when we have heard positive potential news on an iran deal. this shows an iran deal is not priced.
iran are paving the way away from the negotiations, getting there set up ready to create supply if they are given the green light. we are right at the top of this two-year range in brent crude up $70 a barrel. we have not closed above $70 since nearly two years ago. everyone in the oil market is super bullish. i'm slightly wearied -- worried there is downside risk to the iran deal. 10 year yields have a large correlation with oil because oil has a big feedthrough into the cpi basket. oil can close above $50 a barrel, that may be the trigger. anna: still have that impact on the wider market despite all the esg efforts.
let me ask you about the broader commodities base. -- commodity space. iron ore under pressure once again. we have had more details from chinese authorities about how they want to increase supply for some of these markets, more domestic supply. they want more oversight, to crackdown on speculation and hoarding. that does seem to have an impact on companies that operate in that space in the asian session. mark: absolutely, the aggressive rhetoric is having an impact and will continue to. china is by far the world's biggest consumer of commodities. if they are changing their attack, this is massive. the fact is longer-term that demand is still there. short-term, we could be talking weeks or a few months. the next couple years they cannot reply the supply they
need -- replace the supply they need. i'm not talking about oil now, i'm talking about the metals space. even if china managed to make metals prices think, we are still seeing copper prices go higher. anna: let's stick with the commodity steam. the u.s. is weighing sanctions on the company overseeing construction of the nord stream 2 pipeline saying that stopping the project was, quote, a long shot. the biden administration announced the decision before a meeting between antony blinken and sergei lavrov. the two met on the sidelines of the arctic council in reykjavik. joining us now is bloomberg's reporter bruce einhorn. what were the key points blinken raised? how have the russians been responding? >> the secretary of state brought up a lot of the
contentious issues between the countries. including imprisoned opposition leader alexei navalny, russia's involvement in syria, the occupation of parts of ukraine. he called for cooperation in places like afghanistan, north korea, iran. the russians seemed to take it well. lavrov said the talks were constructive and said the sides needed to get away from the unhealthy situation between russia and the united states. mark: can you explain why the nord stream 2 pipeline is so controversial and what the biden administration is expected to do? >> president biden has taken the same position as the trump administration, that the project undermines european security because it ties the continent more closely to russia.
that said, the state department on wednesday said it was going to waive sanctions on both the pipeline itself and the chief executive of the company behind it as a gesture to angela merkel. biden does not want to get in a fight with her. a departure from the approach the trump administration took. anna: it was interesting to see the timing of that, avoiding a diplomatic mess with germany as we saw the u.s. and russia meeting. bruce einhorn on the nord stream 2 pipeline. let's get a bloomberg business flash. >> weibo is said to be talking to outside investors to raise additional capital.
the self-driving car company has discussed plans to eventually list publicly, splitting from its parent alphabet. this comes in the wake of senior departures including it ceo, cfo, and others. a vegan food and drink maker has priced its ipo at the top of the market range, raising more than $1.4 billion. the offering underscores plant-based products' jump into the mainstream as consumers seek alternatives to traditional meat and dairy products. jp morgan set for a bumper payday. it comes from a hedging transaction with global energy partners. it was arranged when a ig invested more than $12 billion in the aramco pipeline.
anna: inflation fears gripping the markets again. rafael bostick says now is not the time for the fed to withdraw monetary support. >> we have never had an experience with a pandemic is not a pandemic response chapter in my econ textbooks. we are going to have to be nimble in terms of our monitoring of the economy and policy responses. and i think about where we are right now, the word that comes to my mind is transitional. we have gone through this pandemic, we have seen the loss of millions of jobs. now we are transitioning out of a pandemic space into more of a recovery space. as we have gotten that public health challenge under control with vaccines and better management of social distancing and other measures, we can turn ahead. we are transitioning out of the depths of a pandemic into a recovery period.
there's just a lot of moving parts we will have to keep tabs of. i'm expecting a lot of volatility the next several months. we have had data points that have not met up with expectations. i think that is to be expected. we are going to have to do extra work. we do surveys of business leaders and communities and we also do a lot of outreach and have one-on-one conversations with folks on the front lines to get a better sense of what they are seeing and more importantly, how they are thinking about what the strategies are going to be moving forward. anna: that was the atlanta fed president rafael bostick. coming up, we get back to the crypto yo-yo. what is next for bitcoin?
