anna: good morning. mark cudmore, our markets live managing editor joins us in singapore to take us through the market action this hour. cash trade is less than an hour away. here are your top headlines. president biden and xi ■ speak n the phone. the lady isn't tapering. the ecb slows the pace of bond

buying, but christine lagarde insists this is not a move to slowdown emergency stimulus. and bidens vaccine mandate. the president calls the unvaccinated a threat, requiring shots for federal workers and pledging new rules for large private firms. welcome to the program, welcome to the european market open. 7:00 in london. what are you watching this morning? tom: in asia, everything was up. a day of green across the board, but not necessarily exuberant gains. at least everything was positive. that is the sentiment going into the european session. the telephone call, the fact they had a call has been taken as a positive, but may be the reset of relations some were forecasting a year ago when we thought -- less than a year ago now, but we thought with the change of the administration -- that has not happened yet.

there is general positivity in asia and we got slightly more positive plans on the policy front from beijing, they toned down the rhetoric on the online gaming sector. overall it is pretty positive. anna let's see how long that lasts. we have had data from the u.k.. u.k. gdp. the economy grows in july, the estimate was for growth of 0.5%. pre-pandemic data, a miss on that side would have been something substantial for the market to focus on. the market has not moved all that much on the back of that. we have had -- this was for the month of july, so it is a little backward looking. in theory we have a lot more freedom to go with what we liked

in july. high-frequency data suggested we did not take advantage of that. the extent to which people by the track and trace app to stay home and self-isolate is seen as something that could be weighing on the economy. that is the latest on the u.k. economy. the u.k. economy grows by 0.1% in july month on month with an increase of -- an estimate of 0.5%. we are just an hour away from the start of the european equity trading session and the futures picture looks like this. modestly positive. we are expecting a bit of again at the start of trading. maybe it comes down to what you were talking about. the fact that president xi and biden are speaking even if nothing was achieved. they are speaking and maybe that is seen as a positive. maybe the mood music is coming through and helping because the chinese equity markets, the tech stocks doing pretty well.

let's have a look at u.s. futures. they also point to the upside, up by between 0.2% and 0.4%. on the gmm, this sense of positivity on risk assets. tom: -- mark: japan having a brilliant friday to finish off the week. that has been the real winner out of the asian session. the other theme i want to draw attention to, the commodities section. you see there are losers in copper and palm oil. have been big winners. aluminum, copper, steel. it is this massive divergence we have seen for a number of weeks. these are commodities that both depend on energy prices. they both play into the inflation dynamic.

certainly quite drastic. not only about the gmm, but going back to u.k. data, we have had industrial production out. traders will probably pay more attention to that than the gdp. that's going to be a better indicator especially for three-month on three-month gdp. we have also seen the year on year number. it is a bit of a mixed bag in the u.k. but i think traders will take it marginally positive overall. anna they are making links between isolating and july, the regime has changed a lot since then. there are different requirements for people in close contact with people who have covid now. restrictions are not as tough as they were back in july. let's see if the market focuses as you say on the output number which investors have

anticipated. that to china and the rally we are seeing in tech. do you think the market is listening to these editorials we are seeing in china that our state back, suggesting the clampdown is not going to be as extreme as it seemed? the clarification around gaming companies in particular may be seen as positive. mark: i think it is a combination of that and the fact that as we have been talking about, some of the prices look extremely discounted. very good companies here are not trading particularly expensive. they are not supercheap, but a lot of their global rivals are expensive. on a relative basis they are looking quite discounted. on top of that, we are getting a much more massaged policy message. china is being clear they are not closing their backs on foreign capital and therefore the free market still exists. as free as they always were, not

entirely free in china. it is not going to back away from intervention, but intervention will remain targeted. some companies if you pay attention to valuations, some of those companies look like good bets. the shanghai composite is just reaching its highest level in six years today. that is what we see at the moment. state back companies much more in the shanghai composite are doing really well. the csi 300, the new economy, is still languishing. it is above the 5000 level. if it grows above their it will be important as a sign that chinese stocks overall are bottoming out. anna let me go to japan. toyota cuts its full year global production outlook by about 300,000 units. they say the outlook for november and beyond is unclear.

november is not very far away, is it? it gives you a sense of the short time horizons over which car companies have clarity or visibility. they certainly don't have much of that it would seem. many car companies are making news around the world with what the shortage of chips is doing to their production line. even if we have plenty of demand, even if we have is undeveloped markets the freedom to move around -- if we have in developed markets the freedom to move around, that is going to be something that weighs on gdp expectations, the growth we are going to see. that is what supply chain disruptions are threatening. mark: absolutely. this idea that there are supply constraints can be a really slow down impact on growth. it gets solved by higher prices. i think people are increasingly

realizing the inflation threat is bigger than anticipated. it is still the transitory versus persistent debate. but those who -- are a lot more nervous than they will. it was back in july or august we saw the market suddenly tanked. markets fell quite drastically. the september production numbers at the time were being cut by 40%. for september they have already been cut by 300,000. i expect people put the toyota cut, they are going to say, wait, we knew that. this is not new bad news. it is just putting the numbers in context. i do not think it will be taken to drastically today. anna they are also saying the part shortages due to the covid

spread in southeast asia. another reason to keep our global focus on covid. you can get analysis and insight from the markets live team. mliv is the function to use. coming up on this program, christine lagarde says the ecb is not tapering. their policy decision and what slower bond buying means for credit markets coming up next. plus combating climate change. an insurer's plan to transition to net zero. ♪

