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tv   Bloomberg Markets European Open  Bloomberg  February 2, 2022 3:00am-4:00am EST

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chairman of sand under -- santander this hour. francine: we had that figure, 80%. what was interesting was that out of the six fed speakers, they are lot let -- less bullish than the market. we will see if the markets are repricing some of the hikes. tom: currently the market is repricing around 20 basis points for the hike. none of these officials that have come out the past three days have said they expect to see 50 basis points in march. the markets have taken this from jay powell during his commentary during the conference, so two factors are showing up at the moment. it is the been officials but also the earnings picture. that comes through with the likes of alphabet which shows the broader economic health of
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the united states. across the european space, up five -- 0.5 percent for the ftse 100 and the cac is gaining 0.3%. we talk about santander and we will speak with the ceo in a couple of minutes. that will be a beat that is flagged in for the spanish ibex. as we look to the futures after thursday, a solid gain on stateside. futures points to gains of 0.5 percent for now on the u.s. you saw a bit of pressure on the greenback yesterday for em and other parts of these equity markets. you will see yields up just a little bit, but still below that 180 level. brent is up $89 a barrel today.
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they make these pledges to increase output, but can they match it? the data bloomberg has been looking at says they cannot do that. how that plays into the low -- broader price picture for oil is crucial. francine: one of my morning must reads is a ven ram looking at the money markets, but there's a lot to learn. this is the kind of market we could see going forward. we had amd and industrial and materials are the second-biggest gainers. it is still gaining a touch. if you look at health, a mixed picture because of the vaccine approval the you have some of the stocks down, but the sexed are -- the sector is still gaining a touch. tom: down 0.3% for this and the
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earnings came in above estimates that came in as well, the pledge from santander to improve its earnings. the eurozone was also at a peak. the ceo for vodafone gaining a list from the earnings. team viewer is a german-based software company. they also announced a share buyback. a couple of corporate score -- stories we had to look at. francine: in just a few minutes, we will be speaking with the santander ceo. we will ask about inflation in spain. that conversation coming up, do not miss it. this is bloomberg.
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then coming up later, we also look at facebook, now known as meta-, and what investors will come out with. that extra advertising spending money could be stalling some of the other companies that we are talking about. tom: we have the idiosyncrasy of paypal and that is around ebay and the exposure they have for that. that is less interesting than alphabetic given the size and scope as sales growth for them. sales points to that strength across the broader economy and meta is likely to pick up. starbucks was interesting. they are now paying $17 on average their employees. francine: i am so glad that you said that i will not be spending $70 on a cappuccino. let us get to the bloomberg business flash. laura: alphabet shares have
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jumped as earnings topped estimates. fourth quarter sales earned almost $62 billion. gains were driven by advertising and were focused on e-commerce. cloud revenue only narrowly beat the industry. amd is stocks rallied after giving a surprisingly strong sales quarter, suggesting it is making further gains. the chipmaker's the first quarter sales exceeded wall street estimates. that exceeded intel, something that would have been inconceivable a few years ago. paypal broke its spending on capital and continues to flow during the fourth quarter as economies reopened and can zoomers -- consumers return to an person spending.
