tv Bloomberg Markets European Open Bloomberg March 8, 2021 2:00am-4:00am EST
>> good morning and welcome to bloomberg markets: european open. longtime friend of the show, our markets live editing -- managing editor, joins me to take you through the market action. first, your headlines. the cash trade is less than an hour away and here are the top stories. higher treasury yields temper optimism.
the pandemic relief plan has back to the house this week. brent jumped about $70 a barrel after an attack on a key saudi oil site. iran act fighters in human claim responsibility. it is an international women's day and we have a lineup of interviews with leading political and business of figures bringing you important conversations throughout the day. welcome to the program. it has just gone 7:00 in london. welcome to the european market open. it is actually a lot later than that in singapore. mark joins us from that city with a look at the markets. mark, we are seeing it is the yield story that again seems to be dominant. what are you seeing in markets this morning? mark: there are three things that are interesting, it is an exciting start to the week and markets. we have the surge in oil prices because of the news from saudi. then the spill, how that will
fit into yield prices and into the dollar. the final thing i am watching, what that means for the former highflying stocks, popular trade in the tech space and china. we are seeing them suffer already this morning. anna: absolutely. let's look at where that plays into the european equity session. european futures come to the upside, between seven and 9/10 of a percent. we see the difference the u.s. makes, because the u.s. sure is more muted. this is partly to do with the timing of things on friday. we sell the jobs report produce real volatility in markets. the net results was a strength in the u.s.. european equity markets have to catch up and that's why we see some of the move to the upside in european futures. that's what we are seeing in the
european and u.s. futures picture. let's look at what's going on in asia. down a tense of 1% on the msci asian-pacific. oil prices come on the far right-hand side, you have commodities and you see brent prices up. it is a key story, $70 the price of brent, on the back of that saudi attack. i started the hour talking about yield. i think i was drawn to align, we had a headline from the bank of japan. one of the policy makers saying wider yield fluctuation is ok if the easing is not hurt. this is the role that yield is playing, i suppose. for all investors. it has been a big week, recent weeks. mark: the two parts of that headline are interesting. one is we are generally hearing
the story from central bankers they are not overly alarmed by the move in yield in terms of levels and i think that's scaring some investors. think they thought there would be more active pushback. the general message by the fed is as long as it doesn't go too quickly, it doesn't scare us too much. that's the second part of the story, is not so much about the level, it's how quickly the move happens. we don't yet understand how far central bank's are willing to tolerate the yield move, if it goes at a gradual pace, and even what a gradual pace means. anna: it's a lot about the speed of the move, isn't it? the fed officials acknowledging they are thinking about this, they are often saying the speed of the move is catching there i. something else to give thought to is the sense of buckles, -- bubbles, tech markets globally, china. i see the csi 300 index has fallen 3% from february the
10th. it is now in correction territory. i was reading a piece at the weekend telling me to love bubbles, saying they are really important -- a really important way markets overcompensate for lack of investment in new technologies. mark: i think all of the consensus trades at the start of the year are getting cleaned out. china equities was one of the most popular trades to start the year and that is suffering. we are seeing it very popular trade, whether it is tesla, arc investments. i agree that bubbles are not going away. any investors use bubbles profitably, you want to ride the bubble and get out before it's too late. but we've got to the stage where
these doubles are deflating. if they will pop is a different story. think there's more downside on these popular trades to come. only this morning have i seen investors seeing the pain, they are worried this will go farther. they are trying to prepare themselves psychologically for the fact that wait a minute, maybe this percent pullback isn't sufficient, maybe it is 40%. they are very onside the last year overall even if the pain is in the moment. anna: yes, matthew goes back to the industrial revolution. let me ask you about oil prices. we are going higher on oil prices and it was the attack in saudi arabia that doesn't seem to be as material as previous attacks. that is an important thing to keep in mind. you drew my attention to the fact that refiners are spread low.
mark: i personally see this article is a must read, i did not read it all. i did flag it to you. i am not convinced this oil spike will sustain. i think one of the big differences is there hasn't been any real damage and that is important. suddenly we are spiking because there's been an attack, but it's a failed attack. the other reason, people got excited about china trade data that came out sunday, saying look at those norma's important numbers and showing the demand they have for oil products. i see that as a bearish factor, given we know storage facilities and china reaching capacity limits. we are hearing that yes they imported oil, but that doesn't mean they will import way more in the next weeks. i think the bullish factor has been misunderstood. starting to wonder whether this oil spike is a medium-term top forming of oil prices.
anna: mark, stay with me. you can join the debate if you want to get in touch with the markets live team. you can do it on your bloomberg. get up-to-date analysis and insight from the markets live team on your bloomberg. while we were setting out the storm for the day head and thinking about the week ahead, what we are seeing in markets, let's get to breaking news. a much anticipated ipo confirms it will list on the lse. we understand we've got the confirmation from them. it will be interesting to see how much they decide to lift -- to list. valued around $7 billion in its last funding round act in january. this is a food delivery business founded in 2013. interesting timing for listing given we have the announcement
of a change in listing rules that might attract more tech heavy businesses to london. coming up, we focus on the u.s. as the senate passes president biden's $1.9 trillion stimulus bill. we will dive into the market implications of that, and as we said at the start, it is international women's day and we have a stellar lineup of guests. if you have any questions of your own, please send them to us, as i said come on your bloomberg. this is bloomberg. ♪
the reopening. >> we are looking for strong gdp numbers for q2 and q3. >> over 7% gdp now. >> the market is in pause and digestion mode. >> i would not expect it to derail progress on the covid bill. >> cornersrket are wondering how patient the fed can be. >> uncertainty as high as to how the fed reacts to a rapidly accelerating economy. >> the fed is banking on inflationary imports -- and pulsing transitory. >> they will let the market determine where yields are. anna: some of the reactions we gather from seeing that feet on the job numbers in the u.s. i was drawn to that comment from one of our guests saying they did not think it would derail the fiscal side, and in previous iterations, it would have been common, and then starting to second-guess what it means for the fed and fiscal stimulus.
