tv Bloomberg Daybreak Europe Bloomberg December 3, 2021 1:00am-2:00am EST
>> good morning. we are just gone 6:00 a.m. in london. i'm dani burger. this is "daybreak: europe." it is jobs day. traders look out for any clues on a faster taper from the fed. the u.s. snaps a losing streak. opec-plus stays flexible. the cartel stays with its plans to restore more supply, but oil gains after the rube says it
could change its mind. plus, didi delisting. the firm begins plans to withdraw from asian exchanges. the u.s. moves closer to banning chinese firms that do not open their books. hong kong tech stocks slide. happy friday. you have made it to the end of the week. we are ending this week on jobs day and a very fragile market. we had gains in the u.s. session yesterday, but that masks a roller coaster ride of this back and forth over tightening policy, over omicron, over high valuations. what does that mean for this market? in the words of our very own macro man cameron crise over at the mliv blog, it is time that we start looking at the price action. that is becoming more the fundamentals in and of itself. he writes, markets that behave like this deserve to be taken seriously, particularly when lu asian's are so elevated -- when
valuations are so elevated and the catalyst for and certainty manifest -- catalysts for uncertainty manifest. there is a wide range of expectations, but at midnight tonight, the fed does into a blackout period. that means there will not be a lot to communicate from the fed after we get these numbers. if we have a really solid reading, does that mean markets have to reprice even more to expect even more tightening policy from the fed? weaker numbers can have their own consequences as well, since they do not even reflect the omicron variant and the potential consequences. so far this morning, we are looking at european equities that are reflecting what happened in the u.s. yesterday. you're seeing them again, gains of about 0.6%. europe fell yesterday. these are higher, but i should
say the small-cap future index is declining today. yesterday it was able to lead declines. we are seeing no change in the 10 year yield, not even a basis point higher. brent crude up by 1.6%. opec not pausing as many thought they would, instead deciding to go with their planned increases, but leaving the door open. that helps oil prices. let's stick to our top story. a new study in the u.k. which tested several different covid-19 vaccinations and booster shots found that six of them further increase antibodies. vaccines from moderna and pfizer biontech performing the best. that's get the details from michelle cortez. when we first started hearing more and more about omicron, it was we need to wait, we need more data, we do not know the outlook yet. do we have a clear picture at this moment? michelle: we do not have any more of a clear picture, sadly,
on omicron at this point, but the data from the u.k. shows we can get a boost of the neutralizing antibodies against this virus if you get a vaccine, any of the approved vaccines, coming about three months after you got your full first shot. that is great news. researchers are saying they do expect the vaccines to offer some measure of protection, especially for those who are boosted, so that is good news. meanwhile, around the world, these cases are starting to roll in. dani: michelle, thank you. china tech is selling off this morning after didi started to prepare to withdraw from u.s. stock exchanges. it has come under pressure from regulators. that's bring in juliette saly. an ugly day when it comes to hong kong tech. juliette: absolutely. today we have seen the hang seng index test its record low since it wasn't set did last year, but we have seen more positivity
coming through, down 1.5%. you can see the selloff coming through more broadly. a reversal from didi just five months after its ill-fated ipo in the u.s., announcing it will delist and instead move toward a hong kong listing. you're going to see investors move out of the adr, because they say, why would i be in this stock? that is going to put pressure on valuations of the hong kong listed shares. bank of america flagged last month. if you did see a delisting, that would raise concerns about the chinese tech firm's capital as well. this has had an impact on the hang seng, which has lost $1.5 trillion from its february pick, sending more regulatory concerns into this index. your hearing didi plans to lift in hong kong in march. dani: juliette, thanks. i am convinced you have the best chart titles. "half of my former self." opec and its allies -- bowing to
pressure from consumer nations in proceeding with the planned production hike, but the cartel left the door open with the caveat they could revisit the decision at any time due to market uncertainty. joining us is andrew james. what did oh like policy do -- what did opec-plus do in terms of supply? have we seen in the market reaction? opec: there was something in the decision for everybody. it went ahead with restoring 4000 barrels per day of supply in january, leaving consuming nations, particularly the u.s., happy. at the same time, it could come back at any point and adjust supply. that is why we are trying to figure out how big of a threat omicron is. it is essentially buying time. there has been a natural sharp drop-off of the restoration of supply, but once the market digested the escape tools, wti
finished up about 1.5%. it is also up about 1.5% today in asia. the opec decision gave the cartel a lot of flexibility. dani: thank you for staying on top of this story. let's get over to the bloomberg first word news. with us again is juliette saly. juliette: the u.s. senate has averted a government shutdown from a passing a stopgap spending measure which now goes to president biden for his signature. the vote followed a day of negotiations between senate leaders and conservative republicans. democrats agreed to vote on an amendment to block the biden administration's covid testing and vaccination mandate for large employers, an amendment that ultimately failed. new york state has reported 11,300 new covid-19 cases, the most since january, with dozens of hospitals nearing capacity.
