♪ >> good morning. welcome to bloomberg markets. the cash trading, less than an hour away. here are your top deadlines. closer to pulling back stimulus. biden's infrastructure bill clears the last hurdle before a senate vote. bonds and commodities selloff. goldman-s lashes the nation's

growth forecast as the delta variant spreads. anthony fauci says the vulnerable should get a follow-up jab fairly simple would let's look at the futures. a little bit of a mixed picture depending on what you look at. u.s. equities futures retreating. a similar story in the u.k. with the 100 futures down by 0.3%. traders are looking at friday strong employment data, trying to figure out what that means for the federal reserve, whether it's closer to pulling back on stimulus. some of the other things we are watching, the focus of course is on a lot of the commodities. silver dropping to its lowest. i'm also looking at gold, for

example, touching the lowest since march. the prospect of higher rates makes some of these precious metals less attractive relative to other assets. i also think we have crude oil in there, extending last week's decline. the u.s. labor market, charging ahead in july with the biggest increase in employment in nearly a year, highlighting optimism about the economy's prospects, even as coronavirus concerns resurfaced. our guest weighed in on the latest employment numbers and implications for fed policy. >> another incredibly strong jobs market report. >> very strong report, across all metrics. >> across-the-board favorable report for the economy. >> leisure and hospitality jobs were among the top gainers. >> the service sector shows this recovery is coming in full force. >> this is a critical note for the fed.

it's a month after month. >> may this transitory inflation that supposed to be short-lived is going to be with us a bit longer. >> this is not going to be an earlier tightening but it could be an earlier tapering. >> this is going to embed itself in the fed supporting behind the curve. >> very encouraging, very consequential report. >> the next report is clint to be the decision-making report for the fed. >> joining us now is the j.p. morgan asset management portfolio manager. thank you so much for joining us. what does this actually change in terms of markets? we are talking about tightening that could come earlier from the fed or is it just tapering? >> i think we certainly think this is sectoral adjusting policy. i think it's a little too early to think they will be tapering earlier than indicated. they will certainly tea off the

market in september. the tapering is common. >> how difficult is that at this point to look at the trajectory of u.s. gdp or u.s. economy strengthen general given we are also seeing a pretty big resurgence of covid-19? the eu is also talking about putting back the u.s. in terms of travel here. does that actually lengthen the pace to recovery or change the kind of recovery we can see? >> i think that's a really good question. we certainly have been debating it. we are less concerned perhaps about this notion that q3 is the peak of global gdp. we have seen gdp will continue to be strong, will continue to be supportive. does this mean we get a more elongated circle? that is possible. that is pretty positive

for risk assets. >> are you selling gold at the moment? how do you construct a portfolio? there's probably a little bit less volatility because it's the month of august. there's a lot of european traders away. what's your idea of portfolio construction right now? >> we certainly are posted on equity at the moment. in order of preferences, equities, then credit, then government bonds. we have seen some pretty big moves in the bond market for example. which i think certainly has surprised people. i think the key thing is making sure you have moderate levels of risk. hedging is really expensive. treasuries are very expensive.

specifically on gold, we are not nearly an investment house, looking for the big calls on gold, certainly interested to see those [indiscernible] >> [indiscernible] volumes all unusual in august. my faults. some of the things we are seeing in terms of u.s. data, we are expecting some inflation data a little bit later. is it the jobs data that you are most focused on? or is that some of the consumer prices? maybe housing, one to look at, to give you direction on treasuries? >> i saw your snapshots on the show earlier. i think it is an absolutely really strong number. we still have nearly 6 million

people a lot of job in america. we see progress on that side. on the inflation side, we want to see how long transitory actually is. so far, the data has in many respects supported that position that it is a transitory inflation environment at the moment. if that does not become more elongated, that is of a concern. >> don't go anywhere, we will come back to what we heard from the ecb governing council member. coming up, time for a booster. america's top infectious disease expert says the vulnerable should get a follow covid infection soon as u.s. cases hit a six-month high.

we will hear from anthony fauci. plus, saudi aramco follows it's competitors, boosted by oil prices. we will take a look at lumber. plus, china's economic risk builds. we take a look at the country's growth outlook amid a surge in the covid variant. -- in the delta variant. this is bloomberg. ♪

♪ >> this latest outbreak could shape q3 gdp growth. >> we have not changed our forecast yet. our analysts see 8.7%. we need to incorporate the latest development into our two -- into our

projection. >> the only risk to the nation's growth, consumer prices have searched in july. with more, -- what is driving the shift in outlook for china's economy? >> we are seeing a different dynamic emerging. we have the delta variant spreading, forcing the government to implement restrictions on movement around the country. that will have an impact on the consumption story. we are seeing exports are slow. particularly when you take away the base effect.

the famous trade rebound is peculiar. we also had a rebound in producer prices. we see more pressure on manufacturers. we take it all together, at this point something of a different outloo -- something of a different outlook for china. most expectations are for robust growth, it depends on containing the virus. >> what is the challenge here for china, growth or inflation? >> there's no doubt inflation is certainly a problem for the producer side of things. they're dealing with skyhigh input prices. this is something they've been complaining about all year. the bigger story would be the

growth story. authorities have been reluctant to maintain a distant approach there. this will all come back to where we started, which is a virus, the contained delta variant, if they contain it, that takes pressure off the government, that means a recovery can more or less continue. if they can't contain it, that will pressure the consumer side of the story, a weak link in the recovery along. >> i was reading that also some of the local policymakers were basically on hot water because they didn't contain covid so far was the -- so far. what does this mean for policy? >> it will be a very aggressive approach to control the virus. for policy, everybody is looking the bank, they made the move to promote banks to lend more money to companies when they lowered the requirement.

