tv Bloomberg Daybreak Europe Bloomberg November 17, 2021 1:00am-2:00am EST
james bullard calls for more hawkish policy. we await the key c.p.i. print from the -- good morning from singapore, where the new economy is gathering. we've heard from hank paulsen and from gina reymundo but my favorite goes to again henry kissinger. dani, we're through the main class and on the precipice. and we're looking both directions. i call that fully hedged. but this glimpse of deescalating and treating one another in the way -- in treating one another well. the words are equivalence and new subordination. dani: yeah. it's really perfect timing. having these conversations at the new economy forum. considering we just had that virtual summit with xi and biden. also bearing -- very significant that we had the chinese vice president talking about the need for china to have foreign
investment. and it wants to also be open. it needs its global cooperation and china needs the world and the world needs china. we still bloomberg just this morning that china is looking at using more local tech companies versus that of outside of china. so yes, you have this rhetoric of an open china progressing dialogue. but in action, how much of that is going to be followed through and how much of it can be followed through, manus? manus: well, we had a conversation with the chairman for china apco saying businesses have been treated very, very well. and the capital into the cent and one gund manager looks after $5 billion at janing saying money is still pouring in on the private equity side. the risk is about getting your money out the other side. that's what the world is worried about. the australian -- the new zealand trade minister with me this morning he's on his way to do a deal in europe. we talked about supply chain risk in the fertilizer market and the agricultural market.
and the risks that some of these countries still face. so this is still very much in not lockdown but this is a country re-emerging from covid. very different to how you are in london and how life for me is in dubai. so asia, and australia, and new zealand, all at different cadence in the evolution in the post-covid world. dani: yeah. it really is fascinating, manus. you are hitting on all the important topics. and also fascinating to hear from axel faber saying inflation is uncomfortably high and may last that way one to three years and an important context as well as we discuss the possibility of a different fed chair come next february when powell's term expires. manus: indeed. those markets, are they risk on or risk off? dani: well, they are hanging tight perhaps a little tinge of risk off. at least if you're judging by this equity market that is flat to ever so slightly down.
we're not getting a lot of movement of course. the concern is inflation and those really strong retail sales numbers yesterday in the u.s. and that fueled move higher in 10-year yields and hanging tight this morning but above 1.6% at 1.6335 and that in turn fuels a stronger dollar as well. and one of the biggest sufferers of that stronger dollar is the yen. the yen is trading at a more than four-year low versus the dollar. it's all about that yield differential and we're having a higher yield in the u.s. those japanese j.g.p.'s look less' attractive and that money gets poured into the u.s. market and into the dollar. finally i had to touch on bit coin falling another 1.5% so far this morning. below $60,000. a couple of different factors. and concern about taxes. there's concern about china. cracking down and the usual suspects. but still so far these losses in crypto not yet abating, manus. manus: yeah. and axel, the chairman at u.b.s., this is the closest he's come to a little bit of
skepticism around the cryptocurrency. just keeping in mind on the headlines. and let talk about china. because the plans are accelerating to replace american foreign technology. it's quietly empower. and the secretive government-backed organization to vet and approve local suppliers in areas of supplies through to semiconductors. so let's get a little bit more on one of our lead stories this morning. it's a bloomberg exclusive story with edwin chan who's in hong kong. he had whip -- edwin, good to have you us with. the broader picture of what we're hearing verbally between xi and biden. >> you mentioned earlier we had xi and biden have their first face-to-face meeting. i believe there's a lot of optimism right now that maybe we're moving to an engagement first approach. but i think what this story underscores is that there's a bigger picture to look at.
