tv Bloomberg Markets European Open Bloomberg November 18, 2021 3:00am-4:00am EST
investors debate central banks' next moves. and more top interviews from the nef in singapore. more from our conversation with hsbc's ceo noel quinn and microsoft founder bill gates. let's check in on the futures. european markets managed to post gains. the ftse ended in the red. futures in the u.s. currently posting currently up to two point 6%. the ftse 100 is lower. don't forget a sick resources will be in focus giving -- given iron ore is down between 2% and 3% again. it also has to do with car registrations, falling since october by almost 30%. you also have to bear in mind that citi joined the likes of
bears that markets will be going higher. france and the cac is flat. i want to bring your attention to the technology story in asia. we planned a preview of alibaba, but chinese tech stocks are being hit with the likes of baidu and billy billy weighing. you did have a bit of upside for japanese equities on the back of some stimulus news. brent is in focus again on the back of reports that maybe the u.s. and china are continuing discussions about releases of reserves. euro-dollar stronger by .1% on the back of a softer dollar, and sterling is also gained .2%. let's have a look at how things are breaking down on a sector by sector basis. yields have come up a bit, but financials are slightly lower. industrials mixed but slightly
to the upside. in terms of health care, that is low. we will get some views on that in a moment. that's a picture of the sector breakdown. we will get to the movers later. cisco under pressure after hours. strong demand with the components, but lack of components means it is missing out on getting product to consumers. equity markets opening mixed. we do have individual stocks to watch now. talking about the fact the cfo who has been ousted as the investigation into the diesel fixing scam around vw continues. major supplier, of course, for the car company. metro bank unchanged, surprising given talks with carlisle falling through.
european equity markets, we just run through that. we saw losses in asia. we talked about why. the u.s. as well. investors grappled with banks possibly raising rates. speakers at the new economy forum have weighed in of course on the inflation debate. take a listen. >> this is in china and i don't see that changing, but there are ways, as i said, they give us an opportunity to work together. >> this pressure for directives for us to do things differently. certainly there is a possibility. we think about this with a 10, 20, 30-year perspective, not with a next couple of year perspective. >> i think they need to both take a little more time to better understand each other. there is a disconnect right now.
i think biden is trying to engage more, but there is still some disconnect. >> we all acknowledge there are differences, but differences get resolved through dialogue, and it's great that china and the u.s. are talking. i don't think the world can decouple from one of the biggest manufacturing nations of the world. i really hope it does not decouple. tom: joining me not to discuss the markets and all the action is bloomberg's top economic editor in asia. what is standing out for you? mark: i think from the new economy forum, it is the idea that we are very focused on the u.s.-china relationship, and the
mood music is generally a little bit positive. nothing concrete, but the idea that it is moving better than it was a year ago, but people are very nervous and focused on this, and of course, inflation is very much front and center in everyone's mind. i thought some of the topics around food inflation in particular were really relevant. that will be the big crisis to come next year, and food inflation plays into every single factor we talk about in markets at the moment. it is climate. is it the energy crisis which makes it expensive. it is the supply chain issue, delivering food around the world, and it is a problem that led to labor shortages, and food insecurity is a big concern and that really came through. tom: what is your take of this move by citi to price in a more aggressive response to rate hike cycles from the fed? mark: i have a lot of sympathy
for the idea. to me, it is basically a bit of a binary outcome next year. either we will get beyond the inflation scare early in the year and be back to rates never moving higher, in which case you've got a small bit of downside, or there's the chance the fed is really behind the curve. the fed needs to hike super aggressively and talk about two or three hikes next year are irrelevant. they might have to be doing 6, 7 hikes. they might have to be raising 200 basis points, so i think there is a risk/reward on that trade, but my one qualifier is i'm not sure this is the time to do it. i think there's a chance the next couple of weeks could see inflation pressure. it may be more of a trade for the first quarter next year when rates come down a little bit. tom: iron ore is down almost 60%