>> we go through soul-searching times. >> people have made their peace with the volatility. >> imagine roads with no speed limits. nobody knows if you should drive fast or slow. if you have a speed limit, everyone knows what the rules are and they adjust their behavior. >> the comment from china had an impact. i don't know that there was anything new. >> a rehashing of an announcement that was made in 2017.
not a material event in our view. anna: some of the voices we have been speaking to on bitcoins fall and rise. it was a roller coaster. let's get more on that. walk us through what we saw yesterday. this incredible volatility in an asset some people say could be a haven to replace gold. walk us through what we saw. >> basically it started to go down and there was this quick drop of almost $30,000 in bitcoin. it did rise pretty quickly back up. it was not just bitcoin. it was either -- ether. the entire crypto conflux lost a lot.
you could say it was comments out of china, it was elon musk. it was probably a combination. there was liquidation. there was some amount of capitulation. mark: we have crossed above the $40,000 level. i feel like we get excited by arbitrary levels. where do we go from here? >> that is a pretty important support level. it feels somewhat fragile. it feels somewhat fragile. also could be a lot more downside. people are saying it could drop below $30,000 because there is still a lot of fragility and
uncertainty as people figure out what is happening. anna: when you speak to people about where crypto should go, what metrics are they using? we were just hearing from cathie wood about her view it could go to $500,000. is that all about technicals? i was thinking about how on earth you would value this. it seems to be driven by celebrity endorsements and fears of regulation. how do you go about valuing that? >> it seems like 500 thousand dollars, one million dollars, our long-term estimates on potential demand for bitcoin from institutions and the global population. the technicals tend to be near term.
the moving averages have been significant at times. those are more near-term. jp morgan looks at the marginal cost of production. a lot of people will try to value bitcoin in relation to gold and the volatility of gold or the market value. jp morgan has looked at the 130 thousand dollar level for a long-term target for bitcoin several years down the road. we have decades and centuries of trying to value things like stocks and bonds. crypto is so new, how do you evaluate? it is difficult. anna: thank you for joining us. let's stick with this narrative, this story. arc invest's cathie wood thinks
bitcoin will go to $500,000. her team thinks renewable energy sources can be used for bitcoin mining. >> because the stock market, the highly volatile part of the stock market, the innovation oriented part has gone through such a correction inflamed by inflation fears. the correlations among volatile assets are going to one right now and that includes bitcoin. >> you told dow jones it could go to $500,000. do you think that is where we headed? >> i do. we go through soul-searching times like this. our conviction is as high. the one thing that has changed is the environmental concerns
around bitcoin in particular have because people like elon musk to pull away -- have caused people like elon musk to pull away and say let me make sure i understand this. first of all right now the percentage of bitcoin mind with renewable and hydroelectric power is quite substantial. in china it is over 50% in renewables. we believe bitcoin mining integrated into the distributed grid, and by that i mean solar roofs, power walls in homes, utilities, merchant power producers starting to include bitcoin mining in the ecosystem, why would they do that? because renewables are intermittent power sources. is it sunny or not?
is it windy or not? bitcoin mining could take off if there is excess energy from solar being loaded into power walls, it could be offloaded into bitcoin mining and the whole ecosystem therefore becomes more economic. anna: that was ark invest ceo cathie wood. let's get the first word news right now. >> there are reports that israel and hamas are nearing a cease fire. fighting could stop within two days. the wall street journal says potentially tomorrow. it comes amid pressure from the u.s. to de-escalate the conflict. 219 palestinians have died. boris johnson says he is confident vaccines are working against all coronavirus variants
raising hope the last lockdown will be lifted as planned. the spread of mutations of the virus had some spots concerned the government would be forced to delay plans. a commission to investigate january 6. the plan calls for an independent report by the end of the year. global news -- global news, 24 hours a day, on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. anna: coming up, your stocks to watch. the u.k. regulator gives the green light to a proposed merger of version and 02 -- virgin and o2. ♪
anna: welcome back to the european market open. expecting a bounce at the start for european equity markets after yesterday's big selloff in europe followed by recouping of losses. dani burger is here with your stocks to watch. the o2 business part of the m&a we are witnessing. >> deal news this morning, 02 and the virgin media proposed merger, the u.k. cma saying that can go ahead. o2 on by telefonica's.