>> the department of labor is developing an emergency rule to require all employers with 100 or more employees that together employ over 80 million workers to ensure their workforces are fully vaccinated or show a negative test at least once a week. some of the biggest companies are already requiring this. united airlines, disney, tyson foods, even fox news. this is not about freedom or personal choice. it is about protecting yourself and those around you. anna: president biden speaking last night, this as the delta

variant threatens the recovery in the united states. chris, we heard overnight from president biden, the vaccination rates in the united states. some people are talking about whether this is part of the threat to the growth story for the u.s. to go into the winter. what is your assessment of that? >> i think that covid, as we all know, continues to be a challenge to the global economy. we are seeing it have an impact on gdp growth. the opening of the economy is stuttering at various stages across the globe. it is important that there is a coherent message not only in the u.s., but europe and asia. the reopening is really dependent on improvement in the underlying infections.

mark: when you think about the covid impact on equity markets, do you think it is more important on the top-down gdp growth, or the earnings story? the rally has been about the earnings growth story. will that disappear as covid is worse than expected? are you differentiating between regions based on their covid success rates? >> we are at a very difficult point in navigating the global equity market. initially we had growth in momentum and that was replaced by value and cyclicality. the reopening began in early 2001. technology lead rallies in the market.

the reality is the market is at a point where it is not clear any top-down macro factor is going to drive the market. we have challenges facing the market. it is going to be the ability of individual companies to navigate the challenges before them, whether it is supply chain related, whether it is input cost related, or whether it is measuring demand. right now in the short-term term of matching supply and demand, to what extent does that extended to further quarters? anna: where in europe do you see risk? some people look at the tilt toward cyclicals on that particular market and suggest if there's going to be some slowdown into the winter if that's going to be driven by delta or the second derivative,

which is the supply chain disruption we are still living with. what is your expectation? >> the supply chain is an issue across europe, germany, the u.k.. the automotive industry has been in the spotlight because of the inability to get semiconductor companies. that is a contributor in terms of the automakers. in the u.k. as well, i had a colleague who return from holiday in the u.k. with his family. he recorded that he was struck by the lack of menu items on various restaurant locations due to shortages. that was all down to supply chain. i think everybody has anecdotes in their own lives where they

are seeing the supply chain is not quite normal. in the very short term, individual companies are going to be hit in different ways. it is a great time to be a stock picker because you are able to hopefully identify those companies which have better pricing power, a more resilient business model, a more robust supply chain sourcing so they can see their way through this in the short term. anna: stay with us. chris dyer, eaton vance director of global equity. get a bloomberg first word news update. >> president biden had a broad and strategic conversation with china's xi jinping. officials say the call was initiated by biden, underscoring u.s. frustration with what they see as beijing's lack of

seriousness with washington. robert kaplan and eric rosengren say they are selling all their stock holdings by the end of the month amid ethical concerns about their trading activity. the fed presidents released near identical statements after their financial disclosures showed investments in stocks and other financial instruments. u.k. wholesale electricity prices surged 2300 pounds as europe continues to face an energy crunch. the peak was more than 10 times the price seen the following morning. low winds are exacerbating a lack of natural gas supply across the continent with record prices in spain, germany, and france. 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 on this program, christine lagarde says the ecb is not tapering. ♪

>> the rebound phase and the recovery of the euro area economy is increasingly advanced. inflation increased to 3% in august. we expect inflation to rise further this quarter. but to decline next year. new stock protections force the underlying inflation at 2.2% in 2021. see the risks to the economic outlook as broadly balanced.

the lady isn't tapering. what we are doing is recalibrating. anna: christine lagarde after yesterday's policy announcement. let's stay on the euro area story. chris dyer is still with us. i'm going to give you a multiple-choice question. when we think about whether to taper or not at the ecb, do you say it looks like a taper, smells like a taper, that is what it is? or do you agree with christine lagarde? they are not discussing ending the program in response to financial conditions, therefore it is not tapering. or do you say the name does not matter? give us your thoughts. >> the last option is the closest to our perspective. as equity investors, we know that eventually tapering will

come. interest rates will rise. from that perspective, that is what we need to think about. we need investors to think about what drives long-term value of companies rather than short-term moves in share prices. the debate is when does tapering begin, whether it is in europe or the u.s.? o$=■let's get improving a more stable global economy. that will go along with tapering and higher interest rates to some extent. those are facts that we know will come in time. the specific timing is not so important. just understanding the way they are going to impact specific companies and their businesses from our perspectives is what's going to impact the valuation. >> i know you think europe is one of your favorite overweight globally.

where is your weak link globally? where are you underweight to compensate for your overweight in europe? >> across our global equity portfolios, we are underweight the u.s. at this point, most significantly overweight europe as you mentioned. it is not a reflection about the u.s. economy or anything along those lines. it is just from the perspective that valuations of those companies are more stretched. the u.s. market has been pretty narrow and one-dimensional in terms of big growth technology companies and online platforms that have led that. we are coming into an environment where we expect to see a higher tax rate in the u.s. impacting corporate earnings. there are still many challenges facing the european economy, but we are starting from a basis where the valuations are much cheaper in europe and across europe we see a number of leading global companies with

interesting stock specific stories. that is where we are in the market cycle. we have yet to focus on specific companies, what is going on within their businesses in the long term ahead. anna: one thing europe makes a lot of his cars. news out of toyota reminds you of the difficulties that sector is facing. you find stocks to like in the auto space, chris. >> a company we really like right now was created through a merger earlier this year. fiat chrysler and peugeot. it is a very interesting stock-specific story. we have a lot of respect for carlos tavarez, the ceo, his ability to execute, which he has a track record of doing. there is likely to be more than 5 billion euros of synergies coming out of this. this is a company that trades in a very low multiple.

