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tv   Bloomberg Markets European Open  Bloomberg  September 22, 2021 2:00am-4:00am EDT

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>> live in london, alongside mark cudmore, joining us from singapore, to take us through the market action this hour. cash trade is less than an hour away. ever grand investors exhale, but just a little. the developer will repay interest due tomorrow, but.
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u.s. rates -- just four days until the vote in germany. angela merkel campaigns for armen lasher. just gone 7:00 a.m. in london. late in the day, of the markets yesterday. what are they telling you in the asian session? mark: generally a positive day. we interpret the news out of china with ever grand -- evergrande as mostly positive. we still don't have much clarity. investors are choosing to say it is overall positive. we are not running away with enthusiasm yet.
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with the fed upfront, that makes sense. annmarie: we are seeing a positive session when it comes to futures. just about an hour to go until the start of these markets. we had a positive session for european futures. a gain of 1% yesterday. european equity benchmark futures on the stoxx 50 pointing higher. 0.6 percent for the ftse 100 and the dax. we will see if macro risks creep into the picture. not as strong of gains in the future session, up by 0.4%. a huge exodus out of the dow jones etf's.
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although we were able to push higher yesterday, this certainly is not the all clear. we have analysts from peter oppenheimer at goldman to julian emanuel saying nerves still abound. what does the broader macro picture look like? >> we don't have the all clear yet. futures are higher, but only a little bit higher. the gmm screen is mixed. there are green boxes and red boxes. a couple things to highlight, you can see the csi 300, chinese stocks show up in the equities column. they were expected to be down about 2%. the fact they are only down 0.7% is a positive. the other thing to draw attention to is in commodities we are seeing a strong rebound. iron ore, the price is still half of where it was a few months ago. this really is a balance after
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an incredibly steep and sharp decline. we are positive in the commodities sector. generally it reflects more positively about the china growth situation. china has done the first step is an messaging they are not going to leave an unmanaged collapse. the economy will not be messed up entirely. annmarie: the evergrande pressure is easing. the developer saying it will pay the interest due tomorrow. the vaguely worded exchange buying does not specify when or how much of the $36 million evergrande will pay. that is left to analysts' guessing. a filing here that has confounded many, it is confusing analysts, we are stronger on these markets, but what do we know about the repayments in evergrande?
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>> it is unclear whether there is a repayment or not. they did not say they were going to pay anything. often in these situations, if something is resolved after clearinghouse, a deal has been done between the borrower and the lender. that does not have to mean repayment. it is unclear what the situation is going to be. there's the dollar bond, $86 million in dollar bond coupons tomorrow. i guess the only thing is there is a 30 day grace period before the bond can be declared to be in default.
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obviously through the rest of the year, there is $550 million of coupon debt that is due. even if we get past thursday, we will see what happens, there is quite a lot of the same situation again. mark: it is a lot of money but it is quite small relative to liabilities. one thing we have seen with the market impact, i'm curious how much it is expected to weigh on the economy. how priced is the economic impact of an evergrande bankruptcy? >> the effects will be on banks and lenders to the company. the expectation is there is not
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going to be a huge impact on employment and construction because the government will step in and make sure construction continues on the 1.4 million apartments they have sold. if they do not build the apartments they promised to build, there's going to be a lot of angry people. the expectation is somebody, whether it is other private real estate companies, state owned companies, or a consortium will step in to finish building those homes. to make sure -- people still get paid. some people may lose their jobs. i think the expectation is the real economy shot will not be that because it would have social stability effects the government does not want. annmarie: thanks for joining us.
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we also had this injection from the pboc of liquidity into the market. i'm wondering to what degree that is acting as a soothing agent. the chinese benchmark index not dropping as severely as you might expect. >> it was an important signal. it was not that it was not an aggressive event. it is the fact they did not quite get another net injection after finding liquidity last week. it is saying look, we are not maintaining. we are willing to manage this. the real thing to remember is china has an immense amount of firepower to ease the situation when it wants to. everything about how we analyze this is what the pboc wants to do, not what they can do. we are going to talk later. everyone has been talking about the difference between lehman situation and every other crisis
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in the west. in china, they have the ability. they just do not have the will. annmarie: what do you make of metals bouncing? mark: that is positivity. there may not be the big economic flow. there is not going to be a big shock in the market. that means there will not be a big housing infrastructure deal here. not important for the commodities sector. there is more positivity across global markets, but particularly china this morning. it is not that anyone thinks we are past this. it is just that we are more positive and we could be back within a panic state next week. >> tomorrow is going to be a big day when we find out what they
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meant by repayments, what the cryptic relief meant for everyone who participated in these markets. you can stay up-to-date with analysis and insight from the mliv team on your terminal. coming up we hear from scott minerd and peter oppenheimer on the direction of the markets. we will talk about the chances of the correction. we are at a 10% loss watch on this market. plus pret a manger aims to double sales by 2026 in the u.s., europe, and the middle east. area ♪
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>> the selloff yesterday was a clear crack and the uptrend. a lot of people talking about it is not that big of a deal.
