tv Bloomberg Markets European Close Bloomberg September 24, 2021 11:00am-12:01pm EDT
european close." with guy johnson and alix steel. guy: what do you need to know out of europe, this ahead of a general election this weekend. it looks too close to call. panic buying returns to the u.k.. we are seeing shortages in delivery to consumers. the prime minister wanted this fixed yesterday. it has been a positive week for european stocks. despite munday's selloff and rising yield, uncertainty and pmi's. let's look at where we are right now. we are down by 8/10 of 1%.
we are getting back some of the ground gained on the british pound. yields are continuing to creep a little higher. alix: same thing in the u.s. i want to point out you had bank of america in the weekly outflow charts. there was $28.6 billion that came out of u.s. equity funds this week, the first three days of the week. huge amount. today, the inflation theme is front and center. s&p is down by .11%. we have yields picking up a little bit more, up two basis points. 145, we have not seen that level since to be getting of july. you have the bloomberg galaxy crypto index. it highlights all forms of crypto. still down about 7%. we are not seeing anymore selling pressure in addition to
that. nike, i wanted to highlight. it is .5% of the s&p and it is down 7%. they can't meet orders. demand is there and supply is not. guy: the story around china is getting more interesting and murky at the same time. ever grants -- evergrand, no guarantee it can meet its financial obligations. they have suspended supplying of goods. we know there is a cash shortage. we don't know how the remaining cash will be distribute it. we have an idea that the first thing any money will be used for is to finish current projects, i.e. the retail buyers are at the top of the structure. we are trying to find out and
are awaiting the details of what is happening with the dollar bond payment, which we don't have any clarity on. he has tracked china for years. tom, what do you make of what is happening right now and what is your expectation of what happens going forward? >> firstly, the government has stepped in and taken control of some of evergrande's bank accounts, intending to ensure complete construction of properties. bloomberg has three evergrande bonds they have not received. the situation continues to
unravel. the key question in my mind is how does the government prevent contagion? there are resources and motivation -- it would not take china going into cross -- crisis for this to send shockwaves around the world. alix: thanks. we really appreciate that. but still, a big question mark when it comes to the dollar bond payment and what the recovery mark would look like at the end of the day. they also tackled the crypto world today. the government, announcing that they banned digital tokens like bitcoin.
here with the latest is eddie. the crypto bulls say it is ok. you can wallet off and it is no big deal. is that true? >> cryptocurrencies are bigger than china. that is true. this is worrying for cryptocurrencies. number one, if china cracks down, this is a big source in demand. it has been a place where people have moved money about and out of the country. if they are successful in cracking down on this, that proves global governments can crackdown on bitcoin if they want to. there are many other countries that are not exactly happy with what is happening. guy: i think your microphone may have dropped off. we can't hear you. usually, i want to hear every word you say. alix: what did you do with it? where is it? what did you do? >> you don't want to know where it is. alix: [laughter]
>> it is somewhere down there. we apologize for the ruffle. we will get a clear and concise view from eddie. alix: we will talk to him on radio and there will not be the microphone problems. guy: we will get it all sorted. the u.k. seems to be suffering more than most, and that is the issue of the blindside shortages. this is the labor and lack of availability of truck drivers. we are seeing brexit having a factor in terms of what is going on. the prime minister, boris johnson, who had hoped to have a good week, apparently once this fixed asap. andrea joins us to give us her take. how serious is it? >> it is serious.
this is happening all around the world. almost every bit of the supply chain from the factory in asia to the growth of the storeroom is closed off. alix: i guess the question is how soon can those things wind up being fixed and what is less transitory? guy: i think -- >> i think they will not be fixed overnight in the u.k. and u.s. that is going to take time. i think the big battle for christmas is not going to be price, it is going to be availability. this has started to feed entire pricing delays and input inflation. it is starting to come in higher prices. alix: thanks a lot. last but not least, germany heads to the polls on sunday.