anna: thanks so much for joining us. have a good weekend. chris dyer, eaton vance director of global equity. credit spreads in europe have not been this tight since the summer of 2007. should the stability ring any alarm bells? ♪

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anna: half an hour until the start of friday's cash equity session. european markets are pointing to the upside. next futures less enthusiastic than others. we are seeing upside over in the united states. a little less worried than we were about global growth. -- growth of the delta variant. i know you have been keeping a very close eye on commodities this week.

mark: absolutely. this has been an exciting year for commodities trading. inflation is the big macro theme. the divergence between industrial metals and agricultural commodities. there'll set -- there will be some commodity traders saying what? these things are dominated over the longer term by macro. they both depend on the energy market. they both compete for shipping routes. there are a number of common factors over the longer term. here is the chart which shows. as you can see over the last four years, they tend to trade roughly in tandem. the last 30, 40 years, the same

idea. you have changes when you get idiosyncratic stories like the china infrastructure boom in the mid-2000. now i want to bring attention to the next chart which shows how extreme this is. a year-to-date chart. a nice range all year. suddenly, recently, you have seen a crazy breakout on the metal side. it is two different things happening. we are getting a good harvest in china, seeing the earlier fear about food prices subside substantially because of the weather impacts. on metals we are just seeing this crazy drive higher. the coup in guinea driving up aluminum prices, but industrial metals doing exceptionally well. when will macro factors matter again? these things will converge, but they should re-correlate.

it will stop diverging on their idiosyncratic stories and the macro story, energy costs, inflation, will dominate again. i'm trying to work out when it will be. i have not solved the question yet. anna: mark with thoughts on the divergence within the commodities space. let's pivot to a conversation around european credit markets. credit spreads in europe have not been this tight since the summer of 2007. should this stability ring alarm bells? issuers have rushed to issue more debt this week, looking while they have the chance. james, good morning to you. thanks for joining us on set. let me ask about this eerie calm we are seeing in bond markets. some colleagues writing about this in the european markets,

maybe the spreads are too close for comfort. >> they have tightened over the last 12 months. it is very justified. results have been very strong the last couple quarters. but has justified fundamentals being very strong. the other thing we have seen his default rates go very low indeed. that is what offsets the return you get from the high-yield markets. while those are very low, it justifies also the credit spreads. at the moment we are looking at 0.6% annualized data. there is a link between the default rate and the spread. mark: we saw extraordinary measures by policymakers to

backstop credit markets and encourage lending to keep them afloat. when are we going to see them pay the bills for this credit support? do you think we are going to follow the japanese model where we have zombie companies kept alive for years that are not profitable because we are going to keep supporting the credit market? or do you think we are going to have a mini credit crisis when we have to pay the bills? >> either is a possibility. the aim of the central bank, the banking system as a whole, is to thread that neil carefully between the situation so we end up with neither. the way they are operating is very successful. clearly one of the biggest risks to the credit market is policy. as we have seen from christine lagarde's announcement, there are risks rising that we end up

in one of those situations, but currently we do not see it. anna: trying to eradicate boom and bust -- others have declared that and it was not. >> with market conditions being quite favorable, especially in the credit market, we are seeing a lot of money coming into the credit market, so the technicals are very strong. they really are favorable circumstances. it is no doubt we will see a credit cycle again, but i don't think any time soon. anna: how well absorbed is this? it seems the market has appetite for it. is that something you expect to continue? >> yes. the difficulty is it is hard to find yields anywhere else in the market at the moment.

we have already seen, it is a record for european markets for issuance this year. that has been exorbitant -- absorbed extremely well. what people have done is build cash buffers. we still see inflows into the markets. they will be very well absorbed. mark: given the amount of support for the credit markets and a low yield out there, is there any chance we should rename a sector of the industry? does a b plus become investment grade? it is quite crazy to call high-yield high-yield. we talk about yields on a 2% handle.

>> traditionally that is not what anyone regards as high yields. but it is a relative situation. what we are seeing is we see investment grade buyers pushing down into the double b plus egj■category especially where we the opportunity for companies to be upgraded. the opportunity for return, appreciation on top of that, can give you the total return. in terms of sectors, areas we would be investing in, we see more value at the moment because you get an extra yield we would not get into the triple see sector where we see more risk. there seems to be a sweet spot where we can still see credit improvements in some companies but giving us a good yield as well.

anna: we talked a lot about the drive toward esg. a lot of companies wanting to raise money that way. therefore getting some better terms. incentives to behave in a certain way. do you think the incentives are enough? that the rewards are driving change in an esg direction? or is that a work in progress? >> it is a work in progress. two years ago companies would not think about esg. now it is at the forefront of investors' minds. suddenly there is evidence that companies that have better esg strategies are managing debt i cheaper rates and getting access to larger amounts of capital. the flip side the coin as well, just as important, is companies with poorer esg credentials are struggling and having to pay a higher cost of debt.

that is something we want to encourage. it is a benefit for society as a whole mark: two years ago nobody was thinking about esg. now it is at the forefront of their minds. i want to put that in context of the market in terms of pricing. are we going to correct back to a more -- partially as part of their mandate instead of the complete focus, or are we in the early stages of a massive esg pushy? will next year be bigger? >> we are still at the beginning i think of esg revolution. particularly as it relates to things like climate change. what they are doing about social policy. it is just the tip of the iceberg.