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payment volumes declined in the final months of 2021. exxon mobil is trying to accelerate a $10 -- $10 billion buyback share. aggressive spending cuts help the oil companies surge on energy demand. cash flow more than tripled to almost $18 billion during the final three months of 2021 compared to a year earlier. that is your bloomberg business flash. tom: let us get into the key market drivers with art markets reporter, christina team -- kristine aquino. are they blocking back the commentary from jay powell? they have a hawkish tone in that press conference. is that a hawkish approach from the fed markets? kristine: it seems that way and
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it is adding nuance to what the fed is planning to do this year more than any sort of walk back from the message we heard from jay powell last week where we are seeing. i think the fed is still raring to go in terms of its rate hiking cycle this year, but they also want to indicate to the markets that they are not going to do anything crazy like a 50 basis point rate hike in march. commentators were perhaps expecting or putting a damper on some of those expectations for six or seven rate hikes this year. what we see is adding more nuance to that message of an overall hawkish fed but a bit more measured in the way they approach that. francine: measured and nuanced. that is the way to describe the markets around 2022. paypal and facebook really shows a growth and were disappointing in earnings. kristine: there is now a
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baseline expectation for private earnings, which is ironic, but that is what markets want to see now. that these companies, particularly those in the second -- tech sector beating expectations, and if they don't, they are being punished a lot more than companies who are beating estimates are being rewarded did it is an expectations game, especially when companies have come out roaring after those really low expectations from the pandemic era, coming back from that. the game is beating those estimates and if you don't, you will get punished by investors. tom: the ability of companies to hold onto pricing power has been the key. how are things shaping up across the european equity space? which sectors are doing the best when it comes to the ability to
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maintain margins? kristine: what we have seen in europe is the luxury companies like lvmh really building that pricing power because luxury goods tend to be more desirable, but for other sectors like those in materials and financials, those are more exposed to these issues of higher costs and supply chain issues. it is a different story for them. we are seeing that margin pressure come through and the estimates coming down for 2022 as well. for europe's earnings, investors are working for companies to yield that -- wheeled that pricing power. if they cannot do that, that is not great news. francine: i always read the news when i come in in the morning, and there is nothing that does the brain like instances of
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making money and central-bank bond purchases have contributed to investors during this spot like market. that seems to be the overarching theme of 22 -- 2022, which is to move higher. kristine: that is a great analogy. they realize they lost too much money on the table and are reeling it in. that is the mood coming into this year. francine: kristine aquino there with your market view. coming up, santander promises to raise possibility as their fourth quarter reports beat estimates. we speak with their ceo. that is next. this is bloomberg. ♪
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tom: welcome back to the open. we are 13 minutes into european trading day. the stoxx 600 gaining 0.5%. it is one of the indexes that are in the right up the moment. technology gained up more than 1%. technology getting a boost from what happened since the results from alphabet and amd, the
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chipmaker. francine: santander has pledged to raise profitability on the markets. the bank plans to increase its returns and the likely possibility metrics are 13% this year. we are joined by the chair of santander, ana botin. thank you for your time. talk to us about how santander will move concretely as interest rates rise across the world. ana: 2021 has been an into -- an excellent year. we are near 15%, but for us with capital, we moved to 12% and we are actually targeting 11 to 12. we have delivered excellence across our regions, and europe both profited from last year.
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zillow and she led being the most -- brazil and chile gained as well. higher rates, we think that will happen to the markets as -- markets sooner or later. we are excited for the future because we are begging for the future. -- banking for the future. francine: what is your message on capital for investors? there has been a lot of pressure for investors, but the risks are not the same for santander. ana: that is precisely the point. our scale of diversification have continued to make us different. revenues were strung across all sectors of the business. we had a's dando -- a standout performance in the u.s..
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that is the reason white 12% for us is not only for us to continue growing, increased for shareholders, and it is enough for having a strong balance sheet. that is important. we announced this year that santander will have a buyback of our shares. if you consider a buyback of dividends, we have the own shares for us. this is an excellent investment. francine: what are your plans for the u.s. consumer that -- now that you have bought out minorities? ana: the u.s. has done incredibly well over the last few years. we have come to 2.3% gains this year. we announced the posting of a minority buyback this monday and this will allow us to give the business to become a consumer
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finance business. it is a business where we are leaders in europe, latin america, we have a strong position in the u.s. combining that with our regional banks, we are gaining 15% through the cycles, which is excellent in the u.s. it has strong productivity to other regions for our business, and we are the leading auto, finance bank in the world. we can generate lots of value for shareholders by hiving -- having a preference in the u.s. francine: talk to me about these inflationary pressures we saw in spain and gdp growth was not as expected in spain. we are worried about europe going into stagflation. what does that mean for your wages? ana: we are one of the leaders targeting 45%.
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importantly, the way we are doing the changes in our business model allows to be more efficient and put out growth. inflation is not negative to us. it is a good thing. having negative rates is not ideal for us and the economy, so progressively as we are going, higher rates are actually good as long as they do not grow too fast. the key here -- there are a few things. the supply chain problems need to be resolved, consumer spending that has been channeled is good and should now be going to services, which is great for spain. 30% of our economy is in tourism. to some extent, the energy crisis also, so if we can manage those items, i think inflation
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-- the ecb is still targeting 2% in 2023, so i think the percent in u.s. will be less than the americas. francine: are you looking at increasing wages? ana: for the markets, for sure, but we committed to another billion for 2021 and 2022 of reducing costs by taking the business model. what matters is that we are increasing revenues of more than cost, what you call operating leverage. that is the key to any business. that is exactly what we aim to do again in 2022. grow revenues, grow customers. 150 3 million customers total, and growing revenues, being careful about profit in europe.
