tv Bloomberg Markets European Close Bloomberg November 9, 2021 3:00am-4:00am EST
inflation is transitory. it could be counterproductive to tighten policy now. later we will speak to the ecb supervisory board chair, andrea enria. let's look at the futures, one minute from when they open. the focus is on inflationary pressures. we look at the price of oil. i hear that wti and brent is on the way up. we have strategic concerns about the reserves in the u.s. that will depend on the medium-term outlook from the eia. we are seeing pressure on futures. i keep an eye on natural gas, this will have an impact on what consumers can afford or not in the winter months. iron ore a little subdued compared to the last couple of days. the cac, the ftse and ibex down
0.2%. the focus firmly on the fed. we understand there is a serious contender, and the president will make a decision by thanksgiving. other things we are watching, this is brent. some of these sovereign bonds and equities will stabilize. the euro -- and the the bank of england last week with andrew bailey on the promise of a hike. we continue to look at the u.k. together with brexit. laura: the fed's warning that risky asset prices keep rising, making them more susceptible to crashes if the economy takes a turn for the worse. the financial stability report says a change in investor sentiment was containing the
pandemic -- it listed stable coin and fragility in china's commercial real estate sector as two key threats. softbank plans to repurchase $9 billion of stock, a strategy for the founder. a $22 billion buyback last year helped more than triple the company's valuation from the pandemic low. softbank shares have slid more than 40% from the march peak. ab foods expects progress in operating profits for the full year. the owner has declared a special dividend as it reports a strong recovery in profit margins. the company will grow around 400-530 over the next five years. francine: thank you so much. now for a bloomberg scoop, an interview for the fed top job.
she visited the white house. brainerd is regarded as president biden's likely choice if he decides to replace jay powell. on the subject of interest rates, the fed's vice chair, richard clarida that, says to raise rates will be at the end of 2021. >> if the outlook for inflation is unemployment, if that turns out to be the outcome, i believe these conditions for raising the target range will have been met by year-end, 2022. what i anticipate is the depth of the global supply supply shocks are a fact of life for monetary policy. francine: joining us now is --
i have a million questions of what we should be looking at. how much more dovish would lael brainard be? >> this is a golden opportunity for the biden administration to reshape the fed board. clarida's term ends soon, and another ends in december, and now the fed chair. the question is whether the biden administration is going to shake the structure of the fed in the coming months. francine: could it be more dovish? when do we find out? >> that is according to biden. we will have to wait and see. of the people we will see, the fed is not an island, there are several members, and bullard talking yesterday has scheduled
next year and he is a voting member as well. different members will vote on this, but a chair who is more dovish will tip those two on the side closer to them. it is something to keep in mind, but inflation is a big problem, something to consider as we change these moving pieces. francine: we have the financial stability report. they talk about stable coins while bitcoin is at a record. >> i have so much to say about bitcoin, but when i think about reptile currencies, i think about momentum trade. the more we talk about it, the more it gets hyped. seasonality is in favor of cryptocurrency hear it if you look at this function on the terminal, you see that bitcoin does rise every november more so than any other month. keep in mind corrections insight
for any cryptocurrency. every time he comes up to new highs, it comes back down a little more. that is not to say something is definitely happening. francine: we are also watching out for the oil price, and what beijing is trying to do on the property crackdown. >> we are always talking about contagion when it comes to china. ever grand is a big story, and education tech. the thing to keep in mind, when it comes to evergrande is whether it will signify a slowdown in the country. that means less imports and less commodities. that is a big problem for the commodities space. that has rallied on those demands and assumptions we will have more demand. i'm not concerned because it seems china is teaching the property market a lesson. it is a costly lesson but so far
it seems the pboc has said we will not let this spillover. but it is happening, so let's see what they will come up with. francine: if we have oil at 100, does it hurt economic growth to where we could fall back into recession? >> back to the financial crisis of 2008, if you look at the price of oil, it was high. that led to what we saw there. a lot of people will tell you that is something to keep an eye out for because you cannot control it. this is something opec can control 100%. but the oil minister cannot yesterday and said no one voted for us to increase production. oil is definitely a point of concern but bullish for the
moment. that is weighing on the inflation debate. francine: we will see if the u.s. does anything with its strategic reserves. this is the picture for markets seven minutes into the trading session. we opened a little lower as we had pressure surrounding these expectations on inflation, what that would due to monetary policy. losses are not huge, pretty much flat. the cac taking the brunt of it. coming up, we talk about the european banking sector and look at the groups that are moving the most. we will speak to the ecb's andrea enria for what is going on in the banking system. this is bloomberg. ♪
make a decision by thanksgiving. let's go through the main stocks that are moving. what do we have? lizzy: bayer is up 2.6%, having raised its earning forecast this morning. it says sales rose. it is capitalizing on the past year searching agricultural commodity prices, and that has helped it weather supply chain costs. we are looking at associated british foods, up 5% at the open. it is paying a special dividend and says it plans to expand about a third because it recovered so strongly from lockdowns. it has no online business. finally, the french grocery chain down.