it became a niche thing at first. it is more mainstream. i think in 18 months time, it will have to be part of a company's policy to have good esg credentials. anna: james turner, blackrock head of european leveraged finance joining us. let's get a business flash for the top corporate stories we are covering this morning. >> the world's number one carmaker is cutting its production outlook. toyota will make 9 million units. 300,000 fewer cars than planned. the spread of the coronavirus in southeast asia is to blame. china has made an unprecedented intervention in the global oil markets with the explicit aim of lowering prices. the announcement comes amid surging energy costs in china for coal and natural gas as well

as oil. goldman sachs is dropping social distancing rules in it london office and returning to full occupancy starting next week. half of the bank's london workers are already in the office each day. free food is also going, which goldman says will support local restaurants. that is the bloomberg business flash. anna: coming up on this program, president biden speaks on the phone with xi jinping. more on that next. ♪

anna: welcome back to the european market open. 15 minutes until the start of the european equity trading session.

the ftse 100 futures, 0.3 percent on the back of a strong session through asia, lifted in part by what we have heard geopolitically. at 11:30 a.m. u.k. time, the bank of london announces its rate decision followed by trade and gdp figures. then the latest canadian unemployment figures will be released. at 1:30 we will have some data from the united states including wholesale inventories and cpi numbers. later today eu economics and financial services gather in slovenia for an informal meeting. sticking with geopolitical themes, president biden held a phone call with xi jinping urging him to cooperate on key issues as washington said it is growing increasingly frustrated with what it sees as beijing's

lack of engagement. for more we are joined by bruce einhorn who has been following the details of this exchange. what did they talk about? what have we learned? >> we know they spoke for 90 minutes. they spoke about a range of issues, including some where the white house says there were agreements, some where interests diverged. in that first category, they spoke about climate change, the second category, the much bigger one where interests diverge, there were discussions about things like hong kong, human rights, trade. potentially even the pandemic, because china has been upset about calls in the u.s. to investigate the origins of the virus. that is something that is a contentious issue as well. mark: good afternoon.

the factor that there was this call has been taken positively by markets. is there any possibility of a face-to-face meeting in the near future? what is the interpretation of how the reaction is on mainland china? some internal china watchers hope so -- have said a candid conversation is not as important as we are interpreting it. >> candid can mean there is not a lot that we agreed on, but we did speak. that is probably a good summary of what happened. they are not going to resolve all the differences in a 90 minute phone call. regarding face to face, that is unclear. there is the meeting of the g20 coming up. it is possible the two presidents might meet there.

we are not sure if that is in the cards or not. . anna: thank you for the update. bruce einhorn with the latest. coming up, stocks to watch, including the read across the european carmakers. we will focus on the car sector and other stocks that could be on the move. ♪

anna: 10 minutes onto the start of cash equities trading. u.s. equity futures pointing a little higher. european carmakers could be in

focus on the back of what, the toyota news? >> that is right. this is the second production morning we have had. we had one for the september output. that was primarily on the chip shortage. this is another component shortage to blame, but a lot of it is being attributed to covid-19 cases. we will expect stocks to be under pressure thisfb morning. mark: what is going on with mining stocks today? >> this will be right up your street. metals are flying this morning. especially aluminum and nickel. they are at the top end of decade highs. copper is rising. iron is a little lower. for those stocks that are specifically base metals, very likely going to see a good day.

anna: some deal news, what is the story? >> the ongoing restructuring, it has been going on the past few years. they are selling a brazilian unit. we have heard this is likely to be taken very well. they are selling an underperforming business, what analysts see as a good valuation. anna: we will look out for that. thank you very much. sam unstead with the latest on the individual stocks we are watching. they hand into the asian session -- the handover into the asian session, another day of strength for japanese market and the chinese market. the handover strong. mark: it is. going into europe positively, the ecb did not rock the boat. i think the u.s. is going to be interesting.

the u.s. has fallen all week. every day this week, lower prices. it is still less than 1% from its record high. the fall has been very minor, but i think in that context, the price action has not been great for the u.s.. they finished this week a little more negative. i expect a slightly positive turn. anna: it is the length of the losing streak, not the amount. going into the weekend, the ecb did not rock the boat. what is your take on the way the messaging was handled? maybe that was quite something to pull off, to cut back on those purchases even if it is just a modest trimming. to do that, but not spooked the market. mark: they have done a great job. i wanted to get excited about

the ecb meeting, but they have made it a nonissue and that is their job. they should not be rocking the market. this is an excellent job of communication. whether to call it a taper or not is not relevant. the ecb is extremely dovish, and yes, they needed to tweak things. the ecb balance sheet is crazy and they do not need to be buying so many bonds this time of year. it does not matter whether they are calling and tapering or not. it leaves a lot of flexibility for the future. the ecb has done a great job, but given the inflation expectations, for most of this year, we are like, inflation is a u.s. threat, nem threat. it definitely will not be persistent in the u.s.