mayor bill de blasio says new yorkers should assume the omicron variant is spreading in the city. a visitor from minnesota who attended a credit convention last month has now tested positive for the variant. u.s. antitrust officials have sued to block nvidia's proposed takeover of u.k. based arm, saying the deal would harm competition in the semi conductor market. the ftc says it is acting to prevent a chip conglomerate from stifling the innovation pipeline from next generation technologies. arm is owned by softbank and licenses its technology to lots of companies, none of which it competes with. an official watchdog says the u.k. failed to put measures in place to protect taxpayers exposed to nearly 5 billion pounds of fraudulent is in his loans. it is said the government -- fraudulent business loans. it is said the government program was designed to lend quickly with limited verification and no credit checks. the report says changes came too
late to prevent high-level fraud. global news 24 hours a day, powered by more than 20 700 journalists and analysts in more than 120 countries, this is bloomberg. dani: thank you so much. coming up, it is jobs day. traders are on the lookout for whether the data provides any clues on the early taper from the fed. this is bloomberg. ♪ [inaudible]
equities portfolio manager. -- a columbia threat needle global investment equities portfolio manager. what could a strong jobs print today mean for a fed already turned in a hawkish direction. >> thank you for having me. you are right, a strong jobs print could mean rate hike fire. we came into the week expecting to hear more soothing tones from powell, and what we got were males being scratched across a chalkboard. the fed has pivoted. previously there was a focus on jobs and the maximum employment and eight, but now they are clearly focused on tightening inflation. i was just going to say in the short-term it is quite hawkish
and bearish for risk assets in the short-term, but in the long term i am trying to focus on what this means for growth, for earnings. dani: that is the perennial question here, what do you do with equities in a world where you start to get that holdback in terms of accommodation from the fed? is there more concern, more jitters going into this jobs day, considering, as i was saying, after which we will have a blackout period from the fed, so it is less to investors and their imagination to decide just how hawkish the fed might start pulling back in accommodation? natasha: i think is going to maybe take a step back. we have seen equity markets perform really well this year. we are at the high teens. we have been in a pandemic year. companies have had to grapple with supply chain issues. overall, we can say companies have become more resilient.