i think the u.s., chinese race for technological and political and economic supremacy will continue. but i think any opening up of the vice president or other officials talk about will be limited in scope and considered areas like the provision of technology to a pivotal industry and government sectors. i believe very much a china first policy. dani: that's bloomberg's edwin chan. to the u.s. where joe biden will announce his fed chair nominee in the next four days. but according to a person familiar, the u.s. president has not yet made a decision. let's bring in bloomberg's derrick wallbank. can we glean nailing from the timing that this is speeding up within four days -- glean anything from the timing that this is speeding up within four days what the fed composition will look like? >> i think the thing you can glean is the biden administration is pretty close
to a decision that feels like it's got two pretty good candidates between incumbent jerome powell and also leal brainard. and when you got a sort of decision like this, you're going to go one way or you're going to go the other. at some point you conferred know which way you're -- you kind of know which way you're going to go. what's really interesting to me is that the white house is going around and talking to members of the senate. the senate has to confirm this position. and so i think the key thing that they want to know is who's kellerable -- kellerable and what's going to be easy and hard and what can we get here suspect and that is a really critical consideration. you've seen the white house go through a really bruising fight related to infrastructure that's not completely over yet, right? because the whole biden build back better agenda is hanigan on in a reconciliation bill that's going to go by the slimmest of majorities. and you are starting to see some voices from within the senate. there are some democrats that
want to see the brainard pick. they think that would be better on some issues. but you're also seeing some republicans coming out and saying yeah, you know what? even though there are some democratic skeptics about powell, we actually like powell. and we would prefer that to be the pick. so you are seeing this political jockeying right now. and i think that's a place where if you're really into the sort of -- you should probably look to the halls of the capital. manus: we have martin milone last week who pointed out that if it is leal brainard the -- her husband drives a giant agenda inside the biden administration and she would be at the top of the financial stack so a power base and a half there. thank you very much. wellbank in singapore with the latest on the fed debate. our attention to the u.k. because we are just under an hour away from getting the very latest p.p.i. data and analysts believe that inflation will far outstrip the bank of england's 2% target.
that is the given. just how bad can it get? how high would it go? the numbers and the estimates. and it's a debate between p.p.i. and r.p.i. for the linkers and p.p.i. for the bank of england. good morning, lizzi. >> good morning, manus. and economists are expecting above target krupp inflation. -- c.p.i. inflation. and to come back to the supply bottlenecks and the energy crisis that is really affecting the u.k. just this week the governors of the bank of england said that he's still very uneasy about inflation. and he explained to lawmakers the reason he didn't go for a november rate hike because he wanted to see how the job market is faring post furlough. we got the labor market data yesterday and it showed if anything even more of a case for a december rate hike as economists are joining the markets and expecting now. and the strong c.p.i. print around 3.9% economists are expecting could be the straw
that breaks the bank of england's back. in december. dani: certainly a lot of pressure mounting up for -- thank you so much for joining us. that's our u.k. economy reporter lizzi burden. let's get to the first word news with annabell jewelers in hong kong. >> hey, dani. ireland is reintroducing some covid restrictions as it grapples with rising hospitalizations. prime minister michael martin said people should work from home where possible and -- in cinemas and theater also require proof of vaccination a report says u.s. regulators could authorize boosters for all adults by the end of the week. in asia, fedex is said to be shutting its hong kong power base because of the city's coronavirus policies. u.k. prime minister boris johnson is proposing members of parliament should be banned from taking paid political consultancy work. this as he tries to draw a line
in two weeks of damaging headlines for its ruling conservative party. the plan is a dramatic reversal from johnson's position when he boarded -- to block the suspension of a former minister. the opposition labour party says the proposal waters down its reform plan. and british utility said to be weighing selling a stake in its electricity network assets. and the company is also weighing a move to increase capital expenditure in its renewables business. s.s.e. has been grappling with pressure from activist investor elliott investment management to separate into two. global news 24 hours a day on air and on bloomberg quicktake powered by more than 2,00 journalists and analysts in more than 120 countries. this is bloomberg. dani? dani: annabell, thank you so much. now, coming up, a hawkish call from st. louis fed president james bullard. could inflation derail growth? we're going to discuss all of