it wasn't clear that was the thought process on friday. mark: absolutely right. we are seeing a trend of very strong data in the u.s. and this is another print confirming that story that recovery is going well and many people have flagged that maybe we don't need this 1.9 trillion dollars stimulus package but it will come regardless. the narrative at the moment is not focusing on do we have enough stimulus, it's do we have too much? no one is expecting it to be derailed. one thing to warn on these numbers, a little higher than the economic forecast because california had reopened and many people were speculating there would be an upside. i think that is one thing to soften how positive it was. anna: whis is the function if you want to give your thoughts on the whisper number. meanwhile, president biden nearing a big win on his stimulus plan, the second-biggest in u.s. history, as we were just discussing. it passed on a partyline vote in the senate this weekend and will
return to the house. we are joined by our guest, good to speak to you. your thoughts on the wider impact of this strong recovery in the u.s. economy, economists falling over there himself to upgrade growth. strong drops on friday, and yet we see the push for the $1.9 trillion. does this change the medium-term fiscal outlook to you? maria: i have to say we started this year -- to be honest, we've been positive on equities and risk assets a few years back, but the economic reopening, strong growth, fiscal stimulus are great for stocks. real yield going higher, but we were feeling this constructive outlook, probably into the deep
camp. the selloff eventually happens when yields go too fast, but i suspect markets know that yields are still very low and they seem to be adamant telling us they will not let us run too high. so yes, we are very constructive. mark: i know you've been on this trend for a long time, you and your team. i am curious, given everything is still supporting the bullish outlook you held, what are the risks, what is the thing you are watching that could change your mind? what is the biggest threat? marija: i think it is a fair question. inflation is a key factor. we know this year inflation will be very high. the real question is would this inflation be transitory or not? it's hard to second-guess how the economy opens and what happens. one thing i am looking at is
that the one year into your breakevens. the market is telling us that inflation is coming, the breakevens are high, but it's not expected to stay there. that is important to us. inflation will be there the second half of the year but it probably will not linger very young -- very long, which allows a central bank to be a little more accommodative and not rush toward the recovery. anna: does that allow stocks to charge a positive pitcher through higher inflation prints in the second quarter or into the summer? can stocks remain positive in that environment? marija: that's really our sense. economic recovery and stronger growth is supporting earnings component of equity recovery. last year obviously, stocks did really well on multiple rearranging.
maybe rates would be going behind her -- going higher. even there, i suspect there is this important distinction of -- don't go higher, so cyclical areas continue to perform well and commodities, one of our favorite picks, small caps look interesting, maybe penny stocks left behind. there are areas of the market where a cyclical recovery can play stronger than others. mark: as you say, central banks see this inflation threat at the moment, the spike as being temporary. they will probably stay accommodative. how worried are you that inflation gets its own spiral, people start buying the inflation hedge, which drives inflation higher, driving demand for commodities -- how worried are you that central banks will lose control? marija: that is the argument,
that central banks are saying we will not raise interest mates, and market saying you will because of inflation. i have to say, i am quite surprised with oil prices. we know demand is improving but supply conditions are very loose in the oil market. we know opec countries have challenged capacity. and in the recent year, they've been pumping more, but i suspect they are keen to do it now that demand is improving and finances depend on oil revenues. i suspect the opportunities are there for them to start pumping. shale production as well can pump up fairly quickly. i have to say, i am a bit surprised how quickly oil prices
are rising. i am a bit surprised. anna: a bit of surprise from the lack of production from opec-plus last week in that vein. thank you. you will stay with us a little longer on the program. that's get a first word news update. laura: saudi arabia says one of the most protected oil facilities in the world was attacked yesterday. a drone and missile assault was intercepted, the latest in a spate of attacks claimed by iran rebels in yemen. oil is surging with print above $70 per barrel. china's exports surged in the first two months of the year, reflecting strong demand for manufactured goods. at the beginning of the year, it's usually volatile in china because of the weeklong lunar new year holiday.
things are more skewed this year because of the comparison with early 2020, when factories and businesses were shut because of lockdowns. school students in england are returning to the classroom today, the latest step in the u.k.'s plan to reopen the economy, but it is partly overshadowed by a clash over the pay of health care workers. boris johnson government is suggesting an increase of just 1% after one of the hardest years ever for doctors and nurses. global news 24 hours a day on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. anna: thank you. laura wright in london. coming up, europe's vaccine blunders alarming some of the world's top investors that see economic growth at risk from the slow pay the -- slow pace of businesses reopening. this is bloomberg. ♪
anna: welcome back to the european market open. we still got 37 minutes to go before the open of equity market training. mark, futures point to the upside that we are a little upset in europe because it u.s. futures are point to the downside. the european story is catching up at this point. mark: i think that's right. since the show started, the main thing that's happened is the pain of the morning has continued. the asset i am watching is the bloomberg dollar index, the dollar higher again and some stock losses are going off in certain fx pairs. anna: we will keep and the dollar index. europe vaccine blunders alarming some of the world's top
investors, who seek, growth at risk from a slow pace of business reopening skewed -- reopenings. continental europe is far behind. our guest is still with us. we talked a little bit on the geography of your strong stocks call in the last conversation, but how much do you buy into a strategy that avoids europe or invests in europe ahead of a recovery still to come? what are your thoughts on europe? marija: a little bit less optimistic on europe than the rest of the world. i think that is because of the slow vaccine rollout that is playing on earnings expectations. a lot of our regional strategies, expected earnings growth, as we talked earlier, we expect earnings recovery this year to be strong and multiples to be at best a flat and maybe a
little lower. earnings are really important. in europe, we are seeing the pace of earnings upgrades being slower than the rest of the world, and quite a few regions with local downgrades. that's a big concern for us. yes, it is cyclical, it is the recovery area, that -- but if we have to choose between recovery areas, we favor japan over europe. a strong cyclical element, closeness to china. given the rise last year, the euro is still fairly strong and that could intentionally weigh on opportunities for recovery for european exporters. so we prefer japan and europe is liking behind a little bit. -- lagging behind a little bit. mark: the problem many people have with this market is it is quite binary. people on the right side of the
trade, they see millions of opportunities. there are some a thing is working because they are buying into the big theory there is in less money chasing these assets. other people think everything is overpriced. as someone who has been on the right side of those traits, if there had not been any reflation trade until now, from today, where is the single best reflation trade to get in on now? marija: i would probably still say small caps. i appreciate they've gone up and performed quite strongly in the last few months. but if you look at the chart, they've underperformed for a number of years so there are opportunities. they are cyclical and linked to economic recovery. if i think about small caps, again, as we've seen over previous years is mega caps have performed very strongly, or even like s&p 500 quite a bit higher. small caps lag behind. anna: thank you for your time
