tv Bloomberg Markets European Open Bloomberg November 30, 2021 3:00am-4:00am EST
a difficult year for chinese tech firms. we speak with fred hu. >> the turnaround that happened yesterday turned around again. just before 6:00 a.m. u.k. time that we got lines from the moderna ceo about concerns about the effectiveness of the vaccine. futures dropping lower i more than 1%. tom: if you like i never went away because the market action is a mere image of what we -- is a mirror image of what we saw on friday. reflecting the commentary that you got from the ceo of moderna. the length of time it could take. the spanish ibex falling 1.5% and further losses across the ftse 100. the oil markets, the pressure
they're continuing in terms of the selloff. wti below $17 per barrel. yields lower across the belly of the curve. in terms of france, losses of 1.5%. futures lower in terms of the u.s. down zero point 9%. the oil story is back in focus. watching travel and leisure especially with the new policies being implemented around the world to curb the new variant. the 10 year yield lower by five basis points. the japanese yen is bid in terms of moves to safe havens. >> it is turning out to be an ugly day in terms of sectors. you will be hard-pressed to find any tidbits of green. two come to mind. classic haven type assets.
staples, consumer discretion and a little green at health care but elsewhere, it is a broad-based selloff. we are also looking at materials, oil, a lot of different commodities moving lower. financials, some of the yield curve coming lower. not great for the financial sector. red across the screen so far this morning. tom: jay powell saying it is a concern focusing on -- jay powell saying it is a concern. iag, the owner of british airways down over 2.5%. inditex, an intriguing story about the changes at the top. the daughter of the founder is taking over.
losses of 5% in the first few minutes of trade. glencore, an activist investor pushing the company to spin off some of its coal assets. pressure of about 1%. let's get the bloomberg business flash. >> easyjet says the omicron variant of covid-19 has had an impact on short-term demand but has not derailed a recovery and air travel. the u.k. discount carrier has reined incapacity plans for the current quarter as some customers delay flying and put off booking. lundgren said there are many uncertainties in the coming months. >> we always knew there were going to be uncertainties. we think this year is going to
be a year of uncertainties over the winter. we also believe there will be a strong pickup into the summer. >> jack dorsey is stepping down as chief executive of twitter handing over control of the company he cofounded in 2006. the chief technology officer is being promoted and at 37, becomes the youngest ceo of a tech company just ahead of zuckerberg. goldman sachs has added new employee benefits as part of a package of changes to address worker burnout. the additional perks include higher retirement contributions, and a six week sabbatical for long-term employees.
employees complained of declining mental and physical health. that is your bloomberg business flash. dani: leigh-ann gerrans in london. an ugly start to the european trading day. the benchmark down more than 1%. great to have you on this morning. what do we make of the selloff driven by a headline from the moderna ceo that this is not a new concern? >> feeding into the concern that this variant is not the same as the other ones and it will be something different. the pandemic is going to be with us for a lot longer than any of us had hoped. tom: what do you think it means in terms of how investors are positioning? >> but is clearly the silver
lining a lot of people are talking about. whether this new covid wave will mean softer monetary policy going forward but if you look at the market action today, no one is seeing that. it is a risk off. all red. all of the optimism baked in a month ago that we were returning to life as normal is not happening. dani: i do love this line from yesterday that this is a get out of jail free card. christmas for central banks because it gives them more time to think. is covid and the new variant going to be the determinant of where policy goes? >> it seems that way. maybe give it a few weeks and we will see what happens. there has been news that we are going to need a few weeks to see how the current vaccines respond and how contagious this is. give the scientists some time.
at the moment, inflation, rate hikes are not the dominant theme right now. tom: the discussion had been around taper and speeding that up in december. do we start to recalculate that assumption? what with the market impact the? --what would the market impact be? >> at the moment, it is an open question. the moderna ceo speaks to the idea that we are going to need a whole new set of vaccines to deal with this. dani: do we have any idea how caught off guard markets were? and how wrongfooted people are heading into this? >> i think you saw some sense -- no one -- very few people were
talking about a new wave of coronavirus hitting markets as the dominant theme. it was all about the inflation and the economy being too hot and that is now all turned on its head. tom: what are you hearing in terms of big tech as a hedge? >> that is an interesting question. big tech is down today. at the moment, it is a risk off move rather than a rotation. people are not going out and buying zoom shares but it is that they are selling everything and trying to buy treasuries, cash, and gold. dani: are you surprised by some of the moves we are seeing in the currency bid? what do you make of this asset that previously had seen lower volatility than stocks and bonds. >> currencies are exciting again. feeding into the risk off moot.
