tv Bloomberg Markets European Open Bloomberg May 21, 2021 2:00am-4:00am EDT
♪ anna: good morning. welcome to the european open. mark cudmore joins us in singapore to take us through all the market action this hour. the cash trade is less than an hour away. here are your top headlines. stocks push higher amid falling u.s. jobless claims. confidence in the fed's view on inflation. european finance ministers meet in lisbon today in person.
eu negotiators back vaccine certificates in a bid to save the summer. israel and hamas agreed to a cease-fire, ending a deadly 11 day conflict. president biden praises the accord brokered by egypt. welcome to the program. welcome to the european market open on bloomberg tv. 7:00 here in london. mark is with us in singapore. what are the markets saying to you? mark: unfortunately, the markets aren't saying much to me. all the traders i speak to are still preoccupied by what's happening encrypted currency. it's really engendering great debates about whether this will be the ultimate breakdown point in the bubble. whether this is just another usual downturn in the longer-term cycle. it's amazing. all my chats are obsessed with bitcoin. even today. mark: absolutely. -- anna: absolutely.
interesting to see how bitcoin sucks the life out of other conversations. we will joined -- redrawing bitcoin judiciously. breaking news. retail sales numbers coming out from the u.k.. i don't know if this speaks to the theme of higher consumer confidence and maybe inflation. a difficulty in forecasting at this point. u.k. april retail sales including fuel of 9.2% month on month. the estimate was 4.5%. if you exclude fuel, you get a similar picture. an estimate of 4.4. the reason i make the point of forecasting is i was looking at the range of estimates here. retail sales including fuel, the forecast range from an increase of 1% to an increase of 10%. that's from 22 economists. 22 were struggling to come to some sort of consensus. we've given the estimate here on bloomberg of up by 4.5% or so. interesting to see the range of numbers going into this.
we will see how this plays out in terms of the recovery story. april retail sales, it would make sense for that to be strong given that it was the end of march where we started to see further retail opening across england and other parts of the u.k.. that number has been interesting. we see a little bit of movement there. under an hour away from the start of cash equity trading in europe. let's have a look at those futures. the picture coming off those strong gains from yesterday. it's a positive one for europe. futures point two the upside. ftse futures not as much. the commodity waiting there. maybe we are thinking about what's going on with commodities and the asian session. we did have gains of 1.6% in europe more broadly. nasdaq ended up by more than 1.7%. the u.s. futures suggesting more modest gains.
things looking this through asia. what does the gmm look like this morning? dani: -- pretty mixed -- -- mark: pretty mixed in asia. we started the day quite positive. looks like a pretty good day in asia. a good day in europe yesterday. things got more soggy as the session went on. chinese market turned negative. it's one of the things you see on the gmm. chinese equities are up there. the one thing is that indian equities are up 1.5%. that market has never really seen much of a problem from the tremendous humanitarian disaster from the virus there. it's been really right -- remarkable given it's inexpensive index already. we are seeing this theme and commodities. it's more mixed overall. metals are still heavy because of what china is doing. overall, it's a mixed picture. mark: things -- anna: things did not look mixed in terms of u.s. stocks.
they looked fairly boring and. big moves in the nasdaq, up by 1.7% at the close. does this tell us anything about whether tech stocks are back in favor? was this just wobbles earlier in the week? mark: there was that debt buying mentality. people were taking the opportunity to get in at value prices. i feel let -- that mentality is less strong than it was a couple of months ago. we are seeing a more volatile market for the last couple of weeks. we've noticed that the down moves have been bigger than the up moves. that's the big change from the previous year of trading. it's hard to know whether the bottom is it. the price action is positive. price action over the last few weeks is quite negative. anna: quite negative in the last few days has been the quad -- commodity market. particularly things to do with china. iron ore down 3% in singapore
right now. this on the back of commentary we've seen consistently from china over the past week. unhappiness with the pace of the previous rise in commodity crisis. an urge to do something. how for -- far does the jawboning go? how much can be done? mark: look, the very aggressive verbal intervention from the chinese government is being backed up by some measures domestically, micro measures. they will try to increase supply. they are trying to change purchase roles and make it harder for speculators. there's a number of measures they can do here. this will have an impact on a short-term basis in terms of the next few months. longer-term, they can't change their genuine demand for some of these metals. it's there. copper is the best example. iron ore as well.
longer-term, they can't do as much as they can do short-term. anna: let me ask you about gold. and all the excitement about bitcoin, gold around a four-month high. headed for a third straight weekly gain. it did not seem to wobble that much even when we had that paper from the fed. you may be thought that the relative arguments about holding assets without yields might diminish in the face of that. it did not seem to wobble that much. it got quite a lot of mention in comparison to bitcoin and the volatility that we saw this week. what do you make of gold at this point? mark: it's doing really well. at a time when bitcoin is making the idea that it's a haven asset pleat we laughable given the volatility, gold is going, i'm still there. i'm still haven asset. it's doing well. it's being low volatile. it's doing well as the dollar weakens. yields are lower.
overall, a positive story. i'm not sure i buy the argument that they are piling back into gold from bitcoin. people are making that switch unlikely are to be so back and forth. gold has done well. some people say that gold breakout from its downtrend from last year was proof that we are ready -- ready for the next dollar down leg. i'm not sure i buy that. we certainly have the story that the uber dollar index is within a 0.5% of its last low. it keeps on testing. anna: i share your skepticism. i would like to see that venn diagram. everybody can stay in touch with mark and the team and get the thoughts of the mliv team on mliv on your bloomberg. coming up, open for summer. the eu agrees on travel certificates, offering hope to the regions battered tourism industry.
we are live in lisbon with the latest next. plus, israel and hamas implement a cease-fire earlier this morning, ending 11 days of conflict. bring you the details. we will be speaking to the president of microsoft for western europe about what the future of work looks like and how the tech giant is adapting to hybrid working. if you have any questions of your own for us, please feel free to get in touch. this is bloomberg. ♪
we will get back to a full recovery. by the end of the year, we will be in really good shape. anna: that was the chair of the council of economic advisers on the u.s. labor market recovery. we might not get a very easy to understand, simple picture on the labor market in the u.s. for some time. she was talking later in the year. we have u.s. jobless claims that our colleagues at bloomberg economics say suggest the shortage is intensifying. it's very complicated on the jobs front in the united states. mark: yeah. there are many different ways to look at the labor situation. i think you picked the stats to fit your argument. that's the most of morten takeaway. the fed has made clear that they will pick the labor indicators that will suit their argument to stay as dovish as possible. we know that lisa church around for the labor market indicators.