people are not expecting -- interest rates percent. it does suggest more support will be needed for the economy. probably for the medium size businesses. via the money market or buying lending out. all of it will depend on how the delta variant is controlled. if it is controlled, that will get china's recovery back. if it continues to be a challenge, that will certainly question the china growth story heading into the end of the year. >> thank you so much. let's get back to the jp morgan portfolio asset manager. china's trying to contain the virus. what does the forecast for gdp mean, what is your expectation

of what we will see in china? >> the answer to the question has become complicated when you compare the outlook for this year compared to last year. we saw a strong rebound in china after the covid crisis. we could be more sanguine on the possibility that we could see some more policy support in terms of rrr cuts. we don't think it can prevent further easing of liquidity. we know every couple of years, we get regulatory changes thrown income and it is important in terms of certainly if you look at the long-term strategy, it's an area where you want to be invested pivot i agree in the short term, it's a more difficult picture. >> when you look at some of the

previous concerns, the western world importing inflation from china, is it something you think we will talk about more, or are we creating this so-called homemade inflation in the u.s.? >> in terms of the price pressure you are seeing, china has been a huge deflationary force in the western world for the last 20 years. is there a possibility that could change? yes. i think that is certainly possible. actually very long-term -- a very long-term dynamic. something to keep an eye on. the u.s. economy itself [indiscernible] there's inflationary pressures both from the domestic side in the u.s. economy and also from the reopening. >> could we actually see a pausing from china?

>> i think that when we look back at previous episodes, where we see some of these regulatory changes being enacted, i think you need to be very careful about over interpreting the wholesale attack on the private sector. it's really much more about china wanting to sort of balance its own social agenda with its growth agenda. i think the chinese authorities will be monitoring the situation very carefully. we saw in the past they have been prepared to step back from some of these regulatory changes , these growth concerns in the past. they will follow the delta variant virus as well. that's another competition for them. >> haven't even asked about europe. we heard inflation will

pick up more significantly so it will not be as transitory as central banks are saying. is inflation -- inflation seems to be a concern in the u.s. especially if we have the big infrastructure bill which could come soon. here in europe, is it really a concern that all the forecasts are wrong and we have inflation that stays much longer and more aggressively than we are expecting it to? >> it's very hard to call that at this stage. given the history we've seen in europe, i think it remains the question, can they generate the same inflation in the long-term? we certainly are sympathetic to the view. not justified. we have similar comments from the bank of england. inflation has always been transitory. it's linked to the opening up of economies post-covid. certainly, when i look at the

long-term picture, you have some long-term powerful forces at play. my view is the covid episode is going to have the adoption of online shopping, we've seen the surge over the course of the covid crisis. those are powerful deflationary forces. >> thank you so much, the jp morgan portfolio asset manager. let's get straight to the bloomberg first word news. >> the top infectious disease doctor in the u.s. is strongly in favor of speeding up booster shots for people with weakened immune systems. anthony fauci told cnn plans should be implemented soon. his comments come as a delta variant drives u.s. infections to more than 100,000 a day. levels not seen since the winter

surge six months ago. alibaba fired a manager accused of sexual assault while two other managers who mishandled the allegations have stepped down. the ceo said any memo seen by bloomberg news that the company must reflect and rebuild. alibaba says it's been cooperating with investigators in an internal post -- wildfires rushing in greece. the blazes began almost a week ago. destroying homes and businesses. thousands of residents and tourists have been forced to flee. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. ♪ >> thanks so much.

coming up, saudi aramco, with profits, the highest since 2018. this is bloomberg. ♪

♪ >> welcome back to the open. we had 37 minutes from the equities saudi -- saudi aramco, you can see the future is depressed today. the world's biggest energy company made a net income of $25.5 billion in the second quarter. the highest level since the end of 2018. for more, paul joins us. we are going to -- what are the key points from investors? >> that rise in income was the

big thing. it was the highest net income the company has generated since the end of 2018. they were expected to have good results given the rise in crude prices. prices for all petroleum products and chemicals. they beat estimates. the other thing analysts were looking at closely was the gearing ratio. aramco's leverage. that came down. that's important because it rose quite a bit last year, with the spread of the coronavirus. and the toll it took on the company's earnings. a very strong set of results, very high -- with very high income and leverage coming down. >> dividend was not increased. his saudi aramco bucking the trend? >> it is somewhat. it is strange that we are talking about why aramco didn't increase the dividend and it's set at $75 billion a year,

easily the largest dividend in the world. a year ago, traders and analysts were wondering if aramco could sustain it. but now, some are saying it might actually have to be increased for aramco to keep the interest of stock investors. the main reason for that is, in relative terms, $75 billion is not actually that much. if you look at the company's big oil rivals like bp and chevron and shell, there dividend yields are higher. at 5%. aramco's is at around 4%. francine: they very concerned about the spread of the delta variant. >> it was interesting, the aramco ceo was contradictory yesterday. he said he was very optimistic about the outlook for the rest of the year and early 2022. at the same time, he said it's very clear this pandemic is not over. that aramco needs to be cautious.

obviously, this part of the delta variant and the heavy toll it's taking on oil markets, 8% in the past six trading sessions, that's the biggest issue for oil markets at the moment, it is certainly something that saudi arabia and aramco will be concerned about. we are not that far away from the next opec meeting. francine: in two seconds, do talk about peak oil? we have a great story saying at least two thirds of global car sales would be electric by 2040. what does a company like aramco do? >> aramco and saudi arabia basically say, people who are talking about people demand are being too optimistic and too hasty. aramco and saudi arabia think oil demand is going to remain very strong for several decades to come. francine: thank you so much, paul.

we have the yuan report on climate change later on. coming up, the $550 billion infrastructure plan. a cornerstone of president biden's agenda clearing hurdles in the senate. we have the latest on that next. this is bloomberg. ♪

♪ francine: welcome back to the open. 30 minutes from the equities open. we can see depressed futures. if you look at the ftse 100 futures, they are down to 0.3%. we had some pretty good u.s. job numbers. trying to reprice some possible fed tightening, but certainly tapering sooner than expected. we see quite a lot of volatiles. volumes are short. this could all change in the next couple of hours. a focus back on the u.s. and a