the demand for yen, demand for gold. anything for safety. a few weeks ago, that is what some strategists were talking about. i think of strategists as being bullish but you are hearing people talk about concerns. tom: we have touched on the labor market and the question of inflation. the question of whether this variant will prevent people from looking for jobs. how should people be thinking about sustainability? >> think about how contagious this variant is or do you see in some sense people are over it. they want to get back to normal. it feels that way in the u.k. the prime minister is saying we need to wear masks on the tube
and in the shops but you look around and it is not happening that way. dani: the tube is not the most comforting place to be in terms of mask wearing. we will have much more on markets but later this morning, we will speak with the european commissioner for the economy. don't miss that exclusive conversation at 9:30 a.m. london time. this is bloomberg. ♪
tom: welcome back to the open. 30 minutes into the trading day and we are seeing losses. every single sector is in the red today as investors weigh out these comments from the ceo of moderna around the potential need for new vaccines. all lower in the session today. the hang seng stock exchange closing at its lowest level since may 2016. this is the blue chips, chinese blue chips within this index, at the lowest level since may, 2016.
jerome powell says the omicron variant poses risks to both sides of his mandate. the testimony. market participants continue to assess the risk from the new variant. here is how some key players have react it on bloomberg tv. >> i would not expect this to change what is happening in the local economies. inflation is running hot. >> the disinflation -- the disinflationary effects would be larger. >> if there is going to be a repeat of the winter lockdowns, it would be a surprise if central banks continued on course. more likely they will delay the pace or start of their tightening process. >> the variant is already there
so trying to impose a travel ban now is --. >> i think investors will count to 10 before moving again. tom: joining us now is marcus morris-eyton. good morning and thank you for joining us to kick things off. what do you make of the market moves today and what it tells us about the underpinnings of these equities? marcus: it is interesting to see. it is understandable on the back of the comments from the moderna ceo. indicative of the nervousness we are seeing from the markets broadly. until we get more data on the severity of omicron, the transmissibility come and the efficacy of the vaccines -- that
is what has been cast into doubt overnight. dani: nothing is being spared in this session. technology. are you a buyer? marcus: before we rush to conclusions, we need to understand how severe the threat from omicron is. on friday, you saw a bid in risk off trade. travel and leisure declined. i think that does indicate that many people are really lacking conviction at the moment until we get more data. tom: building on the comments from dani, to what extent is "bu
y the dip" something you can rely on? marcus: we are talking selloff. but this should be placed in context. we have had be restrung absolute performance in the wider market and in that sector. you need to be selective and invest in the companies that are going to drive returns in the next decade. not just in the next day or two. dani: i still wonder when the tail risk of a new variant is particularly grim, where you are finding hedges. marcus: we have to listen to what the company is saying. by and large, bear in mind, we are in the middle of conference
season at the moment, companies are pointing to almost record demand. the challenge for these companies is on the supply side. we have spoken to some companies in the last week. they have had to close plants due missing one or two raw materials. and inflation. clearly, you have energy hedges rolling over next year. one thing people are discussing is wage inflation. tech holdings -- having to pay more to attract talent and retain talent. it is a cost that will come through in income statements pretty strongly in the next 12 months. tom: which companies are most immune to that wage inflation
where headcount is not as much of an issue? marcus: there are two aspects. inflation generally -- companies that do not have a huge raw material prospect and tech fits into that. and you have other companies that need human capital and that does involve tech. companies are able to pass through these inflationary pressures to their customers and that is something we have been analyzing in greater detail than usual making sure the companies are able to benefit from this inflationary environment. dani: does the potential for further shutdowns especially in places like asia, change the
calculation at all? marcus: for many people it does. i think there was a greater complacency in markets around covid in recent months. in most of the conversations we were having with companies, it was very inflation and supply chain focused with perhaps not enough attention around the risk of a covid flareup. if we do see parts of the world go back into lockdowns, we have to remember that we are in a more delicate position then we were during previous lockdowns. supply chains are already disrupted and inventory levels around the world are at low levels going into the peak christmas season. tom: marcus on the need to be selective and pick companies that have pricing power within this environment. thank you very much.
dani: welcome back to the open. we are 23 minutes into your european cash equity trading. it is red across the screen. on a headline level, the cac down 1.2%. the other story we are watching from yesterday from the u.s. session is jack dorsey stepping down as ceo of twitter. the cto is replacing him. tom: the fact that jack is stepping back and off the board suggests he must have significant faith in the new ceo. a focus on him and on what jack will do after this. dani: can we expect more crypto related tweets from dorsey?