anna: welcome back to the european market open. half an hour until the start of the european equity trading session. teachers to the upside. mark is with me -- futures to the upside. mark is with me. european teachers out of step with u.s. futures and the asian session. mark: i think it is part of this theme that stocks and trades that were doing well are suffering and those lagging will be doing slightly better. at the moment, this is a simple deleveraging trade, people are unwinding the positions they had
before, long or short. as we heard from our guest, people have been underweight europe and decided it has been lagging on the vaccine programs and the growth is not picking up as quickly as elsewhere. anna: she was saying she preferred japan, but also talking about the timing around the european story, one we are watching with the vaccine rollout, maybe johnson & johnson news later this week. let's get a business flash from the top corporate stories. here is laura wright. laura: a sophisticated attack on microsoft is this email software is morphing into a global siegrist -- cybersecurity crisis. a senior u.s. official tells us it has claimed at least 60,000 victims around the world, many of them small or medium-sized businesses. a chairman and board memos have resigned as a trade finance company fights for survival. it is facing a criminal probe
from the german banking unit. no comments from them. one of europe's top-performing banks was named the world most gender diverse firm. this in a new ranking by equity. it is making sure women are not disadvantaged when they have children, including paid parental leave. that is the business flash. anna: so it is international women's day today, and looking at gender parity and financial institutions around the world, we have a long way to go. fewer than 1% of leading global financial institutions have achieved gender balance, that is according to a new survey. for the first time in includes commercial banks. we are going to bite on fifth's -- by on the fifth's chief
economist. you widened the institutions you represent. i had to get to page two of the release defined real progress but there is some. below the top, more women appointed to senior positions. how does this year stack up in your view? >> it is good to be here celebrating international women's day. unfortunately, international financial institutions and policy making institutions are far from gender balance. we've been doing the gender balance index for eight years, this is the eighth addition, and this year's report covers 540 institutions. we looked at 9000 individuals, the topmost positions. most senior people. governors in the case of central banks, policy committee, executive committee, so on. only three institutions scored a perfect 100 and only four scored
above 90, which is close to gender balance. europe does the best in terms of regions and the federal reserve system does well in terms of central banks. mark: we are clearly seen not enough companies, banks and organizations generally are doing enough on this issue despite the fact we are getting massive evidence from the private sector that the areas that have gender diversity have a better return on equity. is there an argument there should be positive regulatory incentives for companies or even subsidies rather than quotas or targets? >> what we have found in our research in eight years is this is a persistent structural or problem and it will not go away if there is not positive action. it's not just a case of saying look, the younger cohorts are gender balanced so with the passing of time, we will have gender balance at the top. the more policymakers we speak to, everyone says we will not get there this way.
there are structural barriers to women's progression and we all lose out, because as you said, gender parity leads to better outcomes. we do need more targeted policies, and what are survey found this year, which asked central banks what type of policies they have to promote diversity and inclusion, very few take positive action. measures such as quotas for interviews or fours or junior or intake are around 10%-15% that institutions offer these kinds of measures. anna: you cut across different cultural backdrops doing this survey. you mentioned europe comes out of this quite well. you are reflecting statutory rights in different parts of the world, different maternity benefits certainly. are there lessons we can take from certain places and apply them more globally? >> yes, what we find is
generally, small economies tend to do better, and that partly has to do with the fact that you have a stronger incentive to make the best use of it because the chances of having the best person with the best ideas in the room are higher if you give the opportunity to everyone to have a chance at those careers. also, economies that tend to have more supportive childcare benefits, parental leave and so on, tend to do better on the index. economies such as iceland or the scandinavian companies, one that got a perfect 100 was a danish company. also australia and new zealand do better than other economies. there are some lessons. the size correlation stands out, but it takes time. even though europe is doing better, it is not very gender balanced. it is very far from that. mark: troubling slightly, one
area europe is not doing better on is the economy itself. last year, europe with a much deeper recession than the u.s., going by eurozone numbers, and this year, banks expected to be more sluggish than -- the bounceback expected to be more sluggish as well. what should the ecb be doing to improve the structural growth levels in europe? >> the ecb has done already quite a lot. they really stepped in and provided accommodation. what we are facing now, when we have the meeting on thursday this week, is there is an issue of communication. we have seen the rising bond deals in u.s. treasuries and also imported into europe. we have to see how the ecb reacts to that. it's also the first time we've seen real fiscal action in europe and how that coordinates with ecb action will also be something to watch, especially in say, six months time, when
the ecb has to consider whether it extends its emergency purchase program. but i think the accommodation has been very strong in europe. what hasn't been as strong is the vaccine rollout program. that is a main determinant of the recovery right now, so that is something for governments rather than central bank's to focus on. anna: thank you for your time. thank you for being with us this morning. international women's day. coming up, we speak to the deputy governor of the central bank of spain. we will discuss spain's that to gdp ratio, it's fiscal package and banking regulation and we will touch on our previous conversation, the banks gender balanced score. it comes out in the top four. that is next. this is bloomberg. ♪
you know, the g20 initiative, the common framework to deal with debt problems and help countries through this very difficult process needs different creditors to come together to offer, you know, the process of concerted debt relief, organized debt relief, debt reduction. this is a problem if creditors don't trust one another. anna: that was the world bank vice president, and reinhardt speaking with bloomberg -- carmen reinhart speaking with bloomberg. there is a conversation around debt levels, it seems a lot of a
conversation will be on the time horizon to pay it back. that applies to many different jurisdictions over the years to come. mark: i think there is another issue as well that is deterring some of the buy side investors on the debt relief plan. carmen made a good case that many investors buy in for long-term benefit, but i think there is a worry about corruption. we talk about transparency, but maybe it is corruption. some markets don't have a lot of clarity how the debt really will be allocated and that slows down some of the buy side enthusiasm for these plans. anna: and the role of all of those creditors in those programs are a key part of that. we were having a conversation, with on fifth, on international women's day. let's stay with the theme. spain's financial -- spain's central bank is one of the few to achieve gender balance. they ranked fourth this year with a score of 92, calculator from the ratio of women and men
weighted by seniority. the closer you get to 100, the more balanced the gender metric looks. we are joined by the spanish central banks deputy governor, margarita delgado. very good to speak to you. i wonder if you could give us your thoughts on why you think spain performs a so strongly relative to the world and europe on this kind of gender balance measure from on fifth? margarita: first of all, good morning and thank you for inviting me today, on women's day. first of all, let me start by congratulating the reserve bank of richmond, they are leading this year the gender index. we are in the fourth position, but we maintained our marks and we are really proud of this, especially -- taking into consideration the competitors.
