tv Bloomberg Markets European Open Bloomberg March 16, 2021 3:00am-5:00am EDT
anna: good morning and welcome to "european open," i am anna edwards live in london. our editor joins me to take us through the market out -- market action. here are the top headlines. the dow and s&p closed at record highs as market attention turns to the fed and all important dot plots. european futures trade higher. europe's vaccine campaign in turmoil.
germany, france and italy suspend use of the astrazeneca vaccine. plus, targeted one million electric car sales this year, looking to unseat tesla. we speak to the ceo shortly. it's just gone 7:00 in london. mark is in singapore. what other markets -- what are the markets sing to you today? mark: a quiet day today, and a holding pattern ahead of the fed. in asia, we are a little distracted by china volatility but it seems like chinese stocks have managed to finish and positive territory, a good sign, because there was nervousness earlier in the session. anna: absolutely, we will return to those themes in a moment. just under an hour away from the start of cash equities trading in europe. let's look at futures, a little bit of comb as mark said -- of calm as mark said.
european stocks sluggish by comparison to u.s. european futures have some catch up to play, u.s. futures look more mixed. nasdaq futures pointing strongly to the upside, up by 6/10 of 1%. through the asian session, it's been a bit quiet, but we saw buying stocks and bonds during this increased focus on treasury yields we have at the moment. we are down to less than 1.6% on the treasury yield as we wait for the fed. interesting to see the pound under pressure as well. we will talk more about fx as we go through the program. there has been much talked about legal action against the you key -- the u.k., some sing the pressure is to do with the irish. still a lot in the next. let's think about where we go from here in terms of these markets.
we are waiting for the fed. treasury yields just hitting 1.6% as i speak. a little calmer as we brace for what the fed has to say in the next couple of days. mark: i think some people are interpreting this as a sign of things to come, like the volatility period is behind us overall. i think we saw that with the vix yesterday, the lowest level in a year, a positive sign a equity markets. i am worried about the event risk with the fed tomorrow. i think the leverage issue has become quite binary for markets and could send on markets moving rapidly in either direction, which will then have a spillover effect across the markets, whether it is fx or equity markets. i'm not saying it is skewed to be a negative risk event, but there is a binary risk of a -- risk event tomorrow. anna: we will talk more about that as we build our coverage
toward the fed. we're also talking about treasury yields and what the fed says about that, and what is driving that, easing expectations. the inflation conversation makes me think about what is happening in the u.k. as well, u.k. breakevens at the highest since 2008 yesterday, just as the bank of england seems to be following the fed in its assessment of what is driving higher inflation expectations, and suggests is all about economic recovery. mark: we are seeing the superlative inflation expectations around the world, and understandably given what we've seen in commodity prices and what we know of the stimulus coming into the system and how quickly vaccines are being rolled out in most of the world. not everywhere. i noticed in the u.s., we are seeing inflation measures break even higher in the u.s., little under the radar, we talked about this a lot a few years ago.
the two-year for the u.s. 2.7%. they are all trading higher -- at the highest level for many years. i think there's a risk that inflation expectations get their own momentum and running away from policymakers. anna: i was looking at the chinese equity markets, we've been keeping a close eye on this story, and earlier on, the headlines were suggesting they were finding it difficult to make headway. we've seen a bit of recovery in chinese stocks through the session, the china -- the composite up. there was an interesting piece, talking about the stock bubble concerns he suggest the
national team can deal with, and maybe it's investors who want to go in the china direction some comfort. mark: i think the mine part of the -- main part of the narrative is a chinese duck markets are not entirely free. they are not as micromanaged as the other parts of the economy but the government will intervene at times. that was always the case. the chinese stock markets are a liquidity play more than anything else. we can interpret a lot of the friend policy messages they send but liquidity is the biggest factor in whether or equity markets go up or down. i am slightly worried that as liquidity continues to tighten and short end rates raise in china, that chinese stock markets will be in for a period of struggling in the next couple of weeks. last year, it made sense chinese stock markets performed ahead of the u.s. i think this year they will log the u.s.. i'm not sure what the overall picture is, probably tougher for equity markets overall. anna: we will be back to that theme later in the program no doubt. breaking news coming out of london, six minutes past 7:00, the financial conduct authority is taking action against natwest, one of the biggest
banking businesses in the u.s., filing criminal proceedings, alleging that they failed to adequately monitor -- this is around money laundering. we will get up to speed with that story pretty quickly and follow it for you. coming up, we are back to the conversation around the auto sector and the pivot to ev's and investment in battery technology. the volkswagen ceo talks about the company's earnings and the electric car race. then later we return to the pre-pandemic levels, that's what the bank of america ceo had to say about financial conditions. we will bring you more from our interview with him. plus, we will speak to the africa director of the disease -- center for disease control and prevention about the pandemic. that is coming at 8:30 a.m.
anna: welcome back to the european market open, 10 minutes past 7:00 in london. european futures pointed to the upside. market, coming off records in the u.s. once again, five days of gains for some of these equity markets stateside. as we head toward the fed. mark: i think it's another positive day, we might get more records in the u.s.. we have to watch the s&p 500 level, the big round number, 4000. another thing to note, apart from the equities slight positivity, oil markets are little soft today.
that is an interesting one to watch. anna: that can have an impact on the london open and we will keep an eye on those oil makers. let's focus in on automakers and the race to lead the electric vehicle volkswagen is targeting one million ev sales this year. it is planning to build six battery factories and invest globally and charging stations. the push will cost some $29 billion. that as volkswagen is setting up efforts to kick tesla out of the driver seat as the dominant ev maker. joining us is matt miller, and you will be speaking with the volkswagen ceo. matt: let's bring him in. herbert joins us after a slew of announcements. so much news around ev's. you are investing on multiple fronts. i wonder first, which do you
think is the most important in order to win over the consumer? i mean, the battery factories, you need to keep costs down, but how quickly can you build out the charging stations? herbert: i was say it is a mixture between. we need to scale up at her ease but we are good until 25 or so. we are heavily investing in fast charging, which is probably the biggest constraint on the customer front because of range anxiety still. some regions in europe are well covered, germany is growing, but other regions are lagging behind like spain or italy. that's where our investment mostly goes, into fast charging, and providing home charging devices. step-by-step, we see the situation will alleviate, and i would say the battery capacity,
ev capacity, and fast charging capacity. so far it is going well. ev's, a sickly all competitors are following us. -- basically all competitors are following us. matt: i look across investments and i see when he $9 billion for battery for -- battery factories . obviously a cost aliens of dollars to design these new cars and put them together. how are you financing what looks like almost $200 billion in investments to push into the electric car industry? herbert: you know, we don't do all of the investing by ourselves. we are joining forces on the fast charging side. we also have very strong
financially groups. we don't spend the money all ourselves. we do some investment internally, most of it is still also with partners, startups or established manufacturers. it is important to find the rules on technology and we set the standards. to finance, we finance internally and we have strong cash flows from our i.t. business. last year and also this year we are fighting hard to get our -- i would not call it legacy business, but the internal combustion engine business, we want to keep it going strong and we are working hard to keep a strong and profitable. matt: how long will you keep the internal combustion business? i know you want to have 50 electric car models by 2030.