look for the ones that paint the worst picture. that's the largest input for what volatility is going to be. anna: you make it sound so simple. [laughter] let's bring in another voice to the conversation. stefanie holtze-jen. good to speak with you. the currency strategist, your focus on this conversation will be on the dollar. think about the things that input into your dollar view, what thought do you have on the later market -- labor market at this point and the weaknesses the fed is focused on? stefanie: we have understood that we need to get ready for much more volatile economic data. we will have to brace for that. this is a major input to monitor. we will do accordingly and hope to get the dollar right. mark: good morning. am i correct in understanding that you don't really see that we are on the verge of the big dollar breakdown right now?
you think that is something that the secular bearish trend will resume later this year. if that's correct, when do you think the dollar downtrend will resume? is that a trade for the start of next year or sooner than that? stefanie: this would be -- i stand more at the beginning of next year. i see this come to an end exactly as you said. we have seen dollar weakness. it is still going on. we are getting close to very crucial levels. the dollar index is 1% short of the low from 2018. time is running out from a macro perspective but also from a technical perspective. that's an important pillar to look at as well. behind this was also a big catch up that europe had to do. replacing of the reflation story there.
i see this being maximum price, too. it's important to monitor what the ecb has to say to that. 120 was the key level in 2020 and also 2018. we had last mentioned at the meeting in april, we have the next meeting coming up in june. i can't see why this time should be different. in terms of causing concern or impacting the fed on inflation. i expect commentary before that. anna: [inaudible] back to the dollar. i appreciate that you have to look at it relative to something else. in terms of the dollar, strong data on the u.s. economy, how would you expect that to play for the u.s. currency? is that a dollar positive or does it encourage a little more risk-taking? therefore, investors diversifying into other cut -- currencies. stefanie: yeah. it depends on how strong.
that's the simple answer. if it is that strong that we see a move in u.s. treasuries, that is something that will help the u.s. dollar. you can see the dynamics playing two ways at the moment. the interest rate differential and tapering debate. whenever treasury yields move up substantially and we have seen a sideways move recently, than the u.s. dollar would move up. if there's no real movement in the u.s. treasury, we see this playing back to the dynamics we have before. u.s. dollar is trading alongside risk sentiment. it displayed much of the same characteristics. the u.s. dollar is coming under pressure. these are the tools at the moment. the u.s. treasury yield is sideways. the equities are still looking
at this from the optimistic side. we have the u.s. dollar coming under pressure to these levels here. anna: moving sideways, 1.6 degrees. not a great deal of movement this week. thank you very much. stay with us. stefanie holtze-jen. let's get up-to-date with all the top stories we are covering up liberty. here's laura wright. laura: israel and hamas have agrees to a cease fire. the security cabinet approved the move posed by egypt. it took effect at 2:00 friday local time. it does little to solve the underlying root causes of the fighting. 232 palestinians and 12 israelis were killed in the violence. the u.s. is calling for a global corporate tax rate of at least 15%. that's less than the 21% they had proposed for overseas earnings of u.s. companies,
level some nations said was excessive. janet yellen argued for an end to a race to the bottom on taxation. negotiations are hoping for a deal the summer. the number of u.k. cases of the coronavirus variant from india has more than doubled for a second week. health officials are monitoring a new mutation of the virus, adding fresh doubts to the plentifully unlocked the economy next month. the government is increasingly optimistic about the effectiveness of vaccines. more than 70% of u.k. adults have now had at least one dose. china has defended retaliatory sanctions on the european union after the block voted to freeze the desmet grail. the european parliament cited the restrictions as the reason for the move, calling them baseless and arbitrary. lawmakers say no talks on the deal will be held while sanctions are in place. global news 24 hours a day on
air and at bloomberg quicktake, powered by 2700 journalists and analysts in 120 countries. this is bloomberg. anna: thanks very much. coming up, central banks way in on digital currencies. jay powell says they are looking into how they complement existing payment systems. they talk about those coins. central bank getting into those currencies. what is next on that agenda? this is bloomberg. ♪
already safe, effective dynamic and efficient u.s. to mystic payment system. we think it's important that any potential cbbc would serve as a complement to and not a replacement of cash and current private sector digital forms of the dollar such as deposit at commercial banks. anna: the fed chair jay powell talking about digital currencies the u.s. central bank is publishing a paper on the subject this summer. the fed stepping up the pace with which it is exploring cbbcs . you wonder about how much of this is wanting to get in their early to set the rules of the game. the pboc has been looking at this for some time. mark: absolutely. this comment is critical. the fed are not exactly ahead of the game when it comes to central banks. it's bringing attention to one of the key points of crypto. it's completely missed among all
the volatility this week. we see this crazy volatility, the cheerleaders get defensive or those who aren't in the trade start cheering those losing money. the tree factor is, cryptocurrencies have a part in our future financial ecosystem. blockchain technology is still underestimated for its disruption potential. many believers mistake those very valid points with the idea that bitcoin is poorly constructed. the argument about bitcoin is very different and separate than the idea of cryptocurrency as a whole. that fed comment distinguishes between those two things. anna: let's bring back into the conversation stefanie holtze-jen. as a currency strategist, you much loss -- must watch with interest as central banks talk more about their digital currencies. take me back to the beginning of this. in the early days when we talked about bitcoin, it was often in
the context of, bitcoin will do its thing. what's interesting is the application of blockchain to other walks of life. here specifically to the financial system. how do you think all of this talk that we are seeing this year, how do you think that will play out? stefanie: bitcoin has been around since 2009. none of us in the market or the central bank should be surprised of the developments we have seen. and all the positive things that come with digital currencies. they are definitely there and coming into play. we have seen central banks really stepping up their work on digital central bank currencies. we have seen a lot of reports now that the majority of central banks around the world are
either in testing or some in rural outfits like china are trying to get their head around it. this is a very important development. what is particularly interesting now is a concerted effort on the central bank side to start regulating the decentralized currency such as bitcoin. i put it into context. something like this, you can only do when you are closer to launching a viable alternative which the central bank digital currency -- the video from the fed powell yesterday is extremely important. as mark pointed out, they were not at the forefront. mark: do you think that these kind of official central bank back currencies overall increase a lot of the value of these market created ones out there?
do you think it destroys the value in that sector? stefanie: maybe it will reduce the volatility. some of the investors into crypto are also looking to invest for valley vet -- very valid reasons. it's not just what has been highlighted recently, that it's tax evasion or people trying to just make fun and distort the market. the ones that are looking into a safer way and more transparently of settling their deals, they will be opting to go into central bank digital currency. it will take out some of the volatility. definitely not a road or finish that market. anna: thank you very much. really interesting to get your thoughts on this developing newsline. thank you. coming up, europe's road to
♪ anna: welcome back to "bloomberg markets: european open." half an hour until the start of cash equities trading in europe. 30 minutes to go until the start of the equity session. you have been thinking about central bank balance sheets. we heard from the fed this week, minutes at their last meeting. in terms of the central bank balance sheets story, it is one we have been watching closely. you see some signs of divergence between what's going on with
asian central banks and those in other parts of the world. what's the story? mark: that's right. a little bit uninspired by the short-term price action today. i like taking a step back and looking at those longer-term drivers. the big driver since the great financial crisis 13 years ago is central-bank action, central banks pumping liquidity into the system. what we are seeing since the pandemic last year is a real kind of shift in terms of the ecb and fed have just been extraordinarily more aggressive than what we are seeing from the boj and pboc. they are so much bigger than any central bank in the world in terms of assets they manage. you see the ecb, the light blue line, is now above $9 trillion. these are all dollar valuations. before the pandemic, no central bank in the world had a balance sheet bigger than $6 trillion. this is an extraordinary gain.