europe has its own inflation problem. it's going to be hard for the ecb to keep their meetings nonevents going forward. anna: let me just think about another of the driving forces in recent weeks. fear about the delta variant and where that rubs up against vaccination rates that are not entirely stellar. when you think about the rates, first let's say japan, which started so much later, but is now rapidly rising up the vaccination rankings. mark: this is going to be an ongoing problem for the u.s.. the vaccination rates are terrible. many who want vaccines cannot get access to them. the vaccination rates, fully vaccinated, it is tragically low in the u.s. given the supply rate and it is not picking up asked enough. the rest of the world is going to move on even as it continues

to be a drag for months to come. it is going to be a tough winter, sadly. anna: mark cudmore over in singapore. mliv for the markets live team. this is bloomberg. ♪

anna: welcome back to the european market open. a minute to go until the start of cash equities trading. tom: here are your top stories. president biden and jinping speak on the phone. slowing the pace of bond buying. christine lagarde says it is not a move to stimulus. requiring shots for federal

workers and pledging new rules for large private firms. anna: we are 15 seconds away from the start of the equity trading day. ftse 100 futures up by shy of half a percent now. we are expecting some of the positivity in part dlifn by the gio application. we expect some of that to feed through despite supply concerns at toyota. tom: that is one sign. the asian session driving the optimism once again. putting aside what was a foul mood on wall street. we had that change in sentiment around chinese technology. that is feeding into the session this morning in europe. on the back of that e.c.b. decision, to paire some of those

bond purchases. of course the focus on that meeting in december and the flexibility around that. this is the open as things stand spain also gaining .3%. if it was a taper, then it was a very dovish one. anna: the lady is not tapering as she said. the e.c.b. will slow the pace of the pandemic bond buying program in the find quarter of this year. christine lagarde says it does not amount to -- as we have been discussing. >> the recovery of the euro area economy is increasingly advanced. inflation to 3% in august. we expect inflation to rise further this autumn but to

decline next year. we see annual inflation at 2.2% in 2021. we see the risk to the economic outlook as broadly balanced. the lady is not tapering because what we are doing is recalibrating. anna: christine laggard there with her interesting reference. -- lagarde there with her interesting reference. nice to get your insight this morning. don't call her to taper. >> absolutely. i say the e.c.b. will be very happy with the outcome of today's -- of yesterday's meeting. essentially they have started refusing the asset purchases or recalibrating in the words of the e.c.b. and they got a dovish outcome and i think markets now

are going to become much more dependent on the outcome. they won't be more dependent on that but i think the e.c.b. did a fantastic job recalibrating while not triggering a tantrum. tom: a fantastic job. one line that stood out from your notes to us in terms of caveat to that. the e.c.b. start is misinterpreted by the markets. unpack that for us. >> yeah, there is two parts to that. one is what does the e.c.b. do in the short-term as we re-emerge from the pandemic as we see economies reopen and as we recal brakes, and the second part is what is the goal of the e.c.b. on that front i think there is some confusion that is likely to

be more confusion in the markets as inflation pix up, how the e.c.b. reacts to that, if you had to think about the strategic review. each while inflation picks up in the near term. when we look at the projection increasing those forecasts by a mere.1%, that indicates a very dovish central bank over the medium term. of -- a communication challenge. we have high confidence that they are -- they have adjusted their framework. they will focus on keeping stimulus in place well into the upcoming years. there will be challenges as we recalibrate committee in coming months. anna: it seems like they have

done this because of financial conditions and didn't warrant any higher amount of purchasing. the hawks say they have done this because of inflation fears on the horizon. the inflation estimates that the e.c.b. put out, not all ha high. they are still not as a body, as a group at least, still not assuming inflation is well and entrenchinged and systemic and much higher from here. >> that's a fair point anna. we have been watching how inflation has traded. long-term inflation expectations we see encouraging signs from that moving up in the near term. but as you say, the medium term structural issues on weak inflation, it is an open question, the ability for

central banks to relate in those terms europe through the european recovery fund, the strategic review from the e.c.b. and potentially a more -- government in coming years. all of these factors would increase the chances that we do see it over the medium term in europe. tom: global multiasset strategist stays with us. we'll be getting market views in a few minutes. coming up, president biden calling the unvaccinated a threat. what it means to the market next. this is bloomberg. omberg.

tom: welcome back to the open. nine minutes into the european trading day. the negotiation asia intleegd the markets in europe. gains around 1/10 of a percent across the european markets. 2/10 of a percent. anna: u.s. still pointing to the

upside. i'll start with lvmn the luxury space. up by 1.6%. according to hsbc, they are upgrading this one. to a buy. a business that'll help navigate a slower growth period for luxury stocks. tom: that is the luxury space. looking at the banking space, you have the bank there, the biggest owner taking another step toward exiting. a finnish ensurer, worth about 745 million euros. they want to be out of this position by august. the shares of nordea down. anna: the inch from i.p. services business, it is going to be removed. it is the worst performer on the cac year to date. the stock is down on today's

session. in france. get vaccinated or else. biden ordered people to to get vaccinate # or tested. federal employees who don't comply may be dismissed. president biden: the department of labor is developing an emergency rule to make all employers of more than 100 employees to make hurry sure they are fully vaccinated or be tested once a week. some other companies are requiring this. this is not about freedom or personal choice. it is about protecting yourself and those around you.

