tv Bloomberg Daybreak Europe Bloomberg November 2, 2021 2:00am-3:00am EDT
standard chartered third quarter profit soars 44% even as the bank keeps its flat earnings outlook. we speak to the cfo up next. bp numbers. 6:00 a.m. in london, 10:00 a.m. in dia fc. if you take a look at what brooks is saying, this is the narrative. delivery delays everywhere. i follow brooks at the iaf. i suggest you do. it is as tight as take can be 62011, belittle elsewhere. i want to show you the chart that underpins robert brooks'
belief that things are tight in the united states of america. shortages were mentioned 70 times in the beige book. 75% of businesses are experiencing supply shortages. but this is japan back in 2011 and this is the u.s. now. as you can see, it is tight, but it is not global and pervasive. does supply chain rollover? inflation up and over the hill, making the fed's job easier. let's have a look at the equity market. equities are lighter. is that more to do with the fact you have joe manchin potentially blocking joe biden's fiscal stimulus? the best earnings season since 2014. jp morgan says it is too premature. equities will climb the wall of worry. european stocks made record highs.
if you want to belong in europe, aussie dollar down by 0.5%. we are unsure of the timing of rate hikes. it may take some time. there is a bit of a difference between -- and the market. iron ore implodes. crude up. america asks, please sir, can we have more? saudi arabia says no. the reserve bank of australia has bowed some would say to market pressure, signaling they are open to raising rates earlier. i have a problem with this guidance. in the words of the rba, conditions may take some time.
and get the have abandoned yield curve controls. how close are we to rate hikes? the markets is 175 basis points next year. -- the market says 175 basis points next year. where are you? >> nowhere close. there has been a complete overreaction to the markets in australia. throughout the conference, they stressed time and again it is all about wage growth and there is no wage growth in australia. he talked down concerns about core inflation. he is quite sanguine about the supply chain crunch story. a lot of that can be ironed out as people move from buying goods to buying services. there is a headline that they moved away from yield curve control, but recovery is well underway.
they are focusing on getting wage growth. raising interest rates would be counterproductive. there will not be a rate hike until 2023 at the earliest. >> interesting you have april 2024 bonds back on the leash. it is mission impossible to get it back under control. go to tliv on the bloomberg. cop26 talks are underway. world leaders setting out their plans for curbing global warming. we have a new headline from india. francine lacqua did a long day yesterday. tell me about the surprises from
india. good morning, good evening. francine: good morning. the announcement from the prime minister of india injected new life into talks setback by disappointing outcomes from the g20. it is really down to top emitters like the u.s. and china. president biden did not bring anything substantially new. china did not attend and offered no new plans to cut emissions. the chancellor of india is trying to figure out how to finance the transition to zero. 2070 is a long way off, about two decades more than the developed nations. if they do it in a way that works, it delivers on the goal
of trying to keep with 1.5 degrees. that is what the organizers are trying to achieve. trying to get enough commitments overall to stick to the paris agreement. manus: i was listening to mary robinson about the pathway forward, but narendra modi calling for a trillion dollars of financing. day two coming up. we have ceos from unilever and deutsche bank. bank of america and the president of the european investment bank joined the bloomberg team today. -- join the bloomberg team today. let's stay with the energy theme. bp was one of the last majors for third-quarter earnings and results are due.
analysts are expecting a moderate boost as well as additional buybacks. paul wallace has the narrative. we covered the numbers in terms of paying down debt and upping the dividend. >> it is the last of the big oil companies to report results. they are going to be good as we have seen from the likes of shell and chevron last week. we will see whether it beats the consensus for adjusted net incomes at $3 billion. if it does beat that, analysts are saying it will be on the back of higher refining and trading margins. that is where bp could surprise on the upside if trading results come in better than expected.
you mentioned share buybacks. that's going to be the key. competitors have signaled they will do more share buybacks. pre-cash flow is expected to come in at $1.6 billion for the quarter. that is going to give bp the room to play with share buybacks. the share price is up 40% this year, the best of all the oil majors. manus: it is amazing how much jeering there was against strategies -- 24.5%. let's see what they do. thank you very much. paul wallace, our resident energy reporter. at bank of america, calls for
$120 a barrel. we are going to get the results. anna and the team will bring those to you. our conversation with bernard looney, 3:30 hong kong time. let's get the first word news. >> brazil will sign the global pledge making it the sickest -- the second-biggest distributor to sign. signatories commit to reducing methane releases by 30% by 2030. brazil's emissions come mostly from cattle and other agriculture. nancy pelosi is to push forward with plans to vote on key bills that make up joe biden's economic agenda. that is as moderates echo joe
mansion's complaints about not knowing the full economic impact of the package. democrats can only afford to lose three votes in the upper house. the french said they would introduce additional controls with the u.k. border this week. emmanuel macron says he will give negotiations more time. standard chartered has stuck to an outlook for flat earnings growth for 2021 after arise in trading income helped by 40% in the third quarter. the london-based lender's underlying pretax profit rose. loan provisions sank about double analyst estimates.