am i still going to be able to buy a 9/11 with a gasoline engine? herbert: you should be able to buy still. i think the implementation will last two lifecycles or so until 35 or longer. it is -- it depends a lot on regional policies. also, electric doesn't make sense in every environment because electric acacia -- electricfication only works in certain situations. that's why we assume the reasons we will have different speeds in transition. europe has taken over and there is a strong push with the new administration in the united states as well. china keeps on pushing but there
might be regions that only come 5, 10, 15 years later. matt: the market has taken the electric vehicle push well. you have pushed your stock to a 5.5 year high. you're still looking at only about 20% valuation of a tesla, even though you plan to sell more electric cars than tesla this year, and the growth forecasts are much stronger. why do you think the market values tesla so much more and can you get to that kind of valuation? herbert: this transition is not only about ev, it's also about the car becoming a really connected device, and finally also driving out on a mislead. this is a huge value -- driving autonomously. this is a huge value. traffic pools are shifting from
ic engines to electric cars, and then to autonomous cars. we are traditional, so we don't get all of the credentials of a start up and we have to prove. but it also works once we prove and we think we can prove this year that we are strong in ev and competitive in ev, and then we have to prove we are strong in autonomous and software, and the market will follow. this is a long run, it is not about a year or so, it's about 15 years probably. decisive within the next 5-7 years. anna: -- matt: one of the things people have been talking about for years is the possibility to unlock value with the ipo of porsche. the value is so strong and you have shown the results have been incredibly strong.
why not sell the business or a part of it to the public and boost those valuations? herbert: you are absolutely right, porsche is very strong, they had a very strong year. i think for me, the biggest alleviation, which really up trust with porsche is they are also shifting to ev's successfully. you never know whether the customer will follow this route, but now i think we have certainty. we started with a top-of-the-line product for porsche and porsche had the most aggressive transition plan into ev's, 80% by 2030. they want to be fastest in a transitioning their business and they are very strong. but they are also strong because we have platform synergies, with
audi, we are producing some porsches in our manufacturing network that as to the value of porsche. a standalone for porsche probably is not what you want. they get the resources they need so they can develop. for financing, we have good cash flows that allow us to do all of the investments we need in new technologies. matt: porsche has done incredibly well with the ev push, the tykon is impressive. those margins are great. i wonder about the volkswagen brand business, though. it had a difficult time in 2020. how do you see turning that is in his into a success in 2021,
2022? herbert: i have to say, i am really happy with the performance of volkswagen because once again, most of the success in china comes from the volkswagen brand, those are the products designed here. they are can bidding a lot -- contributing a lot to the well-being and wealth of the group. in europe they had a tough year, but i am happy with volkswagen because they are delivering a nice turnaround story in latin america and will become profitable in difficult conditions and difficult surroundings this year. also north america is doing a terrific job. kia is act again and we are gaining market share. next years we will come with ev's.
they will be produced in america. i think volkswagen contributed a lot and they are also strongly focusing on costs and they will reduce material costs and i think they will be in very good shape. matt: herbert diess, thank you for joining us on bloomberg, the ceo of volkswagen talking about the results from last year, but more the push into the future, anna and mark. he has been clearly out front when it comes to investing to build an electric car business. i guess we are starting to see the results. anna: absolutely, and it will be incredible to see the economies of scale a business like this can bring to battery production, and the scale of their ambitions and that particular part of the ev chain. thank you for bringing us that
anna: welcome back to the european market open, 7:23 in london. let's talk about the battle between value and growth we have seen in these markets of late. our guest joins us. catherine, i'm thinking about these because we are approaching the fed, thinking about treasury yields and where they are at this point. what are the sectors you are looking to increase exposure to right now even -- a given the pivot we have seen in markets in recent months? >> i think generally, financial markets continue to find themselves in a tug-of-war
between favorable macroeconomic conditions. we expect the global economic recovery to pick up speed and the second or third quarter. on the other hand, central banks and especially the federal reserve have to keep tapering -- at bay. it is moderately rising yields and you mentioned the value in growth stocks already. we think is environment -- it is an environment favorable for value stocks for the time being. mark: what is your best way of expressing the u.s. exceptionalism we are seeing at the moment? >> the best way of expressing it? several ways, actually. first of all, growth in the u.s. and the economic recovery
outperforms other regions, particularly the euro zone, which is lagging behind in terms of vaccinations. vaccination rollout is another difference. when it comes to central banks, the ecb has last week added -- while in the u.s., the discussion is around a potential tapering, potential communication of a first step to what is tapering by the end of the year. anna: stay with us, i know that was a brief conversation, we will be back with you after the break. a little taste of her views about investing in the u.s. and elsewhere. we will we -- we will be back with her shortly. it is time to buy stocks, not bonds, are they really a bad bet? that conversation is next.