that and look at markets next, manus. manus: we'll discuss what's on the agenda right here in singapore as the new economy -- at the new economy forum? later in the show we will catch up with our stephanie saunders who is on the ground here and we'll also hear from the u.s. commerce secretary gina reymundo. this is bloomberg. ♪
>> the inflation rate is quite high. the core p.c. inflation rate that the committee's favorite measure is about 3.6%. that's the highest it's been had 30 years. so it's -- it behooves the committee to attack in a more hawkish direction, we could move faster. we kept optionality on this. that we could speed up the taper
if it's appropriate. dani: federal reserve bank of st. louis president james bullard on the prospect of reduced monetary stimulus. also going to bring you some lines crossing the terminal on a report from ali wren who says he sees euro area inflation easing next year. also saying that inflation not yet showing in euro area wages and yes, there is accelerating inflation on energy and the supply crunch. but again, he sees that easing into next year. so that's an inflation story. let's go ahead and bring in bill street, chief investment officer at quintet private bank. bill, thanks so much for joke thus morning. off the back of another strong u.s. data report. this time it was retail sales. if the data keeps rolling in to this degree showing growth, showing a hot inflationary measure, how does the fed and does the fed change track in key one -- q-1 of next year? bill: yeah, hi, dani. hi, manus. so we think that we're more on the dovish side of the equation
here. that you look at -- more hawkish, bullard, they're looking at approximately -- because the market, what's priced in, you got nearly five rate hikes priced in the next 24 months. and we are having a liftoff in interest rates. and hopefully we'll get some containment on real rates. but we think quite impressive at the moment. manus: the market a little bit too far ahead? good day to you. a little bit ahead in five hikes in the next 12 to 24 months and what do you see in terms of slow? goldman sayles with a note saying -- goldman sachs with a note extreme bullish positioning. do you get an extreme dizziness in the equity market story? let's start there. because i know that you are overweight equities. and you have a lean to u.s. bill: yeah.
absolutely, manus. i mean, to some degree, it's a relatively simple narrative. we believe the fed and central banks generally are going to see steady as they go. and they're going to be very cautious about rates and interest rates when the supply shock. and going to suppress demand to supply and that's where we are at the moment. that means that real rates will remain very negative for some time to come. when you have a real rate negative, in the u.s., and this example of approximately -3%, that's going to be good for real assets. this will be supportive for sectors and duration assets. dani: at the same time, though, you've also reduced your tactical equity overweight with a specific focus on u.k. equities. what's the thinking there? >> yeah. security composition of our portfolio, we had long-term
structural secular positions. and as manus pointed out, some in the u.s. and this composition of both indexes. you get to the tech sectors of growth stocks and we're also branching out with some moves into the economy as well and we thought there would be some momentum in the opening up trade. and more secular positioning. we saw that in the u.k. and we took some significant positions in that part of the u.k. market which is small and mid cap. and we are just adjusting those positions down as we come into the -- to see how the u.k. manages the economy at the end of the next few months. manus: bill, the dollar, the leave nature of the optionality as bullard referred to, in other words, that optionality is on the table. the dollar trades at a one-year high.
2022, how do you see it for the dollar? bill: yeah. look, this -- the tail winds to the dollar are going to be persistent. at least in 2022. and sort of nominal growth differentials, and also the right differentials. so we don't believe interest rates won't move. they will gradually pick up and not as -- the we see the 10-year yield ticking up around the 2% and that's where the pain trade is. that means that this carry trade for the currency, the growth trade for the currency, are still alive for the dollar at least in the next few quarters. manus: king dollar forever. thank you so much. bill street there at quintet private bank joining dani on the market and positioning into the fed. coming up on the show we discuss the agenda here at the new economy forum with our head of economics stephanie flanders.