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. this is bloomberg. manus: thank you. coming up, the fed and the bank of england left to go. we have just had the rba. tempering the narrative for rate. the fed achieved -- with the fed achieve the same outcome? plus standard chartered third-quarter profit source. -- soars. ♪
actions, abandoning yield curve targets, signaling it is opening to raising rates earlier than previous guidance. the aussie dollar is rolling down. currencies, commodities or on the move. we are trying to understand what we can tolerate in 2022. you are a multi-asset strategist. the market records we are going to get, about 180 basis points of rate hikes, u.k., u.s., and across other emerging markets through next year. call it 200 for cash. 200 basis points for rate hikes across the world. >> good morning. i'm not particularly scared about the 200 basis point hike. if i look at future constructs
for rate hikes, we are expecting less than 200 basis points in 10 years. that is decades of very low interest rates. so no, i'm not scared about it. we are going to have a shallow hiking cycle. the debate is we are going to have a cycle start sooner but be shallower. equity investors do not care -- we care how far you go. there is no expectation of hikes being aggressive. i think that is important. manus: so it's going to be a shallow round-trip on the hiking cycle. let's position for growth in an unchallenged interest rate environment. with that in mind, so for example, goldman talked about $90 oil yesterday.
bank of america said $120 by june of next year. could you see $120 oil and would that unnerve you? is that possible and would that unnerve your equity investment? higher energy prices? >> you have to strike harder. i am a long-term equity bull. i think people have not anticipated the speed of recent increase. i think fundamentally while we are having higher oil prices right now, there is a lot of supply disruption here and there. they are important, but fundamentally we are having faster recoveries than people anticipated six months ago. demand is rising much faster.
it is the underlying strength of the economy. that is what we see in corporate earnings. corporate earnings seem fantastic. to me, the biggest surprises how strong the margins are. so yes, oil prices rising as well as every other input cost rising. corporate resilience is just fantastic. we see quite a lot of increases. companies are telling analysts that yes, we still see strong demand. and we can push higher prices higher.
as an equity investor, i have strong corporate earnings. and a shallow hiking cycle. i am still constructive. manus: i'm going to have to work harder to find your inner bear. profit estimates corroborate you. i have a cracking chart for you, so don't go anywhere. coming up, does the supply chain crisis risk the economic recovery locally? a shallow rate hiking cycle from state street. how worried is the lady about the supply chain game? this is bloomberg. ♪
>> two years ago we had an important decision. we decided to be neutral by 2050. we put in place a package with all the member states. of course it will work only if all the countries are all in the same boat following. >> is that your message to russia, china, brazil, that they need to do more? >> it is an important moment.
there are different situations. it is important to decide to have very clear ambitious goals. >> you mentioned the carbon pricing. are you confident that is going to happen? it would be a real change. >> sometimes -- we have experience in europe, we have put in place for many years and it seems to work. manus: the leaders for cop26 must work together to combat climate issues.
we will bring you more from the summit. the big crunch for 2021, supermarket jobs, backed up ports, car plants, let's talk supply chains. maria, this is the debate. robert brooks' tweet is the first thing i looked at in the car when i got in this morning. he is comparing the shortages in the united states to that of fukushima in 2011. if it were about supply chains, we would see delivery disruptions everywhere. we don't. we see delivery delays in the u.s. on the scale of japan 2011, but elsewhere, u.s. supply disruptions are about demand, not supply.
japan is the purple line. you see the u.s. is in there but it is rolling over from that. if supply chain issues are not global, inflation will roll over and we don't have stagflation worry. do you agree? >> i'm looking at your chart. everything is above three. i would draw the strong conclusion it is just a u.s. problem. we have problems in other places. what i would agree is it is a demand issue. it is what we just talked about. recovery is much faster. supply chains are broken. supply chains are very long, or less reliable than they used to be pre-covid. what is the real solution to it is acceleration in capital
investments. i think this is really exciting now because the way corporate and consumers are exiting the recession is a stronger position. companies have money to spend on capex. companies have money to address those issues. this all can be addressed for capex and ties very nicely in with greener agenda, the biggest shortage we as a global economy are facing is probably the worker shortage, and that can be addressed by more capital investments, more expensive labor or cheaper capital. it needs to happen, but what is different is it can happen. companies have a lot of cash to invest. financing is cheap. stronger demand, profits are
increasing with companies making money. the question for the long run is , will the money be reinvested? and that will stop the shortages problems and a fundamental way. we probably will be less worried about inflation. it can be very constructive to address those shortages at the moment. manus: let's see who the strongest are. we will be speaking to the ceo of maersk in an hour's time so we will see how supplies play into that. the world's largest container line. live commentary on the supply chain.