anna: welcome back to the european market open. we are 30 minutes away from the start of the european equity trading session. mark, i wonder what you are watching for. the pound a little weaker, but that might be yesterday story come around legal action by the eu, maybe filtering through the asian session. what is on your radar? mark: i am watching this can move i don't have any explanation. it accelerates in the last 10, 15 minutes. there is a general theme of
dollar weakness and also a little bit of dollar strength and sterling weakness on both sides of the cable exchange rate i am not sure quite what is happening. it seems like the major news is yesterday evening. anna: we will keep an eye on that and on the fx markets, a little dollar strength more broadly coming through. euro-dollar is barely flat. let's get a bloomberg's newsflash. laura: credit suisse has recorded its best start to the year in a decade. revenue is up more than 50% in the first two months, but the lender is warning it may have to take a charge to the low. the firm is facing questions about its controls and risk management. the world's largest commodity trader shaking up its top management. three of glencore's most senior traders are sent -- set to depart, is part of a wider changing of the guard at the farm.
according to an internal memo, all the new department heads are men. china signaling its month-long crackdown on the internet sector is only just beginning. leadership warning it will go after so-called platform companies that have a master data and market power. president xi ordering a crackdown on monopolies and for regulators to step up oversight of tech firms. that is the bloomberg's newsflash. anna: thank you, laura wright in london. it is time to buy stuff according to ray dalio. the bridgewater cofounder has long been known for his disdain of holding cash amid rising money printing and inflation, now the billionaire investor says bonds may be a bad bet as well, calling the economics of bond investing stupid. our guest is still with us. ray dalio says buy stuff, not specific on what that is, but he means don't just leave your money in cash but do not buy bonds either. you share his -- his negativity
on the economics of a bond buying? >> clearly higher inflation rates would eat into the cash value of fixed income instruments and this would you learn -- this would generally be a challenging environment. for the time being, we expect a continued pickup moderately of yields, which would lead to the result that government bonds should, from a multi-asset context standpoint, rather be underweighted or a duration short. with fixed income, it is attractive to look at curve steepeners, particularly in the u.s.. overall, the inflation environment is conducive for
risky asset classes, particularly with the acceleration in global growth in mind in the middle quarters of this year. mark: as you are tracking the yield story, which measure are you finding most relevant at the moment, real yields or nominal yields, and which part of the curve? there is an argument at the moment that it doesn't matter what is happening in nominal yields, it is about real yields, but some people think it's more about the long end than the front end. what is your view? >> to begin with, the short end of the curve really anchors buying, particular interest rate policy we don't see any interest rate hikes on the horizon. as for the split up of nominal yield and breakeven rates and real yields, i would concur that the focus should be on real yields. because in the past, as the 2013
taper tantrum gave us some lessons, and the past, a fast pickup in real yields was not only reflective of bright economic prospects but could also be assigned of an overheating economy and a potential premature recalibration of monetary policy which could be a concern for investors and risky asset classes. we are not there yet but i would clearly say that real yields are the ones to look at. anna: the real yields are your focus. as we head toward the fed meeting, you say you don't see hikes on the horizon. i wonder how you view the dot plot from the fed and what messaging you are looking to find in those dots. how much do you rely on that with the communication you will
look at this week from the fed? >> the dots would clearly be one aspect that has focus, apart from any remarks from jerome powell concerning the recent hikes or rises in yield. regarding the dots, they will reflect really the bright economic prospects in the u.s. with the fiscal stimulus package just having been passed. i would expect an upward revision of the gdp growth, from 4% to probably north of 6%. this will also be -- a downward revision of the unemployment rate forecast. we will likely also see changes in the interest rate dots. in the summer projection there was no interest rate hike envisioned for 2023 and i would
be surprised if this changes and one hike would be envisioned for 2023 when looking at the medium dots for the interest rate picture. mark: if we get one hike price for 2023 as you forecast, how do you think markets will react? will it be enough to scare markets a little bit? many people are saying the median will be no hikes 2023. >> i think what would be even more interesting and important for markets is any kind of hint toward a tapering. -- tapering of asset purchases. interest rate hikes are not taking place. probably in the distant future if at all. the tapering will come first. here i would expect the fed already to prepare markets for
incremental tapering in the third quarter of this year, because the economic outlook for the time being calls for recalibration of monetary policy asset purchases in 2022. anna: thank you for joining us, we appreciate your time. thank you for joining us. 22 minutes until the start of the european equity trading. set -- something hung over yesterday's session, dominant in european news coverage this morning. coming up, the latest on astrazeneca. some of europe's biggest countries have halted use of the vaccine after reports of blood clots in some recipients. this is despite the medical agency saying the vaccine is still safe. we will bring you the details. this is bloomberg. ♪
anna: welcome back to the european market open, 20 minutes until the start of the european equity trading session. futures to the upside, suggesting catch up with the u.s. yesterday, futures up as much as 6/10 of 1%. interesting lines from nokia, saying they could reduce as many as 10,000 jobs in a plan to cut costs, keeping the 2021 outlook. i wonder how much of a feature cost-cutting will continue to be through this recovery in 2021, whether some businesses will feel more able to do that even if many investors will be focusing on recovery and topline. mark: it has been a massive seen this past year despite the government support. i think it is slightly
underappreciated, even though we've had a very weird and unique economic situation, a steep contraction and a fast recovery, the profit outlook is exceptionally strong, stronger than you think even the pandemic because because have been cut so aggressively already. that provides negative headlines in the economy but is helping individual stock outlooks. anna: it's interesting and our last guest was saying in her notes it has been more than a decade since investors have seen strong earning upgrades in europe. let's keep that story as it relates to what you were just mentioning. let's turn our attention to something more pressing for european governments, the vaccine rollout. europe's vaccination push is pushing into further disarray as some of the biggest country suspended use of the astrazeneca vaccine. in a coordinated that, your money, france, italy and spain have halted use while they conduct a review. findings will be released on
thursday. this despite a statement last year that the number of lug clots and vaccinated people were no higher than the general population. there have been 30 cases among 5 million people who receive the shot. the cofounder of moderna told us speculation is unhelpful. >> at the same time we will learn a lot as a vaccine comes to market, and as we detect certain things we need to pursue through scientific method, being able to delineate that which is constantly link -- causally linked, and those that cannot be linked to the vaccine. until that is done, i am sure authorities are taking the cautious approach to adjust that. i think speculation is not helpful. anna: let's get more with maria tadeo. good morning, another day and another twist and turn in the relationship between the