manus: this is "bloomberg daybreak: europe." i'm manus cranny. dani burger at london h.q. we're live at the bloomberg new economy forum and halfway through the first day of the forum. and i believe it's government and finance have gathered together in person. dani, a very good morning to you. dani: yeah. good morning, manus. and it is just fascinating there at the forum with the world's increasing inflation problem and china's growing role on the world stage. and just two of the things that have topped the agenda where you are, manus. manus: let's bring in our head
of economics, senior executive editor, stephanie flanders. and you've had the conversations and a few radio guests. i'm curious, when we -- one of the first things about perhaps more government. i was kind of surprised when i saw you -- wow. more government. what does that mean? stephanie: one of the first panels involved mainly business leaders talking about how global business has been transformed by covid. and several of them suggested actually what they thought was the way that the world should be run in a way was -- had been affected by covid. that it wasn't -- it hasn't highlighted flaws in business. but it had thrown up some big demand and needs for government to step in. most obviously the vaccine and not just development but making sure the vaccines get out and then it prepares -- and more broadly, if we think that inequality is increased as a result of this crisis, and highlighted as a result of it, and there's a call for even from
business for governments to be involved there as well. manus: i can imagine the responses are like more government, big government. i think that was a design and -- and other democracies. and again, the debate between working from home, and i've had a couple of conversations around property and property developers. and the existential moment and everybody is going from the city to the country and you spent quite a bit of time in the country during the pandemic but the debate is between working from home and climate. those are two big things that we're going to grapple with. you can -- the consensus at the halfway on day one. stephanie: it was interesting. a poll earlier in the day asking people what they thought would be the most enduring result of covid. and the overwhelming majority said that remote working would be the beg effect and a greater emphasis on climate change coming quite far away second. but one of the seekers on that panel, one of the senior
business leaders from india suggested that he thought that would reverse in a year's time. because we would all realize, we would probably be working back to the office a bit more than we are currently doing now. and we would be very focused on climate change. because and the reality, the problems of the environment, not just carbon emissions but also how challenging it is for -- in indian cities at the moment and something people are dealing with day it day and see more and more urgency. manus: and what some people are calling the great resignation, boosted by i don't have respectability -- i don't have flexibility and i move on and the other two conversations which i sit in at the start of henry kissinger and wanted your take on it but through the main half and we're on a precipice and looking in both directions. i call that a perfect hedge by henry kissinger on the u.s. at china relation. your take on the conversations. stephanie: those of us who have heard henry kissinger at previous new economy forums, we were waiting to hear where we
were in this cold war. because the very first new economy forum in the same location, he talked about we mee edge of a new cold war and said we were in the foothills. so quite interested to hear that we have gone through the fire but we still might be looking over the precipice. so i don't think i would want to go mount nearing with henry kissinger. but i think that -- what was encouraging, and he previously had quite stark warnings about the potential for conflict between these two superpowers. and was the idea that this meeting between biden and xi, the virtual summit talks this week, he thought actually had started on the right foot and had set the right tone. because that's a contrast with that first meeting that the u.s. secretary of state tony blinken had at the start of the year which went so badly. so it's nice to feel that he's at least henry kissinger thinks that we're on a slightly better path now. manus: and the other two words
that jumped out, was equivalent and not subordination. and was his interpretation. for me, i think that's quite constructive. the other is around trade. i caught up with new zealand trade minister, and very bullish naturally so. and what was your take on gino reymundo? stephanie: it's interesting because she has been the commerce secretary, has been front running actually for quity aggressive but certainly robust language around china, around the need to stand by its commitments and trade deals with the previous administration. but also the need to stand by its property rights and all the traditional complaints people have about the way china has supported its development and certainly some of its innovations. and conciliatory today i thought but on your point about quiches versus subordination -- equivalence versus subordination wants other allies to -- to work together with her to help to make sure that china is not
breaking the rules and standing by. manus: steph they, thank you as ever for joining -- stephanie, thank you as ever for joining us. stephanie flanders, senior economics editor here at the econom- [announcer] imaginee bloomhaving fuller, thicker, more voluminous hair instantly. all it takes is just one session at hairclub. introducing xtrands. xtrands adds hundreds or even thousands of hair strands to your existing hair at the root. they're personalized to match your own natural hair color
dani: good morning from bloomberg european headquarters 6:30 a.m. in the city of london. i'm dani burger and in the hot seat also is mark cudmore joining us from singapore. this is "bloomberg daybreak: europe." here's what you need to know. the bloomberg new economy forum kicks off. china trade and supply chains are topping the agenda on day one. the yen sinks to its lowest in more than four years with upbeat u.s. data for quicker policy tightening. the dollar climbed to its
highest level in more than a year. and inflation continues to loom large. st. louis fed president james bullard calls for more hawkish policy. we await a key c.p.i. print from the u.k. mark, good morning to you. so great to have you on the show earlier than i know you usually come on. and manus will do his panels for the new economy forum and joining us here early on "bloomberg daybreak: europe" a day after a strong u.s. u.s. economic data in the surveys. it seems if you want to be long revving assets, you continue to get a boost when it comes to the economic data. >> i think that's absolutely right, dani. that's why people are prioritizing the u.s. over the rest of the world. where seeing that the u.s. is making that transition to demand-led inflation and consumer is remaining resilient. for how long is another question. but right now those retail sales, the consumer is strong, and even though consumer sentiment was a little bit soggy last week listen or look at what consumers do not what they say.
