tv Bloomberg Daybreak Europe Bloomberg June 2, 2022 1:00am-2:00am EDT
years. -- from meca after 14 years. storm clouds, not a tsunami. dani: i do wonder what has changed. the question is, how badly cap. consensus may say bad but it -- is it waiting for opec, following yesterday's punch higher in yields? is it the west? let's dive into that. asia-pacific is deafly lower.
we will get into that later. that is at about 1%. euro stocks are up. u.k. is off on holiday. s&p 500 futures. nasdaq futures are up. manus: i have on good authority there is a fast assignment. that momentum is gathering. i think that is significant. you're looking at yields as high as 2018. will society step in and fill the russian supply gap? howdy is opec willing to go?
-- how deep is opec willing to go? it taint 6% yesterday. the dollar-yen, we will debate that. dani: back to the new highs. top stories around the world. jamie diamonds economic warning. oil markets and opec. manus: juliette saly is covering chinese stocks. storm clouds, jp morgan's ceo is warning -- here is what he had to say. >> it is a hurricane.
that hurricane is right up there down the road coming our way. we do not know if it is a minor one. manus: we're speaking with dan moss in singapore. quite a pivot in space. >> there is certainly a significant weather pattern. i think you are selling yourself short. we talked quite a lot about global economy.
i interpret that to mean international growth outlook. it would deteriorate for some time. with the asian financial crisis was developing, he asked at berkeley, is it credible that the u.s. continue to remain an oasis? dani: i am trying to wrap my head around what feels like a tone shift. talking about a potential positive to, the fed continue suitable down on the hawkish. how are you interpreting these cross trends? >> we talked the other day about several verses a couple.
the weight deceleration is coming off, that is a long time from here. it is important to remember that with a third leadership, change their tone. the hawkish this might not be so much of a wall. half-point june and july. manus: ok, walking that back. dan moss, the man who put central bankers on the back benches.
opec-plus following that report, saudi arabia could be ready to put more oil. increasing sanctions. the group meeting today is expect to discuss a modest increase in output in july. let's get more with our correspondent in dubai. we have the story, it opened pandora's box. we had is a definite shift in the past few days or so. americans have made progress in getting the studies to change their tune.
we are clearly not there yet. plus, we have reports on bloomberg today, the first of his presidency. it looks like it will happen this month. they are very much warning of the same. if it is confirmed, that will suggest that the americans -- with saudi oil. dani: thank you so much. oaktree founder has told bloomberg that he sees a return to value firms for investors are tied the u.s.. >> sometimes there are better
bargains. we have been investing in places like china and india in the last couple of years. we will continue to do so. to me, and investable says maybe there are some bargains there if everyone else is boycotting that sector. dani: let's get straight to singapore. they are saying there may be some bargains to be had but we are not seeing any dip far -- dips so far in china, what are you seeing? >> it is looking unsteady. they're saying it is risky to be in these markets. even though there is a lot of geopolitical head went out there and concerns about covid lockdowns, it does not change the reason that you should be investing in china.