it is not quite doubled, but getting there in the space of just over a year. phenomenal. ecb's balance sheet is exploding, the fed's balance sheet is still increasing after a big jump last year. meanwhile, the boj topped out in december, pboc topped out in january. european markets have been the real outperforms this year. u.s. markets are doing pretty well. we have seen the chinese stock market do quite poorly this year. we have seen the boj suffer the last couple of months as well. i think there is some connection. anna: that's interesting, to think about the output of this. is there a connection with stocks? what's interesting is to think about what is driving the decision-making at these central banks and why their balance sheets are growing.
i don't understand why the bank of japan's balance sheet would be shrinking if that is still the intention. we have seen inflation overnight in japan dropping for the 9th straight month in the month of april. we are not seeing inflation surging there as in the you can the united states. mark: clearly, japan is not getting inflation, why are they stopping? the bank of japan has been doing extraordinary monetary policy for the longest time. when you put these balance sheets in comparison to gdp, the boj is still by far the largest relative to gdp. it's economy is much smaller than the euro area, the u.s. and china. that initial chart was a phenomenal chart. the boj has pumped extraordinary money into its system for a
couple of decades and still achieves no inflation. i think the boj is implicitly acknowledging, this is not about inflation. we know we are never going to generate inflation, who cares if we have seen nine months of falling prices. we pump money into the system to profit the financial system. that's why everybody likes buying the debt. they believe -- buying the dip. they believe central banks will continue having their back. anna: that is really interesting, given the mandate that many central banks originally started with. no doubt we will return to this conversation on future occasions. let's think about where we are on the european recovery story. european finance ministers are gathering in lisbon for the first in person meeting since september. optimism about the recovery has seen european stocks jumped the most in two weeks. maria tadeo joins us from lisbon. live on the ground in lisbon, this is very exciting, for an in
person meeting of these finance ministers. they will be busy assessing the recovery. what is the mood like? maria: yes, anna. just the very fact that we are in lisbon encapsulates the mood and story here on the ground, this idea europe reopening, tourism picking up on the economy accelerating. yesterday, i spoke with the portuguese finance minister, and pascal donahue and asked them, doesn't mean we will see faster growth this year in the euro area -- does this mean we will see faster growth this year and the euro area -- in the euro area? >> we have become very optimistic. now, the vaccination program is working very well. the number of cases is extremely low. the numbers remain extremely low. >> i believe the optimism about the prospects for the euro area are justified.
>> we are expected to revise upward are gdp up to close to 5%. we are expecting much higher gdp growth. >> we should be optimistic about our prospects for the second half of 2021 leading into a strong start for 2022. therefore, i do believe it is possible that we will see further revisions in our growth expectations through the year. maria: that was the portuguese finance minister telling us they are looking to increase their growth projections for 2021. a lot of this driven by tourism. the head of the euro group saying that we could see beads on the micro picture. as you mentioned -- beats on the macro picture. european stocks jumping the most in two weeks. it captures the optimism and i have to say i've seen a lot of it from finance ministers on the ground. mark: good morning. how will the technicalities work around the vaccine passports?
who exactly can come to europe and when? maria: well, look, this is also a big story for the europeans. this is a huge industry for them and a real moneymaker. now, we have a deal for tourists outside of the european union. if you're in the u.k. and united states, if you have been fully vaccinated, you can show that you have a negative test or that you have gone through coronavirus. this is a digital app by the european union. if this is difficult, there's a lot of paperwork, it's clear that people will not book a holiday. if you standardize the rules to make it simple, then it is more likely that we will see an increase in tourists coming into europe. europeans are hoping that by the end of june, this will be fully operational and numbers will pick up starting in july. of course, that is reflected in stocks. we have seen travel stocks in europe feeding into this idea
faster vaccination means a quicker reopening in the european union. anna: thank you very much. bloomberg's maria tadeo on the ground in lisbon. i am very much enjoying watching her travels. that's the closest i will get to a european vacation this summer. the u.s. slows to 15% -- the u.s. proposes a 15% global minimum tax on corporate -- global minimum corporate tax. this is bloomberg. ♪
the swedish vegan food and drink maker that ipo'ed in new york yesterday. i am not sure we are post milk. they're interesting to watch how successful the ipo has been an interesting to watch the company's story. they seem to many like an overnight success and it's been 20 years in the making. mark: absolutely phenomenal. it is certainly only come onto my radar and i think we both discovered yesterday how many passionate people there are on the european market open's team around alternative milks out there. as you, say this has been a long-term story in the making and i think it's the same with a lot of these new food technologies coming through. i think we see this on the alternative meat side as well, in terms of cultured meat. a lot of these technologies have an in the works for many years
but the pace is now getting quicker. we seem to be getting to that turning point. i think it's about time i slowly educate myself on the alternative milk industry. anna: i saw the milkman delivered the milk to my doorstep, the old-school variety, just this morning. let's turn to another story we have been following here. let's turn our attention to the chip shortage and the impact on the auto industry. jim farley sees an improvement in the second half of 20 someone. >> we think second quarter is really the trough for our chip supply shock. we think the second half of improve. we have cut production almost 50%. we see the facility that impacted us in japan, they are back up and running. they had a fire burn the whole plant down on march 19. they are back and running. we are confident that in the second half we will get most of
the chips that we need. anna: turning to chipmakers themselves, arm has announced its partners shipped a record 7.3 billion of its chips in the last quarter of 2020. that is 70 million chips per day. bloomberg spoke exclusively to the ceo of arm, simon segars, about the challenges ahead. >> the equipment from people like applied materials, these are massively complex pieces of equipment that take time to build, take time to deploy. it will take some time to resolve itself that i would not call the situation at the moment a disaster. i have been at arm for 30 years now. i think we are in one of the most interesting moments in the semi conductor industry's history. because the demand that we are seeing is not just from one sector, it is expansion going on in multiple markets simultaneously. it is an incredible situation where companies are going to innovate, companies are going to
bring new solutions to market. i think the next few years will be fascinating as we see all of this play out. emily: it's not just consumer electronics and phones and laptops, but cars and microwaves and washing machines and refrigerators. in your view, when do you think this will be behind us? i have heard from others, we will get more supply in the second half of the year. some have said it will be a couple of years before there is a better balance. simon: as you said, demand is all over the place, including a lot going into infrastructure that will fuel the kind of conditions for more technology solutions in the future. right now, everybody is working really hard to put capacity in that can be put in quickly. i think some of the longer-term investments will take some time. you don't just quickly fell it up with equipment. that does take time. at the same time, people really