european union and astrazeneca. what precipitated the caution by so many nations in europe? maria: it is germany, to put it in simple terms. the decision by germany yesterday, controversial decision to suspend astrazeneca. they say they are worried about blood clots and they want to make sure there is no direct link between the vaccine and blood clots. it really is the germans making that decision that triggered a domino effect in the european union. immediately after, the french, italians, spanish, all suspending this until there is further clarity from the european agency. i want to stress that the european union has a right to carry out a review and it is perfectly legitimate if there are real concerns. the issue really is the communication, which has been all over the place for days. information has been contradictory, some information
has not seemed fully accurate and it goes against the european medicines agency that just yesterday put out another statement, the third in a week, saying at this stage, the way they look at it is astrazeneca has more benefits than risks from taking the vaccine. that communication is becoming a problem for the european union in terms of the safety of a vaccine, a very delicate issue. mark: good morning, maria. this story is fascinating because we have become armchair vaccination specialists over the last year despite having no knowledge for it is affecting our lives and it matters for every part of politics and economics and markets. how does this play out next? maria: you make a good point. ultimately this should be down to the doctors and that's the criticism, a lot have criticized it should be about the data and the doctors and scientific community. i want to reiterate, they are still saying they see more
benefits than risks from the vaccine. yesterday, emmanuel macron said he was suspending astrazeneca, he wants to see more data. on thursday, there will be a new review into the vaccine. at that point, the european medicines agency could to pot -- could decide to pull it all together. they could also say let's use it, it's safe. really the question is whether or not the reputational damage has been done already, the damage carried out to astrazeneca, that when you look at anecdotal evidence in europe, it has a problem compared to other vaccines. that could lead to more distribution issues, which has been the number one problem in the european rollout from day one. it is problematic on every front. anna: thank you for the update, maria tadeo. we will be sticking with the theme of vaccination, but thinking about a different part of the world, thinking about
africa. we will speak later to the director of africa's centers for disease control. we will discuss how the rollout is progressing, the infrastructure needed to vaccinate more than one billion people in more than 50 countries, and the global response to the pandemic. that interview at 8:30 a.m. this morning. he will be joining us later in the program. mark, it is interesting, of course that affects everybody's lives, literally life, but also whether economies recover and affects financial markets, as we often have to deal with and talk about on this program. do you think the delay in the rollout is something that has been weighing on the euro of late? we don't have the same euro strength concerns, the ecb doesn't have the same euro strength concerns it had some months back? mark: it has definitely been weighing on the euro a little bit in recent months. i think everyone thought there
was just going to be a delayed start but the euro zone would quickly catch up on vaccinations and we are seeing the opposite. they got a faltered start and are throwing more obstacles into their own way and falling further behind. when you combine that with a confused -- maybe confused is too strong, but a lack of clarity on the policy front, the german elections on the weekend, and eurozone taking action against the u.k., it shows there are still brexit tensions. maybe politics are still influencing things on the astrazeneca side. overall, it's slightly negative for europe, which is already lagging on growth. anna: it was the european ability to show it connected together last year that was one of the sources of the euro strength. we will see what can happen if things pull together. let's talk about the banking sector, inc. of america ready to compete -- inc. of america ready to compete with fintech
startups. the ceo says they have an advantage because of their scale. >> so far so good, we will see how it comes out. leadership is done a great job. investment begging and corporate banking side have done a great job. three record quarters in corporate and investing banking in 2020 and strong trading in 2020. but you have to step back and think what does that really do? it represents clients were able to raise capital and position themselves through the crisis in ways that was remarkable. people needed capital to build a bridge to the other side of the crisis were able to raise that capital. that is pretty amazing. i think it goes to show you, in the u.s. especially, the resilience of the economy is unique on a worldwide basis and we should not forget that. >> look over the horizon a
little bit, walmart's like it might be going into the banking business in whatever way, shape or form. bank of america is so strong throughout the country, particularly with retail banking. are you concerned walmart could come in and compete with you effectively? brian: we look at all potential competitors. i have thousands of banks that are competitors today, but we define what we are going to do. we have been driving in the core retail bank. we serve all segments of clients, mass-market retail clients, wealthy retail clients, small businesses, large businesses, capital markets. that franchise is second to none and we can drive grows across it all. when he think about competitors coming in, we study all competitor moves, whether it is fintech disruptors or major players, and look at what could they appeal to customers and how could we appeal? we just crossed 40 million
digital customers. we are seeing half hour activity in the wealth management business going digital. these are things -- i respect every competitor, i don't fear any competitor. the job of management is to drive this company hard. anna: the bank of america ceo, brian moynihan. nine minutes to go into the start of equity trading. we will be looking at stocks to watch. credit suite in focus as they flagged a trading surge, warns it may -- about it sale to green sale capital. this is bloomberg. ♪
forecast would be as high as an increase of 29% in revenue. they are continuing to benefit even though some of the lockdowns are easing. investors likely to bid that stock higher. credit suisse called lower today, saying they saw a 50% increase when it came to their investment banking revenue in the first two months of the year, however, they are flagging saying they might have to take a charge on a loan. they have recouped about $50 million worth of the loan they made. finally, mount west, dachshund natwest. -- natwest. they are saying that they failed to scrutinize transactions. natwest has said it takes seriously its responsibility to
seek to prevent money laundering by third parties and has been cooperating with the investigation. anna: thank you very much. dani burger with the stocks we should be watching. keeping an eye on financials and also oil stocks as well. oil prices to the downside. mark: here are two of the outperformance of the recent rotation, financials and energy stocks. financials and negative focus because people want profits after recent gains. why not take some money off the table? it will be on some traders mind today, given the cyclical names have done so well recently. anna: thank you very much for spitting the past hour with us. i will be back with the european market open next. european futures to the upside, expecting to see modest gains for the european equity markets. u.s. futures look a little more mixed. nasdaq futures up by have a
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anna: welcome back to the european market open. when minutes to go onto the start of cash equity trading. doubt and equity to record highs. european futures trade higher. europe's vaccine campaign and turmoil. suspending the use of the astrazeneca vaccine. volkswagen targets one million electric car sales this year as it looks to beat tesla as the dominant e.v. maker. let's take a look at equity market futures right now.