they are more resilient in their balance sheets, in their margins. we have seen really good margins in which [indiscernible] and all of that combination of really good q3 earnings, with good guidance going forward as well. i imagine that gives opportunities to pick up interesting stocks in any pullback that may come. dani: this bit leads me to something charlie munger from berkshire hathaway said this morning early in europe at the conference in australia, saying markets are widely overvalued in places, and he calls the current environment even crazier than the dotcom bubble. are those comments out of place, considering the strength you are seeing in terms of margins from companies? natasha: we are still finding interesting opportunities. where we are focusing some of our research recently has been in the industrial sector, something maybe not
traditionally associated with long-term structural growth compounder is that we tend -- compounders that we tend to try to pick up. thank potentially -- we think potentially some some sectors are going into a cycle of underinvestment, but as companies and countries start to adopt more net zero carbon targets, we think that is going to create more demand for some of these subsectors. particularly in the agricultural space. dani: do you wait for these periods of volatility like we have had over the past few weeks to look for those potential value opportunities? are there any areas you have been buying the dip? natasha: yes, like i said, the u.s. agriculture sector is somewhat that. there are other areas that are may be more cyclical and giving
us a good entry point. looking forward and looking past the short-term volatility and seeing through to the other side, there is still the potential for strong earnings growth in these companies. dani: looking at an even longer term picture, one thing i was struck by, the bloomberg news team pointing out that now in the market for 20 25, the euro-dollar curve is signaling rate cuts from the fed. we see in december the 2024-25 curve starts to invert. what does that tell you about what the market is pricing in, if by 2025 we see cuts further ahead, if this policy -- is this policy error from the fed on its way? natasha: you touched upon an interesting point. we are pricing along rate hikes in the long bond yield has been remarkably well behaved. maybe a policy error is quite
good for companies. maybe in the short-term, more volatility, but in the long term, looking through it, still seeing good potential for growth. dani: to that point, if we start to see yields rise higher, we have certainly seen the front end of the curve act quite volatiley, but is there a level you would be concerned where it but start to hit equities as a whole? natasha: if we think about it in the last few months, the equity markets have behaved relatively well considering we priced in three to four rate hikes. despite the higher rate environment that we have seen, equities continue to perform. we may see some dips in the short-term is the markets
interpret what the fed is trying to do, but considering how the market has performed in the last few months, i think they will have the ability to look through that. dani: i think we have accomplished the remarkable feet of going through an entire conversation about equities and not yet mentioning the mu variant of omicron -- the new variant of omicron. is this a concern for you, or is it just a tail risk you do not have to worry about? natasha: in the past week, the movement in the markets has changed. we've got uncertainty around what the virus might look like. we see markets leaning towards -- we don't have any data. any negative news has the potential to unsettle markets in the next two weeks. how are policymakers going to react? are they going to put in new mobility restrictions, lockdowns? that is possible. and we don't know what central banks are going to do.
natosha is still with us. it is not just on the chinese side, but we have u.s. regulators as well looking at putting more scrutiny on companies that list from china, from hong kong. how bearish is this from chinese and hong kong-listed tech companies? natasha: i think this is somewhat expected by the market. maybe the news did not come at an opportune time given all the volatility we are seeing, but companies have been preparing for relisting in hong kong for many months now. i think the news is not totally unexpected. we have relatively positive views on emerging markets, asia in particular, coming forward into next year. part of that is premised on a more clear regulatory environment going forward. dani: interesting. a lot of stocks in china had selloff because of regulatory fears. does that mean a lot of that has been overdone? natasha: we think so.
we had a tough year in china. we had a lot of regulatory headwinds particularly hit that tech sector. we have also had a crackdown on property leverage. all that has been a drag on the china markets. we have seen them under perform this year. going forward, we are started to see the winds of change. in we are seeing also the
government stepped in to protect some of the downside that was there before. we are seeing more government action and valuations are attractive as well. all of that creates more positive outlook going forward. dani: to play devils advocate, another thing many china bears will .2 is a pecan economic growth in china as well. how do you factor in slower growth coming into the region? natasha: that is definitely a question over the next quarter or so. there is a potential for a slowdown as we go into a period where we have a chinese new year and also when we have the winter olympics in china, and there will be a tendency for the government to want to control covid. we may see mobility restrictions in that. after the first quarter, we should see a pickup in economic activity. it is a pickup in economic activity and growth that we would like to play going into the rest of the year. we should see that translate to better earnings. dani: in terms of multinational companies, those are not listed directly in china, but have exposure to china. perhaps for investors who are nervous to touch actual chinese markets themselves, but would you say to them -- what would you say to them? natasha: that is a great way to
play china at the moment. we have in our portfolio stocks that have indirect exposure. we are also finding interesting opportunities in china, given that backdrop and the macro environment, probably we are finding most interesting opportunities that those stocks are more aligned with government policy, that are helping the government to achieve its policy aims over the next few years. dani: when it comes to the wider em space, as we look at the fed that starts to tighten policies, as we look at the possible currency affects on em as well, are you approaching em in general with more caution, or are you bullish on the sector? natasha: i think emerging markets as a whole, you are very right, a strong u.s. dollar does act as a headwind for the region . maybe asia within that is somewhat more protective, it tends to have less sensitivity to the u.s. dollar.