need to plan out those investments thinking for the long-term. we are talking about investments of tens of billions of dollars where the payback period is not short-term. everybody in the supply chain needs to be thinking about what those longer-term forecasts look like, how much capacity to put in. as we solve the short-term issues, what we don't want to do is actually break the industry, and up having way too much supply, and that subsequently drains profitability and nobody can invest in r&d. emily: arm is obviously a global company. you have headquarters in london. you are based in the bay area. are you concerned that the u.s. and europe are falling behind in competitiveness in the chip industry compared to china, compared to taiwan? what do you think needs to be done to prevent that from happening? simon: over the last few decades, we have seen the industry become very efficient in the way that manufacturing is
done and the way that rnd is done. that has helped -- r&d is done. that has helped drive a ton of innovation and drive down the cost of the electronics we rely on everyday. last year showed that there was some for jody's in that situation. it's good to see that -- some fragility in that situation. it's good to see the government working with the industry. the challenges ahead are significant. it will require a lot of r&d, and it's good to see that that is where the focus of government-funded dollars are going to go. anna: the arm ceo speaking exclusively to emily chang, describing the situation as really interesting in chips. the united states is calling for a global minimum corporate tax of at least 15%. that is less than the 21% rate it had proposed for the overseas earnings of u.s. businessesn a
level that some nations had argued -- businesses, a level that some businesses -- some nations had argued was excessive. what exactly is the u.s. treasury pushing for on u.s. global tax rates? what are the chances of this being implemented? they are talking about something that is a minimum proposal. >> right, well, it's going to be an uphill battle. that 15% is much lower than the 28% they are proposing for domestic corporate tax rate. it seems the by those standards, but it's also higher than what the oecd has been trying to negotiate for years. that rate was 12.5%, which was already highly -- for the trump administration, but not high enough for the budget and ministration's standards -- biden administration's standards. they are going to be pushing
against,, you know of course, a lot of corporates who are not happy with those rates and dissatisfaction from republicans and some moderate democrats. there is a little bit of political sentiment here where economists are tracking the inequality, including through the digital divide. these big tech companies continue to see big gains, while certain sectors and pockets of the labor market continue to suffer. it is not unanimous rejection from the corporate world. it's going to take a lot to get there, work out the inconsistencies. mark: what is the biden administration proposing on cryptocurrencies that has the crypto community riled up? how does that fit into their broader tax proposals? >> a busy week in crypto, made
even more exciting by these proposals yesterday. they are trying to basically bring a cryptocurrency into the daylight. crypto, they are calling for a requirement of transfers of at least $10,000 to be reported to the irs. that's an attempt to put these transactions on par with cash transactions. the administration has tried some softer ways of pushing crypto reporting. those who filed taxes in 2020 will see a line on their form about cryptocurrencies. we heard from the security and exchange commission -- the securities and exchange commission chairman. you have the fed exploring digital currencies, trying to take a more leadership position globally on this issue. you see the administration, they are really trying to get more of a gripped on cryptocurrency, bring get more into the daylight, which had some outcry
from crypto fans yesterday, sent bitcoin lower on the news. this is part of a broader effort to get a little more revenue, bring more people into filing. one data point showing that the treasury says they were almost 900,000 high-income non-filers between 2014 and 2016. this is part of a broader push, the administration is trying to get more funding for the irs, bulk up the workforce, update technology systems, and really try to bring in again more revenue to pay for a lot of their plans going forward. anna: thanks very much. michelle jamrisko, interesting to get the perspective of some of the u.s. drivers of this activity. interesting to see what this does to europe as well. we have heard that perhaps there is an argument that smaller countries should be able to have lower corporate tax rates to make up for the suppose it disadvantages of being smaller.
♪ anna: welcome back to "bloomberg markets: european open." seven minutes until the start of cash equities trading. let's get a look at some of the individual stocks that could be making headlines. dani burger has a breakdown. richemont you start with. dani: richemont earnings and that julie resected in particular for them looking very strong -- that jewelry sector in particular for them looking very strong. lufthansa to the downside, already down about 5% in
premarket trading. its biggest private owner will sell about half of its stake. it currently owns about 12% of lufthansa. the price they are selling it at his about one third of the price pre-pandemic. finally, chipmakers. look for any european chip equipment makers this morning. trying to keep up with that demand, still grappling with trip shortage. anna: thanks very much. dani burger, thank you for the rundown. just a few minutes to go until the start of the european equity trading session. i am looking at futures, european futures tentatively to the upside. maybe the london market weighted down a little. we had some weakness in that sector and the asian session. mark: i don't think we've got
any clear direction at the moment in terms of the short-term issues. i think the price action in the last couple of weeks has turned more negative. what's going to happen in the crypto space? one is that going to calm down? there is the ongoing issue of the inflation themes. we have core pc out of the u.s. next week and that will be an issue. people are thinking about how they want to position around those longer-term themes rather than shorter-term catalysts. i do think commodities remain one of the issues for volatility generally in markets at the moment as well. anna: core pc, that will be interesting, despite the fed's focus on unemployment. we know that is what they are closely watching still. hopefully, thursday of next week we get that. thank you to mark for spending the past hour with us. the european market open is coming up next. futures point tentatively to the upside. u.s. futures suggest a bit of
♪ anna: welcome back to "bloomberg markets: european open." a minute to go until the start of cash equities trading. stocks push higher amid falling u.s. jobless claims and a weak auction. european finance ministers meet in lisbon today in person. that's as eu negotiators back vaccine certificates in a bid to save the summer. israel and hamas agree to a cease-fire, ending a deadly 11 day conflict. president biden praises the accord brokered by egypt.
just 20 seconds until the start of friday's equity cash session and european equity markets bolting -- pointing to the upside. futures pointing to the upside. seems as if markets are a little more relaxed about an inflation threat and what the fed might do about that. not all that far from where we started the week, after we saw that volatility around cpi and in the middle of this week around the fed minutes. there was the highest cpi print, the talk of tapering. we are sort of as we were in terms of the u.s. 10 year story. how do we open up this european equity market session? european stocks fairly flat this hour. the ftse 100 fairly flat, the stoxx 600 opening up by around 0.1%. u.s. futures point to the upside but not noticeably so.