they have been pointing to the upside. ftse up by .6%. we are expecting to see some gains this morning. european equity market playing some catch up compared to the u.s. yesterday where we saw new records coming for some u.s. indexes. the asian equity session, buying stocks and buying bonds. a little bit of a drop down in treasuries. treasury yields on the rise but not moving that quickly. it is the pace that matters so much, still around 1.6%. european equity markets getting out of the gate and opening, as you can see. european equity market up by about one quarter of 1%. ftse up .6% despite the negative oil prices which could weigh on the large energy businesses.
european equity market opening to the upside. that is the european vaccination push is going further into disarray. some of the biggest countries have suspended use of the astrazeneca vaccine. germany, france, italy and spain have halted the use while there is a review. guidance from the who has been to keep using the vaccine. joining us is melanie baker, senior economist. good is be to you. this is something that has preoccupied markets a little bit. one country do it and then another. despite the guidance from many in the medical profession, many of the regulators that suggest it would be better to use the vaccine while these investigations are taking place -- i wonder from an economist perspective how much we are seeing now delays to the european recovery, to the
european growth story as a result of the slowness of this vaccine rollout. melanie: it is significant when you compare it to the u.s. and the u.k. where the vaccine rollout has been successful, quick and increasing confidence for the strong second-half recovery. the euro area's theory -- story looks challenged but i am hoping these vaccine delays will be temporary and looking at this on thursday. i would expect the deliveries of vaccines to be stepping up and coming months. i hope this is a temporary thing and we still get that strong second-half recovery in the euro area. anna: i am wondering if that is still your base case, that the second half of the year recovers well for european economies. give us the wording you would use. i am asking this because of the delays to rollout of the vaccine
but france expects a better 2021 recovery that it had previously forecast. it sees things as improving that the french economy would avoid a second dip because it has avoided a full locked this time around. what i your expectations for europe in that regard? melanie: i do worry with covid cases rising in the euro area, we may get a setback in the second owner of this year. the vaccine rollout is continuing. i expect it to continue in the euro area. i still think we are in line for a stronger second-half at the moment. that will be helped by better global demand. the u.s. fiscal package will help excel demand. i think it is on track. anna: what do you expect the ecb to do in response? so far, the messaging has been they will bring forward some of these purchasing, that they would not increase the emergency
bond buying tool they brought in. that is still the expectation, i guess, because it was only very recent. how much further setback would you have to see to the european story for that to change? melanie: interesting question. i think it is a significant setback, but the next step might be to extend it even further. my central case is for no further action in that sense. again, the risks are there. anna: stay with us. melanie baker, royal london asset management senior economist. the 10 year inflation expectations climb to the highest since 2008. that discussion with melanie is next. this is bloomberg. ♪
anna: welcome back to the european market open. seven minutes into the market session that is broadly positive. dani burger is with us. dani: the biggest mover to the upside is orlando, upgrading its forecast, seeing 29% growth for the quarter in terms of revenue. online sales staying strong despite some normality returning to the world.
another stock that has been moving to the upside. helping sentiment so far this morning. always interesting to look at nokia because that is one of the meme stocks we have seen. finally, waffling between gains and losses over the last few minutes, at the moment down .5% with the fda complying with money laundering rules. i want to take a look at the broader market. all eyes continue to stay on what the fomc will do tomorrow. i wanted to point out small caps. russell 2000 down today, it will be the first day of losses in seven days to be continued at this pace. a breather in some of the rallies we have seen in those more cyclical names. bitcoin at $55,000. it hit a record over the weekend. some of the commentary seems to suggest the stimulus check was overly priced in.
the thought that people would use that money to buy did is lowering. anna: dani burger with the latest on these markets this morning. let's focus on the u.k.. market expectations of inflation rose to the highest level in over a decade. a level not seen since 2008. melanie baker, senior economist, is still with us. we have been watching these market based assessments, assumptions, the pricing it of inflation expectations for the u.k. how concerned are are you based on what we've seen with 10 year breakevens? melanie: somewhat concerned, not necessarily from what we can see in breakevens, but i think there are significant upside risks to inflation in the case of a strong recovery. i think you can increasingly
make the case for a strong recovery in the u.k. with vaccine rollout's going well, covid numbers low, keeping the government plan for another set of lockdowns on track. more fiscal stimulus added just recently as well. i think it is an increasing risk . that said, i think if we did have a sustained rise in inflation and inflation expectations with wage growt picking up, i would not expect the bank of england to just sit back. anna: we are away from that. it is interesting when you think about the way the bank of england has responded to rising yields. the global rising yield environment. we haven't focused so much on treasuries, but this has an impact on europe. the ecb has tried to push back against those rising yields. the bank of england is doing more what the fed has done which
is to suggest this is all for the right reasons, improving growth expectations. how would you see that strategy from the boe playing out? do you think that is the right message to be adopting at this point? melanie: i think it's ok for now. the u.k. outlook has improved so it makes sense bond yields are somewhat higher, but it is a fine line for central banks to tread. the recovery is far from complete and the u.k. -- in the u.k. we saw the gdp levels and how far below pre-covid levels. you don't want bond yields to move so far and so fast that you cause a significant tightening in financial conditions that it's too much for the economy to cope with. i think there's a fine line to tread. i think what will be interesting in the minutes this week is whether the more relaxed attitude we have seen from
governor bailey is true of the others as well. whether there are differences of opinion. anna: pivoting to the u.s. -- we mentioned it in passing but the recovery in the fiscal stimulus, the size of the fiscal stimulus -- we spend a lot of time asking guests whether we will see in overheating in the u.s. economy. we've heard various views. to what extent do you think a plan to increase the tax in the u.s. could push back against that overheating or is the latter going to be so much smaller than the fiscal stimulus that it is not significant? what is the balance of risk? melanie: i think at the moment, it is more towards the overheating side. it is not just this last fiscal stimulus package, which is the continuation of the stimulus we've had in place already. the fact that there is an
expectation of another physical package centered more on infrastructure, providing more stimulus over longer period to the u.s. economy. i think there are some risks. on the inflation front, i central bank has an official framework and will be tolerant of some inflation overshoot. i think they are in a difficult position compared to others. anna: we will hear from the fed this week. what will be your focus on the monetary policy side? a lot of people talk about complementary measuring ratios and what the messaging might be. more generally, is there an expectation we hear a message from the fed this is for good reasons, yields go higher and as long as it's about stronger economic growth, the fed does not mind too much. what is your expectation? melanie: my expectation is we get a fairly consistent message from what we've gotten so far from powell.