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actually, when you look at the technicals, you look at the charts, you look at the earnings front, the covid slowdown, we are right for a correction. >> fundamentally we are in early stages of the economic cycle. even as we get an adjustment in this emergency policy support, rates to real terms are still extraordinarily low. we are still getting reasonable profit growth. if we get a 10% correction, fundamentally, that is a good time to be getting back. then we expect lower returns. >> scott minerd and peter oppenheimer on markets. oppenheimer calling correction and opportunity. will our next guest see
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opportunity in a potential selloff? today. get ready for a 10% correction. this is starting to become consensus, that we are going to see a selloff and a correction. are you in the same camp? could we see a decline of 10% or more in these markets? >> the bottom line is we are still in the all clear. if you look at the support that still exists, support for equity valuations, monetary support, fiscal support for vaccination rollouts, all of that lays the foundation for supportive risk-taking environment. you can add on that travel restrictions to abate. you look at high savings rates.
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the ability for consumers to some of that pent-up demand. 2022, 1 of my concerns is the fact that we could have to deal with the specter of tax hikes in the world's largest economy, the united states. mark: if you think there are gains to be made this year, where are those? >> one of the things we are -- we have on in terms of our portfolios, we still have a favorable view of financials energy. we do profit nicely. recognize that is sideways trade. over the summer there was volatility. energy, commodities, inflation, all feed into that. we have the prospect of
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tapering. i'm sure we will talk about expectations for the fed. that should hopefully feed into prospects of making money in financials. then there is -- those are some of the positions we have got. >> energy, financials, leisure. i'm wondering how that shifts and changes. 2022 we start seeing higher taxes. how will that impact your investment and asset allocation? >> we have been very bullish on markets over the course of the past year or so. i'm wondering what could be the fly in the ointment. we have support for unemployment starting to take off in the united states and the u.k.. we are facing the prospect of tapering across central banks
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and the programs we have benefited from. then there is the prospect of tax hikes. the near-term, there is still room to take risk. i just think in the medium-term it becomes cloudier. mark: near-term, it is going to take risk. you may not have meant so near-term as the fomc. how's that going to support the market? >> a few thoughts on the fed. in terms of -- there is a big risk they missed the opportunity to announce tapering. there are high expectations that they clearly telegraph their intentions. my guess is they did not follow through on that. the tapering is going to kick off the side of christmas. in terms of the dot plot, that is not some that is not some we paid much attention to.
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i always jokingly say fed officials don't even know what they are going to be saying weeks out from an event, let alone years out. i would be very surprised if tapering was pushed, regardless of noise in the market. >> we have seen goldman ntd recommend clients prepare for hawkish and us. with billions of dollars in purchases from the fed, what are the direct effects on the economy that are necessary, that would change if that were taken away? >> you are spot on. one of the things, if the fed asks about the tapering strategy, my general advice would be white of you start with mbs and move to ust's later? the mortgage market has been
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strongly supported by the fed. ultimately, the mandate is around stability. we don't want increased instability because of a red-hot housing market. with tapering we see less support in the housing market. volumes in terms of housing, that could certainly decline. annmarie: so great to have you want to get your thoughts on a very busy and exciting day for markets. now let's get over to the first word news. good morning. >> the democratic-controlled house has a bill to extend the debt ceiling and provide the government money to operate. republicans have vowed to block the measure when it reaches the senate over a debt limit provision.
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the standoff raises the chances of government shutdown and default, which could have devastating consequences for the u.s. economy. the u.k. government is to find limited financial support. a bid to ease a shortage of carbon -- a source of carbon dioxide that is key for the food industry. the government has met with domestic gas and power supplies as the uk's energy crisis escalates. the u.k. is said to be exploring joining the usmca free-trade agreement between the u.s., mexico, and canada. the biden administration will not start negotiations on a deal anytime soon. boris johnson sunk expectations of progress. saying an agreement was unlikely
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before the election do in 2024. resident biden used his first u.n. general assembly speech to double the amount of money the u.s. will spend helping other nations fight climate change by 2024. the pledge comes as covid and climate dominate the meeting ahead of the summit in scotland next month. global news 24 hours a day on air and on bloombergquint take powered by more than 2700 journalists and analysts in 120 countries. this is bloomberg. annmarie: coming up, we get back to the markets as tension shifts between the fed and concerns about evergrande. markets pointing higher so far this morning. this is bloomberg. . ♪
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annmarie: welcome back to the open. we are less than 40 minutes away from cash equity trading. futures pointing to a stronger open. gains of 0.7% for u.k. markets, more for france and the dax as well. a bit of relief into these markets. the risk is certainly is not gone, especially given that this wording from the evergrande filing over the repayment is vague at best. mark: absolutely. there is a comment from our colleague explaining. we don't really have any clarity. what we know is they are not going to allow an official default, which is important, but has spillover ramifications. it is not saying they are going to make full payments.
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there is no certainty how much money bondholders will receive and when they will receive it. . annmarie: what they have said in the filing as it has been resolved in terms of their you one negotiators, negotiations off the clearinghouse. let's go to juliette saly. how are the markets looking ? >> we had china coming back from the two day holiday. certainly getting to see more support. there may be dip buyers. the csi 300 is only down 0.8%. we are still seeing asia lower. concerns and questions about the wording of this statement from evergrande and how much they're going to pay. the msci asia pacific index falling through the 50 day moving average with concerns and overhang. hong kong is on a break today.