pretty strong gains on the nasdaq yesterday, up more than 1.7%. the ftse struggling to keep its head above the flat line but the cac opening to the upside. the ibex in spain fairly flat. perhaps we will see london held back a little bit by what's going on in the basic resources space. that's something china has been speaking out about. the asian equity session moving to the upside by 0.3%. that hit quite a lot of divergence within those various asian equity markets. in terms of the sector picture, we do see basic resources is one of the laggards, also basic resources. european equity markets opening just modestly to the upside this morning. asian stocks have been steady after a wall street rebound. traders waited the economic recovery from the pandemic as
well as the possibility of reduced u.s. stimulus. joining us now is john bilton, j.p. morgan asset management head of global multi-asset strategy. it's interesting to me to see be asic resources and banks in negative territory today in europe. they are two sectors that have done well in the initial phases of reflation trade. we saw the translation from higher commodity prices coming through. now, we see a time where people may be rethinking that. what do you make of that weakness in basic resources and the bank sector? john: i don't think it's a long-term thing, let's be clear. these are sectors which have actually had a reasonable run and they've been very good through the whole reflation trade. you mentioned some of the moves and the weakness in auctions. it seems like we've got a lot of positioning that's across the markets. a range of instruments pointing to that full-throated reflation
trade. there's a little bit more two -way risk in this. we have seen some huge inflation prints in the u.s., very driven by this jump in goods prices and commodity prices generally. if you look at the surface level of inflation, the picture is perhaps a little bit more benign. outside of the u.s., europe, japan, etc., you are still facing some of those big disinflationary threats. add in a sprinkle of china raising a flag about the commodities speculation, positioning where it is, and it is probably time for a breather. the reality is, we are seeing strong economic growth, a powerful capex cycle and pent-up demand. that is something that we think will keep this cyclical trade going in the longer run. this feels pause for breath rather than a reversal of direction, in our view.
anna: what does all of that mean for commodities? you flag before that this might be the start, there's a big to debate about whether this is the start of a super cycle or if we are in a super cycle for commodities. when do we know? when do we get an answer on that? we have to sort of work through some of those year on year comparisons, i guess. john: second only to the debate about inflation this year is the question about a commodities super cycle. i would certainly like a dollar for every time i am asked about it. when you look at commodities, you've got a powerful reopening trade going on. last year, due to disruption at this time last year, which means the base effect has been very powerful. there is a powerful growth impulse going around the globe. we expect above trend growth through this year and enter next year, becoming more synchronous around the globe as the year progresses.
what does that mean for commodities? likely it is that the demand drivers are still there. does that mean we will stock up in early 2000's style super cycle? hard to say. we don't necessarily the kind of big bill that we saw in china becton. when we look in the near-term -- kind of big buildout that we saw in china back then. anna: how significant, how relatively significant was the chinese buildout versus a u.s. infrastructure spend to come? an interesting thought. let me ask you about oil prices and the path on them, because i wonder how much of a higher oil price ends up being felt by consumers, versus how much of the other commodities we see on the rise being felt by consumers. which one of these get from ppi
to cpi? which ones do we actually feel? john: it varies from country to country, but the big one is gasoline, petrol. the tax stabilizes we see in so many places elsewhere have less of an effect in the united states. there is a reasonable body of work that points to gasoline prices having a reasonable link to inflation expectations. we have seen the inflation expectations in things like the university of michigan survey pickup quite markedly. this is something the fed are watching, which is one of the reasons people have been watching the fed's minutes. so closely we have seen not just oil prices pushing through. i think some of the volatility there, some of the upside on gasoline prices is causing households in the u.s. to have the pause for thought on where they think prices are going. we have to remember, this
near-term volatility can play quite quickly. when we actually look at the overall picture, our view is that there are many, many more factors to think about, not least the savings rate, which will actually buffer some of these near-term, more volatile series. anna: stay with us. john bilton, thanks for your thoughts so far on the european market open. europe's growth to recovery. eu finance ministers meet today as optimism about the bloc's economic rebound grows. we will get more on that story next. this is bloomberg. ♪
♪ anna: welcome back to "bloomberg markets: european open." 10 minutes into our trading session and european equity markets looking positive. the ftse a bit of a laggard. let's get some of the stocks on the move with dani burger. dani: they get stuck to the downside in the stoxx 600 is lufthansa. their biggest private holder, kb holdings, has sold about half of its stake at a discount. that is knocking prices lower. to the upside and ending the biggest again there is richemont this morning -- biggest gain er is richemont this morning.
they've had this rebound and it bodes well for the rest of the. jeffries calling julie resales outstanding -- jewelry sales outstanding. another stock to the upside this morning, travis perkins selling their plumbing unit to hig for about $460 million. jeffries -- po hunt, rather, commenting on this one, saying it will allow travis perkins to focus on their core business. you talked about this earlier, but we really are seeing those inflation concerns are not in the market today. maybe it's good news is good news from yesterday's stronger weekly jobless claims. perhaps it's that weaker auction or it could be the supply chain bottleneck slightly easing. copper prices dipping. anna: dani burger with a heads-up of the macro movers and
stocks on the move. e.u. finance ministers gather in lisbon for the first in person euro group meeting since september. as the bloc's vaccination campaign advances, optimism about the strong economic recovery is growing. the irish finance minister and portuguese finance ministers spoke in a joint interview with maria tadeo. >> i believe the optimism about the prospects for the euro area are justified. if you look at where we are from a vaccine point of view, we now have over 30% of european citizens that have received a vaccine. i believe we will deliver our targets of a large majority of citizens receiving and being vaccinated by the summer. so, this combined with a really good and sensible economic decisions mean that we should be optimistic about our prospects for the second half of 2021, leading into a strong start for 2022.
i do believe it is possible that we will see further revisions in our growth expectations as we move through the year. maria: that's bullish. minister, i know the central bank is already saying we could see an uptick in growth. tourism is a key sector for your economy. how optimistic are you about the prospects for the portuguese economy? >> we remain optimistic. the winter was very tough, intense. now, the vaccination program is working very well, the numbers are extremely low. . we are reopening most of our economy and the numbers remain extremely low. we are actually very optimistic. we expect to gdp growth is going to be higher than we submitted last month because the numbers now. for example, if you look at the concession numbers from last month, they are higher than pre- pandemic levels.