it announced a 3 billion investment planning e-commerce, and plans to triple the products it sells online by 2020 six. the ceo warned about risks of food inflation in 2022. francine: 3 billion, they must be behind on how much they sell online. ecb banking supervision kicks off today, the event brings together policymakers, academics, business executives to discuss current development in the banking sector. let's go to maria tadeo, live in frankfurt. maria: good morning. we are joined here by andrea enria, chairman, european central bank. you are doing a very good conference. before we get to that, many questions for you. when you look at the provision in europe as one of the key components, we head strong u.s.
earnings. in europe there were some beats, but not wow. is it harder to do business in europe than the united states? andrea: i do not think so. we should be glad for the six quarter in a row we had profits that beat expectations, which is good. the banks were thinking they would have achieved the pre-pandemic levels in 2023. they sometimes argue these regulations and supervision constrained their profits. i do not think this is the case. we are applying the same style as the u.s. is doing. if anything, the implementation in europe has been softer than in the u.s. we are exchanging loans with u.s. colleagues frequently, and came to the share conclusion that supervisory requirements are in the same boat as well.
the main driver of the profitability that european banks have is is structural weakness, linked to cost efficiency, to business models -- banks will focus on measures to address these issues rather than complain. maria: your message is clear, you are saying, do not blame us. you should get more lean. our european banks behind in digital investment? andrea: i think the pandemic has been an important point. it has been a long period that european banks are waiting for interest rates to increase, and are rebuilding their margins. they have started with the
business model, we have seen consolidation, more investment in digital. maybe with remote working they have been able to increase efficiency. they have reduced the branch, not all banks, but some are moving and this could trigger a good change in the european sector. maria: the market is pricing in in some type of way next week, the ecb is pushing hard saying the conditions are not there yet . the market believes something different for the time being. how does that factor into the banking conversation? x are salivating for this. they feel the environment is changing to our benefit. how do you see that from a regulatory perspective? andrea: the low interest rate environment, until the middle of
2020, the effect on low volumes has more than compensated for the negative affect. it is true in the last period the marginal effect has been prevailing so there is a negative effect on bank margins, but this is likely to persist for a while. the banks should focus on cost optimization, refocusing the business model, consider consolidation. to try to build sustainability in that business model rather than wait could help them out. maria: this year overall it has gone relatively scandal free. some argue it speaks highly of supervision, but i wonder when you look at the overall picture, are there any pockets where you
look at red flags or something that could potentially be a problem going forward, perhaps leverage loans? andrea: first of all, i would not say lack of scandals is the success of supervision. this is the responsibility of the bank, the management. the culture and the banks. there has been a long line of scandals in the last years, and the bankers need to take this seriously and change the culture from the top, to the governors, to the middle management. we have seen excessive legs, so there is some way to go. if you read the report on archegos, it shows sometimes
business and the competitive position -- this is a concern for me. in this moment there is some segments of the financial market at the high level, high concentration, opaque products. if there is a sudden change in interest rates, these could keep the banks, so it is important they focus on risk controls. maria: very much in the news -- this is something with the italian government to trying to find a buyer before the end of the year. is there anything out there you think this could be a trigger for something bigger that goes beyond one institution and more systemic? andrea: european banks have made a lot of progress in terms of
reducing risk. a lot a focus on risk reduction. we have a high legacy -- this has been reduced, even during the pandemic there have been --[indiscernible] the risk profile of the banks has improved. the stress test summer showed there is resilience in the system. can we be totally relaxed? no, we still need to see the exit from the support measures of government. this will create risk. we need to see how much there could be hiccups in financial markets. we need to still be alert and focus very much, but the
institution of the banking sector at the moment is not in a bad place. maria: thank you so much for your time, we have a lot to talk about in that conference you are hosting. christine lagarde will be speaking today. thank you for your time. andrea: thank you very much. francine: thank you so much, maria tadeo in frankfurt within an important interview with andrea enria. coming up, bitcoin jumps past $68,000 the first time. we talk cryptos next. this is bloomberg. ♪