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we will see reaction in evergrande. it is taiwan where you are seeing a lot of pain. we have the boj decision today. you can see the dollar-yen move to 109. annmarie: looking at these markets, how much do we really care about the fed? are we going to concentrate on china and the noise coming out of there? >> it depends where you are based. in asia, it is all about evergrande, it is all about china. as we go through the european session, we will suddenly be talking only about the fed later on today. annmarie: there has been some shift in hawkish and us. much of it -- hawkish and us --
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hawkishness. we are going to be speaking to pret a manger, aiming to double sales by, adding stores across various regions. . ♪
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annmarie: looking back to the open, 30 minutes from the equities open. futures pointing higher by 0.7%. china fears ebbing at least for today. talking about china, when anyone is writing about china, speaking about china, i feel like it feels strange when we don't go a couple minutes without someone mentioning siemens for a little bit. mark: absolutely. my chart today is stolen from you.
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there is a news trend chart on mentions of lehman and that has exploded this week. the reason it is relevant is not because it is anecdotal. you see 1200 60 mentions yesterday. if lehman is being talked about, even if people are saying it is not a lehman market, there are people for whom that was a traumatic moment. if we have enough people, there is a chance assets are getting overly discounted. i want to bring it to the second chart and why people are saying this is not a lehman event. evergrande is a big employer.
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economically, it is important in terms of number of employees. in terms of financial markets it is not the same at all. have a look at the assets and liabilities. the mismatch lightly larger. -- slightly larger. what happened with lehman's it completely froze the financial system. if evergrande goes down, it might freeze the chinese financial system, but it would not overnight send banks like rbs to the wall like happened. in the lehman situation. we are going to see more mentions, but this is not a lehman moment. annmarie: so important. we see that chart go parabolic. our next chat, i would be
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surprised if we mentioned lehman at all. pret a manger is aiming to double its revenue, adding stores in the u.s., europe, the middle east, and the u.k.. pret a manger's ceo joins us now. thank you for joining us. i won't ask whether we are in the middle of a lehman moment or not. but some of the places you are expanding to, can you get specific for us? where are you looking at entering? >> it is a little too early, but there is focused around europe, asia, and the middle east. we are in conversation with some partners. mark: good morning. you have given the broad
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regions. which of those do you see as the real potential for profit growth on the next five-year horizon? >> i'm a big believer, we need to grow and grow in a measure matter -- a measured manner. we opened in france just under 10 years ago. we have also developed a world-class supply chain. we are ready to grow on words out.our u.k. business has grownr a number of years. competitors are across the u.k.. you see huge opportunities. we have developed a strong model. annmarie: it has been fascinating to watch over the past year or so, this strategy. i was struck by the idea of
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opening drive-thru prets. i am american, i am used to, i'm on a road trip. i'm wondering if the previous model, follow the skyscrapers, is pretty much done. >> we will still look at urban centers. those have been great for us for a number of years. i think what we have done the last year and a half, which has been challenging for us, for the industry, for the world, what we have done is we have suburban locations that have done phenomenally well. i think the drive-thru model lends itself to the brand.
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i worked at mcdonald's many many years ago and worked at the drive-thru. i have a sense of how they work. mark: i'm curious how you are finding the labor market at the moment. particularly the u.k. and the u.s.. vaccination mandates and the general wage inflation situation. are you finding it hard to hold onto employees? >> it is a real challenge at the moment. i think we have just got to pay up in the u.k.. i think as business has stepped up, supply chains have picked up across the u.s., the u.k., the rest of the world, it is a real challenge. we will ensure we are in a position over the next five years.
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it is a great opportunity to grow. there are many people like me who have grown through the ranks over the years. >> there have been supply chain issues for many companies. to what degree are you able to pass along prices to customers? >> we can ensure -- there are elements we will have no choice but to do that. we look at how the competition prices and how we place ourselves made we are watching that very closely. the challenges around the supply chain are a real challenge. it will take time to play out. mark: the pret founder offered
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extra cash for expansion. how does that work? >> we will use it. we will use it to ensure we are paying our people well. our people have been phenomenal through covid. we are still investing heavily in technology. markets have a ways to go to ensure we are in position in that area. annmarie: thanks so much for joining us this morning. he's going to be continuing the conversation on radio. now let's get a bloomberg business flash. >> evergrande's onshore property
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unit has reached an agreement with you on bondholders -- you -- yuan bondholders. the biggest u.s. banks are prepared for fallout from the crisis. citi says it has no direct lending exposure. j.p. morgan and bank of america also have no such links. disney shares saw their biggest drop since may. the delta variant has been blamed for reduction delays. -- production delays. draftkings has offered to acquire a u.k. gambling firm in a deal worth more than $22 billion. an acquisition would
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dramatically expand draftkings' emerging gambling empire. that is your bloomberg business flash. annmarie: thanks so much. coming up, energy prices surging in europe and the world. we are going to be speaking to the managing director of the nigerian national petroleum company. ♪
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annmarie: welcome back to the open, less than 20 minutes away from the open with futures pointing to an open stronger by 0.8%.