that will usher in a new political era for the country and the european union. here is agee cantrell. what can we expect? >> it is going to be an incredibly tight election. in the last couple of months, it has seemed like, on his own personal popularity, the candidate from the social democrats led the polls. the lead is tightening to a single or two percentage points. it is not just about who gets the largest vote share, especially when the vote share is smaller than what it would be. what we are looking for is what will happen and how they will be able to build coalitions out of that vote share. they will be trying to go to the
liberals and build the coalition and convince the liberals that it is worth joining in coalition with him. however, the alternative is also that merkel's conservatives are not out of the race and they can ice out the social democrats. guy: we look forward to the coverage over the weekend. we have great lineups to give us an idea of what is going on. aggi joining us from berlin. we have great coverage. we will carry on the conversation on this program as well. tune in sunday at 5:00 p.m. u.k. time and 6:00 p.m. in berlin for our germany coverage. this is bloomberg.
that is not normally the kind of politics you want to see. an economic economist joining us. is this going to be a factor in the election? the effect is that we are seeing a slowing in parliament. >> the german economy -- guy: a slowing economy. >> the german economy is slowing. i noticed that the company referred to cut their forecast for 2021 quite a bit for the near term. i think in terms of the election, this is probably not going to be a huge issue in terms of it is happening now or
in the past couple of months rate it will not make a big inference. -- couple of months. it will not make a big difference. guy: i wonder in terms of fiscal spending overall, you have the possibility of a coalition led by the social democrats that could be more aggressive on spending. you have a slowdown in the economy in the short term. i wonder if we are in for a little more stimulus? what do you think? >> this is the big question. my short answer would be yes. if you look at the possible constellations, all of them are likely to be more progrowth from a fiscal policy perspective than the current government. we also have to consider that germany is spending more and has spent more to combat the pandemic. in some sense, we have already made a transition in germany toward --
toward a more stimulative fiscal -- this is tight. very close to call. difficult to see a clear result on sunday. the coalition could go either way. depending on the results, it could be interesting. we are looking at a more progrowth fiscal environment. guy: what challenges does angela merkel leave whoever succeeds her? china stands out as a huge issue. the u.s. is taking a harder line. germany has taken a more mercantile approach. how does this work out? >> it will be difficult for germany and europe. germany and europe will try to
find a way between china and the u.s. in some sense, they are dependent on both. they will try to weave through both sides to an extent. europe in some sense is forced to follow the u.s. lead. i think germany and europe will wait and see a little bit, in terms of how far the u.s. goes over the next 12 to 18 months. alix: which brings us to the evergrande situation. you have european banks come out and say they don't have the exposure. christine was saying they don't see a lot of exposure. what were the circumstances -- what would the circumstances have to look like for evergrande
to feed into something more dramatic for europe? >> is minimal. -- it is minimal. when i look at markets in europe, we are operating with the assumption that evergrande might fail forward. the authorities in china will make it a soft landing. that is a complacent assumption and we don't know. china was slowing before this. in manufacturing, you will see more downside. we just have to wait and see in terms of how far this spreads in terms of contagion. guy: in terms of how we should think about the exposure, the chinese economy has been driven by what has been going on in the construction sector. germany, sweden, manufacturing companies in europe have supplied a lot of stuff that is required to make the construction happen.
if we continue to see the homes being finished what a slowdown in the process of building, how quickly does that come back? what is the transmission from one to the other? what is the speed of transmission? >> the speed will be quick in terms of the cycle. in two to three months, we will see it. the idea that china is trying to engineer a transition away from the public sector toward consumer spending, in the short run, if everything stops, that would be bad news for europe. and for the global economy. alix: sure. this brings it full-circle circle, back to germany, which leads me to central banks.
we see the boe getting more aggressive. same with the fed. the ecb is not. the power of china to disrupt that trajectory of raising rates, i wonder. >> if it -- if chinese markets are in the financial sector, that could postpone any plans any central bank might have of tightening. the fed is now expected to start some form of papering. in england, markets are pricing in a rate hike or two. we do not think that will happen. we don't think that will hike rates. the ecb is still accommodative. the ecb is discussing whether to go from a decision of maximum
accommodation to slightly lower accommodation. again, central banks will respond. we know that. alix: it was good to catch up with you. thank you very much. coming up, we will have more on what is happening in the bitcoin market after china's crackdown. the chief strategy officer will be joining us next. what this means, china's crackdown, for the crypto industry. this is bloomberg. ♪
officer. -- coin shares chief strategy officer. when you say transactions, what did that mean for you? >> that means people interacting with bitcoin exchanges. in this instance, china called out otc, or over the counter transactions, which are facilitated through brokers or peer to peer. they are facilitated using tether or ustc. guy: are we done with cryptocurrency in china? is china done with cryptocurrency? it looks like they are trying to move the economy off this stuff. meltem: absolutely. china has been crypto close to eight to nine times. you can only ban something once.