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again by changing the business model and building platforms together. francine: talk to me about how you will deploy capital. santander is looking at citigroup's baking operations in mexico. you confirm that? ana: mexico is excellent. we are increasing profitability and we have built up zero from the finance business. we built up from scratch to 10% market share. we are growing in customers. it is one of our core markets, so where growth begins, we expect to be part of the process. francine: is there a treasure trove or would you be happy to spend on that? and where else do you want to grow through and was issued in's -- through acquisitions? ana: our goal is to grow organically.
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we are targeting higher growth. as an example, in europe, which is not a high-growth market, we had 2 million consumers in our consumer banks. we have by now and pay later, which is to finance consumer purchases within six months. it has 4 million customers organically, so we can grow organically. not many banks can say that. it will not always translate into actually doing a deal. you can look back and see we participated in some. that is exactly what we will do in this case. francine: what do you think will happen with the lawsuits with rochelle? ana: that will be for the courts to decide the processes and this one is still under judicial
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review we should not comment on that. we are focused on the business. francine: do you think a compensation package will have to be reduced? can you tell us anything about how this will play out and how the shareholders are talking about it? ana: they are not really talking about it. that is a matter for the courts to decide. it is going to a higher court and we are appealing. francine: thank you so much for joining us, ana botin, chairman of santander. santander beat out the earnings and announcing an aggressive strategy. tom: the probability targets in terms of the equity targets. coming up, we look at german work from home. they are up significantly this morning. we will have a chat with dani burger next. this is bloomberg. ♪
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tom: welcome back to the european open. the stoxx are on the move this morning. we are here with dani burger. what are you looking at? dani: it is a busy earnings day. i feel like every company is in the world is reporting today.
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let us kick it off with vodafone. this will be the highest vodafone gains since may. they beat the estimates. this is the report for vodafone. they are trying to deal with investor activists. this gives the ceo a bit of breathing room as that sets off. also a big day for tech. we had a big day for tech earnings on wall street yesterday. the work from home stock listed up in germany up 15.6%. for their 2022 outlook, they are maintaining that. results were strong for julius baer. the issue is playing all of wall street as costs being higher than expected. francine: santander also had
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cost being higher. i like how kristine aquino plated out. chores -- shares for alphabet go up and there earnings beat estimates. this is bloomberg. ♪
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francine: welcome back to the open. here are your top stories. upbeat earnings. alphabet, the giant announces shares above estimates. u.s. stocks post for the three-day rally. plus the crude question. opec barely managed to raise output last month. there's a lot going on in the
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markets. we have the bank of england and we have the six fed speakers, and the hawkish speaker said that we would not go too much on the fed hike rates. tom: the central banks still in focus. we speak to that ecb ceo tomorrow. the gains across the european index, 0.6 percent. the backdrop for the u.s. markets, you have got the peak to drop and above the midpoint now. we are back to that level we saw. we are back above that level and that points for some to further upsides. that is the idea that some are looking at. gains of 0.6% for the stoxx 600. the cac in similar territory to the dax.
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muted optimism as we look up to the statement from the boe tomorrow, but it is all about earnings as well. all about financial service, media, and technology is also up there on the back of the alphabet earnings. paypal not exactly meeting expectations. interesting to see the gas prices dropped yesterday across the european space. more outflow from russia amidst these continuing geopolitical tensions. francine: alphabet had soared after the markets closed. it grew with its advertising business. we look at other tech earnings. joining us is marcus morris-eyton, portfolio manager at allianz. good morning. joining us as well is alex webb.
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your share prices might be better than expected, but if you do bad, investors punish you. reporter: big tech stocks are the concern at the moment. they are trading out their premiums out to the market. this means that they did not need to do as well to be rewarded in the share price. the advertising business jumped 33% as did revenue as a whole. coming out of covid, it was clearly good news and it was a good quarter. tom: alphabet for the masses is how some people are looking at it. >> what apple did was make a similar move recently. google is delivering 20 shares to its shareholders, so 2700 dollars stock will become
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feasibly into something like a $13 or $14 stock. it makes it more accessible to retail investors. when they search for google, they will find alphabet. francine: marcus, how do you look at technology and what is the place of technology that you want to be invested in? marcus: the sector in europe was affected by the sector today. broadly we hope to say the earnings, and in europe we see a state of rotation. myself as a growth investor, they are taking it in the short term and they have opportunities for the long-term. we have opportunities in the physical area for the tech sector, but where you see the connections toppling as though wavering that you have got up there. tom: what would you need to see to get you back into the
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bargaining group sector? what would you need to see to make that attractive once again? marcus: as respective to relative earnings. where the macro picture is coming from, so we would much rather face is a company to have the shares and stable earnings growth over a multiple period. that seems to be leading the way. francine: where do you stand on value versus growth right now and is that change by the end of the year? marcus: we have always been in the growth camp. january, they are much more confident than a month ago.