they are seeing a between percent upside in the china index over the next 12 months. let's have a look at that. we are expecting earnings downgrades as well. we have four percent earnings growth in 2022. a little bit below the market. it is a negative session on the back of those. fairly flat today. a bit of weakness with those concerns. capital economics now saying we could see a weekend pivot to the dollar by the end of the year. manus: we will see you a little
bit later on. standing down, the chief executive officer at meta. ed ludlow how's this. >> sheryl sandberg, took facebook now known as meta to a behemoth bringing in millions of sales last year. she will stay on the board but the writing has been on the wall for some time. there is a risk -- in a conversation, she gave her reasons -- >> in 14 years, i want to make
more room to do more with the nonprofit with my foundation. i have not been able to do as much i wanted to. it is a really important moment for women. >> when she joined facebook it was just at a fraction of its base. mark zuckerberg, college dropout with very little experience. he grew to a multiplatform company that has more than a billion users in its platform. the replacement is also capable. focuses on the company's growth initiatives. it was interesting to see it was shocking, the investors identified some key risks in the
announcement. facebook also saw in transition for being at face model when it relies on users being targeted. they want to sell more hardware and have users spending on services through augmented reality. dani: shares falling there. coming up, jp morgan ceo jamie dimon issues a dire forecast, we will talk about why he's telling investors to brace themselves. this is bloomberg. ♪
jp morgan's jamie dimon once a investors to prepare for an economic hurricane ahead. he says that it is right down the road, brace yourself. manus: it is a more dire warning compared to his previous comments. a couple weeks ago, there were storm clouds hanging over. on the other hand, he remains positive on the economy and markets. we have to patch it -- take down the hatchet. where you think diamond, the king of wall street is on a dramatic tip? >> the article, we expect it
will be transitory inflation -- were basically now we are seeing that battle with hiking rates and a slowing of the global economy. in that sense, what we are seeing is banishment from growth. if that is the target, 3.5%, i think it can be more given or inflation is. -- given where inflation is. dani: does it then make sense that storm clouds are on the horizon? does that factor in right now? saed: i do not think so. i think you have to look at two
things. we are looking carefully at the impact, the lockdown in china, european sanctions on russia as well as the oil embargo from russia. val has an impact in terms of production and inflation. those issues play an important role in growth outlook. even the bank of japan is talking about in terms of reducing their accommodation. i think the ecb is looking at managing a slowdown, rather than expecting it. manus: translate your narrative, that rate, to bond and dollar
for me. saed: he saw a selloff last week and we saw a reversal in the past few days. we are looking back at 3% over the next few months. i think that is where we anticipate inflation. i think in this environment, i think we are looking at it in arnie. manus: -- in irony. dani: i have to ask something bank of canada related, he teed it up for me.
a concerted global think effort. are we entering a period of something else besides pure fed hawkish this? -- hawkishness? saed: i think what we have to look at is the impact on the economy. the european economy has a very different structure than the u.s. economy in terms of the impact. bank of canada, bank of england. if we look at that from the perspective, there is more a
management of the slowdown in regression. manus: i know you like currency. doomsday scenario. don't use my words. those two currencies more pronounced in a goal slowdown. saed: if we look at them, the correlation of assets. what we're looking at is a more hawkish fed. i think we're looking at adjustment, prolonged aggression
it -- aggression which will lead to a more negative and hawkish fed. dani: great to have you on the program, saed abukarsh, from ark capital. coming up, trade commissioner tells bloomberg that the latest you sanctions hit the heart of putin's war machine. we get more of the interview, next. this is bloomberg. ♪
it is an important fact. these are major steps like the oil embargo. not fully like it was proposed. 90% less imports of russian oil. it is always a financial package. we need to continue to do this pressure against russia. >> will you implement this package and you have any calculation in terms of economic damage this will do to russia? a lot of this is about preventing them to -- preventing them from funding the war so they do not have the financial means to continue to push on the battlefield, do you have anyt hing on the actual impact? >> 62% of exports to the eu were
fossil fuels. now we are pretty much banning all the imports. we are getting to the heart of the financing of his war machine. also, other measures related to other russian banks will help impact the economy. maria: you mentioned coal, oil, and yes. are we going to see sanctions on gas? >> as we have been saying, all options are on the table. we are not excluding anything. it also must be said that, regardless of sanctions, the decision to move away from
dependency on fossil fuels is already taken. there is already a plan in place. including the rapid phaseout of dependency of russian gas supplies. manus: european trade commissioner speaking exclusively to bloomberg's maria tadeo about the hit on the russian economy. dani: carl lco saying that momentum trade is over. it is no longer highflying and looks more like value at the moment so many people are overweight now and asking themselves, "why can't i lose weight?" for most, the reason is insulin resistance, and they don't even know they have it.
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manus: this is "bloomberg day break europe accounts. i'm manus cranny, dani is alongside me. these are the stories that set your agenda. >> it's a hurricane. it's coming our way. we don't know if it's a minor one or superstorm sandy. dani: from storm clouds to hurricanes, j.p. dimon warns investors to brace for turbulence. rates decline amid stock fears. the financial times reports saudi arabia may boost production. opec meets today. met mor fis -- metamorphosis, sheryl sandberg steps down from meta after 14 years transforming it into a powerhouse. and breaking news when it comes to corporate this is morning.