tom: ok. jpmorgan asset management strategist is still with us. concern in the white house about the continued spread of delta. the data suggests the concerns, bank of america, morgan stanley and others, the recovery is starting to falter in the u.s. largely or at least one key component of that is the spread of delta. where do you think things stand? you are pro risk at the moment. does anything change your views on u.s. equities? >> there is a recalibration. also in terms of growth momentum. you know, i think it is worth bearing in mind that even though we're seeing a slowing in growth momentum, the slowing is happening to the pace of growth, still going to be significantly above trend in the u.s. financial conditions that are

extremely easy and you're right to point out that the market is vulnerable to that recalibration. as growth momentum does slow. what we do know is that actually the u.s. large cap equity market is the highest quality region to be investing in, especially in the period of that recalibration of growth. we remain pro risk as you highlight and we're increasingly positive on that large cap space. we see them benefiting as momentum does slow. from an economic perspective we see the u.s. economy moving more to a mid cycle phase. it is very interesting this time that the policy outlook or the monetary policy outlook remains -- even as we make that transition. anna: some large cap american

stocks are not botheredded by the supply chain disruption. this is a big concern and increasingly so. it has been an ever present people in the auto industry. it is something talked about in other sectors as well. are you concerned that this is something that limits the global recovery because it might not be that demand doesn't live up to expectation but perhaps supply can't keep up. >> that is a reasonable point. three months ago we thought supply chain disruptions would start easing by now. we clearly have not seen that. there could be a continued delay on supply. that 2350eds into the slowing og growth momentum. there are winners and losers that emanate from this disruption and we see that more

affecting our cyclical market exposure in the euro area. you mentioned auto and in as i arkansas we see u.s. large cap markets, especially the quality part of that still being a beneficiary of that in this period. the thing that we are watching closely in terms of disruption on the supply side is inflationary impact rather than pure think constraints on places on demand. tom: that takes me to my next question. the next cap list for these markets are once again earning and they are divergent views in how strong they are going to be. and then the question that anna posed around supply chains. how does that fold into your view on earnings? >> we still have a very strong positive view on earnings but i would say that the main change

in that view is we have seen significant double digit pro files -- profiles already. we're moving into a phase of momentum slowing in earnings. the absolute levels of earnings remain strong the u.s., they are still significantly above trend and closer to 10% than 5%. they remain high but it is change that is slowing. yes, you're right to point to the distribution of risk. they are toward slowing of momentum. when we think about the phase of cycle, the monetary policy support and the expectations that the quality of returns or earnings in the u.s. cap market are well maintained, that keeps us positive on that market. i think this does translate

selectly in view of cyclical spaces where in japan we would be reviewing those views post earning season. anna: thanks very much for your time this morning. good to speak to you. jpmorgan morgan asset management. the corporate news we're tracking this morning. here is laura. >> the number one car maker is cutting production. toyota will make 300,000 fewer cars than planned. the coronavirus in southeast asia is to blame. u.k. wholesale electricity prices surged earlier this week as europe continues to face an energy crunch. the peak was 10 times the price. record prices seen in spain, germany and france.

amazon said it will pay college tuition fees for some front line employees in the u.s. they will spend an extra $1.2 billion on the package. amazon is the latest big employer to offer educational perks to attract workers. tom: coming up, it is september of course. offices were supposed to be buzzing with workers back at their desks but many companies from london to san francisco have delayed their comeback plans. we discuss more. this is bloomberg.

>> 20 years ago it was a tactic. you we want to the g.e. board just to pick a name and it was a tack toying get a strategic opportunity done and you may or may not do it. today it is an industry. there are firms in the business of doing m&a. they are given money, $25 billion, some of them, $30 billion and they want to do transactions. now they also delegate down to junior talent like we are. the biggest checkbook in the world 20 years ago, and today a

37-year-old at a major p/e firm may have a bigger m&a checkbook than the fortune 10 did 20 years ago. >> do you think we'll see a 50 billion private equity fund? >> oh, definitely. people forget when k.t.r. did the big mill enyel fund. it was like $25 billion. they raised 67 billion in first quarter. the realization of capital into private equity, the attributes. i can't sigh why it wouldn't happen. >> $250 billion, $300 billion. markets have grown. i have known you as someone who'll go anywhere and talk to anyone even if it means getting up many in the middle of thanksgiving dinner to catch a plane. that is a story we can tell

later. doing business in china is no longer morally justifiable because it is tantamount to supporting a totalitarian regime. >> no. i'm a business person. there are politicians who make that. i think the amount of business people that are getting involved in these issues because they think there is only one side of an issue, but the reason things are issues is because there is two sides to it. china is something that our government should deal with in that sense. in my world, you know, i try to look at business as business and i think there is way too much pressure or way too much focus on business, trying to get involved in issues. let me tell you most of these issues are 55-45 or 60-40 and there is a lot of people who think there is clarity on which side you should be on. i think this is very dangerous.

tom: talking about the intense talent on wall street and the investments in china. the other key discussion in big banks at the moment beyond the talent question is the return to office. the week following monday, labor day holiday was supposed to be a america a to the return to normal but the delta variant that is up ended that plan. the return to office, this was widely between cities. we have a breakdown of what has been happening. what are we seeing in the u.s.? anna: we start with the u.s. we had a lot of news out of there yesterday. microsoft and blackrock delaying the return to office next month saying they don't know when it will be safe to return with that delta variant surging. president biden coming out saying employers must man manny

ramirez date the vaccine or have testing requirements in place. still finding that 53n't be are not requiring vaccination for its staff. interesting on wall street which has been some of the more aggressive players getting people back to their desks. goldman sachs mandateing the vaccine. jpmorgan has not done so just yet. anna: we heard from others about the vaccine or testing. what about hong kong? how are we doing there? are. >> i want to take a look at this prep index. you can see in hong kong here. we're really very close to this white line, prepandemic levels. we have been there for sometime. hong kong is very strict approach. they are taking a no covid approach there.

they are isolating really from the rest of the world but they have had some backlash from business byes saying this could be debt home in their label. tom: is there a linning between sandwiches and users? >> i would love to talk about that. we have seen such a pickup in activity. the london underground, we have had the busiest morning going back to march. we are 60% below prepandemic levels but it suggests we are getting a slow return back to desk. that return to school factoring in. very interesting here. the story we will be watching in the case week, goldman sachs will be returning to full capacity in their london office. anna: there were lines outside of sandwich shops. lunch places.

things are picking up in the city. coming up on the program, imaght climate change. we hear from the c.e.o. of zurich. cuts to air travel up to 17%. we'll talk about that next. this is bloomberg.