tom: maybe some more volatility for cryptos. twitter is underperforming. easyjet ceo says the omicron variant has had an impact on short-term demand but has not derailed. >> it is not at the same level of downside that we saw previously. what will happen is it will take 3-5 days and it will settle out at a certain level. we are monitoring to see when that -- what that will be like. the effect we are seeing is very much on the short term. some people are transferring out their bookings.
we are seeing the most affected is probably city to city destinations. holiday destinations are still holding up as our domestics. that is like the previous time we have seen. >> in the worst case scenario where omicron does lead to more travel restrictions on lockdowns, how will you get through that with your cash pile? how would you raise more cash to survive another extended lockdown? >> we are, relative to others, in a relatively stronger position. we have the least amount of debt of any major european airline and this is because of the steps we have taken up to now. we always thought this winter would not be straightforward. we always knew there was going
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dani: welcome back to the open. 30 minutes into the trading session. markets turned risk off after the moderna ceo warns scenes may struggle with the new variant. concern not panic. president biden urges people to stay calm. the fed chair says omicron threatens employment and inflation. a difficult year for chinese tech firms. we will speak with fred hu.
it is an extremely fragile market when the concern that we already know existed is able to set off markets turning around from some of those monday gains. tom: the volatility showing the fertility of the markets and the valuations, how stretched they are. what we are seeing today is the concern from the comments of the ceo of moderna and powell saying he is more dovish and concerned about what this may mean for the trajectory of the u.s. economy. losses of 0.9% across the benchmark. 0.9 in terms of the docs as well. -- of the dax as well. oil as well under pressure. wti below $70 a barrel. travel and leisure clearly in
focus. we have been hearing from the easyjet ceo and iag. in the corn -- in the u.k., there are additional testing. energy is lower. no surprise. down 1.6%. every sector is in the red. that is the shape of play 30 minutes into the trading session. it has been a tough year for technology in china. the twin forces of economic slow down and regulations have seen tech giants feeling the pinch. tencent had its slowest quarterly sales since 2004. and bytedance has called off its ipo plans.
joining us to discuss the landscape in china is fred hu. the current founder, chairman, of primavera capital. always a pleasure to speak with you given your history and experience. and the companies within your portfolio. where do you think we are in terms of the regulatory shifts we see in china? fred: i think we have seen most of the initiatives with this anti-monopoly --. the markets are feeling the impact.
the economy [indiscernible] it has managed to adapt. dani: what about from the tech companies themselves that within china? are there more transformations you expect them to do in order to keep up with the regulation or is that mostly finished as well? fred: i believe the high tech sector -- many have responded. [indiscernible] in-depth reviews of their business model to bring everything in compliance with the regulations.
they have come a long way but there is still work to be down. in the meantime, you will continue to see the results. the big risk -- tom: the biggest risks may be behind us. after a stellar year in 2020 for ipo's in china. given what you just said about the adoption of these companies to the regulatory changes, can we expect that 2022 comes back as a year of public listings in the tech space in china? fred: china remains a major
engine of innovation and technology in terms of r&d and the number of new startups. there has been a significant selloff in the public market in reaction to a very strong victory of crackdowns. but, the immediate trend regarding human capital, in this covid environment, all remain --. market conditions are stabilized. there will be many ipo's to come. tom: i want to get your views on didi.
there was some reporting suggesting that maybe it will be delisted from the u.s. and could be taken over by state backed firms. i wonder what message you think that sends to investors and if you are concerned about that messaging? fred: in general, we say the chinese government is still set for the transformation of [indiscernible] at the same time, there is heightened concern over security . i expect the company will be in
close concentration to overhaul -- to address the concerns. that will take some time. i am cautiously optimistic. dani: i know you are bullish on the chinese economy but does the presence and continued new variants, does that threaten your view at all? fred: absolutely. after starting strong this year, and we know the economy hit a tough patch in the second quarter, [indiscernible]
the government response has been nothing short of draconian. zero covid policy. with the new variant, on the one hand, the china strategy could be to protect the country but on the other hand, the covid control. i expect this will persist going forward. tom: that pressure could persist. where do you see opportunities when you take into account these factors whether it is the regulatory environment where the concerns about the chinese
there is a tremendous bottom up here. we have been on the forefront of these changes. tom: fred hu, always a pleasure. founder and chairman and ceo of primavera capital group. coming up, president biden warns against panic over the omicron variant but the moderna ceo predicts existing backing -- existing vaccines may struggle to deal with the new variant. this is bloomberg. ♪
highly exposed stocks. what is taking the brunt of the beating today. as the new omicron variant spreads, the u.s. has imposed travel curbs on some nations but the president says the new mutation will not prompt new restrictions in the country. new vaccine targeting the very will be ready in a couple of months. >> this variant is a cause for concern, not a cause for panic. >> i think this threat is something we have not seen before. >> does this variant have the ability to escape the vaccine? >> the pcr's we mostly use will pick up this very unusual variant. >> my team is already working
with officials at pfizer, moderna, and johnson and johnson. >> we have a high level of confidence that we will have it ready within 100 days but we have a very high level of confidence that we can manufacture it by the billions. >> based on what we have done already with mrna vaccines, they were an ideal solution. dani: let's add another smart voice to the mix, joining us now is oak signed up isaac -- oksana pyzik. what do you make of the reactions so far from governments? oksana: i think that it is not going to stop the spread of omicron based on what we know about this new variant so far.