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the gas tech convention agenda will be dominated by global prices and the transition to net zero and the use of hydrogen. let's get over to manus cranny, joined by a guest. manus: good morning to you. it is great to see you to get your opinion. you told me, don't get excited about an ipo that is years away. what is top of your agenda? you have just been confirmed as the acting ceo. >> we are going to lead a company that will become the biggest company in africa. a company that will lead the transition to renewables. what you have to do is focus on gas development as everybody else is doing. you need to -- make this company
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completely commercial and profitable. it will lead a very big transformation. manus: keep me abreast of when the assets get readjusted. are we in crisis in the gas market at the moment? >> in the sense that last year, a number of things happened. underinvestment in the oil and gas industry. that will hurt gas supply all over the globe. that is going to show up in a number of gas rich countries. the number of purchases has been
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stalled or delayed. >> they are going to push you on the prices. i'm looking at asia over 25%. do you think prices squeeze higher? >> we clearly have a supply gap, that it's obvious. that means you see something very close. manus: the gap tightens. in terms of the underinvestment, i look at nigeria. nigeria has gone from being number four in the world in terms of your gas lagging to number six this year. do you seek to regain market share? will you build out your gas opponents?
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>> we have issues around gas supply. the net effect is you see some slippage in 2020 two, even 2021. the implication is you have to do something better for investment. we must return to pre-covid levels of investment. it is a key challenge for the industry. manus: let's pivot to oil. you will be meeting with oil ministers. goldman sachs say let's take a look at this. the tightness in global gas supplies is a clear and potentially meaningful bullish catalyst to the oil market for this winter. will it build and boost oil prices? >> gas production is tied to oil production.
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we need -- when you invest in oil, you have a problem with gas. we will see prices spiral in both areas. manus: you think oil could spike too? >> an additional $10 on the barrel. the next six months. manus: in terms of will that endure, that is the question. can opec continue to add 400,000 barrels a month as you see it at the moment? >> is a challenge getting that done very quickly. surely you cannot have a cure in six months. manus: when do you think production for you will get back to your allocation from opec? you have underperformed. >> we see getting back to the
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opec level probably by the end of october. manus: thank you very much. we will check afterwards. the managing director of the nigerian petroleum corporation joining us here. annmarie: good morning. annmarie:thank you for bringing us that conversation. potentially higher prices with delayed gas project. coming up, only four days to go until the german election. angela merkel joins the campaign to give armin laschet a last-minute boost. maria tadeo with the latest. ♪
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annmarie: welcome back to the european open. we are 10 minutes away from the cash equities trading open. we are about 1% higher on the dax, the outperformer. four days to go until germany's general election. after a disastrous campaign, the german conservatives are hoping they can still narrow the gap for social democrats to win the election. maria, just how much can angela merkel swing undecided voters? >> we did get angela merkel on the campaign trail. of or single a merkel as the politician in germany. the opinion polls are always very clear that for germans she
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is probably the best chancellor this country has had since reunification. she is a strong asset for the cdu. she was on the campaign trail yesterday in her home district with armin laschet. she said people be the right chancellor for germany. i would argue two things come in. the fact she had to step in on the campaign trail does show the cdu needed her star power. she did not want to get involved initially. it is a major need. many of the germans i speak to tommy, i like angela merkel, i respect angela merkel, but i'm not sure the cdu is the cdu of angela merkel. that is the question germans will have to answer for
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themselves. annmarie: thanks so much. maria tadeo keeping on top of the election. . for us. mark, sorry to step on your toes. i wanted to give us more time to talk about the function nt go. we were looking at lehman but you have another one for us. mark: you gave me the nt idea. people talk about the buying opportunity with the current discount. i have seen a phrase that enter the financial lexicon that was not there before. here is a chart of how frequently buying opportunity is a term in news stories. it has exploded and this ties into the retail, the buy the dip phenomenon. it is about buying opportunities.
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annmarie: there is some sweet irony to this chart. if you think about the big by the dip opportunity, you think perhaps we see a spike in this chart when we get -- in the market. the big spike comes in 2021. the market has been able to stay afloat. i don't know what buying opportunities people are looking at exactly. mark: absolutely, and even in 2020, the big spike is before march. the decline in buying opportunity is as we panic. it does show we are not getting that kind of timing. it is interesting. i wonder whether a development in crypto, a market where we have seen really steep declines, and that movement has proven to be buying opportunity.