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♪ anna: welcome back to the european market open. 30 minutes into our european trading day. here are your top stories. president's bind an xi speak on the phone. the lady is not tapering. christine lagarde says it is not a move to wind down emergency stimulus. vaccine mandate. the president calls the unvaccinated a threat. pledging new rules for large private firms.

a positive way to end the week. a dominant theme earlier this week. we end the week on something of a high. a modest gain for european stocks. tom: glapping with mixed data out of the u.s. claims in terms of jobless claims coming lower that than the forecast. the labor market, what that means, the tapering timeline will be key. we have the e.c.b. decision. they are going to be reducing. it is not a taper. christine lagarde reducing those bond purchases. the focus shifting to december and the discussions there about the atp program. the asset purchase program. up .2%. the ftse gained .3%.

the dax is also gaining 37 points. the application remains in focus following that raid on the finance ministry. the cac gaining .4%. xi jinping and president biden having a phone call. is that easing some of the tenges between the two sides? -- tenges between the two sides? telecom down .5% of a percent. anna: let's get to an interview this morning. climate change. the topic will be in full force next month. one of the industry's most affected is the insurance sector.

zurich has measures to be a netzero business by 2030. they need to cut travel by 70%. joining us now in conversation, the zurich insurance group c.e.o. very nice to speak to you this morning. thanks for joining us this friday. let's start with -- i think you're coming to us from your new headquarters. let me ask you about the sustainability credentials. how it works for a hybrid working era. are you building in aassumptions how full this office will be? how much people will work remotely? how much is it all going to come together? >> good morning. good morning to everyone. we are heading into a completely new phase in working habits and behaviors. when we started this, ahead of this five years ago, we had in mind it will never be above 70%

of the max capacity. we really have in mind a hybrid working and we're happy for that and we think the sustainability will further support this different style of working. >> that sustainability is built into this new office of yours. i have a question about underraining. what is the -- of what percentage of your revenue comes from underwriting that sector? >> very little honestlily because we haven't been underwriting, not because of sustainability but because of profitability with this sector. the big issue about the underwriting is theg overall industry transformation toward sustainable -- producing.

which is tough to do unless more economic incentives will be introduced. this is why i have been advocating strongly for pricing for carbon in production of the good. that doesn't happen, companies will not have an incentive to do the proper transformation of their businesses. tom: that is one solution or you could just start underwriting the oil and gas industry. >> which we do. we have been canceling commerce. to be honest, this is not a gooe cancel a customer, somebody else will underwrite the customer. society doesn't get any better. we have been publishing the number of customers that we have let go but it doesn't help. it doesn't make the planet more sustainable just doing that.

it is not what's happening today. i think we'll continue doing that and we will do our share of that but it is not enough. we need to do more. anna: can i ask you about m&a? this is something that the insurance sector has seen a lot of. i wanted to get your thought. maybe you stayed away from some of the larger transactions that maybe rivals had done. are you interested in larger transactions? has it been deliberate to stay away from those? >> no, we're not. i think one of the reasons we have been successful over the past years, we do have capacity for m&a. we're not looking for big -- and we don't want to be distracted. the oil industry needs to reshape, to transform. there is so much that you have to do in your house to fix it

and make it more productive and more profitable that big -- and and don't create value. i think the market so far has rewarded our position. tom: maybe it is the strategy. in terms of the asset management side of business would you be looking for some acquisitions to grow your footprint there? >> not really. we don't see acquisitions in asset management. there is a solution for us. we have been doing a very targeted different -- we believe the new services to customers. we require specialized data, analytics services in order to provide better solutions for the customer needs. but the big visible acquisitions

i understand are very nice and some of the -- go after them but it is not our philosophy to go after this kind of acquisitions. anna: not something you're interested in. can i ask you something about the u.k. market there? some changes around social care, looking over the elderly and other vulnerable people. the government also indicated that the role for the private sector, a role for private insurance, are you familiar with this? have you been talking to the government around this topic? >> i haven't been talking to the government lately myself. but we're very familiar with the u.k. markets. highly committed. we are dealing with a british business and british customers. we don't have european -- we have a british business.

we have been growing very nicely last year and this year. with mid market commerce. we're highly committed to continue growing in the british markets. anna: committed to growing in the british market. do you see opportunities around social care, around insuring people's care in later life in the u.k. market? >> we do. we're also very committed to develop a health and assistant services all across -- accident services all across the world. very interesting for the commerce. we would love to see growth and development in the u.k. tom: ok. zurich insurance group c.e.o. coming up, an energy supply

crunch sends european prices soaring. we're going to dig into the details and challenges it presents for the continent. this is bloomberg. ♪