manus: absolutely. if you like your cocktails and i know you like a little bit of the savoy bar on a friday afternoon. remy cointreau, $40.4 million. that's comfortable. in the u.s., you know, you've got a whole momentum going on, remy to pay 185 in cash dividend and one euro exception dividend. the current operating income beats estimates. condition firming targets. everyone can rest easy in the american bar and the savoy. there'll be plen of remy. i used to love a martini in the savoy. that's how long ago i drank martinis in the savoy, dani.
dani: that sounds like a -- manus: how are your equities? dani: i do feel like we've push turned a little bit in market. i say late bit because we're mostly unchanged that the moment when you look at s&p and nasdaq futures. there's the feeling of stay us is. we were up in euro stocks. is it about the global central bank tightening story? is it about opec? sit about oil? asia pacific stocks? those are down about 1.2%. but again i do think one of the more interesting assets i know you have is bank of canada, the idea of fueling global central bank hawkishness. manus: not that i r make a mistake but i think it's that -- said to a pain for the canada,
i'm not infallible. the highest since 2018. actually it's the highest since 2008. that's why i put rates on the board. but it is significant. let's have a look at it. canadian paper, the highest since 2008 on the back of the second jumbo rate hike, saying the neutral rate in the states is four, 4.5%. we're all underpricing what will happen in the states. crude come down by 1.2%. will they fill the russian gap if that's what they're called on to do? will they pull it forward in sent to perhaps july? dollar-general, lost over -- dollar-yen, lost over 2% of its value. the let me take the oil story to my guest onset. we've got the financial times reporting that saudi arabia is prepared to boost its output in the event that russian production falls due to
sanctions. by all accounts it already is. paul wallace is with me in dubai. lavrov was in saudi arabia yesterday. the optics are interesting. let's deal with production. how big a risk is there that saudi arabia will deliver more oil? paul: if you asked me a week ago i would have said unlikely. everything coming out from saudi arabia and also the e.u.a. suggested they weren't returning, they were going to very much stick with their plan to only gradually increase production. whenever they were asked about russia they said russia's infleution in opec plus was absolutely vital for their interests and -- but something seems to have changed in the past few days or the past week and it seems as if based on that f.t. report and an earlier one from wawj and what bloomberg is reporting this morning about joe biden likely heading to riyadh late they are month it seems the
americans are making progress on convincing the saudis to do something on production. dani: what sort of political hurdles would be needed to overcome in order for bide ton be able to go to the saudis and have this materialize, more oil being put on the parkt? paul: this is a fascinating question. there's probably quite a lot that needs to be done. one thing the saudis and emiratis have been telling americans for a while now is they want some kind of security guarantee or at least a commitment from the americans to do more for the gulf -- the gulf nation security, particularly when it. comes to iran and iran's proxy groups. as far as saudi arabia and crown prince muhammad bin salman, their de facto leader, are concerned, it might be down to recognition that could be part of it. if joe biden's trip is confirmed that could probably be hugely
valued -- hugely valuable especially if it involves a very public handshake with joe biden and something that shows the americans or at least biden recognize n.b.s. as the defact doe leader of the kingdom that he is. dani: paul, great roundup. now let's go to carol, founder and c.e.o. of energy. before we get to the question of if saudi, if opec will do this, i want to know can opec make up for the lost russian supply? carol: good morning. well they can make up for certain loss in russian supplies because of the question that everybody is asking today, how much oil will be lost from russia because it's not the whole world that is stopping to buy russian oil. it's primarily the e.u. which is planning to cut its imports from russia in terms of oil in the next six oeight months.
but the rest of the world including the largest oil importers that is china and india, are still buying russian oil. we're going to see a re-- reduction in russian oil production or loss of certain level of that production and it is that amount which can be compensated for to a certain extent by opec as a group but i would say primarily those who soint the largest capacity, the g.c.c. countries, saudi arabia, the u.a.e. and kuwait. manus: carole, good to have you with us. we had bobbing mcnally with us a few weeks here said if biden beats m.b.s. and there's a rapprochement, then the probability of them turning on the taps goes up over 50%. how quickly can saudi respond? what sort of capacity does saudi have? that's the debate, isn't it.