why are we here? first of all, we have been promoting the new incorporations of female technicians and experts when entering into the bank. over the last five years, they've been a kind of renewal of the staff, and almost or even beyond 50% of those were female candidates. the other part of the equation is the upper part of the hierarchy, and there we have feminine -- i can say that -- governing council, with a balanced committee. i think this is part of it. we also have to take into
consideration the different measures and initiatives we already have in place, from promoting a work-life balance, supporting maternity leave, supporting flexible and part-time schedules. we really don't have any kind of policy -- sorry, we have many kinds of policies promoting career redevelopment for the future. we are really proud of being in the gender balance index this year, although we were in fourth. mark: you should be very proud of that score on the gender index. it is brilliant results. if you had one specific policy to recommend so other central banks could catch up for you -- catch up to you, what policy
would see the quickest results? as you point out, there are still too many institutions lagging generally. we need to see quicker results. what would you recommend has the quickest turnaround time in terms of a lead in on the gender balance improving? margarita: we tend to believe that gender balance will be achieved through time but it is not true. we have massive corporations of women in the 1990's, but it has been recently that we reached a more fair gender balance internally. first of all, we need to make a culture change. it is not easy. we need to do it on a continuous basis. we need to design and external narrative to raise awareness internally. the third element that i
consider is crucial is to really work on the careers through different channels, not only empowering young professionals but also of course developing and mentoring programs and leadership programs for women, because we have the right to create the future in central banks. anna: as we have you, i want to get to some questions around your day job and regulation at the banking sector in spain. thinking about what europe has done on dividends, one of the most obvious bits of regulation we have seen recently from the ecb, the cap on dividends is expected to apply broadly until september. do we go back to business as usual on dividends or do we need a more conservative approach?
margarita: that is a very important question. we have seen a lot of comments and controversy in the media and industry. banks argued dividends were -- behind low prices. in our opinion, this is not the only driver. it should be more muted. if you look at the sector in the last weeks or months, the behavior has been very positive. despite the restrictions in place. if everything goes as expected and the economy behaves as predicted in the projections, most likely this restriction or recommendation will be lifted this year.
if everything goes well and the economy really recovers -- i mean, we will not see any potential problem to go back to business as usual, but of course, first of all, we need to recover the economy. mark: the ecb has warned several times about the risks from leveraged loans in the financial system, a global problem. do you feel banks in the euro zone are well-capitalized against this risk, have they taken enough steps to counter it, or does it remain a big concern for the central banking system in europe? margarita: that is a very big question because as you rightly mentioned, this is europe and europe is different. at the very beginning of the crisis, we were faced with a lot of uncertainty and downgrades by the normal application of the
regulations, in the end, it did not happen. yes, it is true that probably leveraged loans are the canary-in-a-coal-mine, that i -- but i think in europe it is not a big source of concern. since 2019, with new reporting obligations, we are closely monitoring the most active banks in europe. no more than 16 or 18 banks. we are keeping an eye on banks and focusing on risk management practices. but again, we have reinforced the supervision but we have to consider that in europe, this isn't a problem.
anna: welcome back to the european market open, seven minutes to the start of cash equities trading for europe and we see futures point to the upside. that's get to the individual stocks we are watching. >> this is one we should keep an eye on, they had earnings today and they did not quite meet mark, but they are examining some of their businesses, specifically education materials and property portfolio, signifying they are hitting the reset and concentrating on some of their core offerings like english language training. also looking at direct line, and insurance group, their pretax profit was somewhat off.
cost-saving initiatives. they are reinstating a buyback program of about 100 million pounds and at the same time declaring a final dividend. some confidence from the company. finally, keep an eye on this ipo mania hitting london, it should be beneficial for lse and deliveroo and trustpilot saying they plan to list on the lse. we had a poor performance to into the week, perhaps this gives a boost today, but very notable this rush of ipo's coming to london. anna: you have to wonder how quickly the rules can change to justify this frenzy, if it is -- not necessarily agree just yet. thank you so much. mark, as we have been sitting here the past hour, we've seen nasdaq futures deteriorate and
that is something europe finds it difficult to latch onto. mark: i think europe will be a little bit of a positive session, consolidation before the u.s. session. in europe's favor is the lack of tech sector. even know it is holding up, i think we get to the u.s. session and see pain. the things to watch, the dollar, yield, oil, all of these assets at multi-month highs. some of the tech stocks, which have suffered from these kind of traits, will be at multi-month lows, more on the downside. i think it will be a painful session in the u.s. even though europe is looking vaguely positive for the moment. anna: more pain for tech perhaps in the u.s. session ahead. also we will keep an eye on airlines with oil prices going higher. thank you, mark, for spending the last hour with us. i will be back for the second hour of the european market open to take you to the start of european equity trading. futures pointing to the upside, u.s. futures pointing lower.