so far, the rising bond yields that we've seen is consistent with a stronger growth outlook, but they may be quite clear about what it would take to cause a reaction or more clear what it would take. that would be centered around disorderly conditions in markets and financial conditioning that have tightened too far and inappropriately. we may get more color on some of that from the fed but i think the messaging of the forecast will be interesting as well. we may get more participants penciling in a rate hike before 2023. anna: melanie baker, royal london asset management senior economist. thank you for spending time with us this morning. coming up, we will talk about a sector that is interested in what the fed has to say -- banks. a big day as news from the
anna: welcome back to the european market open. 18 minutes into the european trading session. equity markets moved to the upside. a little bit of breaking news in france. france begins the sale of a new green bond for the first time since 2017. we will keep an i on the rollout of green finance more generally. bank of america ceo brian moynihan says u.s. consumer spending is up 10% compared to this time last year as the recovery continues. he spoke to david westin about the risk of inflation and his team's forecast for growth. brian: our team has the u.s. growth predicted -- the number one research program for many of the last decade -- they've done
a terrific job. they have the u.s. growing at 6.5% for 2021 and 5% for 2022. that is an economy basically the same size of what it was coming into the middle of the end of 2018 which was pretty good times. predicted to grow three times the rate with an interest rate environment that is probably half or lower than it was. at that point, 2.5% moving towards 3%. the fed funds rate is much higher than it is now. then you add $1.9 trillion stimulus on top of it, plus stimulus still unspent. you put that altogether, and then the stimulus of people going back to work, the team has 6.5% in a huge economy, growing faster than the world economy. if you think about that, that is pretty powerful engine that has
recovered about 95% to 97% of where it was, and now is growing at three times the rate. that is a pretty powerful prediction. our team is convinced that is all there. david: that raises the question is it possible we may be overheating the economy? we've been increasing the money supply, up about 25% year-over-year. there has not been much velocity. what happens when they come out? some of those deposits you talked about, didn't spent the stimulus checks. are you worried we could get inflation that could be troubling? brian: that is part of the discussion in the market. let me tell you what we are seeing in the customer base. if you think about last year up until march 9 or 10, that was before any activity was taken to shut down and we were hearing about this virus and learning about it. it was march 15 and out when people started ticking at the government level and employee
level significant action. if you look at that period of time, it grew double digits. when you look at it 2020 to 2021, we are not growing at 6%. for the month of march, it is actually growing above 10%. that is pretty unbelievable. what you are seeing now is the credit card charges which had been depressed because of a lot of travel and payments, they are back in growing over year over year. you are going to see massive year-over-year comparisons as you move into april when everything was shut down. the consumers of the bank of america, which is 50 million people spending $3 trillion plus a year, are spending more money than i did last year and growing at 10%. that was before the pandemic. that bodes well. if you look at the charges on a credit card, seniors and boomers are getting vaccinated, up 50% in charges in terms of travel
and related things. you have seen the tsa statistics. by the way, grocery stores are done a little bit. why? people shifted to restaurants. that all bolds well for normalization of the economy. anna: boomers back on the move and that bodes well for the credit card companies. brian moynihan with really interesting insight. natwest is facing criminal charges for failing to comply with money laundering rules. it concerns over 260 million pounds. the financial conduct authority says the bank failed to adequately monitor and scrutinize the large cash deposits. natwest says it takes money laundering extremely seriously and is cooperating. credit suisse has recorded its best start to the year and more than a decade. revenue at the investment bank was up more than 50% in the first two months of the year. joining us for more on those stories is michael moore, our
managing editor for finance. good to have you on the program. first of credit suisse. what does this mean for performance at the outlook for the bank, the things they told us this morning? michael: sure. the first indication we have gotten, the first couple months for the european banks. we are going to be hearing more from the european banks over the next couple of days at a couple of conferences. we knew it was a strong start to the year. this is perhaps stronger than many anticipated. in terms of the revenue environment and with the event activity in the stock market, it seems that banks are benefiting from that, carrying over a very strong 2020 on the trading and banking front. anna: telling a very positive story there. we know the stories we've recently been covering -- they mention to that this morning. how could the debacle disrupt
that good start to the year we've heard so much about from credit suisse? michael: certainly. it is definitely an overhang for the firm. they talked about this morning, on the loan they made to greensill. $50 million of that have been repaid. that could be a hit on the provision side. i think the more concerning peace for credit suisse is what it means for their asset management business. they have 10 million of funds that are frozen. what the fallout from that is from a client perspective is think where a lot of the concern is. the loan loss would not be great, but i think there are bigger concerns about the asset management side. anna: moving onto natwest then. we heard this morning about the money laundering charges. what do we know? michael: this is an
investigation that has been going on for a number of years, starting the middle of 2017. what's alleged is that a customer made increasingly large cash deposits and ended up depositing more than 250 million pounds in cash at the bank. what the fda is saying that should have tripped some alarms on the money-laundering front. this was over several years in the last decade. natwest says they've been cooperating over the course of several years with the investigation, but now we have moved from a probe to a criminal complaint. anna: ok, interesting. thank you very much. michael moore, managing editor for the finance team. a quick check of those share prices of the businesses. natwest down by .9%. credit suisse up by 2%, just
over 2%. a couple of other movers. 25 minutes into the european trading session. do lando is moving higher. cornering 1/10 of europe's fashion market. very pudgy statement from that business after hours last night. that stock up by 5.3%. we have a mover in volkswagen. we heard comments from our interview with the ceo. that stock up by more than four than percent. after this big push into the world of batteries, trying to bring the economy of scale to the production of batteries. they will do some of that with partners and some of it alone. coming up on the program, vaccination efforts in africa. we speak to the director of africa's cdc. we will discuss how the rollout is progressing, the infrastructure needed to vaccinate more than one billion people in more than 50 countries, and the global response to the pandemic. we will be back with that
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♪ anna: welcome back to the european market open. 30 minutes into the european markets moving up half a percent this hour. if we break things down to how things look from a sector perspective and we've got energy for the downside, not many sectors in negative territory but energy is one of them and this morning oil is down .9% w-88.28 is the price. auto parts move higher. b.w. is one of the big gainers within that sector.