carole: if there's one country in the world that can put more barrels on the market swiftly it will be saudi arabia. if we take you back, i think it was 2019 or 2018, i think 2019 if i'm not mistaken when saudi's facilities were hit by rockets coming from yemen. that targeted almost 50% of the production of saudi aramco. the market did not really feel any loss in supplies because the saudis were able to compensate for that quite swiftly. i have no doubt in the ability of the kingdom to put more barrels in the market and they've shown that on several occasions before they would put one million barrels here. but what is interesting is that for more than a year now they've been resist anything calls for putting more oil in the mark. they've been quite cautious in terms of that. now suddenly we sense a shift in the turn and they are able to do that. dani: if they can do it, walk me through the scenario, what that
means for the price of oil per barrel if this ends up happening? carole: you can see how there was downward pressure today. it's still a rumor so we have to be careful that there is a rumor that the saudis can put oil in the mark. this is what the market has been waiting for. we had this resistance from the saudis and new they finally say, hold on a minute, we can help should there be a significant shortfall in production from russia. so that by itself has had an impact on market, not on its own but also heard from news coming from the e.u. that hungary has again caused some headache to the imposition of sanctions on russian oil. there is a great power in the saudi and the fact that they are stepping in and saying we can do that, again i'm saying this is a rumor being reported, nothing officially announced, we can see
how the market is reacting. manus: carole, the other side of this we just got word, 2/3's on the sea born oil will be phased out. there are tucks about a reduction on russian energy needs by the end of the year. they've still not switched off gas. what would happen to the market if europe, i mean, can europe even countenance switching off gas from russia? it's not a real threat is it? carole: that would be the ultimate nuclear option, i would say, for europe and that suffering significantly economically speaking because it's not -- the plain fact you cannot replace gas easily as much as we can do with oil because these are two completely different markets. oil is a dwhroabl market. you can buy, you have all sorts of shipping around the world, crossing oceans. with gas even though you have ao
gas trade and europe largely depends on gas come big pipeline from russia. it's very difficult to find a legitimate alternative to russian gas. that's why it's taken longer than for example sanctioning oil. dani: to the point of oil being a global market, a lot of debate has been does russia oil just go offline or does it find a different buy her to that point, j.p. morgan said if china doesn't step up their buying of russia oil, it could peak at a monthly average of $136 in june do. you see a similar scenario in carole: in economics, everything else being the same, if demand, we don't see a demand destruction, we don't see a slowdown in economic growth, we don't see an aggressive monetary policy. if everything stays the same and of course there's no increase in demand dpr -- from china and for russian oil and opec does not
put more oil in the market, then the scenario is not, you know, impossible. everything possible. there are so many other dynamics coming into the picture that question now, you're also difficult proto the predict by the summer. manus: carole, thank you very much. great conversation as you say, a number of nuclear options which can possibly put into play into the game theory. let's get back to jules in singapore. juliette. juliette: russia has been judged to have tbleached terms on a bond after missing a $1.9 million interest payment. this triggered an insurance payout potentially worth billions of dollars. the credit derif tyes determinations committee said the event occurred on credit default swaps because russia didn't include the additional
interest in a late bond payment made at the start of last month. the euro zone is moving closer to adding its 20th member. croatia is ruled suit to believe join the club next year. they recommend they should be allowed to adopt the common currency after finding it fulfills necessary requirements on inflation and public debt. bank of england deputy governor says the umplet k. housing market is starting to slow. he said property prices will be dragged down by rising interest rates and easing economic growth. the remarks followed a 10th con second ty monthly rise in house prices as living standards get squeezed. global news on air and on bloomberg quick take powered by more than 2,700 journalists and analysts in more than 200 countries. dani: thanks so much. coming up, manus is no longer drinking martinis at the savoy but someone is.