$550 billion u.s. infrastructure package has cleared its last procedural hurdles in the senate, setting up a vote on final passage as soon as monday. >> the united states senate took an additional step toward passing the bipartisan infrastructure bill. it is a bill that would end years of gridlock in washington and create millions of good paying jobs. >> joining us now for more is bruce langhorne in hong kong. we've been talking about this almost since week three of joe biden going into the white house. how much closer are we to actually having something tangible? >> we are getting there. there's most likely going to be a vote, if not monday, then probably tuesday. then that will start the next part of the process, which will

have the senate take up the rest of biden's agenda, the $3.5 trillion spending on health care, childcare, immigration, climate change -- all those things. that's something that could be passed on a partyline vote, the democrats can pass that on their own. meanwhile, it would still have to go over to the house. the house is unlikely to take up any of this until after the summer break. so, realistically, we are not going to get anything for president biden to sign until sometime in september at the earliest. francine: so, what exactly is in the bill? what do senators need to resolve before they can have a final vote? >> in this bill, the infrastructure bill that is bipartisan, that's got a lot of money for roads and bridges. this is america, so americans like to spend money on roads and bridges. $110 billion on that. a lot of money for broadband.

money for electric grid upgrades. money for trains and amtrak. money for mass transit. . money for water. all of that is in this so-called hard infrastructure bill, that the republicans and democrats, those from both sides of the aisle on that one. -- votes from both sides of the aisle on that one. still to come as a separate -- th that democrats will pass alone without the republicans. francine: there's also other things that need to happen. >> yes. so the key thing is that nancy pelosi has a very slim majority in the house. she's only got a couple of votes to spare. she can't really afford many defections. there's a significant number of resident democrats in the house who say, look, if this

infrastructure bill comes to us without the accompanying $3.5 trillion bill that covers all the rest of the agenda, the items we care about, we are not going to vote for this. so, they -- they really have to make sure they have both of those in tandem in order for this to go until. -- go into law. francine: thank you very much. the push for a massive infrastructure deal is threatening to deliver higher taxes and inflation. some warn the debt party will not and will. -- well. >> the cyclical convictions are not to just above a bear market. they, but for certain environmental reasons. number one, problematic inflation. we are not there yet.

we are heading in the direction. i'm critical of the fed. i will talk about that in a moment. an oncoming recession. we are just coming out of recession. or and exuberantly priced market. i have to admit the stock market has been very self corrective. the areas of the market that have been overvalued have had a big decline. that explains my positive you. my long-term concerns are far away from the future. a very distinguished economy was still listening would say if i lined up 100 economists and asked him the real potential growth of the u.s. economy, the response is 2%, the function of the labor force growth, which is about half percent per annum. that determines real growth in any economy. 2% real.

end to percent for inflation. phenomenal gdp growth. we have real growth this year of four times potential, yet the fed is holding interest rate near zero. it makes no sense to me. i understand what they are doing and why they are doing it, but i think it's going to have about into it -- a bad end to it. their trent to do another -- they are trained to do another to -- under the two chilling dollars, $3 trillion on top of that. when this party ends basically, it's not going to end well. nobody knows where it's going to end. it is around 400 bc said -- the wisest man in the world

knows nothing. i think we have about into this. i think we have been barred from the future. i think bonds are totally mispriced. if i told you historically [indiscernible] with nominal gdp, on a trend basis, growing up for percent, that would imply a 4% 10 year bond. this year, and the third quarter, it is six director to percent. yet we have a 1.3% government bond rate. you invested, you pay taxes. 78 basis points. the inflation rate is running at 4%, 5%. stocks make all the sense in the world relative to bonds. but bonds make no sense. i think the fed is overstaying their position. that bothers me greatly. >> and the shift taking place in

the country. 30% of the young people today think socialism is a preferred system over capitalism. francine: that is leon cooperman speaking with david westin. let's get straight to the bluebird business flash. >> marlborough -- shares or just over one billion pounds. alibaba will fire a manager accused of sexual assault him a while to other managers who mishandled the allegations have stepped down. the ceo said in a memo seen by bloomberg news that the company must reflect and rebuild. alibaba says it is cooperating with police to investigate the claims by a female employee in an internal post. tiktok owner bytedance is reportedly revising plans to

list in by early next year despite the widening tightening crackdown. the listing may take place either next quarter or an early 2020 will to -- or in early 2022. virgin atlantic is reportedly considering a public offering in london. sources say the executives have been holding discussions and could announce the ipo plans within the coming month. the decision would mark the first public opportunity for richard branson's flagship carrier. warren buffett took a step back with his capital deployment in the second quarter. repurchasing just $6 billion in stocks, the lowest amount of buybacks since mid-2020. it was also a net seller of other stocks. that's the bluebird business flash. francine? francine: thank you so much,

laura. coming up, time for a booster. america's top infectious disease expert, dr. anthony fauci, says the vulnerable should get a booster jab soon as covid cases hit a six-month high. this is bloomberg. ♪

♪ francine: -- >> we think the rate at which the variant is spreading should require that we vaccinate the individuals whose immune systems may be weak, we offer a third shot to those, may be a larger

number, and that is what we are waiting for. >> we need to look at them in a different light than the durability for a normal person, which means that we will almost certainly be boosting those people before we boost the general population that's been vaccinated. and we should be doing that reasonably soon. francine: the moderna cofounder and anthony fauci, speaking about covid-19 booster shots. for more on this part of the delta variant, let's hear from our analyst at bloomberg intelligence, joining us now. samn, thank you so much for joining us. let's start with the booster shots. there's this philosophical or ethical debate i guess whether shots should go to emerging market countries that do not have a very high vaccination level, before people in rich countries get a third booster. what's your take on that? >> well, absolutely, francine. that is a major issue.