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it does not mean they work forevermore. what stock are you keeping an eye on now before we go to the open? >> i am keeping an eye on vw's truck manufacturers rotten. -- manufacturer trafton. a problem continues to go on. we have been talking about supply chain issues for about a year. i would not be supplies -- surprised to see other manufacturers fall in sympathy. we have to watch miners with prices starting to pick up. . mark: supply chains continue to be an issue but miners have been decimated. perhaps we can see some respite. annmarie: dare i say it is a
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buying opportunity? can i do that? too much buying opportunity? thanks for spending the past hour with me. you are lucky i did not say lehman. tom mackenzie up next for the european open." ♪
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annmarie: welcome back to "the european market open." i'm francine lacqua here in london with tom mackenzie. >> evergrande will repay bond interest due tomorrow, but there is a dollar coupon today as well. it is fed day. u.s. futures fluctuate. the fomc is expected to signal a reduction in stimulus later this year. it is just four days until the vote in germany. chancellor merkel campaigns for
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armin laschet in a tightening race. francine: let's have a look at the futures. we could see a big selloff in china, but things seem to be -- somewhat with evergrande. we have had cash injection from the pboc. we are seeing a bit of a selloff. overall the focus will be on the fed. because we have china and everything else, the fed are more hawkish than expected. we could see market jitters. tom: we look ahead to the fomc, the flags pointing to the november taper. you are right to highlight what has been going on in china. you had this injection of liquidity from the pboc. a calming balm. you look at the evergrande
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payment, we are waiting for details and uncertainty remains. a less bad session is an asia. the shanghai compass it currently in the green. the ftse 100 gaining 0.9%. france, you looking at gains of 62 points. span, the ibex gaining 0.7%. energy companies in the u.k., stocks taking customers into the energy suite. france, you have the budget as well. top of the list for sectors yesterday were travel and leisure followed by technology and basic resources. you are looking at energy. a result of higher prices not only in gas, but oil as well. 0.8% in terms of the gains you
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are seeing for the auto sector. let's move along, see how things are shaping up across the region. solid gains we are seeing in the u.k.. italy, strong gains there. looking ahead to the fomc decision for the investor thought process this morning. francine: european equity markets in the green right now. looking ahead to a fed policy decision later today. for all the market action, we are joined by mark cranfield in singapore. if you look at the excitement the past couple days, things are stabilizing. they are stable until they are not anymore.
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mark: the evergrande saga will be with us for a very long time. excitement and relief today. before the cash market opened in china, a statement from evergrande, one of their units in china saying they negotiated an agreement on the bond payment which is due tomorrow. our colleagues in china have looked at the wording and they are not sure whether the full payment will be made or whether or not and effects any other interest payments that are due in the forthcoming future. it does not say anything about the dollar bond payment anyway. what we know is the government is going on with the bond payment. we have no idea whether the dollar bonds will be paid on time. it is all very vague. it is better than nothing. what investors are happy about is the fact evergrande has not
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disappeared into a black hole. that would have been very bad news for financial markets. that is what the deal was earlier in the week when hong kong markets were selling off so deeply. there is nothing coming out of beijing. they thought we were going for a car crash. it is going to be better than that, but we are not sure what. tom: looking ahead to what is happening with the fed, how these things are playing into market sentiment? mark: it certainly is an improvement for sentiment. we saw by the reaction of the s&p 500 monday evening, the american markets have finally taken notice of evergrande. it has become a global issue. the fact we got the agreement in asia will help stabilize the market. we have seen s&p 500 market futures rebound today.
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certainly people do feel better. as far as the fed is concerned, i don't think that will come into their calculations. the calculation is very domestic. they feel the economy is doing well enough to reduce bond buying. they will probably confirm they are ready to do so. they are very unlikely to tell us by how much they reduce -- plan to reduce bond buying. the derivative market is already lining up depending on where they,. there's quite a bit priced in from a slightly hawkish point of view. the fed is more dovish than they usually are. we don't expect anything to be too negative. they will air on the dovish side. francine: if the fed turns
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hawkish, we could see markets. mark cranfield in singapore, please everyone follow mliv on the bloomberg terminal. we talk fed, we talk bank of england, but we probably need to talk about evergrande first. what spillover will there be in europe and elsewhere? i know the luxury industry is under pressure. could taken economy down? >> i don't think this is going to take an economy down. in the near term, markets will be concerned about exposure to not just evergrande, but the property sector in china more broadly. it is likely china will do what it takes to avoid. what does the global economy do in response to a sustained
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slowdown in chinese property activity, which will have strong reflections on domestic consumption? china is a major driver of global demand. on a trading perspective, it is a demand or of goods as well as a supplier. a reasonable base case is that there is a sustained slowdown with downside risk, that there is stop start. this will play out in the global economy. it is not a major financial event in the sense that the near-term risks will be managed. francine: this occupied a lot of social media platforms yesterday. ray dalio weighed in on
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whether evergrande was a lehman moment. >> a lehman moment produced structural damage through a system that was not rectified until the treasury came across in terms of its borrowing and then the fed came across. this is not that kind of a shakeup. this is -- $300 billion is what they oh. this is all management. francine: a lot of these markets are on the verge of panic. i love the peace by -- piece by john officer. >> ray dalio has long exposure to china. he has his ear to the ground. but in terms of the economic impacts, you do get a sense from the likes of bank of america
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that you are looking at a growth schedule for china. i wonder what the reach is for europe when you have companies very link to what is happening -- linked to what is happening in china. >> investors will be exposed to headwinds from china. the question is, do we see the 2015 scenario play out? probably not. the western consumer, u.s. european household, record net wealth, all the key drivers of this business, with any work, even through a slower period of chinese demand, it will be the strongest -- the strong european and u.s. demand which will ensure exporters continue to enjoy fairly strong growth. china will probably take the
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edge of it. what we have seen over the past six months will fade a little. tom: we are going to get the decision from the fomc. is it communication around the taper? the dot plot? the new forecast? >> the new forecast will be interesting. all major central banks this year have been surprised the upside with the inflation trend. each time we get forecast revisions, all policymakers do is remind at the front end, and work on the presumption that two years from now inflation will be back at 2%. there is good reason to believe that's not going to happen. the question is will the fed be ready to admit those medium-term inflation risks are worse than thought? probably not. the focus in markets will simply be on the language and the dot plot. we should be prepared as a base case for the fed to be tightening at a faster pace than it will signal today.