anna: welcome back to the european market open. a minute until the start of cash trading. higher treasury yields tempter optimism over president biden's pandemic relief plan. it passes the senate and heads back to the house this week. brent jumps above $70 a barrel after an attack on a key saudi oil site. iran backed houthi fighters in yemen claim responsibility. and it is international women's day and we have a lineup of interviews with leading female political and business figures throughout the day. let's have a look at the futures and where we are positioned
ahead of the european equity market session. 15 seconds to go until the start of the european equity trading day and the european equity market, futures are pointing higher, up .7% on euro stocks futures. as we've been discussing, we don't have high-tech representation in europe so perhaps we respond to different stimulants and tech still under pressure when it comes to nasdaq futures. we expect that seem to run from asia into the u.s., maybe sidestepping london, the european session i should say more broadly. in terms of where european equity markets open, at the start of trade, the ftse 100 first out of the gate, up .6%. we might be looking for the double-edged sword that is higher oil prices, perhaps an impact on the london market. by which i mean on oil majors, but also airlines. we see oil price $70.30 on brent, up 1.4% after the story
in our headlines around the attack on an installation in saudi arabia. that is something we are watching for. the london market up .7%. the cac 40 in paris, up .7%, the ibex up .8% and interesting to see aviation stocks this morning are moving higher, not responding negatively to the higher oil price, but positively to the fiscal stimulus, the catch up we need to make the recovery stocks and the recovery sector of which they are a part in europe urges the u.s. on friday. european equity markets opening to the upside as the u.s. president joe biden is nearing a win on his 1.9 trillion dollars stimulus plan. the second-biggest in the country's history, it passed the senate on a partyline vote and will return to the house. joining us with analysis, chief economist and founder. good to speak with you. give us your thoughts on how
significant this $1.9 trillion package is. a lot of voices were saying $1.9 trillion won't stay $1.9 trillion but it has survived the process fairly unscathed. what do you take from that? >> good morning and happy women's day. it is definitely a success he managed to bring home the full amount, but then again, the election results were strongly in his favor and more importantly, the global situation and the covid situation is very dire so i think it was a combination of certainly a lot of skill and some luck. but definitely came at the right time. anna: how much stimulus is too much stimulus at this point when we see the jobs story in the u.s. developing as it is, lawmakers try to outdo each
other with up growth, a recovery widely anticipated, how much stimulus should the economy absorb at this point? raffaella: i think at this stage, it is not too much in the sense that you have to understand that the labor market gains are heavily polarized. as is the business sector, and this kind of camouflages the average. labor gains are skewed in higher education and lower education jobs are heavily suffering in the pre-covid, the same goes for earnings so to some extent, yes, the recovery is robust. globally, we do need a robust recovery so at this stage i don't think it is too much stimulus, but what you will likely see is the combination of this monetary and fiscal stimulus is covering the
headwinds that will come from higher fuel prices because inflation is going to jump everywhere including in the u.s. normally -- the impact of higher transport costs have strong -- are almost as strong on retail spending as employment gain. normally, the two would offset each other but this time, it is going to be a much longer lag. i think it will become too much going forward if we don't update our view on how fiscal and monetary policy should adjust to digitalization. so far, it is good. going forward, it will start getting dicey. anna: ok, and does the rise in bond yields, a rising bond yield environment make it increasingly dicey in your words? what do you make of that recent rise? it seems marsh -- markets are bracing for more of the same, and short positions saw a record
increase last week as markets anticipate more to come. how do you interpret that higher yield environment? raffaella: well, if we take a step back and look at our fair value models, we think the 10 year is already pretty much above what real conditions would justify. the market, in a long-term perspective, is discounting tapering this year under a kites -- rate hikes, which is not going to happen so to some extent is overdone, but you have to consider there is massive amount of supply coming in, inflation coming through, and the central banks are not really stepping in with additional liquidity immediately. i think you will see more yields rise in the very near term. i think you will see eventually the fed stepping in and yields coming back in in the summertime, but i think for the time being, we are in higher yield environment.
the path through to the economy is happening. if you look at 30 year mortgage rates in the u.s., they are up 37 basis points from the low in january so that normally is a very big change, but as i said, with all this monetary and fiscal effect, you don't see the impact on consumers yet. anna: thank you for your thoughts. raffaella tenconi. ada economics chief economist and founder. coming up on the market open, brent jumped above $70 a barrel after saudi arabia says one of the most protected oil facilities in the world came under missile attack. limited damage, but it did push prices higher. this is bloomberg. ♪
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anna: welcome back to the european market open. nine minutes into the session and positive, but how much is this out of step with what is going on globally? the asian market session dragged down by chinese technology and nasdaq 100 futures for march, extending losses down 2%. text selloff outside europe, one of our key themes.
let's look at some of the movers that are moving markets this morning in europe and for that, here is dani burger. dani: pearson one of the biggest movers to the downside, the education company missed earnings and resetting, looking at options for businesses including their local education business, but shares, dropping more than 3% on that revamp. keep an eye on the energy sector, one of the stoxx 600 as the price of oil rises above $70 a barrel after the attack on a key saudi oil site. finally, the best-performing stock today, and quite the turnaround from friday, carnival. the cruise line operator, up more than 6%. friday, it had fallen more than 11% but perhaps that was overdone. it is the reopening trade coming back. speaking of coming back, i want to look on u.s. macro markets. we are looking at the u.s. 10 year yield, moving higher yet
again. friday at 1.6%, but you can see that spilling out into other assets. you have the bloomberg dollar spot moving higher today as foreign buyers are moving into the u.s. and of course, the higher inflationary, higher yield picture taking a hit to the nasdaq futures this morning, which are down nearly 2%. anna: thanks very much, our markets reporter dani burger with the stocks on the move and big picture stuff around what is going on in the u.s. in terms of the broad markets, the oil price is part of the story. brent has jumped above $70 a barrel after saudi arabia says one of its most protected oil facilities in the world came under missile attack. iran backed houthi fighters in yemen claimed responsibility for attacks on the saudi kingdom. joining us, more from our oil team. tell us more about the nature of this attack and with the effect