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the duration is extreme, but what is the opportunity of that? that is more nuanced than many people believe. on the one hand, you have the initial cyclical value, and second, we have more expensive values rallying and the political issues in russia. it will get tight from here. the market account pricing rate hikes this year from the fed. the picture is very different in europe. in europe, we are only talking about 2.5 rate hikes. it moves into the quarter. it is actually the earning themselves that is drawing shares, and that is a better share for the long-term regardless of whether you are value or growth. tom: as we look ahead to meta
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and other big tech, where is your focus? reporter: facebook is similar to what google does. they are advertising companies. the extent to which they may be affected by apple and the crackdown to take down their apps. and if you are sued, you are also fined. francine: marcus, the big tech, are they value or growth stocks? marcus: it is a combination. some of the u.s. companies have gains. generally the tech sector is valued in their space. tom: so that european tech sector is widely misunderstood. francine: alex said we need to understand if it is growth or value. tom: thank you, alex, for the
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best questions. thank you to alex webb. marcus morris-eyton from allianz stays with us after the break. boris johnson the government parties, the story is next. this is bloomberg. ♪
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francine: welcome back to the
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open. 40 minutes into european trading day. you see these stocks getting 0.5%. there is a recovering of u.s. stocks yesterday. we heard many fed speakers saying that they will be priced gradual for the interest rate hikes. also oil hitting a seven-year high ahead of the opec+ meeting. tom: back to u.k. politics. boris johnson's latest effort to get the public's attention back on his policy plans. more lockdown of gatherings on downing street. it is reported that johnson had attended another gathering. joining us now to discuss this is our bloomberg editor.
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does this convince anyone that we will see the full unredacted report? reporter: we will believe it when we see it. what is clear is that there is a lot of pressure on boris johnson from his own party to publish the full report. disclose any penalty noted, and he finds that are given by the police. this is all about boris johnson playing for time, trying to change the subject and trying to convince mp's that whatever damage has been done is outweighed by his potential wind on a future election. francine: does it matter if we get a full report? we had another mp talk -- calling for his and -- his resignation. reporter: it was a report which was an update and had some very
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damning lines in it. effectively, she gave a verdict on whitehall speaker gatherings for the rest of the world for the parties, and she said that these were effectively rule breaking. not exactly in that language. you are right. for much of the british public, their mind is made up. it is a clear breach of the rules that boris johnson himself made him about the decision here is with the tory mp's. his job right now is to convince the mps to stick with it. we do not know when this police investigation report will come out. they have lots of photographs and 500 pages of evidence. i would be surprised if the photographs do not come out at some point. a photo circulating around the
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internet can also do a lot of damage. the question for me is whether we get the police investigation result before or after the may election. that will determine when the real crutch point is for boris johnson. tom: our bloomberg political columnist on the pressures facing boris johnson. marcus morris-eyton from allianz is still with us. is this because the value proposition of u.k. equities is that much more compelling in the environment we are in? marcus: you are absolutely right. we are looking at boris johnson day by day. that is largely due to the issues on the hand. on the one hand, they are trading on less than a power of
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the valuation of the u.s. market. the u.k. is geared towards commodity plays and the value benefit from the greater market. francine: relative valuation, and we have a great chart. when you look at the relative valuation, it is for a reason, so why do you think they will outperform this year? marcus: there are quite a few reasons, and that is explained by the competition between the u.k. market and the tech sector. it is against other sectors like energy and the mining sectors. but business tech tends to do well when revenues grow. the u.s. market is certainly overweight is a long-duration outset. they will struggle more in the long-term growth. if you look at the rates, the u.k. market is a good place to be. tom: there is another asset here
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to our chart team. we get so many guests that say, you have got to look at the fundamentals and the threats to the balance sheet. and yet, this is companies with weaker balance sheets have outperformed those with stronger balance sheets. what does that tell you? marcus: if you are backed by three or five years, that is the sector. we thousand january that we have seen a large value of rallying seen yesterday and it tends to be weaker than a week ago. the beginning of the year is that you had omicron. on a five to 10 year view, your positioning the company without the balance sheets to have the opportunity to deploy that. francine: marcus, are we in a