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we will get a sign of tightening before the year. i would not be surprised if by this time next year the fed has already hike. d -- already hiked. francine: coming up, just a few days to go until the german elections. the final day of the baron berg and goldman sachs conference coming up shortly. this is bloomberg. ♪
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tom: solid gains across the european market. top of the list in terms of the sectors, travel and leisure followed by basic resources. angela merkel has joined the campaign to give cdu candidate armin laschet and last-minute boost after a disastrous campaign. german conservatives are hoping they can still narrow the gap with social democrats in time to win the election. the goldman sachs ehrenberg --
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berenberg corporate conference. let's get the corporate perspective as we lead up to the elections. thank you for your time this morning. what are you and the telecoms sector looking for from the new german government after this vote? >> good morning. if you look into the program of digitalization, what you can see no matter which program will come into the government, they have similar agendas. they want to further improve the mobile and fixed coverage. they also want to increase investment in r&d for new technology. for us, the most important thing
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is that the government realizes that good infrastructure will only be possible if we as infrastructure companies have planning security. it is of the utmost importance we get clarity on the prolongation of the extra frequency that we have so that we will have no auctions where we have to allocate money into an auctioning process. we want to build the infrastructure and that should be the focus of everything we do. we need the right regulatory environment. francine: i was going to ask you, follow-up on what you were saying, if you look at governments around the world skeptical about using huawei technology for 5g, if a new government says we don't want to use this technology or we want to limit this technology, what are the options? how much more will it cost? >> we have already decided to go
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with our 5g corrine the european lender -- 5g core and a european lender. it looks like the government will have high security standards that companies will need to fulfill. as long as they can be fulfilled, we will go further with our existing strategy. it would be a gradual shift. we would be able to use normal renewal cycles. we do not expect that to happen. it would be within our general investment framework. tom: the need for fiber networks to households is not just a german question. there is that demand and that push across europe.
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you set up a joint venture with allianz. do you look to invest in fiber for households? >> not on our own because we are a mobile infrastructure player in germany. for us, fiber is a very long-term strategic investment we are doing. it is the reason we have bought only a minority stake in ugg, a joint venture. it is a long-term strategic investment we are undergoing. we are very happy that we have one of the biggest partners to the ugg going forward. francine: why not partner then with an old-school provider to make sure fiber comes quicker to the households?
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it would make sense strategically. i don't know if you can hear us. i think maybe the line dropped. a 2021 kind of problem. usually you are on mute on zoom. tom: technology guests and they are the ones who drop out. we were going to talk about mergers and acquisitions. the need of infrastructure is there at the household level and the level. francine: coming up, travel will never be the same. that is the view of the airbnb chief executive. we will have that conversation
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about travel and tourism next. ♪
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>> the selloff yesterday was a clear crack in the uptrend. a lot of people talking about, it is not that big of a deal, it is a buying opportunity. actually, when you look at the charts, you look at the
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prospects that we are going to disappoint on the earnings front because of the covid slowdown, we are ripe for correction. >> we are in the early stages of this economic cycle. as we get an adjustment in emergency policy support, rates in real terms are extraordinarily low, still negative. we are still getting feasible profit growth. if we get a 10% correction, fundamentally, that is a good time to be getting back in. francine: it is interesting to speak to two grandmasters of markets. scott minerd and peter oppenheim are. oppenheimer calling this an opportunity. what if it falls to 12%? there are technical levels that come through.
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luxuries getting hit quite significantly today. minors also low -- miners also low. do you buy the market as a whole? it's an pieces? that is difficult. tom: valuations across the space are elevated of course. the consensus seems to be along the oppenheimer line. it is scott minerd calling the warning. we will see who wins out. francine: at some point the markets can't keep going up. i am like, if you bring back the dow jones since 2009, it has been going up ever since. let's take a look at the biggest movers in today's market session. deutsche post, one of the key things we are watching out for.
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i am not seeing huge news regarding deutsche's, but if you look at what they said, they had concerns about supply shortage, about supply chain disruptions, the tight labor market. that is impacting similar stocks. tom: supply chain is an issue for traton, the truck unit of volkswagen. they see unit sales significantly lower. they are pointing to supply chain challenges, chip shortages , something we have seen across a number of corporate's. francine: one company that does gambling for sports yesterday confirmed they have received a proposal from draftkings for 2800 pence per share.
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the share price is now at 2445. a ways to go, but it is gaining some 8%. tom: the ecb is to discuss raising regular qe when the ppp program ends. this has been the question. what happens post-pepp? you have spoken to christine lagarde about this. other lines from the ecb, it is more likely inflation surprises on the upside. francine: because the ecb is split into hawks and doves, we have seen a lot of countries trying to go for a more dovish -- a more hawkish stance. this is emergency programming, it will not last forever. this will be significant looking
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at the fed today. tom: coming up, the u.k.'s green bond debut has smashed records. we are going to get the details. more on that next. ♪
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francine: welcome back to the market open. here are your top stories. ever grand investors -- will repay one bond interested
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tomorrow. it is fed day. u.s. futures fluctuate ahead of the decision. they are expected to signal a reduction in stimulus. it is four days until the vote in germany. the chancellor angela merkel campaigning in the race. we get the latest from berlin. a lot going on in the markets. the fed, china, the markets are caught in between. tom: it is a busy day. ever grand did fall into the hole. don't forget do not worry, ever grand will be back. for the moment, investors need to look past the terminal and what we have seen in the last two days that are linked to that real estate development and focus on the fed. the optimism here in the european markets is building from the green we saw on the screen yesterday. you can see gains across the stoxx 600. you see the cat go up. -- cac go up.