has been. >> yes, as you mentioned, what we learned yesterday was saudi arabia said the world's most protected oil infrastructure, some of it came under missile and drone attack. as you mentioned, the result was the crude benchmark him a brent crude rose. its top $71 a barrel earlier. it has eased back, but the highest since january 2020. that is against the backdrop of what happened last week with the opec-plus coalition. effectively, they gave prices inadvertently a boost by deciding to rollover their production curb agreement and in terms of the incident in saudi arabia, what we understand, production has not been affected so it is not like the situation we had in september 2019 where a huge amount of saudi output was knocked out by attacks on the
kingdom's energy infrastructure. obviously, futures have reacted to this. geopolitical risk thing, and against the backdrop of a series of other attacks houthi rebels have claimed responsibility for. this all pertains to the geopolitical risks. anna: even though as you say, there haven't been disruptions to production to supply. is this game going to be short-lived or more to do with the opec-plus decision of last week? raffaella: the opec-plus decision last week has been supportive of prices. helen: we saw futures shoot up. obviously, there are other factors such as chinese export data, for example and u.s. stimulus measures, and president joe biden so all of those things would indicate demand is
beginning to rise, beginning to recover from the impact as the lockdowns, curbing consumption, and traffic. there are several factors at play here. whether this current price rise will be short-lived, obviously it is difficult to say but what we know is the market is currently well supplied. opec-plus, they are raining in -- they have the potential to unleash above 7 million barrels a day off the market and they have agreed not to release in order to rebalance and keep prices supportive so we are not short of oil. anna: helen robertson from our oil team, thank you for your thoughts. raffaella tenconi, ada economics chief economist and founder is with us. we see oil prices higher, but
partly with the saudi attack, but oil prices were supported by the decision last week from opec-plus. would you expect higher still prices from here and how does that way on the european recovery story as it tries to get into gear? raffaella: well, i think oil prices are getting a bit too high, but at the same time, as long as you are in a cycle where qe is still increasing at some point this year, there is certainly further upside. for the european labor market, the gain has lagged to momentum in the u.s., so i think it is a much bigger downside risk to the european recovery, especially because vaccines are being deployed very slowly and because there are some countries that are still tightening restrictions as we speak. so in general, i think it is a much bigger downside risk for
the european recovery than for the u.s. anna: how would you quantify that? not the oil impact, but the underperformance of the european economy you expect to see here? what kind of lag do we have between europe and the u.s. in terms of the recovery this year? raffaella: well, our gdp forecast for the year can be up to 1% lower than consensus, but what i'm beginning to observe is that in europe, there is an ideological shift, a very important one taking place, which is fiscal policy is going to be looser in more pro-consumption that what we have ever seen in the last 10 or 15 years and probably more than what everybody has priced in into their forecasts. you see it very clearly in germany, which, by the way had already spent -- suspended their debt break it while ago and it
is now announcing further fiscal stimulus. you will see it in italy because the only way draghi can hang onto power is essentially by giving away whatever is needed and wanted. in general, the fact that the vaccine story is underperforming expectations, i think it will push everyone to just allow for longer wage support measures so to some extent, i am bearish on the euro zone recovery, but i have to acknowledge we are likely to see more stimulus coming through on top of additional qe by the ecb. anna: may be more stimulus on the fiscal side and more qe from the ecb. on the commodity side, we talk about whether we are seeing a commodity super cycle and i wonder if in doing that, we miss the details. there is plenty to talk about and plenty of -- there is the cycle, the cyclicality, but also structural change and
digitalization. that is affecting commodities more than others. what are your thoughts on whether we are seeing the super cycle? raffaella: absolutely, actually, i think you are raising a critical story here because we don't fully appreciate how strong is digitalization as a shift and how big it is going to be a headwind for real gdp potential, particularly in europe, because most people think about digitalization as an anti-inflationary effect because we all see the divergence in the labor market, the lagging behind of lower educated workers, but that is only one fraction of the problem and actually, you will see the fiscal stimulus coming in because in the last 10 years, everybody that has been tried to be too much so has not won elections. there is thinking there, but digitalization means investment
to diffuse big data and optimize it, and that will be a very potent trend upward cost effect and also, digitalization means a change in many industries, a shift toward a lagard -- oligarchistic behavior and prices will be stickier and more disconnected from the labor market. that creates an enormous challenge for central banks in the long run. overall, in my view, i think it is very important to focus on the lag. right now, we are in the near term in an inflationary environment, but we will pay some effect in terms of demand probably in the second half of the year, but there is no question in my mind that unless we change the recipes that we produce for fiscal and monetary policy, we are structurally seeing a massive reflation for
the next decade and that will also come with significant credit risks to any country that is not going to embrace the digitalization properly. anna: really interesting. thanks very much. raffaella tenconi, ada economics chief economist and founder. raffaella will be continuing the conversation on bloomberg radio at 9:00 a.m. u.k. time. 20 minutes into the session and the european markets on the front foot. technology underperformance a little. we will talk about ipo's next. take away profits. this is bloomberg. ♪
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on the threat side, they are also competition for deal flow. >> whenever you see the big stream boom we've seen in the u.s., there is going to be some froth that needs to come to the ground. >> they are a useful tool in the capital markets toolkit. >> if it is a good sponsor, a fair sponsor deal that has good pipe investors, if you really do due diligence to acquisition, these things can make sense. >> using the language of inequality, it evens the playing field, democratize is access to high-growth companies. >> some guests on bloomberg tv with their views on the rise in the use of spac's, special purpose acquisition company's. sticking with new listings, ability to raise money, a food delivery company deliveroo has kicked off an ipo in london, putting the u.k. market on track for its best ever first quarter. it comes as the u.k. proposes new rules to attract new listings.