that also helps them in our case. dani: would you touched em outside of asia, then? natasha: i thing we are starting to see interesting valuation opportunities, especially if the fed does not tighten as quickly as the markets are pricing in at the moment. then we could start to see interesting opportunities outside of asia. brazil has had a tough month of performance, and there are some really interesting stocks there that have fallen very shortly. -- sharply. none of that has been on fundamentals. it continues to deliver on earnings growth. there are opportunities outside. dani: we did see the best day for brazilian stocks in six months yesterday. energy prices have been very volatile, be it the energy
crisis in europe or opec, its impact on crude prices. we see opec going ahead with its planned increases, not pausing as many had expected. for a while, the narrative was energy stocks not matching the uptick in the actual focus of cold -- the actual physical energy prices. are we seeing that gap start to narrow, or is there more opportunity and energy stocks? natasha: we have a very big wait on energy at the moment, a small allocation. what is different is how it affects costs of our companies that we look at. any of the recent increases in supply and potentially a reduction in demand from the omicron virus and the mobility restrictions, any softening in the oil price should be positive for earnings. that is something companies are worried about going into the
dani: good morning. from bloomberg's european headquarters, just gone 6:30 a.m. in london, i'm dani burger. this is daybreak: europe. here is what you need to know. it is jobs day. traders watch for clues on a prospect of a faster taper from the fed. asian stocks are mixed after the u.s. snaps a losing streak. opec-plus stays flexible. the cartel stays with its plan to restore supply, but oil gains
after the group says it could change its mind. plus, didi delisting. the group begins plans to withdraw from x dictations. hong kong tech stocks slide. happy friday. it is the end of the week and jobs day. we find ourselves with a fragile market. it was gains yesterday on wall street, but for how long will they last? have we move from an environment of buying a dip -- move from an environment of buying the debt to selling the rally? depending on what happens on jobs day, it could be a volatile day if we assume there will be more tightening from the fed. you have to respect the price action that this might be becoming the fundamentals in and of themselves. markets that behave like this deserve to be taken seriously, particularly when valuations are so elevated and the catalyst for further uncertainty so
manifests. our previous guest said that something didn't seem to have changed in the past week -- did seem to have changed in the past week. she is still bullish, but that does not mean we won't see more volatility. it's get a look at your market action. i want to mention the lira. we continue to see concerns in this market as yet again a new treasury minister in place continuing to flip -- treasury minister in place. the lira continuing to flip versus the dollar, still down about 0.1% versus the u.s. dollar. equity futures in the u.s. climbing, still headed for a weekly loss. you are also looking at a barely changed u.s. 10 year yield, so a little bit of calm in this market that has not been very calm over the past few days. we are also looking at brent crude up 1.8%. let's look at some of the drivers for the crude prices. opec and its allies surprised
traders by bowing to pressure from consumer nations and it is receiving their planned production hike, but the cartel left the door open with the caveat they could revisit the decision at any time due to the uncertainty in the market. joining us to discuss is andrew james. great to have you back. what did opec-plus do in terms of supply, and what has been the market reaction so far? >> -- >> hi, dani. opec-plus had it both ways with this decision. the first part of the decision, a can's expectation, was to keep restoring supplies to the market by 4000 barrels per day in january. that was, in effect, throwing a bone to the consumer countries, especially the u.s. the second part of the decision was to effectively keep the meeting open, which means they could reconvene at any time and in very short notice.
that was essentially buying themselves more time to size up the threat that omicron poses to energy demand. the market dropped sharply when the decision first came out. that was on the restoration of supply. but once traders and investors digested the escape clause that opec-plus gave them, prices came back up. they finished 1.5 percent higher, and at the moment they are round 2%. -- around 2%. investors are saying opec-plus gave itself quite a bit of flexibility. it has been called a genius move and that opec will be able to quickly come back into the market and see prices drop again. dani: i love that description of an escape clause.
i feel like i have seen a lot of estimates of oil that range from $100 to $60. where are we in terms of oil price trajectory? andrew: you are right, there is not a lot of consensus. opec-plus has been talking for a while about how it sees a surplus in this quarter of this year. they are talking about a 2 million barrel per day surplus. we've got the coordinated release of reserves which will start to take effect. that is going to have an impact. hanging over all of this is omicron. the major question with omicron is, are vaccines going to be effective? we may know within a week or two. there are a lot of moving parts. it turns out that omicron is not -- if it turns out that omicron is not as big of a threat as we thought, we could see a sharp rise in the oil price.