this is a signal that the recovery is underway. >> to rub on this issue, when they assume the same dynamics that are driving the u.s. economy and especially the debate around inflation, is it wrong to assume that the same thing will happen in europe? they are two different recoveries in nature. >> well, the recovery in every part of the world i believe is likely to be different. because even though we have experienced a common difficulty with the pandemic, it has experienced and affected different economies in different ways. in europe, if i look at where we are, i think it is to be expected. we will see a change in price levels, a companies in europes try to get more raw materials, try to rehire staff, reopen supply chains. it is to be expected that you will see a shift in inflation but i believe it will be temporary. the reason i believe that will
be the case is that if you look at other economic indicators, for example, where we are with unemployment, where we are with underemployment, i expect to see big improvements in those areas across this year and next year. anna: the irish and portuguese finance ministers speaking to bloomberg's maria tadeo in lisbon. john bilton, j.p. morgan asset management had of global multi-asset strategy, is still with us. i wonder how optimistic you are about the european growth story. we are getting french data on the pmi front. manufacturing pmi, 59.2, ahead of the forecast 58.5. services pmi, 56.6, quite substantially ahead of the forecast of 53. as if to underline the point, i suppose, those numbers from france coming through quite strong. how optimistic are you about the european story right now? john: we continue to be pretty optimistic in europe, for a number of reasons. firstly, where the u.s. economy
led at the beginning of the year, having followed a fairly rapid vaccine rollout and reopening, we now see europe really following on. we think there is certainly appetite really to begin to reopen the economy more broadly. there is a level of caution, which is entirely appropriate, of course. there is also huge, pent-up demand on behalf of consumers. there is an excess of savings. i see significant fiscal response the european commission have already had. one we put all of this together with that reopening, i think it gives a reasonably strong outlook. globally, the goods market has been generally pretty buoyant. internationally, that has worked very well. it has held up pmi's and other surveys data across the world but services have been the laggard. as we see that strength and confidence building, i think that's a good thing for the european outlook. we are in a world where, despite the question marks about
inflation, it has been priced in a little to aggressively, which we think it may have been, it certainly is going to be higher than im the last cycle, we believe. that supports both cyclical regions. europe continues to be a very good proxy for global growth in general. that's why we continue to be overweight towards europe in so many of our portfolios. anna: you are overweight on europe, it's a good proxy for global growth. how much can europe achieve without its bank sector rallying, john? it is nearly back to pre-pandemic levels when you look at the stoxx 600 banks index. talk of inflation and reflation, steepening yield curve and the rest, all of that boosting prospects perhaps for the banking sector. does that carry on from here? do we take out those pre-pandemic levels and then continue? john: getting the banking sector back to pre-pandemic levels is
hardly eight cause for a lap of honor. the european banking sector had been under massive pressure since the crisis. some of the regulation, the changes in capital rules and generally the cleaning up of balance sheet has left it as a much leaner sector. it's only now about 7% of the overall index. as a result, it's not the huge, heavy overhang that it was on the downdraft. what does that mean really? looking forward, can banks alone drive europe higher? probably not so much. will they contribute to it when you look at their prices? i think there is a lot of upside, especially when we look at the comparison in the united states, which is 1.2, 1.3 times. there is a big valuation gap, much cleaner balance sheets, a european recovery which we believe will have some legs to
it. when you're talking single-digit component of the index, you are looking for a more synchronous recovered rather than just being led by the bank sector alone. anna: thanks very much for joining us. john bilton, j.p. morgan asset management head of global multi-asset strategy, will be continuing his conversation with us on bloomberg radio and around 40 minutes from now. let's get a bloomberg business flash. here is laura. >> morgan stanley's chief executive has unveiled his biggest leadership change in over a decade with a slate a potential successors that mostly resemble the old guard. just days after j.p. morgan pushed two women towards the front of the field, morgan stanley's top picks are all white and male. the bank says it is committed to developing and promoting diverse talent at all levels. lufthansa's largest private shareholder, oh, we just lost that story, anna.
anna: laura giving us an update on what's going on with lufthansa. that news coming in after hours yesterday. the lufthansa share price down by 6% this morning. let's move on to things geopolitical. coming up, israel and hamas implement a cease fire early this morning, ending 11 days of conflict. we bring you all of the details next. this is bloomberg. ♪ ♪
anna: welcome back to "bloomberg markets: european open." 22 minutes into friday's trading session and things looking broadly positive but the london market lagging in the. the banking sector and basic resources on the back foot. the ftse 100 elsewhere making modest gains. let's return to some of the geopolitical themes we have been following. israel and hamas have begun implementing an egyptian brokered cease-fire, ending an 11 day conflict that has left hundreds dead. joe biden has praised the truce, which came amid growing international pressure to end the barrage of airstrikes on both sides. we are joined by bloomberg's international executive editor, rosalind mathieson. good morning. thanks for joining us. what are the next steps now that a cease fire has taken effect? >> what really needs to happen
now is to get that cease fire secure and working. it is still very early hours. we saw some very jubilant scenes on both sides, both in the gaza strip in israel overnight as the air raids fell silent for the first time in about 11 days. how do you make it stick? how can you make it farther, communicate with intermediaries to make sure that happens? the egyptians have done the heavy lifting on getting to that truce. what mechanisms need to be put into place to sustain it, particularly because there are parties who will want to see it resume? what kind of systems do you have there? more broadly, does benjamin netanyahu feel like he has done enough to degrade hamas' military capacity? does he feel that he got what he wanted out of this?
hamas has got quite a strong rivalry with palestinian authority. anna: i guess some of the reasons you just outlined was, there is always the risk of fighting breaks out again. >> that's right. you've got long-running, complex issues that underpin all of this. the israeli-palestinian issue is just one part of that, the disputes of the territory, the homeland. these are things you don't fix with a cease fire. you have had very intense communal violence in the corridors of jerusalem, synagogues on fire, buildings on fire, people covered in blood and so on. you've got the issues particular to benjamin netanyahu and his hold on power, and hamas itself. as we have seen from history, these tensions tend to dial down for a while but they do not
last. we are not seeing any indication that any country, including the u.s., which is talking about quiet diplomacy, really wants to take the lead in resolving some of those broader issues and have a longer-term peacekeeping process. anna: rosalind mathieson, thank you very much for joining us, bringing us up to date with the latest developments that have a very long history. we will keep across all of that geopolitics and bring you any develop its as they come through. coming up, the rise of mega firms. giant corporations are getting even bigger. how is their dominance influencing the global economy? we will bring you more on that big take story coming up next. how much tax is paid by these big businesses? and how much have we seen growth in their profitability? all of these really interesting dynamics coming together in this big take story this morning. we will bring you the latest on that from the bloomberg economics team. that is coming up next here on bloomberg. this is bloomberg.