and that means the dollar is doing well. the u.s. curve is steepening and u.s. stocks are outperforming and that is a narrative that will continue into year end for the moment. dani: strong earnings from wal-mart and home depot. but i have to wonder is there any indication that this might be people buying now because they are worried about inflation and the holiday season that this is your sort of sped up and might see that sentimentite weao sales? mark: dani, you're preaching to the converted here. i'm completely in the camp that this is people getting ahead of a problem that is building up a little bit later. and i'm a bit concerned. but i don't -- the market is not worried about that right now because at the moment we don't know what the -- we know we have an inflation problem. we do have an indication that the consumer is getting out of things because they heard of the supply side problems. they know there's an inflation story coming. that means you might have a bigger problem later. but until we know the central bank reaction function very hard for investors to trade beyond going headline number is good. dani: speaking of trading it let's go ahead and take a look at what today's markets are
doing. we are looking at an s&p 500 e-mini futures index unchanged. not quite the dreaded unchanged but not too far away from it. and really we're seeing a continuation of this reaction. oh, no, the dreaded -- and up to where we are seeing this continuation of how markets reacted yesterday of that stronger economic data that we were discussing. you have the yen suffering those yield differentials with higher yield in the u.s. the yen at its weakest versus the dollar in more than four years. not getting too much on the 10-year. still some selling through the asia session at 1.6353 and mark i want to ask you about it and why it's moving but we are seeing bit coin drop below $60,000. concerns about u.s. taxation, china's continued crackdown so perhaps the likely corporates. but mark, beyond the volatility of bit coin, a lot of usual suspects and topics have come up at the new economy forum. i think it's really interesting the dialogue we've gotten about china there. you have the china vice
president saying that it's important that we have foreign investments coming into china. the world needs china, china needs the world and we have henry kissinger talking about improvement, and optimism about the relationship. so it does seem that there's a continuing -- tinge of positive moving between china and relations with the world. mark: you're right, the narrative at the moment is definitely continuinged more -- tinged more positively. and the xi-biden summit or virtual summit where there was a positive takeaway. not a massive one. and they'll need to distinguish between the fact that it was definitely positive. jut very incrementally so. the fact that they met at all and as you say that's encouraged or furthered by some of the sounds we're hearing of the new economy forum here. we're hearing some generally very positive statements. but i wouldn't want to run too far. and i'm thankful you didn't ask me to explain that bit and crypto because i can never explain that asset class. dani: i don't know if anyone
really can or we're taking a stab in the dark. really interesting because yesterday we got the banc of america, investor survey and only 35% thought that inflation was sticking around. but you compare that to example -- of u.b.s. axel faber saying we could see inflation uncomfortably from one to three years out. what sort of takeaway have you been getting about some of those conversations around around -- involving around inflation there? mark: what's interesting, is people seem to be moving more into the camp that inflation in a year's time will be lower than they were a little wheel ago. and the reason they're moving that way is because of the immediate inflation problem. now clearly so bad that they're all buying into the idea that the fed or policymakers generally, particularly the fed will have to react sooner. so it's -- the inflation problem is so bad that the longer-term inflation problem will likely be less bad. everyone knows a headline inflation problem and a supply side driven. and everyone knows the fed must act but they will have --
difficult inflation problem and that might kur tale the economy and therefore bring inflation down maybe in 12 months' time. dani: perhaps also explains why we've seen some of the yield curves. and failure to really steepen to a significant degree. mark, we have heard from another big voice at the event and it's again a very timely interview. u.s. commerce secretary gino reymundo saying china is not living up to its commitment from the phase one trade deal and discussed some supply chain issues. >> for so long in our supply chain the mantra has been just in time. and now we realize the vulnerabilities of just in time. we need to have just if case and redundancy and diversity. and so i'm here in the region talking to companies that are in our supply chain and ministers here to say let's collaborate with our partners. tomorrow i'll be in malaysia. a good part of america's supply chain is in malaysia.