we have to consider that. it would be very difficult, if you are living in one of those countries that didn't have access to enough vaccine, to watch folks in countries such as the u.k., the u.s., etc. spend their time in close contact, and nightclubs, theaters, etc., then needing a booster. those countries have not even had their first shot. i can understand fully why this is such a big ethical issue. francine: the case for booster shots is for the moment, it would only be for the vulnerable. does that also mean after 4-5 months, we know that antibodies actually wane? that the vaccine needs to be given more frequently than we previously thought? >> i think francine, the issue is, i don't want to go into the frequency of how many boosts, because i'm not convinced that is to become necessary. but definitely, at least one

other dose may be required to fully energize the immune system of individuals, potentially all individuals, not just a vulnerable, for a much longer term. the clinical trials being conducted are between one dose and two doses, they were done they stunk prior knowledge -- they were done based on prior knowledge of what you do with vaccines against infectious diseases. it does not prove that we absolutely have the right vaccination schedule. maybe three would've been the right one if we had enough time to do the dose trials. francine: the other story that is really a big deal is what is happening in china around the asian economies. the resurgence of the delta variant, with a very small number of cases at the moment in china, is not something that really concerns you? >> of course i'm worried about any infection in any

country, but the problem for china is, they use vaccines that have lower efficacy against -- lower effectiveness against the delta variant because they showed lower effectiveness against the original form of the virus. if china wants to really manage the infection right now to very low levels, then they should continue to have lockdowns and shutdowns, which will impact their economy. francine: many people are thinking about coming back, coming in. we understand the eu is tweaking travel plans. if you are an american, you can freely go into european countries. are these political questions? or do you believe european countries are genuinely looking at infection rates in trying to close borders or quarantining people even if they are vaccinated? >> i don't think this is a

political issue. i think these are the side effects, the side effects of the fact that we haven't quite figured out what matters to us. i just noticed the first country in the world to go down that road is malaysia, but if you're in the u.k., and france, the u.s., -- excuse me -- you care about how many cases you have on the ground today, respective of how mild or severe they are, then you of course are going to have these issues as the waves come and go. in two weeks' time, that might change. it's very difficult for planning anything, really. francine: how much time do the green --

is there a big uptick in vaccinations because people still want to live their lives? >> at least one person in my circle here in france said it doesn't make any difference to her, she's not going to get the vaccine. despite the fact that it means you probably will not be able to access what you mentioned. i think more people want to go to restaurants, for bars, etc., they have to have it. that every service provider is going to be able to manage this.

>> -- setting up a vote as soon as monday. legislation would move forward to show it has broad bipartisan support. there was no immediate resolution on demand still on the table, including legislation on new cryptocurrency rules. wildfires raging in greece have threatened villages, forcing further evacuations on the second largest island in the country. heat waves have to cut across the popular summer this nation, destroying homes and businesses pay with thousands of residents and tourists have been forced to flee. tela fighters have seized the

fourth capital in a week in the latest blow to government forces , as u.s. troops complete their withdrawal. officials say the group took control of the governor's office, police headquarters, and the main prison building, where 500 inmates and tele ben fighters were freed. -- taliban fighters were freed. lionel messi says barcelona confirmed last week his contract would not be renewed after they could not reach a deal on salary benefits. barcelona is the only professional group he played for drawing his career. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. francine. francine: we should do a whole show on lionel messi and

football. coming up, faxed to watch, including european energy -- facts to watch, including european energy and the outlook in covid cases. this is bloomberg. ♪

♪ francine: welcome back to the open. we are seven minutes from the cash equities open, let's get your stock to watch with joe easton from our equities team. we've seen a bit of a reversal. joe, help me get my head around phillip morris. >> we've got this fascinating bidding war in the u.k., with phillip morris raising the price for the company. what's happened here is one phillip morris initially announced the offer a few weeks ago, there was quite a bit of

pushback, as you referred to, which is quite unusual for a cigarette company, there was a bit of pushback, even some politicians asking questions about the ethical side. we saw carlisle come in, positions for them to come in and try to outbid phillip morris. phillip morris seems to be saying, we are not going to move away that quickly, we are going to stick around and fight for this. there are analyst commentaries saying valuation perhaps is now a little bit stretched. i'm not sure whether we will see more bids coming in from carlisle or elsewhere. can the latest -- and the latest of the press, just above where it closed on friday, it could continue a little bit longer. we will have to wait on see from carlisle now. francine: what about hargreaves? >> hargreaves had this boom year, coming from the volatility from the pandemic, with new people

coming in and trading. also the whole reddit craze we saw at the start of this year. the question now is whether this continues or whether that eases off, as people go back to work and reddit is not so popular at the moment. the company says they have seen a little bit of a slow down and demand -- in demand. they emphasize their client base is a lot bigger now and there should be able to cross sell other products and other kind of retirement products to those customers. they came to emphasize as well the average age of traders trading stocks now dropped about seven or eight years over the last five or six years as well. the average age of people investing is a lot lower, which is positive in the long-term growth. francine: five seconds, energy stocks? >> a really good week last week. the outlook for the variant of the virus is going to weigh on the shares this morning. francine: thanks so much.

i will catch joe easton to talk about lionel messi. the only stock we should be watching his football sucks. coming up, the market open is minutes away. -- football stocks. coming up, the market open is minutes away. this is bloomberg. ♪

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francine: welcome back to the european market open. one minute to go until the start of cash equities trading. here are your headlines. job reports raises bets that the fed is closer to pulling back stimulus, as a 550 billion dollars senate bill is left. bonds and commodities selloff. goldman/'s china's forecast. anthony fauci says the vulnerable should get a follow-up jab soon.