joining us is bloomberg's dani burger and i know this is something we've been discussing. how much does deliveries listing have to do with rules being proposed? dani: it is not a coincidence. deliveroo is hoping to take advantage of these rules but they haven't been put in place yet so it is likely when deliveroo does list, they are not going to exactly be able to take advantage of them right away. the difference is without these rules, stocks can still list in london, but they don't get a premium listing and without that premium listing, it means you are not included in some of the main ftse gauges so you miss out on perhaps some of that passive money, so this is something you really want, but by introducing these rules, which rishi sunak wants push through quickly, it could help u.k. benchmarks. if you look at u.k. performance, the ftse 350 tech as lag to the other regions without having some of these companies included
because of these rules. anna: and we heard from them, they wanted rules to come through quickly, but have we seen pushback against them? dani:dani: we have. it is an error after esg, and by allowing dual class shares where one share gets more voting rights than the other, it is a governance issue. it is giving more power to the founders and we have heard people voice concerns. anna: bloomberg's dani burger with the latest on the listings set to come to london and the regime they might find them selves regulated by. coming up on the program, we focus on the u.s. as the senate passes president biden's $1.9 trillion stimulus bill. interesting to see markets are focusing on the run-up we've seen in tech stocks and selling for the higher yield environment. we are 1.59% on the u.s. 10 year yield. markets focus on the squeeze in
anna: welcome back to the european market open. 30 minutes into our session, european equity markets to the upside. how long does that last when you look at what is happening stateside? let's have a look at the gri. you can see where we are on the sector story for european equity markets. we do not have such high tech representation, but we do see technology as one of the three sectors under pressure, down 0.1%. that was true in asia. it looks like it will be true in the u.s. with nasdaq futures down early on. we see some staples selling off
in europe. utilities, bond proxies, personal consumer, groceries to the downside. we are playing the reflation trade, the steeper yield trade. we see banks moving to the upside. that is a feature of the trade as the u.s. 10 year yield ticks above 1.6% again. let's focus in the u.s. and the inflation and stimulus stories. president joe biden is nearing a big win on his stimulus plan, the second-biggest in u.s. history. it passed on a partyline vote this weekend and will return to the house. joining us is our guest. good morning to you. how significant is this $1.9 trillion? if you had to upgrade your forecasts because of it, because in the initial phases of talking about this deal, a lot of people were assuming it would not remain $1.9 trillion, yet it has? guest: good morning, thanks for
having me on today, anna. as you say, this is larger than our initial forecast. over the last month, we have been upgrading our u.s. growth forecast partly based on this bigger stimulus plan. one point $9 trillion over 8% of gdp. we do not expect it all filtering into 2021 growth. what is crucial is it is leading to trending growth in the future. yes, you are right to highlight it is weighing on bond markets. i would say the combination of the central banks that are being more sanguine about the bond yields as well as the stimulus plan is having a disproportionate impact on yields. we see the stimulus plan as injecting topside risk to our positive growth outlook. it is supporting the sectors of the equity markets that benefit from higher yields and modestly
steeper yield curves. i would say what we are watching is the interaction between higher bond yields and what it means for the rest of the market, whether that is equity, currency, or volatility. anna: you say you are expecting bond yields to rise, but you still see them as facilitating the recovery. i wonder how you strike that balance for stock markets. is it all to do with the speed of the rise in bond yields? and if they rise very slowly, that does not spook investors? what are the limits around that assumption? guest: as you say, financial conditions are crucial here. bond yields are part of that equation. what we are looking at is the real 10 year yields remaining very negative. -65 basis points for a 10 year u.s. real yield, that is extremely accommodative given our growth outlook, given our
views for the global economy over the next 12 months. we characterize the rise in yields as a function of improving growth and the sanguine outlook from the central bank. but financial conditions are crucial. if the bond yields move, it is what it does with volatility and mortgage spreads. i think all of these are crucial ingredients. when we look at what the neutral real rates over the next few years are, we see market pricing as accommodative. what would concern us is, as you say, another big jump or move in the bond market that is not met with central banks soothing or intervention. that is a definite risk over the next few months, especially as we get the strong data out of the u.s. our big case is that the bond yields function off the growth outlook.
as equity markets see that improving picture into two days, that will provide comfort for the markets. anna: it is the size. let me ask you about equity markets geographically, where you choose to put the money, because i notice in your notes you talk about tilting towards europe and the recovery story, and also japan. is this about the structurally different markets in europe -- versus the u.s., or technology versus the u.s.? guest: we do have a pro risk bias and that is a tilt toward more cyclical markets, whether that is europe, japan, and even u.s. small-cap where it has the twin benefit of u.s. fiscal stimulus as well as the reopening environment that we are going to be in.
but why other markets, i think you are right, i think composition is a key ingredient. that cyclical gearing in europe and japan supports those markets. what i would say is this is not a view against the u.s. large-cap market. it is a view on the rest of the world improving as the global economy improves. i know you have been focusing on the downdraft. we have seen it in technology. we see cyclical reasons to catch up in these other markets. from a secular basis, we still see robust earnings in technology. it is not a theme today that we think will be driving that upside for markets. anna: thanks very much for your time this monday morning. thushka maharaj, jp morgan asset management global multi-asset strategist. coming up, we speak to the president of the european bank
anna: welcome back to the european market open. coming up on 40 minutes into the equity trading session. we have gains for the european equity markets. they vary by sector. some of the banking stocks doing well, some of the bond proxies selling off. stoxx 600 up i 0.6%. the higher yield environment, now 1.6 on the u.s. 10 year. that is in focus. it is also in focus when it comes to tech valuations. nasdaq futures under pressure. we have been as low as 2% to the downside on nasdaq futures, but we bring you this chart because we are not far from those session lows on nasdaq futures right now. as the global vaccine rollout picks up steam, it is highlighting the issue of unequal access that countries and a certain groups of people are facing around the world. equitable access is key to economies reopening and the world moving out of the pandemic. even before the vaccine came into play, the impact of the
virus was being felt differently,, with the most vulnerable being hit hardest. the european banks have set aside 21 billion euros to finance projects and businesses in eastern europe and central europe. joining us is our reporter in brussels, maria tadeo. she is joined by a guest from the ebrd. maria? maria: yes, anna, good morning. 21 billion euros in loans to help combat the coronavirus. it is also worth putting out that the european bank for reconstruction and development has an explicit mandate. they already hit their target of 40% of refunding. we are joined by its president, the first female president, odile renaud-basso. i know you care a lot about equal access and equality. that is the goal of the institution that you lead. how much do you worry that coronavirus will set everyone back on that quest for equality when it comes to investment? guest: thank you very much.