in other deal news we have nordic semi. italian newspaper reporting spm micro might be evaluating nordic semi. the final one is blackstone buying same on when. -- st. modwen. the biggest investor said the proposal was too low. it will be interesting to see how this one unfolds. i and i know the rest of the team is focused on blackstone's other investment. anna: providing much conversation this morning. thank you. we heard about oakley in the business flash, didn't we? let's turn our attention to the
market open, six minutes away. does it seem to you the markets are weathering the mention of the taper from the fed? >> absolutely. many people thought the first time the fed mentioned that it would come much later, but also there would be a shock for markets. they are managing exceptionally well. part of the reason is we had other turmoil yesterday. that meant that pressure was keeping yields down. therefore when we got the tapering comments, it meant yields a little bit higher. it did not shock markets. but yes, they are weathering it well. anna: yields falling from those highs in asia. thanks very much. i would be back with the market open next.
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it could be on the agenda the months ahead. perhaps this was a little earlier than we had anticipated. anyway, thinking about fed conversation leaves and what that does to inflation concerns as we see the markets rebound that was driven by the inflation concerns and also by chaos. inflation fierce have been gripping markets of late. but atlanta feds said now is not the time to withdraw monetarily support. >> we've never had an experience with the pandemic. there's not a pandemic response chapter in econ textbooks. we're going to have to be very nimble in terms of our policy responses. when think about where we are from an economic perspective, the word is transitional.
we've seen the loss of millions of jobs. and knockdown, we're transitioning out of a pandemic space as they've gotten that public health challenge under control with vaccines and better management of social distancing and other measures. now, we can turn ahead. and so we're actually transitioning out of the depths of a pandemic into a recovery period. just a lot of moving parts that we'll have to keep tabs on. what i will say is i'm expecting a lot of volatility. you mentioned that in the last several months we've had data points that have not met up with expectations. i think that's to be expected. and what that will mean is that we're going to have to do extra work. in our bank we do lots of surveys with business leaders and we also have outreaches with one-on-one conversations with folks to get a better
perspective on how they're thinking about moving forward. >> that was rafael bostick speaking to my colleague mike mckee here on bloomberg. remarkable resilience. we'll sks europe's recovery. we'll get more on what are the expectations for where the fed goes next and where that tarpe erring conversation comes in.
>> welcome back to the european market open. six minutes into our european trading session. and we're making decent gains. not entirely bouncing back from what we lost yesterday, fearing inflation and watching crypto. dani burger has a breakdown. >> reporting earnings. they're looking strong. they're able to update their guidance. it's this d.i.y. effect. and it shows that that type of behavior is going strong for a lot of these companies. now, to the down side is b.t. group. they've eased some of their immediate losses that they saw
when they opened you. now, this has to do with a rival or its rival telefonica. that's sending shares down nearly 1%. finally last earnings related mover for you, royal mayor seeing a profit increase. a lot of this has to do with their shift from letters to parcels. they went online shopping. so those shares nearly up 2%. when it comes to the equity market as a whole. it is pretty premarkable that we've seen some resilience. they've started to turn lower. but it doesn't look like it did yesterday. and we saw nasdaq 100 index higher yesterday. through this back and forth -- but we are continuing to see dip buyers emerge. but we're also seeing some of those higher yields ease off after yesterday.