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the politics are in focus over in germany, angela merkel coming out. she is raising the flag. gains in that u.k. of more than 1%. the energy problems are the main focus, companies not taking new customers. the politicians will have to grapple with that. let's move to sectors. he saw a picture yesterday, travel and leisure at the top, basic resources at the bottom. the iron ore story has come back. travel and leisure gained 3%, basic resources gained. it is green across the sectors. health care looking at gains. when it comes to the fed, that is the focus. maybe you may even get a hike by the end of 2022. today is about the signaling and
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communication around the taper timeline in the new forecast. francine: let's turn to the top issues dominating the global agenda. world leaders gathered at the u.n. where climate was taking center stage with covid. >> a moment where the world has to decide whether or want to grow up or not, to make a crucial change or not. pres. biden: the united states will double our public financing to help developing nations tackle the climate crisis. i am proud to announce that we will work with the congress and double that number again. >> it will act as an un-blocker. >> they will move forward. our goal of climate in. >> korea will upscale its climate and set up a green trust fund with a view to supporting the work of global green growth. >> china will strive to beat
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carbon dioxide emissions before 2030. we will achieve carbon neutrality before 2060. francine: u.k. has smashed records raising 10 billion pounds. tracking over -- billion pounds in orders. it is seven all-time high. -- at an all-time high. tom: for some matters, they are cheaper. investors are ready to accept lower yields so they can tick the box on their est mandate. that is an issue highlighted by one of the world's biggest investors in an interview with bloomberg. >> once the technology shows commercial application, we can bring down the green premium,
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the amount of private capital that would be running towards these would be enormous. tom: joining us now is our bonds and est reporter. they are still hungry for this stuff. demand we saw when it comes to green gilts. what do these bonds look like compared to nongreen bonds? >> thank you for having me. the distinct character of the green bonds is the use of proceeds. that means when that u.k. raises the 10 billion pounds for the green growth -- gilt sale it will go towards products that the government has deemed green. compared to normal bonds which can finance normal things, anything's, this will be what the government defines as green
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investments. francine: what is the outlook for green debt? europe has taken the esg of $2 trillion worth of assets between 2018 and 2020, is it different when it comes to green debt? >> the broad outlook is looking at more and more. when it comes to the supply and demand, they will not have enough for investors. they will issue green bonds soon. investors have their esg mandates across the world. they need green assets. i expect there will still be pressure on pricing. until supply catches up with demand, i do not see that changing. tom: thank you for that. let us get the first word news. >> the democratic control has
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passed a bill to suspend the u.s. debt ceiling into september 2022 and provide the government funding to operate past the end of this month. the publicans have vowed to block the measure when it reaches the senate over the debt limit provision. the standoff raises the chances of a government shutdown and a default which could have devastating consequences for the u.s. economy. u.k. is said to be joining the free-trade agreement between the u.s., mexico, and canada once the recognition of the biden administration will start negotiations on the deal anytime soon. prime minister johnson downplayed expectations of progress in hinting that an agreement was unlikely before the election in 2024. chinese president told the u.n. general assembly that they plan on stopping building of coal and
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more operations of clean energy. more than 70% of coal plants built today rely on chinese funding. global news, 24 hours a day, on-air and at bloomberg quicktake, powered by more than 2,700 journalists and analysts in more than 120 countries. this is bloomberg. francine: thank you. let's get back to the markets. investors are gathering at the greenwich economic forum in connecticut. we spoke to -- about inflation and where they would put their money. >> we got hit by covid. we bounced back from that. >> supply chain problems that we are facing are very traditional economics. >> supply shocks will reduce potential growth and increase cost of production. >> we are looking at inflation
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being more short to medium. >> we did not take as much risk as we could. we added value but not as much as we should have. >> we are buying and partnering with market leaders who are leading digital transformation in their industries. >> we are taking longer term bets so we felt less sensitive to a change in policy. francine: top investors are speaking to bloomberg about supply chain issues. interesting to hear a lot of investors saying they would buy the dip, but would you buy with all these concerns about evergrand for all the issues the fed is taking? tom: it has gone to china. the credit ramifications following evergrande's leading
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people to rethink that. no surprise about the warning about debt at the central banks. francine: there are a lot of real yields going on. moments ago, we had one on the governing council saying the ecb will be raising went the bond buying ends. -- when the bond buying ends. tom: the hawks were very vocal, arguably smothering the reality that doves -- christine lagarde has made it clear they are nowhere near any type of rate hike in that continue. when you look at peripheries and debt levels, the yield spread, it does not seamless investors are looking at a hawkish ecb. francine: we will see the changes. coming up, a rental economy --
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company has started trading in frankfurt. that is coming up, next. this is bloomberg. ♪
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>> the world is not going back to the way it was in 2019 anymore it is not going back to
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1950. travel is not going back to the way it was. this is the worst technology will ever be, it will only improve. it will be flexible, people will continue to have options and you will live in a world will -- where people do not go to the office five days a week. if you believe those two things, travel will never come back the way was, it will be different. tom: airbnb ceo brian chesky talking about the future of travel. travel company hometogo has partnered with a firm. it is a deal which combined to 1.2 billion euros. joining us now is the founder and ceo patrick andrae. congratulations on the listing.