some of the factories went down due to covid outbreaks. which had disruptions obviously in america. some the fact rice went down due to natural disaster. so we're saying how do we work better together? how do we improve resiliency and transpatterncy so we get rid of these choke points and bottlenecks? >> we have to talk about trade. we had some u.s. trade representatives, katherine py, talking about recumming with china. -- recumming with china. in the area of trade and u.s. and china, what is that exactly? how do you -- define? >> we want trade. that's good for u.s. business. exports are good for u.s. business. but it needs to be -- china needs to play by the rules. they need to respect our i.p. -- i.p. they need to live up to their commitments. right now in the so-called phase one deal, where the chinese committed to purchase a certain amount of aircraft and agricultural products, they're
not doing that. they're not living up to their commitments. we want a level playing field. we want everyone to play by the rules. and then of course we do want trade. and exports. good for american business. >> the u.s. has also talked about using new tools to address chinese practices. what are these new tools and are you looking at -- these new tools along with the allies? >> absolutely. president biden is so clear about this. first and foremost, we invest in america. you know, we just two days ago the president signed a trillion dollar package, biggest investment ever in american infrastructure. and then we worked with our allies which is why i'm here in this region. we want to develop a more resilient supply chain with our allies. here in singapore, for example, or in malaysia, in japan, they are key partners in advancing manufacturing and in the supply chain. so we need to work with them so that -- >> what about the new tools?
>> that is part of it. so, for example, i am here laying the groundwork with these countries to come up with an economic framework for how we work with countries in this region on supply chain, semiconductors, digitalization, cross-border data flows. really decarbonization. so going beyond the limits of a traditional free trade agreement, to look at other aspects. those are kind of additional tools. dani: u.s. commerce secretary gina raimondo. coming up, inflation looms large. and c.p.i. data coming out and what analysts are expecting next. next.
dani: welcome back to "bloomberg daybreak: europe." i'm dani burger in london with mark cudmore in singapore. annabell droulers over in hong kong. vonnie: hey, dani. island -- introducing some covid restrictions as it gray wells rising hospitalizations. prime minister mikhail martin says people should work from home where possible and cinemas and theaters will now require proof of vaccination. meanwhile, a report says u.s. reck lators could authorize wiesters -- beasts -- boosters for all adults by the ebbed of the -- end of the week. hock could be -- u.k. prime minister boris johnson is proposing amendments to parliament should be banned from taking paid political consultancy work. this as he tries to draw a line in two weeks of damaging headlines for its ruling conservative party.