since may, oil, of course, under pressure. what do you make of the moves in the commodities market at this point? >> for iron ore, i always listen to our colleague who is a bit of a soothsayer when it comes to the iron ore markets, and he is continuously bearish. he says there is endless supply and lack of demand, but i think in industrial metals, we do have the intense backwardation across the market, but the median story is still very strong. the greening economy, the drive for climate issues, a big tell with copper that is going to last for years. many industrial processes, so i think generally the medium-term picture is good. for sure -- very short-term, i have no clue in the next few days. tom: bloomberg markets anchor in singapore across all the major topics being discussed. germany's and 26 bank will exit the u.s. market and close
500,000 accounts. this was a bank recently valued at about 9 billion u.s. dollars. discontinuing their u.s. operations. if we get more, we will bring that to your attention. by the way, metro bank, one of our stocks to watch, falling 20% after talks with carlisle came to an end. coming up, we have been speaking to noel quinn at the new economy forum in singapore. we will get his views on inflation, and of course china. this is bloomberg. ♪
tom: welcome back to the open. we are 11 minutes into the european trading day. futures in the u.s. pointing .2% up. the trend of the global economy has been a key theme on the second day of the bloomberg new economy forum. earlier, we spoke exclusively with hsbc's ceo and got his views into u.s.-china relations and of course the inflation space. >> the world's economy is
recovering. it is recovering well. there are tensions in the supply chain. we should not be too surprised by that. we went into past reserves. we are now going to fast-forward. there will be friction in the supply chain for a period of time. we take it as a positive that the economy is recovering. i am concerned about inflation because i think at the same time the supply chain is recovering, there are some new issues. supply chains are repositioning, partly because of geopolitics, and oil prices are going to remain high for quite a while because of constraints -- constrained supply, and the investment cost of sustainable infrastructure is going to have a premium in the near term. >> do you worry about shocks? >> i think controlling inflation
is going to be a fine art as opposed to a science, and i think we are going to have to make careful judgment calls in the central banks over the next weeks and months as to how they keep the balance between economic recovery and making sure inflation does not get out of control, and i think they will do that through pulling back on qe and progressive, gradual increase in interest rates, and i think countries will move at different times on that, and that is ok, but it's got to be about balance. francine: we just heard from the former treasury secretary hank paulson saying it is all most impossible for the u.s. and china to decouple. >> the chinese economy has been big as a manufacturer of the world for many decades. it is also huge as a consumption market for the future. i don't think the word can decouple from one of the biggest manufacturing nations of the world and what will be one of the biggest consumption markets in the world.
i really hope it does not decouple. the differences in views on technology, differences in views on politics -- yes, but i think it is important there is a level of conductivity between the world and asia and between the u.s. and china. francine: do you see any bumps along the road? do you see any trajectory upwards in terms of how you build? >> we already started a very strong platform in hong kong. we are one of the biggest wealth managers in hong kong. we have 1.6 trillion of wealth assets under management in hong kong. for me, it is about a continuous investment program. i guided the market that we were going to spend $6 billion over the next three to five years. $3.5 billion is building on our wealth business within asia, and we are going to do that.
across all of asia. i think there's wealth opportunities in hong kong still. china, definitely. singapore, absolutely and also india. that will be a combination of organic investment, recruiting people, and as you have seen in singapore, we are in the process of buying a business, and we bring that together with our insurance business, and we have a much more powerful wealth proposition in singapore, and i'm looking at three or four opportunities like that over the next few months across asia. francine: have you spoken to hong kong authorities so you do not have to quarantine when you come back? >> i'm not planning a trip at the moment. i think it is important for hong kong to establish what they need to establish with china reopening the hong kong-china border. i don't want to do anything that may jeopardize that. i would love to get back to hong kong as soon as i can and
whatever authorities need me to do when i get back i will do. tom: that was hsbc's group ceo noel quinn speaking exclusively with francine lacqua. recapping one of the big stock movers of the day, down 20%, metro bank on the back of the news that the discussions it was having with carlisle, that they have and terminated. worth pointing out as well that the banks have fallen to their lowest price since november 3. the end of the talks for metro bank. jp morgan said the restructuring, recapitalization of the plan would be significant. we will see what happens with this bank. pressure on those shares, very significant selloff. let's get to the inflation conversation in more detail. joining us on set i'm very
pleased to say is the ceo at captain asset management. do you think markets are underestimating the pace, the aggressiveness with which the fed will be compelled to raise rates once taper comes to an end the middle of next year? >> a first rate is expected in july and then another rate hike in december. that has actually already increased the sentiment around rate hikes. it is hard to see rate hikes aggressively taking place sooner than is priced in with where gdp is. the issue you've got is the back window around supply constraints, what issues will be for tapering, if inflation will actually moderate. there's just too many moving parts. tom: we heard from goldman sachs' ceo that greed is now
outpacing fear in the markets. is that your interpretation? >> i would not say it was agreed, but i would say momentum is at an all-time high. you just have to look at what has been going on over the last 2, 3, 4, 6 weeks. momentum is really, really high, but we have had a really strong earnings season. we have earnings growth at -- what? 17%? sorry, revenue growth of 17%. earnings growth of 39%. tom: what about the sustainability of that earnings growth? does that support the market along with negative real yields? are those the supporting factors we are looking for that keep this market afloat? >> it is hard to see the earnings momentum maintained in the current environment. if you look at what calendar year 2021 is expecting, we are talking about revenue growth of
around 15%. we are thinking earnings growth of around 43%. that is just not likely. certain sectors are going to do well in this environment. obviously, the energy sector. we'll being one of them. broad-based energy. financials should do well once the rate hike cycle actually starts. the rest of the market is struggling, particularly the tech sector, particularly with valuation risks as high as it is. tom: we are seeing some of these changes in countries like belgium around covid, record changes in germany, icu units in some parts of the u.s. at maximum capacity. do you think invested -- investors are underestimating the covid risk? >> it is definitely a risk in terms of delta, delta plus, but the market is used to managing what covid has done.
just look at unemployment rates. they are back up, doing much, much better. look at gdp growth figures. they have actually improved in a quite meaningful way. the issue around stagflation is no longer meaningfully on the table. markets are looking a lot better. we are learning how to navigate through a very difficult market place at the moment. tom: some of the development around treatment in the health care space are positive as well. you are going to stay with us. we will get some of your calls on china and bitcoin as well. coming up, u.s. retailers pledge not to pass price increases on to consumers. we've got that story. this is bloomberg. ♪
tom: welcome back to the open. we are 23 minutes into the european trading day. very marginal gains. u.s. futures up .2%. basic resources, energy prices both under pressure. travel and leisure at the top. despite strong earnings from walmart and target, investors are selling shares after u.s. retailers pledged not to pass price increases on to consumers. it reflects investor unease over
supply chain bottlenecks, rising fuel costs, and the highest inflation in three decades. if the walmarts and targets of the world pass prices on, if they were to do that to consumers, they are concerned consumers might bolt, so they are eating up the costs, but markets are punishing them for it. does this lead to further divergence within the market, those were prices can be absorbed or can be passed on, i should say, and you saw that around some of the big conglomerates, and in the retailers -- how does this play into your view of the markets? >> we would love to invest in companies that can soak up the cost and not pass it on to consumers. if you look at how companies should perform from an earnings perspective, it is revenues minus costs, and we are more concerned on the revenue number.
we want to see any revenue number that is consistent going into next year, and earnings numbers can be manipulated in the short term as you and i both know and the market knows as well, so it is an interesting dynamic. there is obviously an increase in consumer demand. there's an increase in inventory demand, but you see supply-side constraints. they can avoid passing that on to the consumer while maintaining a revenue number and that is what the market wants to see. tom: that is the focus for you then. you have increased exposure to areas affected by health care. unpack that for us. >> yeah, sure. we are looking at a market that is very overvalued on a p/t basis. from our perspective, we want to be more inventive in this market. bearing in mind growth risks and valuation risks, and from that perspective, we like to focus on
health care, focus on infrastructure as a play against inflation, and we are also looking at impact investing. we are also looking at the fixed income markets with a focus on china and chinese sovereign debt as well. tom: you are still overweight china? >> we are still overweight china. the interesting figure for the longer-term, it only has 40% holding versus the u.s. 55 percent. there is huge margin for investment into china over the medium and long-term. remember, this is a $15 trillion economy. japan is only five, europe is only four, and remember, we are long-term investors. we are not traders. we are not speculators. tom: we appreciate your insight. thank you for coming on set with us. by the way, another leg lower for bitcoin.
tom: welcome back to the open. we are 30 minutes into the european trading day. europe grapples with its worsening winter covid outbreak. germany pushes for more people to get vaccinated as belgium reimpose his work from home mandates. wall street punishes retailers that don't pass price increases on to consumers as investors debate central bank's next move. amazon [indiscernible] after its u.k. card ban, it is
shifting its -- considering shifting its popular credit card to mastercard in the u.s. we are seeing gains in the european markets of 0.1%. building on the gains of almost 0.2% we saw yesterday. in looking past the modest selloff in the u.s. and asia. asia dragged down by chinese tech stocks. the nikkei bumped on the back of stimulus plans, then it ended slightly lower. the european stoxx 600, gaining 0.1%. germany, gains of 0.2%. the ftse is lower. iron ore prices are lower. wti and brent both below $80 a barrel. let's of a look at sector by sector. financials and focus. metro bank ending the talks with carlyle group.
financials will be feeling it as well. at the bottom of the list, energy down. travel and leisure followed by autos at the top of the list. interesting that the auto numbers falling almost 30%. that is the sector look 30 minutes into the trading day here in europe. let's get the bloomberg first word news with laura wright. >> many european governments are adding new restrictions on the unvaccinated as they battle a new wave of covid infections. germany reported 50,000 cases in a single day and it is limiting workplace access to people who are vaccinated, recovered, or provide a negative test. belgium is reinstating work from home despite opposition from some businesses. the ecb vice president says inflation should slow next year, but not as quickly as expected a few months ago. easing price pressures would prove it is transitory.
he does not expect the ecb to raise rates for at least a year. >> we will see what happens over the next months, the evolution of the economy, the evolution of inflation, but my personal view is that it is going to be quite [indiscernible] laura: boris johnson is said to have held a private gathering of lawmakers that he has driven the car into the ditch. shortly after the meeting, the house of commons [indiscernible] opposition parties abstain from the vote, calling for tougher reforms. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. tom: has covid cases surge across europe, some countries
are introducing targeted measures against the unvaccinated. austria has taken the hardest line, putting its unvaccinated oculus and under a 10 day nationwide lockdown -- population under a 10 day nationwide lockdown. sam, give us a read of what is happening across europe. there is a divergence between the northern part of the continent and the southern part. why is the breakdown happening? sam: absolutely. when you look at countries such as portugal and spain and perhaps italy even, although every country is seeing a rising number of cases as the winter sets in, you are seeing a much lower level of rise in those southern countries, which to a degree has to do with the impact of the winter that we have seen that drives people indoors and makes them more vulnerable to be spreading the virus.
aside from that, you have a major difference in vaccination rate. we do know that vaccinated people can still get infected and pass it on, so that is a milder benefit, but i think the temperature element and possibly the population level and the density of population, all of those are playing into driving the difference between the colder northern states and the slightly warmer southern states. tom: in terms of measures being put in place by governments around the euro zone to tackle this, we talked about austria and the lockdown for the unvaccinated. what other measures are being put in place? sam: some of the things i've been hearing is to limit the mobility of the unvaccinated. i think the way they are going about it is probably not the most effective way, perhaps, because it really creates a situation. if you were going to do
something to incentivize people to get vaccinated, which is what they need to do in austria given the rate of vaccination there, perhaps having gone down the route of what france did, which basically put in rules saying if you want to partake in society broadly, dine and restaurants, and closed areas where the public are gathering, you need to show proof of vaccination. that perhaps would have been a better way of doing it, but i don't run these countries. austria has taken the way. there is a slight rise in the number of vaccinations. if it works, perhaps it is a price worth paying. tom: and those measures, the very controversial in france, did prove effective in boosting the vaccination rates. in terms of the boosters, do we have clarity as to how effective these boosters are and will prove to be? sam: whoever is a big fan of champagne should get ready to pop it because it is showing an immense effect, a significant
effect in the number of cases. i think what we really want is the day that i would celebrate his if i see that continue well into the fifth and sixth and seventh month. can we end up in a situation where we just need an annual booster to try to keep the infections under control? that would be the day that i would really crack open the champagne. tom: so, ready the champagne. duration in terms of the boosters. that will be in focus. sam, thank you for those insights. ok, it is the second day of the new economy forum in singapore. covid-19 remains a topic of concern as flareups around the world continue to impact lives and hamper economies. bill gates told us covid may get
to flulike levels by mid-2022. bill: well, the vaccines are a very good move and the supply constraints will be largely solved as we get out into the middle of next year and so we will be limited by the logistics and the demand. in a lot of countries, it is not clear with the demand level will be. ironically, in a country like many in sub-saharan africa where the epidemic has not been as visible, your demand for the vaccine is challenging to generate that, but we will do the best we can on that. the other thing that is pretty impressive is that merck and pfizer have oral antivirals that the merck drug we have been able
to reformulate to get it to be less than eight dollars and so we will be able to have anyone who is -- who's a drum medical condition makes them have significant risk immediately begin presumptive treatment as soon as they test positive. so, between natural immunity, vaccine immunity, and these oral treatments that can scale up in a way that the antibodies never did, the death rate and the disease rates ought to be coming down pretty dramatically and by next summer getting to be quite a bit lower than the average seasonal flu level is, assuming there are no surprise variants, which the evidence is that is not that likely. but it cannot be ruled out. >> what do you think victory looks like?
is it effectively taking covid back -- you also mentioned the flu -- is it making covid it kind of flulike disease? i know it is, but is that the kind of version of what victory is in your brain? bill: things are fairly binary. [indiscernible] flu is accepted. the average years of life lost for flu and covid is about eight years. because it is so prevalent in the elder versus the young. we accept about a 60,000 average per year rate. i have to think as part of the tools of innovation to avoid the next pandemic, we ought to go and eradicate flu as well because it's mutations are another significant source of
future pandemic risk, but yes, the idea that economic activity will resume in full once you get to flu levels is very likely. we will have some hotspots where you will still have to have nonpharmaceutical interventions or huge incentives for people to get protected. tom: the worst october in recent records. we will get into what is putting the brakes on the continent's auto industry next. this is bloomberg. ♪
tom: welcome back to the open. we are 44 minutes into the european trading day. european stocks seeing gains of about 0.1%. futures in the u.s. are looking up 0.2%. top sector in europe is autos. looking at energy, followed by basic resources. let's check in on some of the individual movers. we have been talking about metro bank, the fact that they have
broken off talks with carlyle group. that stock-taking a hammering off the back of that news. those have officially come to an end. jp morgan talked about the need for restructuring and recapitalization of this bank. continental, the cfo ousted amid continuing investigations. continental, a major supplier to vw. royal mail, very different picture. they have reported earnings of almost 5.8% -- they will be handing investors $540 million in terms of shares and that is part of what is happening in terms of the earnings out of royal mail. that is the stripe. they have done better in terms of deliveries, so they will be returning 400 million pounds to shareholders, so they are
looking positive in terms of online sales and that is pushing share prices. let's switch focus to the auto sector. another speedbump for car sales. the sector is doing pretty well today, dropping to the worst for october in recent records, that is car registrations across the eurozone. the protracted ship shortage -- chip shortages finally easing. joining us now is elizabeth, who runs our european autos coverage. what is the state of affairs around chip shortages within the auto sector? elizabeth: after this quarter, which was pretty much the worst we have seen, there are now finally signs that things are slowly getting back on track. that said, carmakers still expect the remaining few weeks to be fairly tough and the chip prices to stretch well into the future.