and that means lowering the yield today is giving the dollar some breathing room to move a bit lower after hitting higher yesterday. >> dani burg we are a breakdown of some of the stocks on the move. let's get to our corporate stories. here's laura. laura travel% of the -- laura: a loss of $700 million pounds. >> >> still very limited visibility, beyond the three that we are in. but the trend is definitely there. we know there's a huge pent-up demand. it's all down the restrix of being unwinded. >> wait a minuteo is said to be talking about raising as much as
$4 billion in additional capital. they have discussed spinning out of another department. that's the bloomberg business flash. anna. anna: laura, thank you. year peen trading a little bit higher. getting a chance to react. but actually prizing in some of the gains of the u.s. market and loss. that is according to the fed from the april meeting. official held interest rates near zero and continued their massive purchases. joining us now is sara who is with us from -- with us this
morning. chief economist for america's unit and standard charter. let's start with the fed conversation then. . it seems that the markets reacted in a knee jerk inway tried to work out how many is a number of participants. and then relaxed a little bit in the market's response. what did you learn yesterday? what was the take away from the fed minutes? >> yes, i mean, it was the first signal, i suppose. the very first tentative steps towards ultimately tapering. but the language was very, very contained. a number of fed number. bernanke laid out in the coming meetings that you know what, the fed would do that the fed would take steps to taper. then we're still quite some way even from in the discussion. in our view it's likely that the
tapering discussion doesn't take off until july of the earliest or possibly it starts to pick up the jackson hall meeting in august or even as late as september. it's going to be very data dependent. let's see what we great the next round of jobs and inflation numbers. i think those will be key determinates. >> right in a sense did you already know what was in the meeting? the minutes that we heard about yesterday from the fed? did you already -- did it shift those expectations at all. was that us a your view when they reaffirmed that that would happen? >> yes, i think broadly that's the case. we have caused since the fed meeting had some clear commentary that the tapering discussion is still some ways
off. how in the post meeting press conference also talks about tapering discussion not being on the table yes. i think that we have to really bare in mind that from the fed's perspective, there is not yet substantial progress being made towards the fed's target of unemployment and inflation and therefore the tapering discussion is loss eminent. and although there was this sort of third signal that some members certain le -- certainly believed that the discussion could be in the agenda in the coming months, that's a very, very gentle lead into that discussion. we know it is going to happen. we're expecting that the taper willing start in the first quarter of next year. but that still gives plenty of months ahead for that discussion to take place. >> an important staging class in the run-up to those
conversations. >> where do you look for meaningful clues as much as the u.s. economy is recovering and getting back to what it was in a sense? do you compare year-on-year data? or do you think about how we're recovering in that context? the numbers certainly won't tell the whole story. >> we definite sli to look at the baseline. the gross numbers are going to be impressive given the very, very sharp downturn that we saw at this time last year. so the question is how quickly do we get back to the prepandemic level of the economy. i mean, that's very eminent. but also, at what point do we get back to the trend rate of growth. now, that may be several quarters away. and for the fed and i think for most analysts, the employment
situation is absolutely key. although we've seen very dramatic situations in payroll over a number offer months, all be it not the last report. the number of ununemployed is still many, many millions. the working age population will still have increased. we need to see even more jobs gains to really be back at that full employment situation. now, we think we'll get there, but not until 2023. >> ok some of that's why you've got those fed rate heights in 2023. let's move the conversation on to europe and hear from another voice or two. the e.c.b. is warning of elevated risk to financial stability as the block emerges from the pandemic.
it's cautious as what it sees. still the central bank vice president is relatively upbeat on the economic outlook despite the risks, this is what he said. >> risks looking forward and going forward are much more balanced than in the -- in the past. you have the -- the speed-up in terms of vaccination. vaccination is getting momentum everywhere in europe. and we are catching up. we are reaching the gap. on other hand you have risks and uncertainty. anna: coming back to you, the e.c.b. warning about remarkable exuberans in markets. i don't know if that was intended thing he needed to say. does the e.c.b. need to worry
about this? >> e.c.b. and all central blanks be concerned where there are situations whereas set prices seem to be overinflated and the worry is, of course, particularly given the back talk of substantial levels of debt having been built up during the pandemic. but you know, the -- the economy is less able to with stand a reversal of asset prices. so it's natural that policymakers will be concerned about that. now, let's look at what the risk are out there. the -- the main risk is that we see a run-up in inflation which drives interest rates much higher than markets are expecting and sooner than markets are expecting. and under those circumstances high -- highly debted companies will start to run into difficulties.