the plan of a dramatic reversal from johnson's position when he entered -- ordered his m.p.'s that blocked the suspension of a fallen minister. the opposition labour party says the proposal waters down its reform plan. china is said to be accelerating plans to replace foreign technology. sources say a secretive government-backed organization is vetting and improving -- approving local suppliers in sensitive industries acting as a gate keeper from banking to data storage. we're told that 1,800 chinese suppliers have been invited to join the committee and any company with over 25% foreign ownership will be secluded. -- excluded. wal-mart shares fell the most in almost nine months despite offering an earnings beat and a positive outlook. the u.s. retail giant signals that it's braving for more pressure from the supply chain squeeze. c.e.o. mcmillan saying the costs are rising faster than prices due to transportation snarls and
higher fuel costs. global news 24 hours a day on air and on bloomberg quicktake powered by more than 2,700 juronists and analysts in more than 120 countries. this is bloomberg. dani? dani: annabell, thank you so much. annabell droulers in hong kong. let's turn to the u.k. and we're moments away from getting the latest c.p.i. data. analysts do believe that inflation will far outstrip the bank of england's 2% target. with more mark and i are joined by bloomberg u.k.'s economy reporter liz burden -- lizzi burdennen. what could it mean for policy? >> economists expect the third straight month of inflation would have the -- above the bank of evenedland 2% target and coming back to the energy crisis and supply bottlenecks. the governor of the bank of england andrew bailey is very uneasy about the inflation picture in the u.k. and he explains to law markers that the reason he didn't vote for a november rate hike was because he wanted to see how the
jobs market had been faring post furlough. we got those labor market yesterday and if anything they strengthened the case for a december rate hike which economists as well as markets are now expecting. so a strong c.p.i. print today around 3.9%, economists are expecting. could be the straw that breaks the bank of england's back. >> good morning, lizzi. i'm seek the high inflation prints. my inflation expectation is going higher. i'm optimistic for a wage rise this year. what do you think the risks are, the higher inflation could become a self-driving force through those inflation expectations and demand for wage rises? >> well, it never hurts to hope, mark. in the u.k., though, members of the monetary policy committee told m.p.'s this week that they weren't expecting a wage price spiral. and that's because unions are weaker than in the 1970's. competition for employment is fiercer than in the 1970's. but what we are seeing in survey
data is a record for starting salaries and not translating into payment for existing staff. so loyalty doesn't seem to be paying yet. dani: lizzi, thank you so much. a busy day ahead of you with c.p.i. data in 15 minutes. that's our bloomberg economy reporter lizziie burden. we'll hear from vice president wang qishan and the -- they spoke at the new economy forum in singapore. this is bloomberg. ♪
resolve to deepen reform and opening up. openness brings progress. whereas isolation leads to backwardness. we need to promote trade and investment liberalization and bring down trade and knowledge barriers and stay away from discriminatory and exclusive rules and systems. and to keep the functioning of supply chains and smooth. dani: china vice president wang qishan speaking new economy forum. and industry already recovering from beijing's crackdown and founders and investors are adjusting to the new reality. the ventures gary reichelt chinese entrepreneurs have a you can't kill me attitude. >> that has rebounded dramatically so at the point where record numbers of dollars
and -- this year china will invest $120 billion in five to 6,000 startups. so globally -- globally a tsunami of venture capital investment that will happen and top 13,000 it 14,000 investments this year globally and glows to $300 billion. numbers that the industry has never come close to before. haslinda: are those mostly in the technology space given covid-19? >> covid-19 has not had a big impact on where the money has gone. what happens is you have this independent transition of the consumer internet in china to more of an enterprise and core technology. semiconductors, advance manufacturing, all the autonomous vehicles, that type of investment. and health care has exploded globally. but this is also a global phenomenon where it used to be that china and the u.s. accounted for 85% of global capital consumption ask that's dropped 10% which when you talk about $300 billion is a lot of money going now in a much more global basis. haslinda: the u.s.-china tension that is we've seen and perhaps a
little bit more easing this week given the virtual summit how has that affected capital markets? >> so the capital market effect, i don't think we've seen yet. so the venture capital industry in terms of money being raised and money going in hasn't seen a big impact. china's regulatory changes have largely been positive for the startup infrastructure. because effectively jd.com, ali babb a, have created monopolies so to break that apart is over time going to be good for those companies. the real impact will come on the liquidity side. so because as the lessing venues overseas in the u.s., nasdaq, and new york stock exchange, hong kong now, they're starting to talk about influencing the hong kong exchanges, what that will do is -- that will do is delay liquidity back to investors and logically you would look at a decline in interest in those investors in china. just because it's harder to -- to get their money back. >> how doings the new beijing stock exchange factor in?