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what are you seeing in terms of demand at this stage, are you back to pre-pandemic levels? patrick: thank you for having me. it is an exciting day for us. humbling and exciting. bringing the company to the stock market is one of the aspirations you have when you build such a company for almost eight years. from the demand side, it has been an interesting thing, you just heard it from airbnb, for us, we had higher demands during the pandemic. we had more bookings than we had in 2019 in 2020. 2021 was a record year for us in terms of demand. we have never had such a great quarter one despite europe still being on lockdown.
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it was better than ever. the last month, august was a record month for hometogo. francine: how do people travel and get these properties differently? most people have been stuck at home, do we travel less for longer periods, how do you see that shifting and changing in the next 2-3 years? patrick: the main thing, what we saw during the pandemic, people state longer and more domestic. especially, vacation rentals are a safe option. that is something that people got more used to during the pandemic and got more educated on. we see more future demand for people who choose vacation rental or holiday one for the first time. like brian chesky said, the fact that we have vacation, the
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flexible remote work thing is leading to the fact that you have a lot of people who might not work from the office, but if you want to work remote, you can go to a hotel or vacation rental. you want something that feels like home. you either use this directly or remote and prolong your vacation. we saw all these things that played into the right direction for this market. tom: how do you plan on deploying the capital that you have raised? patrick: we have various things. that marks the next level for the company. we can use this to rebuild, we have execution plans for the future. one part is around broadening our brand and brand perception globally and internationally. building technology solutions, especially for our supply partners and fostering in the
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service business there. also we will be looking at what we have been executing in the past successfully. francine: we were discussing some of our reports, you have not turned a profit since you started, what is the path forward? patrick: one thing, you always have to look at growth, if we would spend less on growth, we could be profitable. how we look at it is, where we see the opportunities for growth we invest. especially if we know there is long-term results and revenues coming from that. tom: what are your priority markets? patrick: basically, europe and north america, germany,
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switzerland, makes one third of our business. the northern american part in the rest of europe the other two thirds. francine: thank you so much, patrick andrae, hometogo ceo. >> the chip shortage is jeopardizing deliveries. sales in the third quarter will be significantly lower than planned. the unit joins toyota and others warning of the quarterly season to come. draftkings has offered to acquire another firm at more than $22 billion. an accusation would expand draftkings emerging gambling empire.
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this neat share drop their biggest -- disney had their biggest drop, they blamed the rise of the delta variant fort delays. disney's streaming service has been a huge growing engine. that is your bloomberg business flash. tom: thank you. coming up, ever grande investors exhale. there is a dollar coupon to pay as well. ven ram from our markets live team joins us with the market reaction to that. this is bloomberg. ♪
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francine: welcome back. we are 50 two minutes into the trading day. -- 52 minutes into the trading day. joining us to talk about the markets is ven ram from the market live team. i guess it is a big market week because of china and the fed, what are you expecting to hear
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from them today? ven: i do not expect them to make a formal announcement on taper today. it will be announced next month, most likely. it means that the most crucial aspect -- what the investors have been watching for is are there enough members who see the first rate hike next year as a -- as opposed to 2020 three. last week we saw only a few members who thought it would be in 2022. if we get two more members, it will shift it in that will be significant for the market. going beyond 2022, should we expect two hikes or more?
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that will be crucial. also, the summary of the accounting projections. the projection for june was 2.1% , this is for next year. if they raise it, that will be more hawkish and it will play into the average inflation targeting that the fed is in now. also, what are they going to do with growth? if they lower it down to 3.2%, that will mean that they are accepting average growth for the u.s. economy. tom: that is the fed. switching to the ecb, we have heard that they are looking to lift qe regarding the pepp program. how much should we pay attention to that? ven: the pepp will always be
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folded into it in some form or another. the program has a lot of -- the longer running assets purchase program does not cap. will they be incorporating into it? i think they will. that will allow them to support bonds especially in countries where the bonds have rallied a lot. there are signals from the ecb saying they may be concentrating more on that. this is all moving along expectations. they are preparing the ground for incorporating elements of pepp into it. francine: thank you for the insight. ven ram therefore the -- there
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from the market live team. the underlying issue, evergrande saying it will not be easy for the markets to swallow it. tom: there is also a difference from domestic bondholders, they have been pushed to one side. you are right, they are also coming in with some support. francine: we are trying to figure out how much exposure there is from some of the banks elsewhere on wall street. that is it for the market open. "bloomberg surveillance: early edition" is up next. this is bloomberg. ♪
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>> this is all manageable. >> we have climate to address. >> that was clearly a crack in the uptrend. we are ripe for correction. >> this is "bloomberg surveillance: early edition." francine: good morning everyone. i'm francine lacqua here in london. here's what's coming up. ever grand


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