let's turn our attention to the vaccination efforts in africa and only a handful of countries have begun a rollout of vaccines, fewer than half a million people have received shots in sub-saharan africa. most governments have yet to fuel supplies and the continent is heavily reliant on the covid vaccine and only will jab 20%. as they trickle in they're facing infrastructure and shortage of trained personnel and the adequate data on those needing to be vaccinated. joining us is a doctor from the africa centers for disease control and prevention where he's the director. thank you for coming to talk to us. wonder if we can start by getting a sense of the size of the covid problem and outbreak in africa. some studies have suggested in the past dumb months there is
vast undercounting of covid in some places outside of south africa, how concerned are you about that? doctor: thank you for having me on your program. the budding of covid in africa is huge. the country has reported slightly over four million cases of individuals who have been infected with covid. we certainly know that is an underestimate because there are studies that are conducted to determine if people have been exposed to the virus and have antibodies to the virus do show up in settings like nigeria, zambia. many have recovered from it and very young people are infected but really don't get sick. in our own setting in the africa c.d.c., over 20 young
people have been infected and nobody hospitalized. there is one unique future in africa. anna: what's the best way to vaccinate people in africa? is it through covax or african countries doing their own bilateral deals with drug manufacturers or is it a mixture of both? what is the best path? doctor: it is a mixture of both. head of states agreed on a common target, in order to get out of this, we should be able to vaccinate up to at least 60% of our population and that will require up to 750 million people are vaccinated in the next two years in africa and that is the target we set for ourselves. it's been agreed they will supply the continent with 20% vaccination doses which we are grateful. you don't get to 60% without
agreeing to 20%. the leadership of the country and also with the initiative of the syrian president when he was here set up the african vaccine acquisition test which was designed to complement the efforts of covax bringing our efforts to at least 60%. we are using all mechanisms at our disposition to try to reach a common target of at least 60% of immunization. you just read last week china is trying to immunize up to 80% of its population and europe is trying to immunize as high as 70% to 80% as well as the united states. there's absolutely no way, no wisdom trying to vaccinate only 20% of its population. anna: africa needs to aim higher. what is the best argument you can think of for the rest of the world when you see the
amounts of vaccination ordering done in the west. what is the best argument for the west to not halt that vaccine after it has vaccinated the own population and vaccinate africa more. what do you suggest? doctor: this is a virus unprecedented and a virus that spreads extremely quickly. we're almost past the one-year mark of the first recognition of this virus and no one could have imagined in 2019 close to 120 million people would be infected in all countries in the whole world. no one could have madged 2.6 million people would die in one year from this virus. so i think there's wisdom in thinking if we do not immunize the entire world almost simultaneously, then we'll not get rid of this despite the fact of individual efforts in the developed world may immunize to appropriate levels.
we have to look at this as a collective solution, we have to emerge selectively from this and restore collectively for so long. the easiest way to get out of this is immunize ourselves collectively. anna: which variants are you most concerned about at this point. there's been a suggestion if the virus is left to circulate in the african population like anywhere else, it would lead to the opportunity of variants to develop, which variants and where are you most concerned about? doctor: the variants are very concerning. our greatest efforts should be in the prevention in the case that we apply to the majors and make sure the vaccines are distributed quickly. if we allow the virus to replicate there will be more variants. the virus varies and implicates us as quickly as the virus. so it is in our interest to
vaccinate very quickly so we stop the circulation of the virus and the issue of variants will be done. the continent has new variants. today the variants have been identified in u.k. and brazil and south africa but tomorrow will be many other variants if we allow the virus to keep circulating and there's plenty of wisdom in trying to vaccinate everybody almost aggressively and simultaneously than vaccinating some parts of the world and some parts of the world are extremely left behind. anna: i think the astrozeneca is the cheapest vaccine that africa can get its hands on, correct me if that's the wrong assumption. think of the astrozeneca vaccine, i'm sure you've been following the difficulties it is facing in europe. some european countries putting a temporary stop on vaccination while they wait for an update from the european medicine agency though the latest guidance from the a.m.a. and the guidance from the w.h.o. is it is safe to use, what are
your thoughts? doctor: the astrozeneca vaccine was determined to be safe and efficacious and need to review it and maintained all along at the start of this pandemic we should guide the response with evidence and guide the response with strong science. that science needs to be reviewed, that evidence needs to be reviewed and we as the africa c.d.c. will convene an emergency meeting this afternoon with all the experts across the continent to look at the data, what we know, and provide appropriate guidance to the continent. i use this word very deliberately, should not be driving the response to this pandemic by fear but truly should be the ability to use science, appropriate evidence to drive decisions. anna: should use of the astrozeneca vaccine continue?
doctor: that's what i'm saying. the evidence will be reviewed this afternoon by the african c.d.c. and we'll be able to make a determination based on the data, science, and that we know has been made available, then we'll make a determination. i would just wait until i hear what the expert committee of the africa c.d.c. will say today and then we make a determination. already the head world organization is saying we don't have enough evidence, the outcomes we're hearing to the vaccine, the european medicine agency is saying similarly. we'll wait to hear what the experts from the africa c.d.c. will say before we advise member states. anna: just in conclusion, then, i wonder if you could give us your thoughts how far through the pandemic africa is and will depend on the vaccine rollout but would you say the worse is behind africa, how would you
put in context where we are right now? doctor: no. i'll put it in the context of what we're dealing with. i will say we're not out of the woods yet. the vaccine offers a promise for the beginning of the end of this pandemic and that will only happen if we do two things, if we vaccinate at scale and do that quickly. if we do what we've stated, that is vaccinate at least 60% of our population within the next two years, then this pandemic will be offer -- over. if we vaccinate slowly it will take us more than five years to put this pandemic behind us and if we do that actually, we may be dealing with the prospects of moving to a vaccination problem and no one wants to see a headline of covid in africa moving from a pandemic to epidemic disease and would be the headline to report two years from now. anna: thanks for joining us today.