goldman thinks oil is over shocked. there is more consensus further out, about the middle of 2022. a lot of people are bullish on prices and say they will be rising. dani: in the short-term, it feels every market has that asterisk of omicron. that is andrew james. let's move to iron ore, which is pairing a weekly advance today as output in major still hubs china heard expectations that demand will improve. this is as the industry looks to the carbonized while selling an -- to carbonized -- decarbonize while selling into a volatile market. joining us is the ceo of metal invest, one of the world's biggest iron ore producers. thank you for joining us. interesting time for you and your business. i want to get into business specifics in a bit, but i want
to start with iron ore itself. it has been a turbulent year, following 36% -- falling 36%. potential variant thrown into the mix. has the potential weakening from the variant change your outlook at all? >> first of all, i want to throw that it was a dramatic, very successful year for the iron ore industry, especially metals showing very good results. the last destination of our reserves was made by british
international consultants. 15.4 million tons of iron ore. -- billion tons of iron ore. dani: i want to dig into that more, but i first want to get your take on iron ore. what are your expectations for prices in 2022? >> i think next year will not show the dip it showed this year, but still, the average of iron ore prices will stay at high levels. my point is $120.
dani: ok, maybe more stability in there. let's get to the business. you offer a type of iron ore that contributes less carbon to the environment. do you expect that the steel industry -- and is beijing tries to target -- as beijing tries to target more blue skies ahead of the olympics, are you expecting more pressure as it comes to the environmental impact of your industry? nazim: yes, the main challenge for our industry is that of carbon footprint. after today, the industry has only one response. the total percentage for the share -- the share -- or the
this is a drastic reduction of co2 emissions. for example, in the united states today, it is about 70%, but in china only 11%. dani: before we let you go, i want to ask about potential plans for going public for an ipo. we are aware it is something you have been looking at. what with the timeline be for a potential ipo, and what sort of valuation are you targeting? nazim: whole year and that we looked at opportunities to make an ipo -- whole year, we looked at opportunities to make an ipo, but we did not make a decision for going public. it is difficult for me to tell you, because any company values
itself much more than anybody else. dani: fair enough. we appreciate your time. nazim efendiev, ceo of metallo invest. juliette: the u.s. senate has averted a government shutdown, passing a stopgap spending measure which goes to president biden for his signature. the vote followed a day of negotiations between senate leaders and conservative republicans. democrats agreed to vote on an amendment to block the biden administration's covid testing and vaccination mandate for large employers, an amendment that ultimately failed. did a global has begun preparations to withdraw from u.s. -- dede global -- didi global has begun to withdraw from u.s. listings over concerns about data security.
it aims to file for a hong kong listing around march. u.s. antitrust officials are due to block nvidia's proposed takeover of u.k. based arm, saying the deal would harm competition in the semi conductor market. the ftc says it is acting to prevent a chip conglomerate from stifling the pipeline for next generation technologies. arm is owned by softbank and licenses asked technology to hundreds of companies -- to license its technology to hundreds of companies. this is bloomberg. dani: juliette, thanks. coming up, germany imposes nationwide restrictions on the unvaccinated in an effort to boost inoculations as the omicron variant spreads. ♪
dani: welcome back. i'm dani burger in london. germany has imposed strict restrictions nationwide to curb the unvaccinated. it is an effort to boost inoculations. officials also plan for mandatory vaccinations -- also backed a plan from editorial vaccinations sitting for a vote in parliament. these are big restrictions coming for germany. plain and simple, will this work? >> they are the most strict restrictions we have seen in the country. the vote is imminent to make vaccination an obligation. this is no longer a personal choice -- you have to get it done. in terms of the vote, we know angela merkel said, if i was a member of the phone stag, i would vote in favor.