each subsequent time you do it is an admission you could not ban it at all. it highlights the strength of bitcoin is a decentralized peer-to-peer financial system. anyone with access to the internet can access the bitcoin network. i think china has taken an increasingly aggressive stance. we saw what happened with jack ma after he spoke out against the ecb policies. we have seen what happened with the ban on the amount of time spent on gaming. generally, i think the atmosphere in china is shifting and i think it has become more aggressive in its tone. alix: what do you think happens? anyone who has crypto stuff sells that? what will be the reactionary impulse within china from this? meltem: the clear thing we need
to note is people who already hold cryptocurrencies are not banned from holding them. what is being done is an attempt to stem it out of the country. evergrande is the story we are talking about, not in the context of this announcement. when the ecb makes a decision on evergrande, i think it will have an impact on the chinese market. they are trying to focus on -- i think it is important to know that this does not impact existing crypto holders. it does impact the broader systems. in the last 12 months, we have seen that shift dramatically. the majority of crypto trading actually happens in your -- u.s. and europe trading hours. guy: are you basically saying
that this announcement is part of the evergrande response? meltem: there is certainly a linkage. they are concerned about stemming. guy: great stuff. thank you very much indeed. the coin shares chief strategy officer. alix steel got it right. i got it wrong. alix: that never, ever happens. i will take a moment and do a victory dance. [laughter] guy: you have done the dance. this is good. this is bloomberg. ♪
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not quite so bad. europe is trading down today. it's not by that much but we are positive on the week. the cac's is down by 1% and the dax is down by three quarters of 1%. we have a negative pound today and we've got some pretty good news from astrazeneca today, rolls-royce is getting a nice up rates of those are helping out the ftse 100. europe has rallied quite hard out of the monday selloff. this is significant. it was a step lower beginning of the week and then there was some positive sections. we reached a peak yesterday and faded a little bit today but on the week, up by 3/10 of 1%.
we haven't seen a correction for a long time. everybody got very excited about the fact that the market was having some downside stuff in terms of what has driven things this week, we have seen the lifting of travel restrictions into the united states, adding a huge amount of upside to that sector. we have had the story around energy which is turning out to be an area of excitement, not just for alix steel. it's up by nearly 4% today. banks are doing well and any concerns about ever grand's part for now and health care is having a good week as well. in the retail space, really big problems in terms of the supply chain story and that is
manifesting itself down by 1.6%. let's talk about our stories today. nike was significantly downgrading it's a that stations -- it's expectations. you want that you wonder how much inventory is out on the water i had of christmas because demand is still there. it's rippling into other stocks as well. rolls-royce got a big up great, up right 4.2%. it's one of the factors in the ftse 100 providing some lift. it's a supporting factor on the upside as we are getting a little out performance. astrazeneca, a big factor for the ftse 100. is the biggest way to the stock
and positive news coming through on its prostate cancer therapies giving the stock quite a big boost. it's been an incredibly turbulent week. we are up at the end of the week but i think the volatility has definitely got everybody paying attention. alix: the fed chair dave powell -- jay powell said he's never saw these supply chain issues. germany goes to the polls this weekend and they are looking to replace angela merkel as chancellor. there was a debate last night. >> europe is looking at germany and what governments will be formed. >> we have to make sure together with friends that your progresses. >> i want to make sure we create a united european approach toward china.
>> we are the big country in the middle of the european union with the biggest population in the biggest economic strength. >> we need to start putting project together and arms project to act together when the usa steps back stuff alix: for an american watching a debate, it might have been oversold. let's get more of what to expect. what is your base case for what we see on sunday? >> [indiscernible] there might be less of a deal with the greens in the right-leaning party will now for me coalition. that is the most likely base case. guy: what does that mean for fiscal spending?