♪ anna: welcome back to "bloomberg markets: european open." we are half an hour into the european trading day and this is the picture for. where up by 0.3% broadly across the markets. ftse 100 lags behind a little. let's have a look at the sector breakdown, giving us a few clues as to where these gains and losses are coming from. you can see autos and auto parts doing well, up by 1%. basic resources on the downside, the only sector in negative territory. some of the luxury goods names
doing ok this morning as well. that can obviously play to the advantage of france. that kind of explains why we are seeing what we are seeing across these european equity markets. breaking news from germany, we had the numbers out of france in terms of pmi, now we get the german numbers. the french numbers look strong, not quite so the story for germany, although we do see a lot of growth in manufacturing. manufacturing pmi coming in at 64, weaker than the number anticipated but well above 50. 64 is very high, relative to history. the services pmi number rising to 52.8, so broadly in line, as germany starts to make some slight moves away from the lockdown story that we have seen. let's get a bloomberg first word news update with laura wright. >> the u.s. is calling for a global minimum corporate tax rate of at least 15%. that's less than the 21% it had
proposed for the overseas earnings of u.s. companies, a level some nations said was excessive. treasury secretary janet yellen has argued for an end to a race -- an end to a race to the bottom for taxation. officials at the oecd are hoping for a deal this summer. the number of u.k. cases of the coronavirus variant from india has more than doubled for a second week. health officials are also monitoring a new mutation of the virus is adding fresh stalls to plans to unlock the economy. the government is increasingly optimistic about the effectiveness of vaccines. the european union is backing the introduction of vaccine certificates to allow quarantine free travel within the bloc. it is offering the region's battered tourist industry a chance to salvage the summer season. the passes will be issued free of charge in digital or paper form. they will offer proof of the holder has been vaccinated, has
recovered or has had a recent negative test. china has defendant retaliatory sanctions on the european union. that is after the bloc's lawmakers voted to freeze an investment deal agreed late last year. that european parliament cited the restrictions as the reason for the move, calling them baseless and arbitrary. lawmakers say no talks on ratifying the deal will be held while sanctions are place. global news 24 hours a day, on-air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. anna: laura wright here in london. let's turn to today's big take story that focuses on the rise of mega firms. gone are the days when ibm and exxon mobil topped the list of the world's biggest companies. tech giants like apple and amazon are dominating the. they are challenging policymakers who may want to rein in their power. let's take a look. ♪ >> the world's biggest companies
are cashed up and thriving. last year, the top 50 raked in a nearly $800 billion in profits. that's equivalent to almost 1% of global gdp. let's break down the trends. 30 years ago, there were no chinese firms in that group. now, there are eight. amtek titans are on the rise, from three companies -- and tech companies are on the rise, from three companies then to 21 now. mega firms are changing the look of the economy. they are hiring fewer workers, more likely to add capacity in the cloud than build a new factory. when they do invest, they often have enough cash to not have to borrow. the median -- for the world's biggest companies has dropped to 17%. president biden's corporate tax plans and china's regulatory
crackdown both suggest policymakers are trying to rein in the mega firms. history shows at the start of the last three decades, around half of the top 50 companies have been new, so maybe they should not get too comfortable. anna: our big take story on the rise of the mega firms. joining us now for more, executive editor for bloomberg economics, simon kennedy. good to see you in person in the studio. very nice to have you on the program. this research looks at how big these businesses have become and the rise of these mega firms. how big are we talking? how big are these businesses? >> big and they got bigger last year during the coronavirus, which allowed them to benefit, if that's the word for a year of the pandemic, but they certainly were able to take advantage of their business models. amazon was built for social distancing. they benefited from that and they benefited obviously from government support and from central bank stimulus.
let's look at some of the numbers here. collective stock market capitalization, about 30%, surged to about 30% of global gdp. median profit margins. effective tax rate fell to 17% from 35%. these big numbers just represent how more important they are to how our economies operate, both the good and bad. anna: does this suggest that a group of businesses that are bigger and more powerful, does that come through in the data? >> absolutely more powerful. the assumption, this is what you are seeing when china looks at alibaba or the biden administration talks about higher corporate taxes. the worries for these governments is that these companies haven't used there might. do they use it to the disadvantage of small businesses? do they use it to the
disadvantage of workers? with some companies, there is less access to benefits, wages more compressed. you will see this worry about wage growth. all of these things stack up. if you rely on voters not pumping these to vote, this is a concern. when you are seeing administrations such as biden coming after trump, this is going to be a big talking point. you saw janet yellen talking about the fairness of the tax system. obviously, there are benefits from these companies. we all like amazon delivers a day later but there are also downsides for the broader economy, broader society. anna: i discovered my local bookshop during the pandemic. . where is the money all going? do these businesses who are making more profits for paying less tax, at least on a percentage basis, where is all that cash going? >> they are rewarded investors, dividends, and the like.
one interesting finding from the study is the cash pile, they are sitting on a cash pile $1.8 trillion, five times what they spend on business investment. ibm back in 1990 spent about 9% of what they had on investment capital spending. apple last year, just 3%. the money is being sat o obviouslyn. amazon potentially buying a film studio, mgm. they are looking for business opportunities. when you look at the government, they want to correct them and hopefully find a way of benefiting society as well. anna:an efficient financial system should be finding ways for that money to be invested, shouldn't it? maybe these businesses have ideas of investing into the future. thank you for bringing us the story. simon kennedy with us. thanks to our executive editor for bloomberg economics, simon kennedy, with us to take us through the big take. if you want to find more, go to
the terminal. coming up, is hybrid working the next big disruption to the way we work? we will be speaking to the president of microsoft for western europe about the way that work is shifting. we will discuss that model of working and how folks are addressing the diverging needs of workers. that is next. this is bloomberg. ♪
>> we don't want to declare victory prematurely, but if we can get the 70% of adults vaccinated with at least one dose by the fourth of july the way the president has set the goal, i think the chances of there being a surge or a rebound is extremely low. that's the reason why we want to continue to get people vaccinated. anna: that was dr. anthony fauci, director at the national institute of allergy and infectious diseases in the u.s., speaking to bloomberg just yesterday. the pandemic has forever changed the way we work, career progression and how we manage our work and life balance. what will the future of look like as vaccines rollout across the world? in a nutshell, will it be hybrid? microsoft thinks so, according to microsoft, which says we are on the brink of another big disruption with a shift to a blended model. joining us now is cindy rose,
microsoft's western european president. good to speak to you on the way the world of work is shifting. you say flexible work is here to stay. the talent landscape has fundamentally shifted. what makes you so convinced that we won't just go back to the way things work pre-pandemic? cindy: good morning. i think for many businesses, managing out of this crisis will be even more complex than managing into it, because it really will require organizations to make that shift to hybrid work that you mentioned. that means rethinking the employee experience. we have done a lot of research on this. employee expectations have fundamentally changed. we feel that flexible work is here to stay, there is no going back. i think we are on the cusp of some pretty significant workplace disruptions. 72% of employees expect flexible, remote work options to continue.