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post-pandemic environment are we still going to see the stoxx doing well? we still do not know if there is a new dangerous variant out there. marcus: that is exactly the point. we are certainly living in a world where things could go wrong at any time. with the vaccine progress we have, we have that under control. i do not doubt that some of the changes we have seen in the business world or consumer life will downplay it. the challenge is for which of these companies managed during the pandemic and other an outbreak will impact their operations. they are in a far better position than they were two years ago. they are trading at wildly
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different positions done they were a year ago. tom: do you think m&a is going to be a key theme as well going into 2022? which sectors are at a ripe state for mergers and acquisitions? marcus: one of my key predictions for the year is that over the next -- last 12 months, you have seen that capitalized companies ready to deploy their capital to their targets. there is a lack of travel due to covid. other travel restrictions leave as well. we are not seeing a lot of that capital. francine: marcus, thank you so much. marcus morris-eyton, portfolio manager at allianz. coming up, we hope -- will have plenty more stories. this is bloomberg. ♪
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tom: welcome back to the open. we are 50 minutes into european trading day. gains across the benchmark. everything is in the green, led by financials. nasdaq futures pointing to a gain up from yesterday.
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alphabet coming out with earnings within the share split as well. we will look at the earnings from meta. let us get the bloomberg first word news with laura wright. laura: russian president vladimir putin has bombast did the u.s. over the moves of nato's. tensions continued in the region. u.k. prime minister boris johnson is on a visit to ukraine. covid new factions -- infections in the new state were peaked above a few weeks ago. south africa, the originator of the omicron variant, is -- in norway, there easing their covid restrictions. the u.k. government published a
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long weighted plan, shifting powers away from london and to the poor regions. this was a key concept for the winning administration, and the tory administration weights on the party gate scandal. global news, 24 hours a day, on air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. francine: thank you so much. oil studies ahead of a seven-year high. the questions are around if the opec alliance can deliver. opec years ago was all about compliance. but they are not even putting the barrels of oil on the market that they promised. >> this is the usual situation
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given the service because normally the problem is people changing on not doing much. right now, they are not giving as much oil as they promised. they target by more than 523%. many are struggling to reach their targets. russia, the most important member of the alliance after saudi arabia, looks like it will miss its target for two months in a row. that is really striking, how many members in africa see a wave of this. the focus is that we have this type oil market crisis. it is if opec can put the barrels into the market that the market needs. tom: there is the lack of investment. what is the timeframe? how long do we have to look at the lack of increased output because of these challenges? reporter: that is exactly right. what has happened with every
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opec member during the initial covid crisis where we saw global demand plummet by half a quarter and pricing at 1.4 below zero. that means they have not been drilling like that you would expect. they cannot keep up. the question is how much they can start investing again sooner. we priced it at $90 a barrel, so it leaves us to expect that some of the short form can be made up. but it is quite clear that it is up to saudi -- outside of saudi arabia and the united arab emirates, they do not have as much. francine: the burden is now on the gulf nations to put out extra barrels of oil. can they do it? reporter: at the moment they are
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not in the planning. can those countries keep those targets? we are expecting kuwait to struggle a bit, including saudi arabia. that maintains a good output of spare capacity, but the question is what the maximum you want to produce for a longer. of time. -- a longer period of time. that has historically been a shocker under the geopolitical tensions and we would not want to get out to early. tom: will kennedy and the challenges for opec+ ahead of that meeting. the attempts by the biden administration to add more barrels to the stock market. francine: investors overall liking the earnings season and there were concerns that the fed
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would reference the hiking. that is off the table now. tom: the nasdaq futures pointing to further gains of above 1% across the benchmark. this is bloomberg. ♪
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>> we are also preparing a package of sanctions another measures to be enacted. >> i informed mr. prime minister about it that principal russian concerns were for the north. >> could we do 50? yeah. >> this is "bloomberg surveillance: early edition" with francine lacqua. francine: good morning and welcome to "bloomberg surveillance: early edition." here is what is coming up on the program.


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