>> that's the right question. it's about what christine litner does or does not do. we have more flexibility within germany at the expense of more fiscal at stake for the rest of europe. we will get some perspective over the course of the coalition negotiations. the government could come together quite quickly because l itner does not have as much leverage as some people think. his career is probably toast so i suspect he will do a deal but he will hold out for concessions. a bit more space domestically. alix: it feels like the
consensus is not about leading the coalition government. what is priced in and what's the risk to that being wrong? in the u.s., the polls are rolled relevant in some ways. same thing in the u.k. >> there is always the possibility that there is one terrible candidate. there's always the possibility that they will deliver a result on sunday. up to 30% could be undecided. you could argue structurally that a majority of the population is conservative. there are structural advantages and over the last few days, it's been frightening. what does that mean as far as
policy outcomes for europe? the difference between the two parties are not that much. you were looking more at the margin or europe. it's not that obvious. guy: in terms of what we need to see happen, in terms of what should happen, what are the biggest challenges that angela merkel is leaving her successor? what does germany need to sort out? what do you think the next chancellor should be prioritizing when it comes to germany? >> it's the same question for europe, creating fiscal space and high-quality investment in public goods.
it's enabling europe to get on this trajectory. what germany does domestically is equally important to europe to ensure there is sufficient fiscal space after 2023 to recover and lock in a net zero transition. alix: what about china? >> germans with the greens in government, germany will probably try to do more of a balancing act. also the rest of europe will be sort of have your cake and eat it. i think wilson -- we will see narrative out of germany to be chuffed -- tougher on china and human rights abuses and tougher on the issue of muslims. at the same time, we will see
unprecedented market access. i think the language may be different but you will look at the economics and the politics. guy: if you want to talk to europe, who do you call? previously it was angela merkel? is it now emmanuel macron? >> i'm sure he would like to be the one you would like to call but he has a tough election in april. he has the covid challenge in front of him. macron is vulnerable. the big problem with europe is
that we have weaker -- we will have weaker german leadership step france's always going through a transition and i don't think you will get any coherence at of the european union from this summer to next year. hopefully, there will be a coalition and then we will see things move forward. guy: many things will have to happen between now and then, civility would be nice. we will have some great coverage and give you a briefing as we work our way through this weekend. we will have coverage and analysis and the polls will close sunday night step it will start at around 5 p.m. u.k. time. we may get a result or not but we will continue to monitor the various permutations out of this german election. mark: alix: jay powell is
speaking at an event and he talked about supply and labor shortages. he said what we've never really seen is these kind of supply chain issues and never had an economy combined such job shortages and slack. guy: that's a huge problem for the fed. they have the idea that they are focusing on the labor market and you've got a problem in the labor market. huge amounts of slack, people worried about covid or not going into the supply side of the labor market and yet there are shortages elsewhere and prices are going up for labor so that's a massive problem for the fed to manage. alix: if this on anchored inflation expectation starts to on anchor 3-5, the 10, that's where it gets trickier for the fed. how do they manage that.
they can't literally wring people back to the job. guy: the idea was you would run the economy hot so it would reach the outer edges of the labor market to pull more people in but that's more difficult than it traditionally would. the pandemic is causing problems with that process. alix: it's also harder going into space. that's a horrible transition. civilian space travel, the commander of the inspiration for joins us on his extort dish on his extort flight last weekend. this is bloomberg. -- on his historic flight last weekend. ♪
guy: it doesn't get old, the launch last week, the first time we have seen in all civilian crew launched into proper space, and orbit of 365 miles above the earth. when that happened, ed ludlow was at a safe distance. he was a couple of miles away watching what was going on. he was nice and safe at that distance and is joined by a man who was little closer to the action. >> just a little. i'm joined by the commander of that inspiration for and the ceo of shift for payments. i asked you 24 hours before launch why 360 miles? why take the added risk? why not play it safer?