let's look at the futures. there are a lot of things going on in the markets. the futures are pointing to a down day. this is on a number of things. precious metals today are tumbling because traders wagering that the employment number in the u.s., that data will move the federal reserve closer to pulling back stimulus. let's see how it opens to see if it has a very strong impact on equities. of course, this is with crude oil extending, the worst since october over concerns that the delta variant strange will hamper growth. this is down a touch, but it is iron ore. gold is one of the biggest stories today. oil down. it is growth concerns because of the delta variant. you can see the spanish ibex down to 0.14%. treasuries, be careful because the u.s. 10 year yields are

steady after climbing. there is a holiday also in japan, so that has an impact on the treasury market. treasury yields gaining on inflation data above expectations. france also opening pretty much flat. if you look at the u.k., the ftse is down to 0.2%, but overall it is a market trying to find direction because of the better than expected jobs data on friday. let's get straight to the bloomberg business flash. laura: phillip morris is heating up the race for vectura group. the marlboro cigarette company has made an offer for the company, trumping an offer for the carlyle group. the shares are estimated at one billion pounds. tiktok owner bytedance is revising plans to list in hong kong by early next year despite the widening chinese tech crackdown. the financial times says the

listing may take place next quarter or in early 2022. it says bytedance has been working on addressing data security concerns raised by chinese regulators. virgin atlantic is reportedly considering a public offering in london. sources say executives have been holding discussions with bankers and potential investors and could announce the ipo plans within the coming months. the decision would mark the first public opportunity to buy shares in richard branson's flagship carrier. warren buffett a step back in the second quarter. berkshire hathaway has a $6 billion in stocks buybacks. it was a net seller in other stocks for the third quarter in a row, despite having more than 140 $4 billion in funds in the war chest. that is the bloomberg business flash. francine: laura wright in london. european equity markets with a mixed bag. if you look at the ftse, it is

down but the cac 40 is unchanged. the biggest increase in unemployment last month in more than a year. bloomberg tv guests weigh in on the latest employment numbers and its implication for fed policy. >> another incredibly strong jobs market report. >> very strong report across all metrics. >> across-the-board, february for the economy. >> leisure and hospitality jobs were among the top gainers. >> the service sector shows this recovery is coming in full force. >> this is a critical note for the fed. it is not just we got one big report, it is month after month. >> maybe this transitory inflation is supposed to be short-lived and will be with us longer. >> the risks and costs are mounting. >> this will not be an earlier tightening, but it may be an earlier tapering. >> the fed risks falling behind the curve. >> very encouraging, very

consequential report. the next payrolls report will be the decision-making report for the fed. francine: joining us now is our guest. great to speak with you as always. when you look at what we heard in terms of the jobs data on friday, what you were expecting from the fed, does a change anything in terms of tapering? could it also mean they tighten sooner than we expect? guest: good morning, francine. i don't think it changes our calculation for when the federal reserve will taper their program. we thought the june and july reports would need to produce a cumulative 2 million drop in order to get this hawkish pivot at the jackson hole meeting in august. they are a bit shy on that.

we are still anywhere between six to 10 million jobs from maximum employment. that is the threshold. francine: is there another data point you are looking at? i think we have cpi this week. is it the next jobs report that could make a difference or no matter what you wait until december? guest: i do think this week's cpi data is relevant. there is expectations that we will see it tick down from 5.4% to possibly lower. i think if we see it picking up. -- yes, the data is volatile, but i think the tolerance level will be tested should the basis

that we have seen push up the midsummer data continuing into quarter three. job reports on that progress is relevance, but that is probably on the slightly longer timescale in terms of the fed funds rate. in terms of tapering, i think these inflation data points for the next few weeks are relevant. francine: what does that mean for treasuries? guest: i think we have thrown in the towel in terms of 2.5% for the end of the year on the 10 year, just because -- you have to give the federal reserve their credit on the credibility of inflation targets. i thought you would see a reduced inflation premium because of an expectation where you would have a period of catch up.

but quite how unprepared they are to go against the federal reserve, while i think the risk-reward is favored in terms of rates being higher, i do not see the scale of that move being likely after the end of the year. francine: overall, there are concerns about china and china growth. the number of cases are quite small, but we understand they could take drastic measures to close it down to make sure that does not spread more. is the biggest concern to the world economy the delta variant coming through china? or is it the infrastructure bill leading to inflation sooner than expected? guest: i think it is the latter. the reason i do not concern myself too much with the china growth story is if you look at the recovery from the pandemic, the economic performance since the first wave of covid-19 hit in the q1 2020,

china had been ahead both in terms of the health care response and the economic response. maybe not on the vaccine response, but in terms of being able to take the measures to control economic activity, i don't think that is too much of a risk. i am not sure the risk usually is in terms of the inflationary impact of infrastructure either. anyone who has been involved with infrastructure programs will no that you announced the funding -- will know that when you announce a funding you are two years away from the shovel going into the ground. in terms of fueling the inflation rate, you don't necessarily see that as a trigger. francine: speaking about the inflation debate, we heard a warning that inflation may pick sooner than expected. is this just because it is the german point of view, or is there something in the numbers that could lead us to worry about inflation in europe? guest: it has the data on the

tide in terms of inflation has been higher than most forecasters have envisioned, not just in europe but across the u.k. and u.s. and china. the effects have been fueled by what has been a rapid economic recovery by historical standards. what you do need to step back and say what is your policy prescription that is different from the current governing council stance? this is where i would disagree with weidmann's comments in terms of the policy having to be different. i don't think that is the case given the inflationary risk is far more of an economic risk than some near term undershooting. if that is the risk, i am afraid i don't see it. francine: simon french stays with us and we will talk more

next. the bank of england's hawkish turn with the pound's pre-pandemic strength. we discussed the outlook for sterling. this is bloomberg. ♪

francine: welcome back to the open. we are 12 minutes into this european trading day. let's take a look at what is on the move. if you look at european stocks, the futures pointing to a lower start. maybe not as bad as we were expecting. overall, the stoxx futures -- not the futures, the indices are gaining. it is not huge, nothing to write home about, but it is better than the futures were indicating. a couple of things to watch out for. these are the biggest gainers. we were looking at deliveroo with the help of my producer, abby. deliveroo is rising because they are holding the voting rights. i am not sure what that means going forward.