>> so the chinese can't help themselves intervening in the stock market. so i think -- i'm sure the first day of trading looked like it went well. but in the middle of the regulatory nest of beijing. and thinking as purely market-oriented effect, i don't think it's going to go down that path. i think -- so i think they'll intervene more than they probably should. >> and seeing an intervention in the regulatory crackdown, has that affected your investment vision of where you keep your money? >> that's a good question. the -- where we put the money, where investing early in our average holding period of eight to 10 years. so we're having to anticipate where all these regulatory changes are going to be. several cycles from now. and what it does do is it -- the chinese government now has made it very clear there's -- some -- some things you don't want to invest in because you don't want to have the questions about dual-use technology and have the u.s. and from china for different reasons. and so it's certainly has guided
the investment to areas that we feel are safe. health care is a great example where over half of the money goes into health care. and that scenario that as of yet has not really been impacted by heavy regulatory -- >> i love the way you say "as of yet." because you infer know with china. >> that's fair. >> what are the risks because you infer know where the political decisions will be made with president xi jinping wrapping up his -- his presence everywhere in the economy. >> all we can do is invest in the best entrepreneurs. the chinese entrepreneurs have a you can't kill me attitude. toward the government and toward anybody. and they're fiercely competitive. the energy is phenomenal. all you can do is pick the best entrepreneurs. if at some point government intervention winds up inconveniencing them or inconveniencing us as investors you just have to deal with it. what you don't don't want to do is something directly in the crosshairs of either the u.s. government or the chinese government. and careful about that.
dani: gary reischel talking about adjusting to the new reality. let's look at some of the stories that we will be following today at 10:00 a.m. u.k. time we expect euro area c.p.i. data, and after inflation jumped again in october. matching the highest rate reported since the inception. euro. later this afternoon, also inflation numbers from canada. and we'll be watching u.s. housing data as mortgage applications and building permits which will give us a snapshot of how the sector is performing. and finally, 4:00 p.m.u.k. time russia g.d.p. for the third quarter. mark, we also have a lot of noise coming in today about this sped up time line of when we might get the biden pick, the white house pick for the fed nominee. if we are four days away as biden told reporters from learning who it is, is there anything we can glean from just the adjustment of the team line itself?
mark: look, i have no reason to think that we can glean anything. but i can tell you that certainly investors and traders think there's information on that. the fact is that the odds have increased on brainard being the next pick. and in fact, now in the whipser market and trader chats i'm seeing that people are neck and neck between brainard and powell. and have perceived the change of timing being a nod toward brainard. i think ultimately when you're comparing the two, there's very, very similar monetary policy turns and decided by a committee anyway not one individual. they're both extremely dovish. even though brainard might be superficially even more dovish than powell hard to get practically more dovish. but she is more focused on regulation. she will be a lack of continuity and be a change and seen as a political appointment. so i think stocks the negotiable reaction might be a little bit disappointed if powell is not continued in the role. dani: it's interesting you talk about the committee. because this is something that the gentleman from st. louis said yesterday on bloomberg tv, bullard saying it's a committee. it's a big committee. expect continuity. nothing will necessarily change. so you talk about perhaps stocks a little bit disappointing.
but is it fair to say this is just a gut punch reaction? or is there something that we might see a more fundamental shift in the way markets are behaving? mark: you're right to ask that question. because to a policy point of view there will be no real change. but i think that -- this is a market that is desperately trying to work out the central bank reaction function to then throw into that mix the -- the change of the chair of the fed when it is perceived done an unbelievable job just seems like an unfair thing to do to investors and that will upset people. so it will only be a gut reaction and an instinctive short-term move rather than something fundamental. but i think it will still disrupt markets in the short term. slightly softer dollar. slightly bad for stocks. maybe a steeper yield curve. that's probably it. dani: mark, so great to have you on our show today. what a treat. i know you're going to be sticking around for the next hour as well. with bloomberg markets europe up next. we are looking at that dollar strength continuing of course despite the fact that if we do get a brainard as mark says nomination for the fed we could