open, 24 minutes into the trading day. a bit of pressure easing off with the stocks flat, but a little green, the dax getting 0.1%. bitcoin jumping past $68,000 for the first time, part of a wider recent rally in the cryptocurrency sector which sees $3 trillion in value. joining us is our bitcoin watcher, eddie van der walt. i love speaking bitcoin with you, you always have a different angle. what is sending bitcoin to a record? eddie: you can really feel it, it is palpable, the excitement is back in bitcoin. there was a sense in the middle of the year that it was tapering out, heading for another crash. that is no longer the case. it is always hard to put a pin
in what is driving bitcoin prices, but over the weekend when elon musk started tweeting about selling 10% of his stake in tesla, there was momentum got behind bitcoin because people thought he would put some of that money into bitcoin and cryptocurrencies. he likes doge more than anything else, but the bounce in the overall market capitalization of cryptocurrencies dwarfs anything musk could put in even if pretax gains from the sale into quicker currency. this is all a momentum trade. francine: at the same time we had the fed stability report saying cryptocurrencies and stable coins create greater volatility and possibly danger. is there anything new in that? eddie: i think we are getting to the point -- a year ago or so ago we said cryptocurrencies are really interesting, they run up
and crash, but they are not systemic. that is no longer the case. stable coins hold a lot of commercial paper to back their value. if this is a run on stable coins and they have to sell, that could have repercussions for the rest of the market. regular leaders in the u.s. have realized this and that is why they are putting pressure on it, but it is not stopping the excitement in the crypto space. francine: thank you, eddie van der walt. check out his live blog, it is fantastic. coming up, indonesia ventures closed to record-setting fund, we speak to the cofounder, jefrey joe, about that next. this is bloomberg. ♪
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open. 30 minutes into the european trading day. the race for fed chair intensifies with biden said to have interviewed lael brainard. jay powell is a serious contender for the top job. the fed financial stability report flags concerns about stable coins in chinese real estate. bitcoin hit a record high. christine lagarde says the central bank is confident that current higher inflation is transitory. it would be counterproductive to tighten policy now. on the report about lael brainard interviewed, treasuries rose following this report. some commentators see her as more dovish than jay powell. the picture today is a little mixed, but the dax gaining 0.1%. it is a reversal to the losses
we saw. futures pointing to a slower start by 0.3%. a bit directionless as we wait for central bank policy. a lot a focus is on oil, and the strategic reserves the u.s. could release. these are some of the sectors on the move. among the biggest gainers, auto part in europe, 0.7%. retail, median real estate are feeling the most pressure. energy after a bounce back yesterday. if you look at these groups, 17 of 20 of them are balanced. the ranges gaining 0.7%. no huge swings or big moves. jwc ventures -- the fund has attracted regional and global
investors including morgan stanley. joining us now is jefrey joe, general partner / co-founder, alpha jwc ventures. thank you for joining us. you found some things that are valuable, or the country as a whole has a long way, a lot of potential, and investors are onto it now? jefrey: we really believe this is an exciting time for us. a lot of positive developments we have seen in the past year. we see a lot more unicorns, and at is basically the market getting more mature. we see a lot of good companies are generating revenue, meaningful revenue.
a lot of things are happening, and we believe a lot more to come. francine: the fund invested in seven companies, in financial technology, and in neighboring countries. where you see the most value created? jefrey: earlier this year we produced a report about indonesia. we believe what is driving the economy -- we are seeing a lot of movement in second cities, and we are really excited. francine: where do you see the most opportunities going forward? is it regional investors coming into the fund or international ones as they try to diversify their portfolios, and looking for yields that are ever more
difficult to find? jefrey: we also share a bit about her performance, and we believe the performance we have shared is strengthening. we believe a lot of global investors are coming to this region. we believe indonesia can be very stable, and we are early in the evolution stage. we believe there is more to grow and a lot of exciting sectors. francine: when you look at indonesia's tech ecosystem, what more needs to happen to go to the next leg up? should the government put something in place or is it up to corporates and private businesses to make sure the ecosystem a strong and attracts the right talent? jefrey: we are in an exciting
time because there are four very important factors that need to happen before we see great growth. number one, stronger founders coming from abroad and the large technology companies. we are seeing positive elements here. two, the fundamentals of the company are getting stronger. i mentioned revenue generation getting stronger. these companies are healthier. number three, we have seen great excess. -- access. we have the largest ipo in indonesia. it is a successful ipo. this will increase investor confidence in this region. in this country we welcome more global investors.