in many ways, you could argue germany finds itself in the situation it is right now with a very harsh wave taking hold of the country, because it did not come to terms with the idea that there are many in germany part of the no vax community, who do not believe in the vaccine, who do not believe the government should to into what should or should not be done for a personal health decision. in similar countries, it has worked, but will it happen in germany? that is the big question mark. dani: i wonder to which degree this is an idiosyncratic thing of germany and australia making vaccinations mandatory, or are we expecting to see more countries going for the same types of restrictions? mary a -- maria: there are huge divergences in europe in terms of the vaccination rate.
in spain, close to 100% of the company's vaccinated. you do not need to force a mandate. i would also point to belgium, where he vaccination rate in a city like brussels is 56%. you could argue we are heading that way. the fact that angela merkel, who does have so much gravitas in european politics, says, i would vote in favor of it, also gives the additional potential and political momentum. it is becoming a mainstream debate in europe. this is now really a very serious government policy. dani: maria, thank you so much. they continued obligated an unfolding story. appreciate you staying on top of it. now to a corporate story. grab plunged on its first day of trading after completing the largest backed ipo ever. spac's are not dead. we spoke to the firm's cofounder, who batted aside concerns, citing the resilience of the app's strategy.
>> we chose the path that enabled us to get to the most important objective first, getting investors. with that, based on our investors that were attracted to the long-term growth opportunities that we see, and they very low redemption rates that have happened during the spac process, we are happy with the outcome we have achieved. >> you have turned grab into a super app, including delivery payments but also ride-hailing. how worried are you about a resurgence of covid and omicron right now? >> i think a critical part of grab's growth trajectory over the last two years has been the strategy that has enabled us to be very resilient to the covid challenges. to share more about what it is, think about grab as uber, doordash, and venmo all in one. from the day when it starts, when you wake up all the way when you go to bed, you are able
to get your breakfast, pay for meals, save your friends gifts, and more. why that is important is because it enables us to have things like shared fleet strategies with our largest driver partner network in the region, which enables our drivers to decide whether they want to transport people, deliver food or groceries seamlessly in the app, and therefore enable us to quickly pivot from mobility to deliveries over the last two years. with this super app strategy, we are confident we can continue to serve the needs of southeast asia's users and our partners, despite whatever challenges covid continues to throw at us. emily: still, though, losses widened in the third quarter. revenue also declined slightly. when do you expect grab to become profitable? >> a bit of context, a large
portion of the last quarter's results were because of non-cash expenses. there were more than $700 million of it, much of which will no longer be required with what we just went through. for us, the other important thing is that growth and profitability are not mutually exclusive. you have seen that consistently from us over the past few years, where we have consistently developed very high topline growth while also making very significant progress on our bottom-line profitability. for example, our mobility segment is positive with market-leading margins. our deliveries business, a very young business, only three years old, also is positive for the various markets we have. ultimately for us, what matters in our portfolio allocation strategy is that we will continue to invest into areas
production numbers. latin america's largest economy surged into recession's as steep interest rate hikes and severe drought. but our earlier guest, natosha, saying she doesn't see value in some brazilian stocks. -- does see value in some brazilian stocks. later, we will get the canadian unemployment rate. it is also a big day for u.s. economic data. finally, at 5:00 p.m. u.k. time, the european banking authority publishes its annual risk assessment report with detailed individual data for the banks. another story we have been monitoring over the past few weeks is elon musk following his twitter poll asking whether he should sell tesla shares. voters said yes. he has sold another $1 billion worth of tesla shares yesterday. so far, he is offloaded about 10.1 million shares. he would need to sell 17 million
shares to get to the 10% threshold. about 7 million shares to go. per the regulatory filings yesterday, the shares were to help him offset taxes. he is making progress towards the 10%, but still not there the world's richest person. it is not just tesla, it is also jobs day. we are heading into this jobs day with what has been a very volatile market. we are starting to hear these tones, these opinions that something has changed in these markets, that volatility is picking up and we cannot continue to trust that buy -the-dip type of action to sustain us. art of it is the fear of reduction of liquidity, or new illiquidity in the market. how long will the fed stick around? they are starting to pull back from bond markets even quicker. we are looking at a stronger indicated open for european
anna: good morning. welcome to "bloomberg markets europe." the cash trade is less than an hour away this friday. here are your top headlines. traders watch for any clues on the prospect of a faster taper from the fed. european futures point higher after the u.s. snapped a losing streak. opec-plus stay