for now, the market seems to like it which is why deliveroo is gaining. the other is pandora. pandora came out with some figures a little bit earlier on, so this was a couple of months ago. i am not sure if it is a buying opportunity on the back of what we heard against the financial guidance for 2021. this came out a couple of weeks ago. it was a little better than expected. maybe it is a buying opportunity. the other one, which is -- pandora, just a reminder, was very popular especially with teenagers and women from 20 to 30 years old because it has a modern jewelry made from silver, but had a can finish. hargreaves is the other one we have been talking about. joe easton is bringing us up-to-date with what was happening. one of those stocks the lowest today, down 8.69%.

tax was short of estimates. the estimate was 381 million pounds. that was 26.6. a little bit of disappointment when it came to the net income or some of the new business inflows. the pound could be about to enter a new era of strength against the euro all thanks to the bank of england's hawkish turn. traders have raised the likelihood of a rate hike to 60% after the boe made clear last week it is beginning a countdown to end the era of rock-bottom are owing costs. it is giving sterling the momentum it needs to pass 85 pence, a barrier that has been intact since early april to hit its strongest level since the pandemic began. simon french is still with us. how do you interpret what we heard from the bank of england last week? guest: it actually is expected. we got michael sanders, who

wanted to see a return to the asset purchasing program. but the bank of england has been consistent throughout the year that they want to see fourth-quarter navigated in the u.k. economy. some of your viewers may wonder why the fourth quarter is so relevant. the furlough scheme, which was protected at its height 9 million jobs, the forbearance on rents and tax is being removed. you mentioned correctly in the introduction that bets are being brought forward for an early rate increase in 2022. i think that is consistent with the quarter. you start to get the case given the inflationary backdrop for a relatively early rate increase in the u.k. francine: what does that mean for the pound? looking at the charts, 60% of

traders are expecting an increase. guest: i think we are more against sterling-euro than sterling-dollar. it is not a long way away from par value against the dollar, but i think there is some upside, probably 1.25 versus the euro. on the basis that historically the bank of england has hiked about nine months after the fed, and i think it will go first this time around and that will be unusual. that will provide broader strength to the sterling in some spaces. but also the fact that the economic recovery should start to pick up in the second half of the year vis-a-vis europe, and we get the q2 data from the u.k. on thursday this week. but i expect q3 and q4 to close the gap and overtake the pace of the eu recovery.

francine: i know there has been some things, carry trades, we have looked at, or sterling-yen. is there anything in terms of currency pairs that you think is interesting because of the dynamics the market has not quite caught on to? guest: i do think yuan-dol islar 0- -- yuan-dollar is interesting. we talked before the break about the china growth story, how that would be impacted by delta. but there are some broader structural issues that the chinese economy is trying to work through. the playbook over a number of years has been china has been trying to introduce it and loosened its monetary policy in an attempt to loom in and

introduce structural reforms and provide some stimulus to counterbalance. therefore, a week yuan against -- a weak yuan against the dollar, and impact of that policy. francine: thank you so much for joining us. simon french. coming up, time for a booster. america's top infectious disease expert says the vulnerable should get a follow-up covid jab soon as cases hit a six-month high. that story is up next. this is bloomberg. ♪

>> we do think that the rate at which this variant is spreading should require that the population, certain health affected individuals at a minimum have a third booster shot to those and perhaps a larger number. we are waiting for other health organizations to do this. >> we need to look at them in a different light than the durability for a normal person, which means we will almost certainly be boosting those people before we boost the general population that has been vaccinated.

and we should be doing that reasonably soon. francine: that was the moderna co-founder and anthony factory speaking about covid-19 -- anthony faucher g speaking about covid-19. our senior pharmaceutical analyst joins us. we have a great story that is really well written on the bloomberg terminal that the eu is expected to discuss the imposing travel curbs on the u.s. is that related to the infection level in the u.s.? reporter: it seems to be. there is nothing else going on in the u.s. the problem for the united states is it is not the united states. you have some states that have 70% vaccination rates, where they are seeing what we are seeing in the u.k. and continental europe in terms of

significantly reduced severity of disease. then there are others that are below 50%. so you have this situation, how do you treat the totality of the united states? in any case, all of our rules seem to be decided by the number of cases irrespective of how severe they are. francine: i was going to ask you that. if i am the authority in the eu that decides who should be and from coming on holiday, is there a metric? i don't know if there is a ratio of vaccination versus number of cases, because that reduces how much you can transmit it. reporter: i really don't know what formula is used. when the u.k. put its quarantine for french travelers until today for the past few weeks, it was not based on case counts or case counts per capita, it was based on the percentages of what they thought they were seeing from the variant, which is

nonsensical because there were higher rates in spain and to spain was not on the list. i am a bit worried they are made up as they go along. we have always been saying together that this is something that has to be looked at internationally. how do we reopen our world? francine: do we need booster shots? i don't know whether we call them booster shots or just a third shot because the second vaccine is already a booster. reporter: boosters are a very difficult subject. we have talked about this a little bit. we have societies in the west that are opening up for people to have freedoms, then we have societies elsewhere, countries that do not have enough vaccination to start to reduce their morbidity and fatality risk. that is a big discussion and is tough to get into. the issue at the end of the day

is some people will have waning immunity, whether they are immunocompromised were older. over time, we may all need a booster shot. that is something we need to square with what the world needs. francine: the other question is, how much should we worry about the next variant? do we need to know how to live with covid-19? reporter: yeah. it all ties it back together again. if we are going to continue to worry about people catching -- because we keep testing people as soon as they have symptoms. they get tested at different rates in different countries. so you find the virus. we never do that for the flu or other viruses at all. if we continue to do that and base our rules and regulations around case counts, we will be constantly worrying about the next variant because there will be another one. francine: sam fazeli. now coming up, alibaba fallout. the e-commerce giant's fires a

manager after an account goes viral. we will talk about alibaba and a lot of these chinese tech giants as well. this is bloomberg. ♪

francine: welcome back to the open, everyone. we are 30 minutes into the trading day. not so bad. european stocks pretty much unchanged. they are in the green.