manus: it's "bloomberg day breck europe." i'm manus cranny, dani in is in london. we broke the news on remy cointreau. they see strong growth for the full year, raising prices. the wider sector view though and what lies ahead in terms of the supply chain disruption and the pressures, that's where we want to get to duncan fox. he's with bloomberg intelligence. let's kick it off with your take on the remy earnings. a bit of relief there, duncan. good to see you this morning. duncan: and you, manus. i'm definitely relieved, i think
when they released the sales two months ago, china was pretty much fully open. now they have lockdowns in key cities. there'd been some caution coming through. the fact that they're still confident show house well business is at the moment. dani: you look at the wider luxury sector, duncan, and there were price rises. now it's coming head-to-head with fears of cost of living crisis. looking at this sort of stuff is there evidence of price elasticity on consumer goods? duncan: that's a good question. i think luxury goods, the profile is largely how certain signs of progress. if you go further down the chain, sort of basic food price, then you are starting to see a little bit of volume decline, maybe prices coming down a little bit. but what is difficult to know
because of covid lockdowns in 2021, food service coming back, again retail sales, it's difficult to know whether people are just trending down yet on some of those more basic goods. if you see, i think as a matter of fact pricing so far, in 2022, just short in 2021 with pricelines. the problem is there's a lot more pricing to come. that's something to watch very carefully over the next few quarters. manus: we're focusing on remy cointreau here, so some of the specialty input into those premier drinks so the supply chain there is perhaps a little bit more unique. when you look at the supply chain, global supply chain and shipping disruptions is that just a lot more relevant in the f.m.g. area, is that a lot more
dramatic in that space? duncan: definitely certain ingredients are very, very important. there were around 60% of the supply. so that's a very, very important ingredient for manufacturers because if you've got a probability, something you'll have to take, use it at high temperatures you can't just relace it -- replace it with anything because it could change the taste of he product. making sure you have enough of that in stock, orange juice, grapeseed oil in europe or canola oil in the u.s., they need to have enough to get through. and that's -- we don't really know exactly where companies are on that at the moment. but so far they have kept supplies moving very well. certainly there's been
pressures. dani: duncan, thank you very much. duncan fox from bloomberg intelligence. we'll be speaking with the c.e.o. of remy cointreau in the next hour. manus: coming up, millions across the u.k. and commonwealth are prepared to mark 70 years since queen elizabeth ii came to the throne. we look at the economic pitfalls and positives of the platinum jubilee. this is bloomberg. ♪
it's a platinum jubilee. it's a bank holiday today and many people who don't work in television will be looking forward to a few days relaxing at home, thank you to whoever wrote that. what effects might we see on the country's economy? laura wright who is also not on holiday, has been investigating. laura, i find this, one, a fantastic screen in front of you that's making me hungry and appreciative toward the queen. what does this mean for the economy at least in the short-term? laura: forward-loobing data shows the u.k. is taking a go big or go home approach though jubilee weekend for the celebrations. whether it's stocking up on victoria sponge cake, street party equipment or a new outfit to impress the neighbors, intringpord data shows us overall retail foot traffic this week is expected to be 8% higher than last week and for the same period, u.k. high streets are the biggest gainer followed by shopping centers and retail parks.
hospitality is forecast to bring in 2 billion pounds from this thursday until sunday. that is almost 400 million pounds higher than a typical long weekend at this time of the year. pubs can stay open until 1:00 a.m. while it's not a lock in, you do find yourself in a drinking establishment you're liking to buy in a couple of extra rounds. airlines is really interesting. passengers are taking advantage of the extended holiday in order to travel abroad. u.k. departures are up over 200 year over year and over 1,000% compared to the same period in 2020. all this shows us that revenge spending this jubilee weekend has arrived. >> revenge touring, revenl spending, victoria sponges, clotted cream. very british and so it should
be. what are the consequences of two extra days bank holiday? we might spend, spend, spend and have a tipple but has it got a broader economic risk? laura: there is unfortunately, as much as we'd love this to be an annual fixture on the annual agenda. when we look at when an extra holiday is added in the month of june, for example in 2002 and 2012, for that specific month the u.k. economy contracted by on average 2%. the dotted line in both respective scenarios shows how g.d.p. would have behaved out and extended bank holiday. using this analysis for the quarter, g.d.p. drops by around half a percent and in this scenario of 2022 that'll bull the u.k. economy into contraction for the second quarter. that aligns with the bank of and's analysis.
typically there's a rebound of such an extended holiday but this time around the path is unclear because of othe cost of living crisis, elevated energy bills and consumer confidence standing at 4%. manus: certainly a lot in terms of what can happen this weekend. my favorite is the corgi, clarence the corgi cake, and victoria sponge renamed elizabeth sponge. laura, you're there getting ready to celebrate. dani, it's all about the bonds and one would say prepare for a hurricane according to jamie dimon. dani: i love talking about two different narrative is inflation mounting or is the fed about to realize they broken something and monetary policy must go in reverse? that's the push-pull we've seen from the bond mark. up next, "bloomberg markets europe."