global investors are starting to see the potential. francine: thank you so much, jefrey joe, general partner / co-founder, alpha jwc ventures. coming up, plenty more on the region in the tech space. these are some of the movers we are watching. ab foods is an important one, planning store expansion after the lockdown recovery. the parent company, abb, expects improved margins and profits. the other one we are looking at is bayer. lizzy burden was bringing us up-to-date what is happening, one of the gainers, 2.8%. investors seem to like what they are seeing early.
down 2.3%. now we are looking at the ones losing the most. this is probably because of the luxury exposure to china where they have a no covid tolerance, and the other thing we are watching for is montclair. we are seeing pressure on luxury stocks. laura: bloomberg has been told lael brainard was interviewed for the top job at the u.s. central bank when she visited the white house last week. it is a clear signal that jerome powell has a serious rival as president biden considers who will lead the fed for the next four years. powell's term expires in february. hong kong may not open up to global travel for at least six months. the territory must finish negotiating open borders with the mainland first. hong kong and china are the only places left in the world --
singapore is easing top covid measures. five people from the same residence are allowed to dine in a restaurant. the fed's morning risky asset prices keep rising, making them more susceptible to crash if the economy takes a turn for the worst. the financial stability reports is a change in investor sentiment will set back containment of the pandemic, and make asset prices vulnerable. it lists stable coins and chinese commercial real estate as key threats. women and minority led hedge funds have outperformed over the short and long-term, according to bloomberg. they had a median one your total return of nearly 30%, and those with women returned over 20%. funds without those had a gain of less than 30% in that period.
>> it is double-edged. on one side we have to ensure emissions are going down, which means increasing prices on energy at the moment on fossil fuels. to a certain extent, states are driving those costs. on the other hand, we have to ensure people can afford heating in winter. when i look at the european development of energy prices, in some countries like spain or france where there is a highly regulated energy market, the price rising.
what we have done is implement a price scheme, an inflation break, meaning if energy prices are rising over a certain percentage, we want to implement the full increase for the next year. also, if energy prices are falling, we will increase pricing to make sure there is an inflation break on prices. francine: that was the austrian finance minister speaking to my colleague, alix steel. the markets are focused on inflation and oil. we started the day on the downside but we are seeing a little climb through equities. treasuries slipping. speculation about the leadership of the federal reserve. the global equity rally seems to
be pausing, but positive territory for the ftse. the cac quarante is now pretty much flat. the dollar is following, the yen strengthening. bitcoin jumping past $68,000 for the first time, part of a broader rising crypto tokens. the overall market value is passed $3 trillion. laura: the fed is morning risky asset prices keep rising, making them more susceptible to crashes if the economy takes a turn for the worse. the financial stability ports is a change in an investor sentiment were to make asset prices vulnerable. it listed stable coins and the fragility in china's commercial real estate sector as key threats. softbank shares soared, a familiar strategy for the founder, a $22 billion buyback
program last year helped more than triple the company's valuation. softbank shares have slid more than 40% from their march peak. ab foods expect significant progress in operating profits for the full year. they are reporting a stronger recovery and profit margins. they will grow from 400 to 530 in the next year. francine: i try not to buy much fashion. it depends on what the end of the month looks like and how much salary is left over. europe once again is a hotspot for the coronavirus, calling into question the recovery from the pandemic. for more on this, we are joined
by sam fazeli. quite a bit of news yesterday, we were talking about mandatory things like nhs workers in the u.k. will we see more legal challenges it country say you have to get vaccinated? sam: i think the legal challenges are tougher in the european union than the u.s. everybody will have a go. however, you need to find a way to keep a lid on this. i'm doing some analysis to see what correlates with higher case counts across different countries. it has a multivariate impact, not just about vaccination. vaccination keeps you out of hospital and reduces the risk of death. that is the critical point. francine: i know there is a lot of talk about the u.s. legal challenges, people not wanting to get vaccinated.