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global pledge. plus standard chartered's profit source as the bank keeps a flat earnings outlook. the cfo joins me shortly. next on the slate, it is bp. anna and mark will bring you those numbers. i want to give you a snapshot of what is going on with equity markets. there is a stall in the fiscal agenda in the united states of america. equities later by a third of 1 -- lighter by a third of 1%. equities are lower by a third of 1%, stocks made a record yesterday. the bank of america says oil could be at $120 by next summer. maria likes energy and the play
on that. the narrative from the rba, it will take some time. the market price in -- sorry, the rba and the market are at odds. the rba say -- the markets is 175 basis points and you have the strongest earnings sheet in america since 2014. a little lighter on the equity front at the moment. standard chartered stuck with flat earnings growth for the whole of this year after a bump in trading income. what was the strongest part of the growth?
a flat year for 2021. take me inside the bank. were you seeing the strongest growth in finance? >> the third quarter was strong. we had overall topline growth again. that is very encouraging. one of the key elements was financial support for businesses in the trade area. we think going into next year, the underlying is really -- as we move into next year, we
should be back to topline growth. manus: you are unhedged. the market is penciling in u.s. rate hikes, two next year. the u.k. to hike, the australians, who knows. what would this mean for senior chartered? 25 basis points for the -- first standard chartered? 25 basis points the u.k.. >> it has not been helpful for our top line, but it has been helpful for the level of insolvency we have seen has been another -- against her credit impairment -- our credit impairment costs have been lower.
having higher interest rates is better. as we look forward, basis points of improvements on a full year basis is worth just over a billion dollars to our bottom line relative to -- every billion dollars is very significant. we will see rate increases coming through over the next few quarters and that will help profitability of the bank. manus: how much do you think the fed will hike next year? >> what we are going to see is a gradual increase. all lot have a lot more data than they had before. i think it could have unintended consequence as.
-- consequences. i think we will see increases coming. manus: the volatility you saw from the aussie market last week, was that a warning shot for central banks? go slowly? >> they know they need to tread carefully here. a lot of businesses need to be very thoughtful about it. i'm sure every government will be trying to go through this then there is no place -- in a reasonable place those far as they can do that. manus: the same question for you
as for hsbc and ubs. how bullish are you on china? are you full bowl on china? -- bull on china? >> the underlining is very strong. there are reasons to be more difficult but if you take a five-year view, our view remains china as well fed and this is going to be with us for a good bit of time. we have business that has been there for many years. we are repositioning ourselves in the region as best as we can do. manus: part of that i know, we touched on it and it is worth addressing it. you are trying to hire 3000 people. hsbc are trying to hire 5000.
jamie dimon dialed in to tell his wealth managers, i'm going to look at your flow and up your comp. do you see beginning to hot up in china? how do you describe the bidding war some people are telling me is happening? >> most people looking at wealth action globally would conclude the trend in asia is likely to continue. more people becoming wealthy, more assets to invest. a number of banks are focusing on what they can do there. other banks will not be immune from that. the opportunity with such great
wealth is very big -- with such a large population with such great wealth is very big. manus: i want to push forward. you are accruing for a dividend at the end of the year. the market is going to reward dividend players on a forward basis. how bullish are you that return of capital shareholders is top of the agenda and the scale of the dividend? click the top of our agenda is getting capital up. it has been below bank averages. we need it in double digits. to do that we need to get
returns out as efficient as we possibly can. we have had a high capital spread on the third quarter which is good. when it comes to fourth-quarter results, we will remind what we want to do. we will provide an update at the end of february. manus: how close are we on knowing whether you will get your hand on citi's assets in asia? on the optimistic scale, where are you -- i know a cfo loves a chart. where are you on the optimism scale and those assets? >> we have said that there are
one or two of those assets we are having a look at. as it becomes clear who has been successful, we will communicate that. it is not entirely within our control. manus: you are a good sport. i look forward to hearing the balance between buybacks and the dividends. that will be music to the markets' ears. coming up, the u.k. sets a 2035 zero goal for the power sector.