it seems that we are some ways away from that. there's plenty of slack despite the rapid rates of growth that we're expecting over the next few months. anna: how good is the european economies to u.s. stocks, sara? a 10% drop in u.s. stock which is is not unfathomable would tighten financial conditions to such an extent that it would risk derailing the recovery. that's quite a linkage? >> yes, it's an interesting linkage. and the -- i would question the extent to which that would have such a knock-on effect to the broader euro-area economy in the u.s., of course, the stock holdings a greater share of the household wealth, and that's the less the case in the euro area.
i think that's a dramatic 10% drop in stocks. we've been there before. and we know that if you get such a drop without a subsequent leveling off or recovery, then there are repercussions some of policymakers have to be sensitive to that. it's a difficult tight rope to tread that would lean toward keeping policy accommodative but you don't want to further fuel the fire. >> let me ask you where you see the beyond yields to go. you see them in anticipation of the economic recovery and a lot of talk of when we're going to start so see more positive bonds yield. from an economists' per spears active whacks are you expecting to see in that bonds market story that will weigh in in the ability of these european corporates to be able to survive?
>> to be honest, we've seen a faster run-up than we had expected. we were really looking for broadly stable treasury yield. and that, indeed, has been the situation. so looking for treasury yields to stay in that 150 to 175 range nover the next quarter and rising up towards this 175 to 2% range after that. what seems to have happened is the, you know, new optimism over the region, over europe is building up, you know, quite rightly so given the success and the acceleration of the vaccination program. we're a little bit hesitant about the variants that emanated originally from india. we've seen that -- that having an i packet here in the u.k. and we know that it's only
matter of time before it starts to make its presence felt across the euro area. the opening up is broadly on track and the economic recovery is on track and it's reflecting that. but we do introduce a note of caution, that the pan dem sick not over by any means. anna: sara will be continuing her conversation at 9:00 a.m. u.k. time in around 40 minutes from now. coming up on this program, a long shot. that's what the u.s. government calls efforts for stopping the gas pipeline. we'll get that story and the relationship between u.s. and germany. this is bloomberg.
the u.s. waived sanctions on the company overseing construction of the north stream two pipeline as the biden administration called a stop to it a long show. the sudden shift them from the united states saying we're not going to get to stop this. it's 90% there already. was it designed to bring the u.s. and the traditional european allies closer together ahead of this conversation where the u.s. and russia would be talking about this? >> yes, i think the bigger picture is really that after the trump administration which has a very tense relationship with germany on a million of issues or a lot of issues but including and in particular about nord stream that the biden
administration is saying to germany, look, we want to work together. we don't want to make this issue the nord stream pipeline such a stumbling block in our global efforts. it reaches a way out of the corona crisis and also china. and this is a clear signool say, look, we're going to have a new start. and we will continue talking about nord stream in the long run. they're having a new reset for this particular relationship between the u.s. and germany around this specific pipeline. what's the importance of the nord stream pipeline. many, many years under construction and providing an alternative route. >> for germany, it's largely an economic project. basically germany needs this
cheap gas from russia. and in the medium term at least in the transition where new energy has been reach and fulfilled. it's of economic vitality, yeah? and politically and the u.s. argument mass been and rightly has been that obviously in the region, it's not just an economic -- it's primarily a political instrument via from russia to basically keep germany going towards russia and basically make germany dependent on russia. so there is this double meaning. and of the nord stream pipeline and this has to be solved some how in long run. anna: thank you. for giving us the importance backstory in nord stream two.
green. just have the insurance sector moving to the downside. we see that sent posts share price weaker. sticking with that part of the world, the semi conductor is up. there has been speculation regarding that company, that sector is going higher. let's get an update. laura: there are reports that is role in ghaisar getting your eight cease fire. -- getting near a cease fire. so far, two hundred 19 palestinians have died as well as 12 is millions.