11,000 boeing employees have asked not to be vaccinated. will we see this scale elsewhere in the world? >> i think you will get pushback everywhere because people feel this is an invasion of their privacy or their rights. on the other hand, i cannot see how you can keep the health care system functioning without this preventative measure. it is possible people will say now that we have a pale, i do not need to do that. but we do not know how that pans out in terms of high efficacy numbers in the general population, because you have to get people in the first five days, and they have to test positive. francine: where are we in the u.k. and the u.s. in terms of level of infections, and booster shots? booster shots cut down the possibility someone ends up in the hospital.
sam: yes, and it cuts down getting an infection. the u.k. is doing really well with boosters relatively speaking. people in the u.k. do not think they are doing well, but compared to other countries they are. the united states is doing really well, and that is where the case counts are coming down. the u.s. has come down, but now stalled. francine: anything else you are watching out for? i do not know when we will see vaccinations for kids in the u.k. sam: there are a couple of things i'm keeping an eye on, i'm looking forward to sanofi giving us data for their antigen based vaccine. that will add a lot of volume next year, and that should come in the next couple of months.
i'm looking forward to data for these pills to be published so we can compare them. i'm not convinced the pfizer drug is that much better than merck. lastly, i hope going back to school in the u.k. does not pick up a rating cases. francine: coming up, we are in glasgow with all of the details, next. this is bloomberg. ♪
>> we are nowhere near where we need to be at. for starters, despite the progress that paris represented, most countries have failed to meet the action plans they set six years ago. francine: that was former president barack obama imploring nations to work together to fight climate change. we are joined by our bloomberg green reporter. you have been doing fantastic work. yesterday was climate adoption day at cop. last week it was finance day, then energy day. these the medic days are
supposed to bring awareness. is it working? >> yes, you were here last week and there were huge announcements from governments on things like ending deforestation or ending coal use. in the second week, adaptation day, a little money from germany and the u.k., that was an allocation of preannounced money. what we are seeing is a change of pace, and we are focusing on the negotiations. there are questions and how countries will agree. francine: the energy ministers arriving today, what can we expect from their meetings? will we see a pushback on keeping 1.5 degrees celsius alive? >> when the energy ministers arrive is when it gets political. we will see the positions of different governments start to clarify. last week we had the officials
to come here, so this will be questions about whether they can agree to have some adaptation fund from global carbon markets, whether they can on 1.5, the question is how will they keep that promise alive. it is all very well to see it. we have seen it and g20 commit a case where they recommit to 1.5 degrees, but what will they actually do? will countries have to come back every year for new climate pledges? some country say that is too onerous. they cannot be expected to come back every year. francine: what else are you watching for the rest of the week? >> tomorrow we are expecting something from denmark and costa rica on ending fossil fuel
production. it is a big pledge they are trying to get other countries to sign up to. i'm interested if the u.k. will sign onto that, because they are making a play at being proactive on climate change. if it does not sign-up, that will be a big question. and i'm interested if the cop talks will end on friday. they say this year it will finish. it might be a bad sign if it finishes on time, because it will show countries do not have much to deliver. we are looking at how long we will be staying up in glasgow the rest of the week. francine: what are we expecting at the end of it? will there be a signed declaration? jess: what i am hearing is it will not be an accord, or a protocol, it might be something like the doha gateway. u.k. officials are try to work
out what we call the agreement. i asked if it would be legally binding. they said it will have legal standing but not be legally binding. the concern is from poor and vulnerable countries that this might be a weak agreement where countries promise to do stuff but it never gets followed up on. i think that is being thrashed out at the moment. francine: thank you so much, our bloomberg rain reporter. this is the picture for the markets, a bit of a reversal and support across the board on equities. coming up, plenty more on "bloomberg surveillance: early edition." we will look at bitcoin and lael brainard and the fed. this is bloomberg. ♪
not anticipate is the depth and breath of the global supply shock. they are a fact of life or monetary policy. >> we are nowhere near where we need to be yet. despite the progress that paris represented, most countries have failed to meet the action plans they set six years ago. >> the future of the fintech industry and it will be the future of money. >> this is bloomberg surveillance: