tv Bloomberg Daybreak Europe Bloomberg May 12, 2022 1:00am-2:00am EDT
companies can pay for gas in rubles, without breaking the root. breaking news coming through from allianz. they are saying that they have taken some huge litigation from a past number of days. they are on track to meet their full profit. a comfortable beat for them. we are seeing the top line for them. we also had some comments from them. tom: the industrial giant seems to be winding down. it is confirming the full year
significant for this. that is the state of play on both of those. it should be said that on those numbers, they took an additional hit unstructured alpha. 5.6 billion euros on the hedge fund. tom: throughout the morning, we will be speaking in hearing from the ceo and cfo. commerce bank, the deputy chair as well. a lot to discuss to break down these earnings. what is happening across the markets? manus: we are in a death spiral in crypto. stable coins have become unhinged.
this is looking at european equity markets at the moment. you get take that down because it is the cryptocurrencies that we are more focused on. you can see in the terra. bitcoin came off the hinges yesterday. deep against the dollar. that terrifying drop from a dollar to $.60. we have this implosion. peak inflation is not behind is all. -- at all. i mixed drops again. euro has rallied -- i'm sorry, yen has rallied. euro has dropped. this is a real canary in the risk: mine.
-- risk coal mine. tom: at some point the yen will find favor again. speaking of which, inflation in the cpi print out of the u.s. yesterday. let's check in on the futures. we did see a selloff. of course, above the estimates. that was crucial. we had a repricing across bond and equity markets. nasdaq down. feature stateside pointing to some modest gain. futures here in europe pointing to losses. the flattening we saw across the bond markets yesterday was pronounced. we knew that june and july were priced in but now markets are
pricing in 50 basis points or september as well. manus: let's get to everybody. the to get to cindy to talk about the crypto implosion. everything is up in hong kong. tom: maria tadeo joins us for the latest. juliette saly is in singapore with the latest and asian markets. they are failing to live up to their name in terra. it triggered a flight from many popular digital tokens. let's bring in andrea flock --
andreea papuc. andreea: the market remains -- it is stable to for stability but is not stable as it broke that in the u.s. dollar. once that was broken, it is done. it has undermined confidence in this. this is at a time when assets are being battered by concern about inflation and higher interest rates. this is a volatile class. manus: dialing up a death
spiral. coalitions will be mind. april court rose faster than expected. that is keeping pressure on the fed to be aggressive. let's get to our chief asia correspondent on the case of the data. what this is tell us about what they need to do, the direction of travel? enda: plenty to do. very broad-based gains. they are 18%. shelter and cost of new vehicles is also up. prices really hit consumers pockets. there are signs that inflation may be peaking.
we will be a long way before gets back to 2%. these numbers will add fuel even if 75 is off the table. there will be plenty more in the meetings after that as we head to the end of the year. tom: they are certainly marking that. thank you, enda curran for walking us through that. meanwhile, it is not clear if -- paid for gas in rubles. sanctions will start for the war against ukraine. >> there's no official pronouncement of what it means to breach sanctions. nobody has ever said anything about whether the ruble payments reached -- breached sanctions or
not. it is such a gray zone here. tom: foam or we are joined by maria tadeo. -- for more we are joined by maria tadeo. this has been discussed and laid out for us, the difficulties in interpreting these rules. it is interesting given the debate that is going on. maria: they are. they are explosive in some ways. a very gray area, a lot of ambiguity here. 's the conversion, no one has said whether that will be a breach of sanctions or not. you and on to say that that same speech, the largest german importer of gas is already the fact over paid in rubles.
-- already defacto paid in rubles. he is pushing them to be clearer. many other countries have told the european commission repeatedly that they need to put out a formal assessment with more detail in terms of this conversion of europe -- of euros to rubles. it is not enough for lawyers and companies to work with. i think they are moving away from consensus or lobbying for it to come out. manus: certainly a huge change in terms of the narrative with what could happen. this is the very essence of the european debate. thank you very much. maria tadeo there.
china's fourth largest -- failed to make a payment. juliette saly is with us. this is putting new added pressure on them. juliette: it is. there is a line coming through from the times saying that china is to seek investors, it remains to be seen if they will try to make future payments. the fact that they miss this deadline has put a lot of pressure. this is an index above the u.s.-china developer bond. we have seen a drop. all of this is adding to the uncertainty of the property market. there is not a lot for them to issue.
that is going through with what we are seeing with higher interest rate. with the hong kong dollar, they are trying to defend it. we're seeing some weakness coming through, we can look at the board, some of these moves of the asian markets. some more transmission coming through that sent the csi 300 under some usher just as we started to see some positive momentum coming through. you mentioned hot inflation larry coming through -- hot inflation coming through. tom: thank you. coming up, it is risk off after the red hot inflation. we dive into the markets next
>> these numbers are too high. >> a significant typo. >> high inflation for a while. >> the market is overpricing with the fed will do. >> we are expecting 50 basis points. some people think it could be as high as 75. >> maybe put 75 back on the table. >> white rule anything out -- why rule anything out? >> that is a lot of tightening.
>> that is what is required. manus: a flow of reaction to the unexpected inflation print. prices stay elevated, spiking is slight in wall street markets. let's bring in our guest for the next couple of minutes, saed abukarsh, chief portfolio manager at ark capital. that discussion of peak inflation, is that fantasy? saed: we do not know. when jay powell came out and talked at his last conference, inflation is a priority.
it is not markets or employment, inflation is the core driver for the fed. from my point of view, does the fed know the impact of china, russia? this is still unknown. in respect to the fed, they need to be reactive to what they have coming in. tom: is it about investors adjusting to the reality that inflation may plateau at a higher level than expected? saed: we are basically between two worlds. the fed had told us in 2021 that it look like inflation would run hot. the problem at this point, do we buy into 3% or do we look at a higher auto -- higher plateau? what i am seeing is that we are normalizing the curve. there is not as much of a fear of recession.
the fed is not as nervous, they are more interested in inflation down the line. manus: to get the inflation in terms of where we have to get to -- >> talking about the angle. 2% inflation, if you start to sugarcoat it, financial conditions do not take as much and you risk that people will lose confidence in the federal reserve. manus: he goes on to say he was at 3%, 4% a few months ago and now he is at 5%, 6%, stop sugarcoating it. he would not be surprised to get 6%. 's let you think -- what do you think? saed: i think we do not know.
the fed may be a lot more hawkish than we have thought over the past even five months. we are looking at more of the back end moving up. we have had the curve in the back suffering, with the fed wants to do is frontload as much as possible. tom: where does that leave you in terms of positioning? saed: this is the problem. we have not had an equity market that has faced inflation in some time. the big problem is of -- is real money investing in equities as opposed to fixed income. now for the first time in a long
time they have an alternative. you don't have to look at s&p, they have an actual alternative via u.s. treasuries. this is a real difference in the market. there is not as much real market flowing in. you are actually seeing real money assets into fixed income. manus: sorry we did not get to your parity. senior executive officer at ark management. we will get to the cfo of allianz, and deputy chair of commerce bank. this is bloomberg. ♪
that impacted our numbers and this impacts our numbers. it is mainly non-cash. all in all just going back to q2, some of the fund shows that topline growth. 7% on the revenue, without the russia effect it would have been 9%. 1.3 billion cash flow. we are happy about it. cutting to ukraine, we condemned the war. we have decided to fully comply with sanctions and now wind down our industrial business. anna: yes. you have been there for 170
years, i understand. how long will it take to wind down the business? >> we are doing it a year-round process. it depends on the service business, our service team. we have no view on the. we want to respect what people in russia do for the company and the customers. also respectfully regarding the customers so we give them some time before we say we are stopping operations. it is a tough decision after being 170 years in the country but it is clear this is the way the sanctions are supposed to work. manus: the ceo there speaking to anna did -- to anna.
looking at the markets, it seems to have turned a porter. most notably in european equities, they are down almost 2.4%. asia is down by 1.6%. s&p 500 index, this is about liquidity. this is not looking good at this stage in the day did tom: -- in the day. tom: a similar picture in the nasdaq which closed down more than 3%. the curve is in focus as investors position for recession.
manus: this is "bloomberg daybreak: europe." tom: crypto crash. stable kleins -- stable coins prove not so stable. bitcoin steadies around the lowest since 2020. u.s. prices rise more than the forecast putting a spotlight on the fed's response. a break from the eu, companies can pay for gas in rubles
without breaking the rules. manus: a little bit of breaking news coming in. we just had telefonica, a comfortable beat of 2.96. spain, 1.4 billion. a nice comfortable beat for telefonica at the operational level. you mentioned, i would say this was a death spiral in crypto. what we talking about, bitcoin. this is the personification, this was supposed to be tied to the dollar. what does this tell you about liquidity? tom: the team failing to line up the funding to support that stable coin.
they're not having much luck on that front. the question is, what does this mean for the bridal -- broader crypto space? we continue to watch. currently, bitcoin is trading at 27,108. down today. manus: from crypto to equities, money going. day four in the rally. crypto is down. very quickly, the snapshot across the board of risk. bitcoin is down. crude is under pressure as well. tom: checking in across features.
its snp -- s&p following. -- falling. june and july were already priced in. markets are pricing in a 50 point basis hike in september. a question of inflation is some start to question the cards. 5 billion euros for the first quarter. let's start with the funds. they came in below some of the estimates, do you expect that trend to continue? what was behind that? giulio: good morning.
yes, we saw some outflows during the first quarter. we had positive inflows. there also moderate. rates are going up. when rates go up, bond investors will on the sideline. our flows were moderate. we expect this will continue we also believe these outflows will be the new flows down the road. investors may be on the sideline now but they will come back. it will be a very strong environment. we are not looking at these trends with any kind of concern.
this is very positive for the performance of our fixed income management. manus: $14 billion worth of outflows, can you say that is a moderate outflow? have you seen a steadying? have they stopped fulling funds -- pulling funds? giulio: absolutely. we look on the 12 month horizon, it will deftly be positive. we will expect to see these kinds of outflows, in our opinion they are moderate. these will be the inflows of the future. tom: on the business of the
u.s., we have seen it announced yesterday in terms of putting aside cash flow or potential litigation as it relates to structure, are you closer to an agreement with the doj, what is the timeframe? giulio: we are closer. potentially it will be broke in q1 and we will take care of it. we will have conversations with investors and make any payments regarding resolution. we are working to come to a realist solution -- a resolution. we are confronting this issue head on.
we have a timeline of 8 months. now we need to do the final step. manus: the market wants to know if you will be limited in your business -- in your ability to do business in the u.s.? will there be any limitations as part of the deal? giulio: i do not want to make any comment. manus: is there a risk? giulio: we cannot make any comment. we need to wait for the resolution. we will be able to speak about any condition. tom: there was a bit of a relief rally in the shares on the back of the announcement, are you comfortable that you have now set aside enough to contend with that litigation stateside?
giulio: on payments for the resolution, we believe it should be enough. [indiscernible] we will see what we will have and we will wait for the final resolution. manus: i know you have had a report commissioned and that found there was no breach of duty. i understand the board has been exonerated, at what level is 30 lack of understanding -- is there a deep lack of understanding or confidence? giulio: we will provide all kinds of comments about the situation once the resolution is
achieved. the time being, i cannot make further comments. i would like to reiterate the point, understand that we will invite all information once the resolution is achieved. tom: given that valuations have come off in some parts of the sector, are you looking at any potential acquisitions this year, anything you want to add? giulio: we have been doing some acquisitions. we have done some smaller acquisitions in asia. we will continue to allocate, it can be in another area.
>> they will have to wait longer than expected to get their hands on the first headset. iphone maker had plans to reveal it and release it later this year of the company has been facing developmental challenges related to that device overheating, camera technology and a new operating system. i means that in intro later this year or early mixture year is more likely. the headset will have fast chips
draghi says it is not sure if it is unfair to pay in rubles. for more we are joined from that meeting by maria tadeo. what is top of the agenda for the meeting and how significant was this comment? maria:, -- tom, we are here and we are expecting ministers from those countries. the ukrainian foreign minister will be here as well. we know his message about weapons and financial health. when it comes to european counterparts, the perspective to become a member of the union. the elephant in the room is always energy as is the case for europe.
especially after that, yesterday. there are a lot of things in terms of what he meant. up until now he said he will not be in favor of paying in rubles that would support the russian economy, that would be the opposite of the goal of sanctions aired -- of sanctions. they are worried about accounts that are already in rubles and calling on the your in commission to pull out -- calling on the european commission to put out clear guidelines. what i'm trying to figure out if draghi is going it alone or trying to pressure the commission to put out legal paperwork that they have not been. they have been dragging on that paperwork. manus: where are we -- no data
on the embargo as of yet -- where are we on the transit of gas through the ukraine that through prices up? maria: a short answer on the oil, is no. it is blocked for the time being. but i hear back home in brussels is that this is something european leaders will have to get together to get over the finish line. many would say this is just an embarrassment. the europeans are still debating the own and the chemo we can go. -- their own plan that came out a week ago. we know this point is almost existential. they continue to do business behind the scenes. if russia continues to
complicate logistics, transit could be affected. it would affect the european economy, coupled that with the oil and it could be huge. manus: thank you. another sector impacted by the war with russia is fertilizer. they are one of the largest producers. experts have been disrupted by sanctions and prices have surged. let's bring in the ceo of its fertiglobe and oci, ahmed el-hoshy. in the first instance, the sanctions, the sanctions leveled aren't russia, how does that impact supply into the market and are you winning orders as a result of sanctions? ahmed: good morning.
it is the entire -- entire conflict. getting russian fertilizer and products out. also, the conflict has caused great conflict to come down. we exports and corn, the increase in places coupled with the high energy costs has meant that fertilizer producers in europe have trouble securing energy. they have shut down over the winter because of these high prices and are still trying to deliver to make up for that. tom: europeans have been reaching out to you to get that other, give us some verity on the volume you look into the
second half as a result of this dissertation in the markets ahmed: we have produced two major product, ammonia and -- which is used in the fertilizer. in the second half, as the gas prices can need to be elevated, we are sending volumes in egypt, it allows european producers to buy from decreased national gas needs and incorporate it as a fertilizer. manus: you have the advantage of
the gas low -- gas flow. when prices remain high, are you seeing any disruption in the dust will side of the demand? ahmed: on the industrial side of ammonia, roughly 20% goes in. for the most part has been running well we're seeing some reduction when ammonia went from the $250 range last year to $1600 a ton in europe. there is some volatility around that. that ammonia it will be redirected into the markets. tom: just to build on that, the pricing around fertilizer, to that being elevated and how to
set factor into crisis and what that means individual household across the globe? ahmed: that is the major challenge in the constraint that we saw this conflict in the last month. we have seen increases in the last several quarters. need to continue getting fertilizer in the ground as much as possible, it feeds people. we have seen real prices in the last four months higher than today. there still elevated. as long as european gas is at the levels and prices are where they are, armors will lock -- farmers will lock in their sales.
tom: an important sector and lori. ceo, ahmed el-hoshy on fertilizer and food. let's check in on the sector. the un-tethering of tara. that ripples across the sector. manus: how many of these are you going to throw in? tom: i added you are you. bitcoin is down 10%. manus: a terrible day for tara. there you go. throw me another ball. a terrible day for tara which d
>> can look on the new scorecard on the website. london has accelerated their away. if you take three key metrics from the work hard, -- from the scorecard, salaries have fallen in 91% since 2019. home affordability has strong and productivity is lost half. horace johnson has committed sewing the way from brexit and what to do it for those outside the office. whether he can deliver that for the next election will be challenged tomorrow. manus: he has had a bloody knows in terms of local elections.
sterling is on its knees, literally. how worried are we about a much deeper number today? >> this is expected to be a last raw the. -- a last hurrah for gdp. consumers have not got as much spending as far as inflation. it may spill into the second quarter. manus: the last hurrah. a great roundup. bloomberg u.k. will expand our coverage of all things bryn. -- all things britain. tom: up next, "bloomberg
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