if you look at the dax, also unchanged. the ftse 100 is getting a little bit of pressure. this has to do with the repricing of certain asset classes. trying to get an indication of when they are looking at the fed to start tapering and possibly titan. let's take a look at the sectors on the move. this is a great sector look you can do by typing grr go on the bloomberg terminal. and of the things we have been talking about is precious metals selling off and gold touching the lowest. when this came up, i was surprised to see financial services. we knew it would be lower but financial services is one of the biggest faulters in the trading session today. we are looking at shares of a

u.k. investment platform fell short of earnings. laura: taliban fighters have seized a fourth provincial capital as u.s. troops complete the withdrawal. officials say the group took control of the governor's office. a top aide to andrew cuomo is reported to have resigned as her boss contends with possible criminal charges. earlier, one of his accusers spoke out publicly for the first time. she told cbs that what andrew cuomo allegedly did to her was a crime and she -- and he should be held accountable. football superstar lionel messi -- barcelona confirmed last week

that after 17 seasons his contract would not be renewed after the spanish league salary limit scotch to a deal. he was emotional at the news conference saying he had expected to stay at barcelona. the only professional club he has played at during his career. global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. francine. francine: laura wright and london. alibaba has fired a manager accused of rape bring to contain the fallout after the account of the employee went viral on social media. a china government reporter is with us. take us through the timeline. >> hello. this came to the attention of the public this weekend when it played out over social media. the female employee involved in

the incident said the incident happened almost two weeks ago. because she was not satisfied with how executives handled the case, she took to the internet publishing a long and detailed account of what happened including that she was on a work trip with pressure to drink and was sexually assaulted by a client as well as her boss. francine: what are we watching for next? reporter: we know the case is under police investigation so we are watching to see at there will be a criminal conviction. on the chinese internet, there is a lot of commotion and a lot of people talking about this. you have lawyers coming out to say, what are your responsibilities if you witness something like this? it is spurring a lot of conversation about company culture and sexual harassment. francine: what does this mean for china's me too movement? >> it gained prominence at about

three years ago and we have had a string of high-profile cases. but it has not really gained traction the way it has a broad. many of the cases are reported on and looked upon as an individual case. what we have had this case and just a few weeks ago, we saw another hugely high-profile case with a celebrity who was also detained by police on allegations of rape. these high-profile cases again bringing sexual harassment and women in the workplace to the conversation at least online. francine: lucille, thank you so much. coming up, as wildfires rage in greece, we get an update on the situation and we talk about climate change. we are also expecting an important u.n. report in about 25 minutes. i will have a full round up of climate news shortly. this is bloomberg. ♪

>> beijing is promising a successful winter olympics in february. still, a number of hurdles stand in the way starting with transporting athletes and delegations. officials have yet to share quarantine plans with borders

now largely sealed off. even for vaccination against covid may not guarantee easier access. international fans could be limited but beijing may allow home crowds kept at two thirds of venue capacity. brother social distancing rules, organizers will have paid close attention to the tokyo rulebook. winners could put medals around their own. infrastructure is where beijing could shine. state media says all the construction work is on track but what about the snow? skiing will be staged in a desert averaging eight inches per year. environmental concerns are being raised. and then there are human rights issues. some are calling for a diplomatic boycott of the games. critics including u.s. lawmakers want a change in beijing

regarding hong kong and uighur muslims. pressure is being placed on supporters. particularly those that benefited from its breakneck growth. with these games, beijing has a chance to dazzle the world. officials are said to want at least five gold medals and now the challenge for the country -- another challenge for a country historically week in winter sports -- weak in winter sports. francine: here is laura wright. laura: saudi aramco's profit rose to 25 point $5 billion in the second quarter, the highest since 2018. free cash flow rose to -- for the first time since the start of the pandemic. it is the latest think oil giant to post bumper earnings boosted by the recovery in prices.

the company says it is positive about the second half. philip morris -- the company has offered 165 pence per share for the british manufacturer of inhalers and nebulizers. the new bid is just over one billion pounds. bytedance is reporting they are reviving plans to list in hong kong early next year. the financial times says the listing may take place next quarter or in early 2022. it's as bytedance has been working on addressing data security concerns raised by chinese regulators. that is your bloomberg business flash. francine: wildfires raging increase as villages spread further evacuations. blazes that began almost a week ago due to a huge wave have cut across the popular summer

destination destroying homes and businesses. we are joined by our reporter increase. you are in central greece across from the island where the wildfires are. what is the situation on the ground? it is getting better or worse? reporter: the truth is that right now the air quality is terrible. people are in central greece and they are advised to stay inside. the fire on the island which is closed to athens is still burning. and people are still evacuating by sea including tourists. there is a big part of the island that has been burned. the most part of the north of the island is almost completely destroyed. and according to the --, during the last week, over 2250 square

kilometers of land have been burned. francine: the figures and the pictures are horrendous. are there any major power outages or business disruptions? reporter: no, as devastating as the images are and people losing their homes, animals losing their lives and forests being burned, it is an environmental disaster right now. greece was going through the worst heat wave since 1987 and record temperatures of 45 degrees celsius. fortunately, there were no major power outages and businesses are running as normal and tourism as well. but local, small businesses and farmers are going to have a