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broadly positive, stocking europe 600 up .4% and the auto sector doing well today based on the new information from b.w. europe's biggest countries, germany and france are suspending use of the astrozeneca vaccine despite assurances from the e.u. medical regulator the shot is safe. the latest health scare is another delay for europe's vaccination program. joining us now is the head of welcome research. good to speak to you. we'll come to you with the stocks in the health care sector more broadly in a moment but starting with the latest news flow surrounding astrozeneca. how surprised are you to see the actions of the individual health regulators and individual european nations taking these steps or are you not surprised at all? eric: a bit of a surprise, i can understand the primary
principal to decide, it's probably delayed by a few days as you stated will be this extraordinary meeting from the e.m.a. no later than thursday so they can take the risk of delaying the vaccine by a couple days to get 100% entrance the vaccination is safe. everything stated now, europe's level, could be a bit surprising to see this kind of decision on a country basis but i think should be back to normal by thursday. anna: it's interesting, mostly i'm sure this kind of thing happens in a way that doesn't capture the public's attention from when any kind of drug is questioned for any reason or suspended temporarily i'm sure it doesn't make headlines but living in pandemic times that's what it does, eric. are we talking about the usual bars for safety being applied
here, is this the usual process or is this high level of caution, these precautionary measures, is it out of step with the norm? eric: there's probably a couple differences. the first is that where inds indicated as a vaccine and vaccinated people that aren't supposed to be healed so we're vaccinating elderly people to prevent from a disease so obviously we need to have more higher bar than any other drugs. and the second specific in this case is that those vaccines have been approved and there is emergency use authorizations so we know it has been quicker than any time before and so here again we need to be more careful than usual. anna: is there plenty of data sharing going on. would you expect plenty of data sharing going on because some of these rollouts in the
european countries haven't vaccinated that many people and there are bigger sets in other countries, would it be a kind of practice for that data to be shared? eric: it's up to the manufacturer, also, to do what we call the pharmaco vigilance. they're putting data from other countries so everything that is not at reach from one single country will be under the umbrella of the company itself, so the 17 million people vaccinated so far with the vaccine, all that will be available for the e.m.a. to make its final decision by thursday. anna: you cover european health stocks, a number of them and astrozeneca is one of those. we heard astrozeneca is of course involved in the covid vaccination process in the initial stages at least, doesn't plan to make money from it, but i know that you look
very favorably on the stock at this point, eric. what is it that drives your valuation on this business at the moment? eric: well, clearly our decision and this is not astra-specific is not to include anything out of covid except for those who are making vaccines that are already in the market like the moderna biontech and obviously this is part of their business but for anything else we decided not to do and even more specifically with astrozeneca since clearly they won't make any money with it, there was no reason to impact our valuation models. so it's free from any covid impact. now, it created some speculation clearly, maybe at some point the share price benefited a little bit but clearly since december, it has been more a drag than on
anything else. paying the price to try to help and well, it is impacting their image for sure. anna: do you ultimately expect these temporary suspensions will be lifted by various european countries and certain asian countries and central american countries, do you think those temporary bans on the astrozeneca vaccine will be lifted or is it simply too early to say? eric: it's early but if we look at the data available on the press release on sunday out of 17 million vaccinees, there's 22 cases of pulmonary embolism and also e.v.t. if that proves to be true the rates are low. we don't know what happens with
unvaccinated people. if we could have this and similarly make some cases with other vaccines and in a var time frame, maybe we could be reassured. this is probably the kind of thing e.m.a. will try to make clear is whether the incidents rate is quite normal of course if it has anything to do with the vaccine and if other vaccines in the same conditions are pretty much reporting the same rates. i would suspect that if the numbers of those once are very likely to be lifted by thursday. anna: thanks very much, eric. thank you for your perspective. it's an interesting conversation. coming up, following the dots. bloomberg economic say a few might drift higher but the committee will hold the line.
it's fed week where our attention lies and let's look at the markets with laura for macrostrategies. it is fed week and are we seeing calm before the storm, is it of comfort or concern? laura: i'm not quite sure whether it is comfort or concern because markets don't know what to expect from the fed on wednesday. it's really going to be that key market risk for the week. now markets we'll be watching for those dot plots and yes, economists don't expect to have the fed actually move that 2023 hike. i would expect more members are likely going to signal that they do and feel more comfortable with tightening bets for 2023. that will really give the green light for markets to ramp up those tightening bets. as well, markets will be looking for that s.l.r. exemption expiring the end of the month. will that be extended?
that is quite important, notably for the treasury market, it is adding an estimate $600 billion on bank balance sheets and a crucial turning point potentially for treasuries and i think we are in the holding pattern waiting the key event risk tomorrow. anna: key event with regard to the fed and risk with the bank of england and you've been talking about the rising break even rates we've seen in the u.k., higher inflation expectations coming into the markets, going back, we haven't seen the rates since 2008, what does it tell you? laura: it tells me markets are betting on the bout of inflationary pressures and if anything are signaling we are seeing a potential regime shift to the period of secular inflation. governor bailey did come out yesterday and say they are embracing the rise in nominal yields that we've seen. in fact it reflects the change in the economic outlook but there is a risk that markets are getting too far ahead of themselves and actually pricing
in inflation. the bank of england still sees it as transitory and are watching. they're going to need even more evidence than usual for them to actually tighten policy this time around. s really this battle between the markets and central banks that continues on both sides of the atlantic. anna: thanks very much, laura cooper, bloomberg markets live macrostrategist. that's it for the european market equity open. they're moving broadly to the upside, up by .4% on the stock 600 now. the sector breakdown, auto parts seem to be doing well, porsche and b.w. all doing well. the energy names are dragging and we have a considerably weaker price for oil by the barrel and perhaps that's not so much of a surprise. that it as i say for the european market open. "surveillance" early edition is up next.
have to stay on top of every dollar spent through the american rescue plan. that's what we will do. >> continuing to do quite well. -- to think about where revenue can come from? >> consumers of bank of america, spending $3 trillion a year, are spending more money than they did last year and growing at 10%. >> this is bloomberg surveillance: early addition with francine lacqua, matt miller, and kailey leinz. francine: good morning from london and new york. targeting top earners, joe biden's tax plan will hit those making over $400,000 a year the hardest. europe's biggest economies have stopped using the astrazeneca vaccine because of a health scare. they hedge fund billionaire says it's time to buy any stock that will increase in price.