possible chipmakers like qualcomm saying that they see the situation is improving [indiscernible] getting back on track. tom: is there a risk that the automakers could be blaming or are blaming the supply crunch or semi conductors for what could be softening demand or is this a genuine impact? is this a primary driver of concerns? elisabeth: it is the primary driver of the concerns. if you look at where deliveries have been hitting, sales during the third quarter and also this month done by a third, volkswagen down by 42% in october, but across the carmakers they have really been able to offset this by focusing on making the most lucrative cars. so, while sales are down,
earnings, profits have really held up very well. tom: ok, and the transition of course is well underway in terms of that shift toward ev's. how are ev sales holding up amid the chip crisis? what does that tell us about forward-looking demand? elisabeth: ev sales have taken off this year. in europe, they make up more than a fifth of sales now, that is plug-in hybrid as well as better really electric -- battery electric cars. [indiscernible] even there, we have seen some of the exponential growth in ev demand that has been flattening, because as the chip crisis grew ever worth -- worse, there were some impacts as well. tom: yes, certainly not immune
from the supply chain constraints. bloomberg's european auto editor, thank you for the latest. let's get a bloomberg business flash with laura wright. laura: india's largest digital payment provider has lost more than a quarter of its market value in its first day of trading, heading for one of the worst ever debuts by a major tech company. the 26% plunge surprised even some skeptics, who had questioned the company valuation. it was india's biggest ever ipo. amazon is said to be considering shifting its popular cobra and credit card to mastercard amid simmering tensions with visa. amazon is unhappy that despite technical advances, some company's payment fees continue to stay high. cisco has given a lackluster revenue forecast, blaming supply
chain issues for component shortages. the world's biggest maker of computer networking equipment says it in -- expect sales to increase half a percentage point below forecast. it is trying to reduce its reliance on hardware sales and boost offerings of software and internet services. nvidia has given an upbeat forecast fueled by its expansion into data center chips and other markets. the chip giant expects revenue to hit more than half a billion above estimate. they have averaged high revenue growth over thet quarters, pushing market cap way beyond. that is the bloomberg business flash. tom: thank you very much indeed. coming up, goldman sachs boosts its bet on london. it targets the world's superrich. this is bloomberg. ♪
tom: welcome back to the open. 53 minutes into the european trading day. clinging onto gains. the ftse 100 is lower. basic resources and energy are the drag. the dax and the cac 40 are higher. futures in the u.s. pointing to gains. the second day of the bloomberg new economy forum is underway. we will bring you some of the
top conversations from the day. there have already been fascinating insights. the outlook for some of these corporate's. the european business summit also today. the focus will be on increasing digitization and the shift toward sustainability. at 11:00 a.m. u.k. time, a rate decision from turkey's bank. that comes in the wake of the country's slumping currency. we heard from erdogan yesterday talking about the need for lower rates. finally, the imf statistical forum is happening in washington, d.c., for all of you stats geeks. the theme is measuring the economic and financial dimensions of climate change. ok, we are talking about -- we are going to be talking about goldman sachs, the fact that they are building out their footprint here. there have been some interesting corporate stories to bring to your attention. we have been flagging these.
let's get you across what is happening across the stoxx 600. flat, building on those gains year to date. you are just seeing this gradual glide higher for european stocks over the last month. what is going to derail that? in terms of the asian session, chinese tech took a really big hit on the back of disappointing earnings from baidu and billy deli. it was a softness around advertising the dragged on those shares. in terms of the brent price, just clinging onto $80. it was previously below $80. 0.3% is where things are standing. maybe the u.s. is going to put in place these reserves, possibly alongside china. now dipping below $80 a barrel. euro-dollar, gains of 0.1%. pressure on the single currency. metro bank, lower by almost 20%, ending talks with carlyle group,
the private equity firm. those talks, we have heard about those, those are now ended and metro bank is selling off. royal mail adding cash back to its investors, 400 million pounds. they are optimistic in terms of deliveries as we head toward the holiday season. let's check in on how things are playing out sector by sector. factor in the lower oil prices, but also iron ore down between 2% and 3%. the continuing concerns about the demand in china as it wrestles with the real estate sector and the expectations for there to be lower demand for iron ore. implications for the u.k., the ftse 100, but also implications for major suppliers like australia. we can take a look at grr. travel and leisure are at the top of the list. autos, as well, despite registrations in europe falling by 30% for the month of october. bottom of the list, energy.
>> people feel the pinch of inflation increases when they go to the store, when they go shopping. >> some of the capabilities that have been built over the last several years, that is something we have been doing is a retailer for quite a while now. >> the idea that economic activity will resume in fall once you get to flu levels is very likely. >> this is bloomberg surveillance: early edition with francine lacqua. >>