really, really hard winter. francine: what does it mean -- wildfires are common increase. what can be done about climate change? reporter: this is the next stage of discussions. something i think the government should be looking at as well. wildfires are common in greece. it is true. recently, in 2018, about 100 people died when a blaze broke out near athens and in 2007, a huge wildfire killed more than 70 people. luckily this time, we have not had any human casualties because the government priority was to evacuate all places. but there is really -- this is really the discussion for the next day because we need a

reorganization of ways to protect because the forests were not clean. there were a lot of wild, dry places that blazed in a second. and there is a lot of organizing to do. francine: thank you so much, our reporter increase with this important story. sticking with climate change, a united nations back to consortium of client -- climate experts plan to release a report today. last time a report was released, a swift chain of consequences was set-off. nearly three years later, most of the current momentum behind climate momentum can be traced back to that report. what exactly is this report, first of all? >> the intergovernmental on

climate change was created in 1988 and every few years it is asked to produce a report of what do we know about the latest in climate science? as you would expect over the years, the amount of research being done on climate change has dramatically increased. so every report that comes out is longer and more comprehensive and the urgency to act through the science becomes louder. francine: what do you think scientists will say? reporter: this report has 200 scientific authors and 14,000 different studies. we can expect, because many of these studies have already been published, that scientists will say that our planet is warming faster than it has in a very long time. perhaps hundreds of thousands of years. and the only way we can stabilize temperatures is if we

bring carbon dioxide emissions to zero within the next few decades. francine: what kind of impact are you expecting from it? is it people taking to the street? will there be more pressure from citizens? reporter: the timing of the report is such that it is going to feed into, as you said, the big climate summit happening in glasgow later this year. there is a lot happening between governments to figure out a deal and what this climate science report which has been agreed upon by 195 countries as a consensus about the warming of the planet will add urgency and hopefully, will get governments to agree on a deal where there are currently differences. francine: my question overall is, this is a biggest report of

its kind. certainly the most comprehensive. there was an ia report that lit the fire under businesses because of some of the recommendations to deal with climate change. how is this report going to be different? reporter: the ia report was more descriptive because it says what you need to do to cut emissions. but the science report which is more comprehensive about not just the pathways we need to take to tackle climate change but what climate change can do in absolute details covering all regions of the world, it will have an impact on how policy is implemented not just in cutting emissions but also adapting to some of the impacts such as the ones we saw in greece with wildfires or in north america where the floods we have seen in europe and china. this is a much more comprehensive report. it is describing the physical

aspects of how climate change is happening. in more detail than we have ever had. francine: thank you so much. and the report comes out and about 12 minutes. you will be with me to break down what we hear. coming up, it is nearly time for jackson hole. in about two or three weeks. we will discuss what the meeting needs. this is bloomberg. ♪

>> another incredibly strong jobs market reports. >> a very strong rapport across all metrics. >> and across the board favorable report for the economy. >> hospitality jobs were the top trainers. >> this recovery is coming in full forests. -- full force. >> maybe the transitory inflation which was supposed to be short-lived could be with us a little bit longer. >> it could be an earlier tapering. >> the fed risks falling behind the curve. >> an encouraging report.

the next will be the decision-making report for the fed. francine: some of our guests reacting to this month's jobs report. we are 52 minutes into the trading day. joining us now is eddie. i have missed you. the first thing that greeted me was your tweet about cryptocurrency. i feel like nothing has really changed. reporter: crypto on the way back. sitting above 43,000 dollars as we speak. i think one of the big things that has changed of late is there are a little -- there are a few changes in the mood music in the u.s. they may approve --. that is really significant. francine: i am being facetious because there is quite a lot going on that is new to the markets. for example, gold is one of the

big stories today. >> you are playing to my favorites. bitcoin and gold. yes, gold absolutely is in trouble. we looked at this on friday after the jobs report. i think a lot of people said, hang on a second. if we start to see tightening in the u.s., that could be the end of the road for gold which was with us all last year. we saw a significant selloff. i think gold was down something like 4% at one point. it has come back a little bit, now down just 1%. don't forget, we are moving towards jackson hole where the central banks have typically set out their big picture assumptions moving forward. if we move away a little bit from the fear of covid and move

towards the inflationary fear against a hawkish central bank backdrop, that is really the death toll. francine: volatility has been high. i don't know what volume we will see in august. but how much focus is on the delta variant as we try to figure out the growth trajectory in china and the u.s.? >> goldman this morning downgraded its growth functions for china and the third quarter. they said it is going to be carried on into the fourth quarter. we have seen the delta variant impacting markets, sure. but nothing like the scare that we saw last march. i think people now know that there will be variants and there will be vaccines when the variants come to play and it might slow the pace of the economy but it will not derail

it completely. i think the focus is more on inflation at this point. francine: there are quite a lot of data points. the cpi in the u.s. is one of the big ones. is there anything else you are looking at on the mliv team? >> markets are very interesting even though volatility is quite low. you mentioned the big one earlier, gold. i want to think act to about 2013 when we saw the taper tantrum then. gold was the first to selloff. it was the first to selloff and it really broke with the dollar. and it only caught up months later. and i wonder if this is what we will see again here. don't forget, gold is still extremely elevated, some -- something above 3000 metric tons in the gold etf's. if we start to see that come back to market, hold could be

the canary in the coal mine. for the dollar. francine: we are going to talk a lot more about gold with eddie from our mliv team. that is it for the european market open. surveillance, the early edition is up next. we will talk about cpi and a couple of other things that we are watching including the asset classes which goes to the market coverage and the repricing on the back of the better than expected jobs data from the u.s. and we will talk lionel messi and football. this is bloomberg. ♪. ♪

>> folks or the population that are even together to offer a third booster shot to those. >> we will almost certainly be boosting those people before we boost the general population. >> the majority of people that aren't getting vaccinated, it is a political thing, and it should not be a political issue. >> this is "bloomberg surveillance: early edition," with francine lacqua. francine: good morning, everyone. welcome to "bloomberg surveillance: early edition." i am francine lacqua here in london.