it could slow it in its tracks but we should also be thinking about what other measures we should be doing beyond travel bans. we should be operating -- offering a support package for countries in the region to help accelerate their vaccine rollout and increase sequencing globally including in the u.s. it is behind other countries like the u.k. in terms of sequencing ability. it is fantastic that african scientists moved so quickly to report this. it is time for us to support them in return. tom: you point to an important failure among the developed nations to support the underdeveloped nations in the rollout of vaccines. scientists have long pointed out that as long as you have significant portions of the
world unvaccinated, there is a point when new variants can come out of that population. what needs to be done to address that? oksana: omicron should not come as a surprise. the who has warned repeatedly that the consequence of axing inequity could be a more fit variant. it will take a couple of weeks for us to see the effect around vaccination protection levels. i get it. our initial gut reaction is to protect our own populations first. but this is an emotional reaction. the strategic, higher order view would be to look at all of the players, the threats, and the long-term impacts of the
decisions that we make today. we do need to boost our own populations but not at the cost of people not getting their first doses. only one in four health care workers in africa have their first dose of vaccine. we need to be creative in order to get the manufacturing capacity rolling out much faster. the g20 has committed to increasing this. let's see that political promise translate into action. dani: how much more difficult will that be if it is true that the current vaccine does not protect us enough and a new booster needs to be implemented to protect populations around the world? oksana: we have had some encouraging reports from pharmaceutical companies saying, we can tweak the vaccine but it could take up to 100 days.
and that is probably an optimistic view of the situation. i think it is unlikely that we will see -- that current vaccines will be unable to protect us but the degree of redaction means we will have to look at vaccine plus strategies. in the u.k., in addition to increasing face masks, following freedom day, we are looking at shortening the booster period to just three months and catching up to the u.s. in terms of allowing more young people to be vaccinated. there was a very restricted age limit previously. moving in the right direction late but i think we will have to have this pandemic treaty locked down to make sure there is a framework in place to make sure
tom: welcome back to the open. 54 minutes into the trading day with losses of about 1.4% across the european benchmark. inditex is shaping up its boardroom with the next generation of ortegas taking over. oscar will take over as ceo. this sends shares tumbling. let's bring on maria tadeo. what does this restructuring mean? >> you are seeing the reaction in the market. one reason this is happening is this is unexpected. we knew there was a conversation
about the future of the company. the founder cannot be in place forever. the announcement today, the timing, it took a lot of people by surprise. this is unexpected. when you look at the structure, she is going to inherit this position to fail. she is the daughter -- someone who has connections with the company but many could say that up to this point, you have to prove yourself at the executive level and she has not done that yet. the other thing i would note has to do with the broad management. we know pablo who has been the chairman up until now has been successful with this company and he will be leaving. this reshuffling has probably spooked markets. dani: you talk about marta's
lack of experience but what do we know about her? >> it is easy to write off somebody. you are still young especially in spain where a ceo or chairman is usually male and much older. she is scandal free, very discreet. she is someone who has worked at the company and different positions. she was even an assistant at one point when she was very young. it was unclear what role she wanted to have in the group. there was a telling interview in the wall street journal when she signaled she did not want to be an abbasid or for the brand. -- an ambassador for the brand. tom: maria tadeo on the ground
1 >> this variant is a cause for concern, not a cause for panic. >> i definitely think this is something we have not seen before. >> we have a higher degree of confidence that we will be ready within 100 days. >> this is "bloomberg surveillance: early edition." >> good morning and welcome. i'm dani burger in london. here is what is coming up. concern, not panic. president biden urges america not to react -- overreact to the new variant.