>> i can hear you. the rest of the world hears you. and the people who knocked these

buildings down will hear all of us soon. >> wall street never opened on 9/11. the open was delayed after the first plane struck and canceled after the second plane crashed. markets wouldn't open until the following monday. it was the longest shutdown citizens great depression. once trading resumed it was a massive selloff. the dow jones industrials were down 14% but by early october stocks with your back up to where they had been the day before the attacks. almost an entire generation has grown up since 911. on this 20th anniversary many will join those who can never forget that day and remember the nearly 3,000 people who were lost.

anna: tomorrow is the 20th anniversary of the 9/11 terrorist attacks. the lives of the familys who lost loved ones that day were changed forever. we have been speaking -- we spoke to several of them in today's story. you can read it on the terminal or at bloomberg.com. let's get back to today's business news agenda and get a business flash. here is laura. >> the world's number one car maker is cutting its production outlook. toyota will make 9 million units, 300,000 fewer cars than planned. the spread of coronavirus in southeast asia is to blame. china made an unplanned intervention in the global oil market goldman sachs is dropping

social distancing rules in its london office and returning to full occupancy starting next week. an internal memo say it is half of the london workers are already in the office each day. they still retain mask wearing in common areas. free food is also going which goldman said we will support local restaurants. tom, anna? tom: thank you very much indeed. europe is facing an energy crunch that september prices for energy and gas and carbon surging. ireland is in a power shortfall that could lead to blackouts. joining us is our energy reporter. what is the situation with energy price now p? what is driving the pickup? the strength that we see in these prices and the impact? >> we're having a wild ride on

energy markets at the moment. each day, a new record seem it is to be broken. what is really driving it is a shortage of natural gas. we don't have enough in storage ahead of winter and there is -- prices are so high that people are not replenishing as quickly as they would this time of year normally. coal as well is being pushed out. anna: not replenishing storage sounds dangerous for the winter. what are the dangers that we have shortages over the winter? >> that is something that people are talking about. if we can't get storage elles back up and prices continue to rise. we could see stronger shortages. the in order -- the nordstream gas pipeline will start up. that should ease pressure on the markets.

we're still seeing very, very high prices. >> pressure on prices. pressure on markets. pressure on application as well. should we expect a response from brussels and elsewhere? >> that is the next step. this has an impact. we haven't seen much and with citi bank saying it could mean a 20% increase on bills you must expect the government to start to try to calm things down a bit. na: tha. rachel morrison with the latest on the european gas market. coming up on this program, the e.c.b.'s christine lagarde says the lady is not tapering. recalibration is the word of the day. this is bloomberg. ♪

>> the recovery to have euro area economy is increasingly advanced. inflation increased to 3% in august. we expect inflation to rise further this autumn but to decline next year. the new projections for the

annual inflation at 2.2% in 2021. we see the risk to the economic outlook as broadly balancedded. the lady isn't tapering. buzz what we are doing is recalibrateing -- recalibrating. tom: 52 minutes into the trading day. joining us now is ben. how do you assess the market? if this was a taper it was a dovish one. is that expected do you think? >> i think that this is the thing going into the november meeting when they are supposed

to give their plan. i take it from the case to be something of up to 70 billion a month compared to 80 billion in the second quarter. plenty of money to support the markets. i think this will definitely be -- supportive of the markets for now. anna: global stocks or u.s. stocks. the longest losing streak in in the s&p since june. sounds dramatic but maybe the losses not as dramatic as it makes it sound. how do we cover the momentum through september? >> we have fallen nearly 1% so far this week. you're going to get increasingly nervous given u.s. stocks are the priciest they have ever been

in history in economic output. that is more so than during the dot.com bubble. the gravitational pull that they are looking for is elusive, higher interest rates. that is not happening in the u.s. any time soon. stocks trying to push higher and higher though they may be -- volatility occasionally because the evaluations are. tom: investors hedging for that volatility. >> i mean, i think that you wans were long -- basically using swaps and options to make sure they are hedged. it is like given that the fed is not going to be -- any time soon, that is what i believe is

at the moment. anna: and thinking about where we head next week, ben, what is looming large on your agenda? >> welshing we are going to be be trading now because i think we're going into the -- before the fed's meeting on september 22 and september 22. we already know the -- for august, i don't think the fed is going to say anything about taper. so i don't think we are going tn september. that is more likely to happen in october. we are going to get a lot more dovish for the time being. anna: ok. thanks so much. thanks for joining us. have a good weekend. tom, a number of factors seem to be driving european equity markets to recover a little bit in today's session and global

markets. market sentiment. this call that to being place between president biden and xi. no progress came out of it. they talked. maybe that is enough. tom: they talked for 90 minutes. the two biggest leaders on the planet. we didn't get any real substance from this. it is positive they are talking and the other is it underscores the reason president biden picked up the phone to jinping is he is frustrated his officials have not been making progress on climate change. china is not giving any ground on that. in fact china has demands from the u.s. anna: what is xi's price for engaging on climate change? i wonder if we will see movement on tariffs that have been in place for a while. we'll see if is that returns to the agenda as we go into next week.

european yanickity markets. u.s. futures this friday morning pointing higher up by 3/10 of a percent on u.s. indexes. this is bloomberg.

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>> favorable financing conditions can be maintained with a moderately lower pace of net asset purchases. >> we have seen strong economic growth. however challenges abound. >> it may remain higher longer than we currently anticipate. announcer: this is bloomberg "surveillance" early edition with francine lacqua. francine: good morning and welcome to bloomberg "surveillance" early edition. i'm francine lacqua in london. here is what is coming