40% of the global workforce is considering leaving their employer this year unless flexible work continues to be an option. it really is critical to attracting and retaining the best talent in the future. anna: dare i say, tech businesses have benefited perhaps from some of these work from home models, hybrid models. maybe you would like to see that come to pass to some extent. others might have a different view. we took some soundings from two real estate managers with exposure to commercial buildings, so they might have a different view of the way things will develop. let's listen in to what they said. >> as we work back to a hybrid model, and some people are in the office and some are at home, there is going to be fom and what -- fomo and what i called the hamilton moment. they will want to be back in the office. >> it's tough to build a
successful premier league football team by zoom. it's tough to field a successful major league baseball team by zoom. that goes for corporate cultures and corporate winning teams. you've got to be in the room with your colleagues. anna: two real estate managers, ric lewis and bill benjamin, speaking to bloomberg about what they see as the future. they've got some skin in the game when it comes to commercial buildings. how do you think that the hybrid models can be made to work, despite that, as it was referred to, hamilton moment? people wanting to not feel excluded. cindy: what those videos show nicely is that every organization's approach to flexible work will be unique. at microsoft, we have given our employees the choice to work from home up to 50% of the time. our experience in china, for example, where we have been practicing hybrid work for several months now, suggests
that's what optimal for most employees is three days at home and two days in the office per week. i think a mindset shift is meant to be required. we are going to need to let go of the idea that people need to be in the office physically 9:00 to 5:00 for people to be productive. we need to think of work as an activity and not a place. physical space still matters, because face to face human interaction helps people feel connected and build social capital. those physical spaces will need to be redesigned to optimize for the people who are not in the room, so that remote participation continues to feel like a first-class experience, even in a hybrid work environment. anna: what have you learned on that front about the way physical spaces should be adapted? i am sure many of us have had experience of a small group of people meeting face to face and trying to involve those who are remote as well, physically remote, and trying to make sure the whole thing still has the same momentum that you would
like it to? >> it probably -- cindy: it probably will not surprise you to hear me say that i think that technology has a huge role to play. offering live captioning and transcription, raised hand features, digital whiteboarding features for collaboration. technology becomes quite important. it's important to have inclusive meeting behaviors, such as things like making sure that as soon as you get into the meeting room, you join the team's meeting, or whatever technology you are using, so remark participants do not miss out on that -- remote participants do not miss out on the informal banter. it's about embedding technology to create a hybrid environment and adapting our behaviors as well. anna: it's about the technology and also some of the ways we use it, cindy, and the practices we put around it. what about digital exhaustion? many people who have been stuck at home for many months might be feeling a little bit fed up with
the way that their meetings appear to be longer than they were. they've saved time on the commute but seem to spend it more and more on online meetings instead. what have you learned on that front? cindy: we have learned that working from home is hard, right. the amount of time we are spending an online meetings has more than doubled in the last year. people are struggling to switch off at the end of the day. research shows that that can result in elevated stress hormone levels right through the night. there is absolutely no doubt that employee mental health and well-being is a concern. our survey shows that 39% of employees globally are feeling exhausted and 42% are feeling stressed. we don't have all the answers, anna. our advice is to set a strong tone from the top and engage employees in conversation. it's about creating an environment where talking about mental health and well-being feels safe. at microsoft, for example, we
have encouraged our employees to establish boundaries, manage their workloads by prioritizing, may be saying no to meetings that don't have value or recording them and watching them later, and taking frequent breaks so they don't burn out. we empower them with data and technology. workplace analytics tools gives us a data-driven view of how we spend our time so we can make deliberate choices. cortana tells me when i am in meeting overload and not getting enough recovery time. new settings in outlook automatically shorten my meetings to ensure i am taking enough rates during the day. anna: thanks very much. thanks for joining us, for sharing the microsoft experience. cindy rose, microsoft western europe president. we should just tell you that france's bruno le maire is speaking right now from lisbon. let's listen in. >> want to play in the first league or do we want to be left
behind by china and united states? the willingness and the determination of the france is to do all and are forced to have europe remain in the first league, in the race of innovation of new technologies, and remaining at the same level as china and the united states. in that case, there is a need for new investments, there is a need for more activity, there is a need for more investment in new technologies. we have to improve the growth potential of europe. coming back to normal is not the right ambition. remaining in the race of technology is the right ambition. we must improve the growth potential of europe. this is from the historic point of view the key decision that we will have to take over the next month. i just want to conclude by a wo rd on the question of
international taxation. first, to tell you that 15%, the last proposal made by the united states, could be a good compromise. the key question is clearly to have a compromise and an agreement in digital taxation and minimum taxation as soon as possible, i mean during the g20 in italy at the beginning of july. even if we can leave with 15%, it can be a good compromise between the different expectations of all members of the oecd. the key question is to define the global framework for global taxation and minimum taxation and to have a point of agreement no later than the g20 in italy at the beginning of july. we will not spare our efforts. we have been working for more than four years on this new international taxation system.
france will not spare its efforts to pave the way for a compromise at the beginning of july. reporter: -- there should be more stimulus put on the table in europe or implement what is a ready agreed -- already agreed? >> the first step is implementation. the second step is disbursement of european money no later than july. the third step, on which i think we should altogether, the 27 member states, think about is the question of new investment so that we can raise the level of potential role in europe. even if we come back to the gdp -- level by the beginning of 2022, there will be a loss of two points of activity compared to the previous trend. if you're making a comparison with china and the united states, it is not the case in
those two continents. what do we want? do we want to play at the same level as china and the united states or do we want to lag behind? i want europe to play its role at the same level as china and the united states. this is the key question. this is not only an economic question, this is also a policy and strategy question for all of us. [speaking french] anna: that was bruno le maire, the french finance minister, speaking to reporters in lisbon at the eco-fin euro group meeting. speaking to my colleague, maria tadeo. interesting to hear his thoughts common friend increase in the growth potential of your.
when pressed to explain, what he was really talking about was implementing what has been agreed, dispersing it and investing that money. interesting to get his comments on the u.s. proposal around a minimum u.s. corporate tax -- u.s. proposal around a minimum corporate tax of 15%. we will watch that story as it unfolds. let's get back to the markets. good to speak to you. a little calm things appear to be in the markets. is that because cryptocurrencies are a little calmer? what do you think is driving risk appetite into the weekend? >> good morning, anna. i think the markets are in kind of a pause and reset kind of mode. we have seen real rates kind of driving higher this week. and breakeven rates have fallen. that's leaving the rates market
a lot farther to think. i've got bitcoin and a lot of other coin complexes. looks like there is some kind of calm at the end of the storm, the bitcoin storm that we had. anna: we have seen gold do pretty well. i don't know if that's something on your radar. a lot of people comparing it to the volatility we have seen in bitcoin recently. >> obviously, gold is not going to do as well as bitcoin can on a day to day basis. on a volatility adjusted basis, you will see that gold has done a lot better than bitcoin, definitely, in terms of returns this quarter at least. gold is falling this morning because real rates have come out. it's going to kind of put a
downside on gold in the short-term. i expect gold to be treading water around current levels. as for bitcoin, there is no particular point that can tell you where we go. anna: i saw you earlier this week, it's a bit of a fool's errand to find some of the fundamental drivers of what is happening with bitcoin. it's not going anywhere very fast this morning. we certainly have a calmer picture there, down by just 0.4%. thanks. that is it for the european market open. surveillance early edition is up next. we have interesting data on the labor markets. we look ahead next week to some pce data out of the 96. we will get a bit -- out of the united states. we will get a bit of a better sense of the preferred inflation method by the fed. we will continue the inflation conversation. u.s. yields, 1.61 is the handle
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