they're open to a debate. that is according to the meeting, never policy makers. as people return to the office, a new season ticket will be available for people to go to the office. the government is creating a new public sector to integrate the nectar, -- integrate the sector. 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: thank you very much conjunction with the story laura was talking about, trade line is a business in that u.k. that sells tickets for trains. that stock is down more than 18%
in today's sector. let's get a look at something else that has been a bit of a wild ride. that is the crypto markets. bitcoin, later in the afternoon it surged. today, prices are up. here is bloomberg's dani burger. you have been looking to the action, who has been selling and who has been buying? dani: thankfully for all of us, keeping track of the prices, it is remarkable to see. in terms of the driving players, there was a refill flavor to it. we have not seen too much contagion did -- contagion to
it. we saw a go out of service for a while. it is also likely, a lot of leveraged players were stopped out. maybe this is more of an institutional aspect. the same kind of calculation done, bitcoin, the volatility numbers are really wild. it would force some people out. you can see bitcoin in the white. these are really big numbers. it will be difficult for anyone to digest. in terms of the buying, you have a lot of the big crypto, the three horsemen of the crypto world. it is continuing to fuel gains today. you have just and son saying, i just bought, he talked about bitcoin. you have would saying she sees
it go about 500,000. of course, elon musk, always a tweet from elon musk saying tesla has stopped with bitcoin. anna: great for that. what is next? what are the key levels we are looking for? love what you read around bitcoin is with the technicals. it is so driven, the endorsements, celebrity tweets, and by regulatory concerns, we see buzz for those holding sway over cryptocurrency. dani: in regard to the regulatory concern, it is interesting because in talking to different analysts today, you have some of bitcoin saying, the one thing about bitcoin that is getting to regulation, and some other concern come from the
divided administration not china. you have the bulls worried about it, and those with regulation. in terms of levels, there is an average we watch a lot. yesterday, we felt below 200. maybe we just go back to that 40,000 level. the fact that we are above that now, it might encourage people to go back in. hoping that yesterday was not a turning point in just a bad day. anna: dani burger over the technical wizardry. referencing china, we will see any regulatory threat with the crypto space from the biden administration. let us stick with the theme of the wild crypto. world's biggest digital asset
exchanges, coinbase suffers. with finance a particular force to temporary disable the withdrawal. the company is still a weapon to address for remaining issues. >> the platform is amazingly resilient. there is an all-time record for the exchange. it has held up very well in the time of rapid transaction. we have way too many customer support issues, we have three or four major initiatives that are going to fix that. we hired one of the most notable leaders in the technology industry. a person who took comcast from one of the worst customer
experiences to one of the highest voter exchanges. we have something coming online that will allow people to solve their own problem. we can control those kinds of risk changes. i know it is a big deal. we will see a different customer experience very shortly. >> one of the reasons we are having this big conference, over the last years when we see this migration, to a certain extent they have become mainstream. being part of the mainstream means there needs to be some degree of stability or predictability. this cryptocurrency actually
have that? >> i was looking at the chart about how the dow jones is performing, it is a straight line down over the last three bar hours. they write about crypto because it is new and they assume it is a risk free zone. it really did not. volatility is inherent in the investor market. >> absolutely. the volatility we see, typically the drawdown you see, when you
have 30% drawdown in a single day, it is an embarrassment compared to some of the drawdown we have seen in the dollar or equity markets. >> if you are a retiree living on savings, that deal is part of your day today. we have to ask ourselves, why is this going on in crypto? there is a fair amount of misinformation going on. from elon musk tweeting to what china actually said, those are in a very weird way. even more important, we have not yet built the side for the market. there we we have for every other traditional asset class. what i mean is, you can buy a bitcoin or you can sell bitcoin. what you cannot do is engage in
their futures, derivatives, these are think that point to price discoveries. we need to get regulators comfortable that these things are positive and not negative. anna: that was the finance ceo speaking to bloomberg and saying that digital currency focuses on the trail of the fringe from crypto trade. with bazaar meme-based names, it loses the mainstream. charlie, thank you for bringing us a really interesting story. your story is about the acronym, what is going on here? >> the question.
i am going to have to watch my language because there is a lot of joy -- joke-coin that have curse words in their titles. what we are looking at is the crypto and retail movement. some crypto including doge is about self awareness. how much of a joke this seems to people, particularly after the fall of crypto prices. in particular, we talk to the buyer about the coin and what he told us was that he is not employed, he got burned in the robinhood-been stuck and he had this epiphany that this is a joke. he is going to go after some of the coins that seem like they belong in a garbage can.