>> i am cautiously optimistic we can get somewhere. manus: some of the top voices we spoke to at cop26 kicking off in glasgow francine: -- in glasgow. and let's get to glasgow. thank you for taking the time to be with bloomberg this morning. india will sign up to a net zero target by 2070. ambitious interim goals. is that the boost boris and cop26 need? this is quite significant. india joining with a target, lb at -- albeit 2070. >> it is very positive. we need everybody to start setting targets. to get to 50% renewables by 2030. that is a good short-term target. at the end of the day we need everybody to commit.
equally what will -- what we will see is countries moving forward, what we have seen in the u.k. is it is like a snowball effect and you can make more progress. it kickstart's where we are going on deforestation later today. we hope to see more from india and hopefully other countries to accelerate their plans. manus: one core piece for you is your inflation -- ambition. ambition is fantastic. mark is leading the charge on finance -- mark carney is leading the charge on finance. how do you get the structured finance in place to achieve this? >> government policy is usually important. once you have that in place,
companies like ours and throughout the world can commit to major projects we have got. two thirds of the 9 billion pound costs will be met with bank financing. we see interest from banks in what is a well engineered process supported by government policy. the most critical part of what we will be talking about the next two weeks, certainly got a lot of meetings with banks and fund managers about how we can generate that $100 billion. manus: a lot of people are saying to me there is still a fundamental funding gap in this project. two your domestic market in the u.k., every time i'm indoors
watching, another week, another electricity supplier -- vendor i should say -- goes bust. give me your estimate of the scale of supply shortages the u.k. could face this winter. >> we definitely see some distress in the supply market. record high crisis across europe -- prices across europe reflecting demand, specifically for gas coming from the far east. we have prices generally between europe and the far east at high levels. i think you have a number of smaller suppliers. business models have not been robust enough to face difficult conditions. in terms of supply generally, there is more than enough supply throughout the u.k.. it is just prices are high and that is causing difficulties. we know the regulator and
government are working hard to make sure that works. also i'm very confident based on what the national grid has said that the system itself will not have problems in terms of delivering electricity and gas to the u.k.. i don't think that is going to be the issue. it is more financial consequences for smaller companies within the market. there's a lot of companies in that market. there's going to be a reduction. i think we will make the best of the market going into next summer. manus: is regulation or deregulation, which has perhaps presented this plethora of vendors -- when you talk to governments, what are you going to ask this government to deliver in terms of topline regulation? is it obvious it needs regulation rather than more deregulation?
>> i think some people have talked about additional regulation in terms of the price cap. we know the regulator is currently looking at the price cap and reviewing that. i think that cause problems in the sense i do not think it was designed for circumstances we have seen today, a bit like extreme weather circumstances we have seen with climate change. they need to look hard at the cap and hard at the balance sheets, companies coming in and out. a key thing for us is in terms of regulation and government policy, what we have done to lead the world in terms of offshore wind development and getting more in the u.k., the key issues are continued to focus on that for the near term. so we can meet the ambitious new targets the prime minister announced a few weeks ago to make sure the electricity is
going to be d carbonized by 2035. manus: we wrote a story, all you needed to supply suppliers for new electricity was a software company that came with its own licensing. that is a low bar to entry. >> i think people were looking to encourage positivity in the supply market. 20 years ago when that first started, there was competition. perhaps things went further than they wanted. we have to remember we are is an extraordinary territory where gas has gotten to 50 p at the start of the year, to still under two pounds and peeked around three pounds in the u.k.. we need to make sure the systems prepared to take those shocks. manus: back to your project in
scotland, that is where the projects you have got are based. how do you get electricity where it is needed in these crunch times? do you think there is enough investment in the grade? -- the grid? >> grid investment has been strong. we completed billion pound projects. i think going forward we will see greater need. we recently had a regulatory settlement that covered the period from 2021 to 2026. we are looking at a core investment of around 3 billion pounds. we've also got around 40 additional cases in at the moment which will take the spend too well over 4 billion pounds. i think we have seen a
reasonably ambitious package for the regulator. what we also need to see is if we get a lot of these additional packages that were coming. we are working at the moment on a major grid line that's going to go for scotland down the side of the country. that will be about 2000 megawatts. we are already starting to plan for one or two more of those. the enormous resources scotland has. take that to the population centers further down into england and wales. manus: we wish you well. have a good week at cop 20. -- at cop26. still plenty more ahead from the agenda in glasgow. the ceos of unilever, deutsche bank, bank of america president
>> you know they cannot last forever. how long they last is hard to say. the longer they last, you have a risk inflation becomes entrenched and expectations go up. that is a big unknown and that is a risk factor. manus: singapore's top central banker speaking to bloomberg exclusively. still plenty more ahead. we are going to have the following conversations. the ceos from bp, bernard looney , a big advocate of this transition to new energy at bp.