my question now is did you wish you went further? >> i sure do. >> why is that? >> people talk about the overview effect of looking back on earth from an interesting vantage point. we went so high there's -- there's probably less than 25 people in the world now who have seen the world from this perspective. i saw the space around the earth and the moon rise and it made me think that we've got to get out there and go farther. we've got to satisfy that curiosity we have and explore the universe. we took -- we know so little about their probably answers to questions we have been thinking about for some time that are out there, you just have to find. >> the other mission was to raise $200 million for st. jude's and you blew past that but ultimately, you pay for this
mission. how do we move beyond space just being the domain of billionaires? >> it's expensive, that's why we have to make sure every mission has a profound impact on the world until the cost come down to the point where everyone can explore among the stars. this is no different than tesla roadster's 15 years ago versus elon musk announcing $25,000 test was recently or computers in the 1960's or cell phones in the 1980's. cost will come down but while they are expensing, we have the opportunity to do good with it and that's why inspiration for set out on this massive fundraising effort that's why we have an inspiring crew so that we can make a difference while we were in no fortunate position to go to space. >> there is a backlog of willing, paying customers they say. what sense do you get from
spacex that this type of mission will ramp up into next year? >> i think with spacex pioneering reusable rocket technology and driving down cost to make space more accessible is there will be more people working in space. i think working, exploring, i don't know if you will have too many people going on sightseeing trips but as it cost less and less to put people in orbit, we will create infrastructure in space and people will be working there. we had 14 people in space and it could be 240 within 10 years. >> you guys had a nice time up there. you are conducting scientific experiments and a study on the human physiology. where those tests real?
did they give real meaningful data? >> for sure, nasa was listening in on our communication bloops and there was a high altitude research plane filming us as we just as we reentered. this is the only third time a dragon capsule has reenter the atmosphere since his program began. there is still an awful lot to learn. we were at an altitude suggesting is to radiation profiles we have not studied since the apollo program. it was way higher than the space station which is shielded by our atmosphere. we have a lot to learn if we are going to go to mars. imagine going to mars over six months and back and that's hundreds of ct scans that will kill you if we don't learn to deal with it so we were doing all sorts of research over those days and i am looking forward to
the results. >> i have to ask you about cryptocurrencies. the first nft track in space and one company is investing more accurately. where do you stand on cryptocurrencies as in transactions? >> we were happy to bring the kings of leon nrg up to orbit to help st. jude's children's hospital. i think the blockchain is interesting. we are a ways away from crypto being a main form of currency and i say that as the ceo of a payments company. i don't think we are there yet, it's just too volatile. we are not ignoring it so we are making investments so consumers can do business with our merchants the way they like.
that will probably be an alternative payment method in the future. >> will you go back up into space? >> it's got to be more than a word but if there is a mission that can have a meaningful impact on the world, i would be there. >> jared isaacman, the commander of the inspiration for mission. back to you. alix: that was a great interview. i would be too scared. this is bloomberg. ♪ >> this week we lost robert chin , he was the first to makebtv what it was today by expanding our footprint globally was part of the team that launched bt inv france, italy and japan.
if you wanted to achieve something that was impossible, he just needed to tell rob it cannot be done in the next thing you knew, it was happening. throughout it all, he was always putting people first and never turned away anyone asking for help. those of us who knew him over the past two decades, he was someone you could always count on to make work and life quite interesting. we will miss you, rob. ♪
yellen and statements from both of them. that will be live on this program. we got china pmi, gdp out of the united states, it's going to be a pretty packed week. there is a lot going on next week and this week has felt like it lasted a while next week could be just as exciting. alix: maybe positioning will be different after the selloff in equities earlier this week. coming up, richard haass will join balance of power with david westin. this is bloomberg. ♪
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♪ from bloomberg world headquarters in new york to our tv and radio audiences worldwide, welcome to "balance of power." is inviting is hosting a meeting of the leaders of the quad -- the quadrilateral security delegate between the united states, india, australia, and japan. we turned to annmarie hordern. what is on the agenda? annmarie: good afternoon, david. definitely squarely on the agenda is economic and security concerns and how this group, although they will not name china by name, how they will counter climate together. climate change, semiconductors, g5 technology, these other things we are looking out for to see what comes out of the meeting. this is the first in-person meeting of the so-called quad.