anna: so he got burned and when he got burned he realized it was a joke. instead of stepping away, he thought i would step in and have my own joke. the whole thing is around decentralized finance. there are others who believe that this is the future. where do we risk -- what do we describe with the phrase? charlie: there is a specific ecosystem. a few years ago, in order to create the token, which we talked about earlier, in this world, people could create new coins, with even stranger names,
risk limited money, limited resources and start selling vent to people and promoting them. in this story, talk about the creation and promotion. trying to drive up the prices. anna: charlie, thank you very much. thank you for bringing us of story. for more on that, you can head to the terminal. coming up, vaccine hesitancy may threaten hong kong's financial hub. we have that story for you next. this is bloomberg. ♪
anna: welcome back. we see european equity markets making some gains to the upside. in the u.s., things are improving in the last half hour or so. nasdaq gain is up. futures have been modest the negative. the vaccination rate in hong kong is lacking. despite relatively few cases in the vaccination rollout.
it can permanently change the future. >>. then 15% of people have had their covid shots in hong kong. that has businesses worried. >> other regions are moving ahead. >> hong kong could fall behind. >> quarantine measures are under the strictest measures in the world. they have gone years without seeing love ones. >> it starts to make people wonder if they are going to be stuck here and whether or not it is actually worth it. >> they are reporting fewer international arrivals. >> we are almost 80% down. that is very dramatic. >> an idea of how you are going to open up again because it is
stressful and more difficult. >> we need a way to open borders. >> we wish there would be a way to relax things a little. things a little bit faster. >> some criticized rules forcing inconsistent. >> there is still a lot of gaps in unfair policy today. >> their questions on whether businesses should mandate vaccinations. >> some understand that is required to do their business, so they may be able to push the envelope a little further. western companies here will value individual rights. >> i would like to see it take up. i am a little reluctant to cross that line and sank the business should do it, because they have concerns. >> after a tough two years,
vaccine hesitancy is complicating the move forward. >> in the next half year or a year, the pandemic will be up and down because government policy is not there yet. >> we could have a situation where private bankers and those with ipo's will not want to be in singapore. >> a shortage of labor and specialized roles. we have not seen the yet, but i think it will start to happen. >> we will see a continuing of this inflection point. what is hong kong? where is hong kong going? anna: the latest on the vaccine rollout in hong kong. a complicated picture for the international community when it comes to dealing with the city. coming up, another wild ride for the crypto market. we will discuss what is driving the market.
good morning to you. a resilient market perhaps. crypto roller coaster, the fed talking about tapering a little earlier. there is a little bit of resilience and bounce back carrier. laura: it tells us how much it is driving the market behind any fundamental. we did see a wild volatility yesterday. that captured the risk around over leverage positions the fact that these margin calls for liquidation and that there is a spillover across assets. today, we are seeing a bit of a reprieve on that. we are seeing text bounce back in europe. commodities as well. nursing some support there. combination of factors are supporting risk appetite.
i would expect those volatilities to come. anna: what are your conclusions after the fed, words around taper, what you would expect to see? what is eight number, does this change what we knew already around the fed's path? laura: the market reaction, the knee-jerk market reaction that we saw i think came from the fact that we sought that we are surprised that the fed is talking about potential tapering because i came after powell stated that now is not the time. as you mentioned, it is around context. there is anonymity in terms of those minutes. we do not know who said what. that matters. they are all saying that we have
not seen substantial progress yet on the economic recovery to warrant that tapering. it is conditional. they expect rapid progress needed before they can taper. the minutes came ahead of those recent prints that we have seen in the labor market and those retail sales. i think it is premature for markets reacted that tapering. i would expect later this year, given the strong backdrop. anna: thank you very much, laura cooper. thank you for joining us. that is it for the european market open. "surveillance: early edition" is up next. european markets are rebounding. that as u.s. futures look fairly flat. day after we saw a big selloff
>> if we see progress, i am advocating we move tomorrow. >> we go through these models, yes, our conviction is high. >> it is new and they assume that the status quo is risk-free. it is not. >> this is "bloomberg surveillance: early edition" with francine lacqua. francine: welcome to "bloomberg surveillance: early edition"
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