i am happy to be with you this morning. indeed, the covid crisis has setback economies. countries that spend more on tourism have been harmed, as well as countries relying on oil and gas. the impact of the covid crisis on the different economies is quite different. the impact of the crisis is very different. [no audio] we know the vaccine will be very
important in the recovery. what is clear is that countries do not have access. some countries benefit from the coverage of global access, common access to the vaccine, countries which are not members of the eu, which is an ambitious program which also foresees the coverage of 20% at the end of 2021. eu members from eu countries have access to vaccines. this is ensuring equal access over time with an extremely important tool for recovery all over the world. maria: you know very much on this side of the channel in
continental europe, there is a conversation about whether or not the european union is nationalistic and it comes to the vaccines. do you see thought happen? should europe be doing more when it comes to securing vaccines for other countries? guest: i think europe is working actively with covax, which promotes equal access to all countries across the world. i hope that the increasing of the level of production of the vaccine is the objective. [inaudible] the production is intriguing.
it is enough to cover all the needs. what is very important for all to understand is as long as the vaccine will not cover all places in the world, we will knock it out of -- we will not get out of the pandemic as a whole. the solution, we need to be global. maria: as far as that global solution, i wonder, you are putting billions of yours out there to work. do you foresee a situation in which you as a european would put money directly to covax and pay some of those vaccines? is that something you would contemplate? guest: we are not financing directly the vaccine or covax because we are a bank which is focused more on private sectors and investing in business.
what we foresee is the responsibility [inaudible] vaccine production in the countries. what we have done in the first month of the pandemic is to support investment in infrastructure, including in the health sector, in order to increase access to health care in some countries, but it was very difficult. our focus is to support the recovery. almost all countries in which we intervened have had a recession in 2020. we see our key objective to support as much as we can. the in equal impact, and
particular, i am thinking of today because it is women's day, the covid crisis has had a strong impact on women probably more than on men because women are working more in sectors which have been affected by the pandemic and have been more affected by covid. what we have to do is help the countries to build back better and address inequalities, as well as you were mentioning at the beginning, the climate challenges. maria: just briefly because we are running out of time, which regions in which projects is the bulk of your investment going to this year? guest: as an objective, 40% of our project financing is green. we are supporting -- we have an objective of 25% of our
projects addressing inequalities, particularly gender inequality. we are working in southern europe, but also southwest asia and north africa. mediterranean countries like egypt. our objective is to support all these countries to rebound and have the strongest recovery possible. maria: odile renaud-basso, president of the european bank for reconstruction and development, thank you so much for joining us to talk about a very important issue, which is equal access to vaccines for all. thanks for your time. anna? anna: thank. thanks to odile renaud-basso. overly interesting conversation around the intervention and where they see fit to intervene at this point. thanks for bringing us this conversation. it is 48 minutes past 8:00 in london.
let's get a bluebird business flash. laura: a food delivery company is kicking off its london ipo that could put the london market on track for its best ever first quarter. it was valued at more than $7 billion since the last round. it plans to list with a structure that will make it an eligible for the ftse 100, despite its expected size. a sophisticated attack on microsoft's business email software is morphing into a global cybersecurity crisis. microsoft is blaming a chinese government backed group for the hack. a senior u.s. official tells us it has claimed at least 60,000 victims around the world. many of them appear to be small or medium-sized is misses. one of europe's best and top-performing bags was named the world's most gender diverse firm. norway's biggest lender achieved the highest score in a new ranking, making sure that women
are not disadvantaged when they have children. the best way is to provide adequate paid parental leave. that is the bloomberg business flash. anna: thanks very much. laura wright in london. coming up, we are asking the question on the markets live blog, which asset will gain most from the stimulus? we will put that question to laura cooper. not much evidence of the fiscal stimulus in u.s. futures right now. we will get that conversation next. this is bloomberg. ♪
anna: welcome back to the european market open. 53 minutes into our trading session. equity markets moving to the upside. in terms of the u.s. futures picture, that looks a little bleaker. down by 1.9% on nasdaq futures right now. let's get into the markets conversation. i am joined by laura cooper. good to speak to you. it is interesting to speak about our question of the day-to-day in context of what we are saying in markets. which assets will get a boost from the one point 9 trillion dollars in fiscal stimulus? what responses have you been getting? laura: i certainly think it is the case that a lot of this is priced in. the top line $1.9 trillion may be a little higher than consensus expected. but i think what we are seeing
is profit taking on some of those cyclical sectors today. the tech route is going to extend because the path of least resistance is for yields to climb higher. really, the question now is looking for instead those inflation protected yields. we know that the stimulus euphoria has been priced in, so it is looking to those financials that provide that dividend uplift, that are tilted toward the reopening trade. energy had an exceptional month of february. looking at positioning, looking at valuations, there is still white a bit of upside for energy. i think it is focusing on those in terms of the post stimulus world they and it is looking at tech, which will come under pressure, because clearly the fed has made it clear they are comfortable with rising yields at the low end. anna: that is where we have seen a lot of those gains have been in a recent months.
just seeing a headline across the bloomberg, the chinese on sure you want raises -- onshore yuan raises gains against the dollar. we are dealing with a stronger dollar this morning and those two sometimes go hand-in-hand. i wonder if that plays negatively to other currencies. now 1.6% yields. laura: the dollar is dominating across we had the offshore yuan pair trade above its moving average. the direction is for more dollar strength. even with the boosts we have had in crude oil prices overnight with brent above $70 a barrel, we are not seeing commodity currencies gain from those tailwinds. i think it captures the strength of this yield environment with real yields continuing to climb in the u.s. and outpacing peers. we will likely see more dollar
strength. yes, that does have a negative relationship with risk assets, predominantly the s&p 500. it does look to be potentially a down day as the u.s. trading session comes later today. anna: laura cooper, bloomberg markets live macro strategist. interesting to see how the oil price is playing through market. we lost some of the earlier gains laura was referencing. the attack on saudi arabia pushing the branch price to $70 a barrel. it is now just under $70 a barrel. while that does put pressure on oil majors, it is not taking the edge off the gains we have seen in the travel sector. interesting to see carnival, easyjet, all moving higher by 3% as the markets focus on the reopening rather than the damage a high oil price could do. that is it for the european markets. "surveillance" is next. they will continue to monitor. this is bloomberg. ♪
>> transparency is not a buzz word. it does not sound terribly exciting. it is quite fundamental. >> a lot of companies look around and notice hong kong as a viable market. >> this is "bloomberg surveillance: early edition" with francine lacqua. francine: good morning and welcome to "bloomberg surveillance: early edition" on monday, the eighth