>> good morning from bloomberg's european headquarters. stocks drop as investors focus on the impact of rising yields. the jump in u.s. jobless claims offers fresh concerns for the shape of the recovery. the u.s. vaccine supply is set to double according to a bloomberg analysis. robinhood's ceo bears the brunt

of a congressional hearing. he is sorry for what happened. what a week it has been. a very busy 24 hours ahead. happy friday. coming up we are going to speak to a number of cfos. many guests coming up. the allianz cfo coming up in 40 minutes time with myself. let's get a check on where we trade. it is red across the screen when you look in terms of equities in asia. the benchmark down nearly 0.3%. global equities had to be the first week where we are lower since january. the s&p 500 futures are lower as well. the 10 year yield hovering around that 1.3%. we are going to talk about inflation expectation. wti crude, this is new york

clued -- crude below $60 a barrel. we see more wells in texas online. we are going to have an update on houston in 30 minutes. we are seeing a little bit of a blip when it comes to the recovery in the united states. i want to get you up to speed on what we saw, applications for u.s. state unemployment insurance, jumping to a four-week high. a fresh setback for the covering in the u.s.. a second straight increase after a prior week revise higher. continuing claims climb by 64,000. but optimism coming overnight from treasury secretary janet yellen. she told cnbc the u.s. could hit employment in 2022 if all goes well. that is the picture on the labor front and all of this comes as we have bloomberg have fresh analysis that shows u.s. vaccine supply is poised to double in the coming weeks and months.

we could see potentially more than 4 million coming up before july. we have some of our top guests and their take on where the trade goes next. >> as long as authorities continue to be expansionary, it is not just the fed. it is the people's bank of china. the reserve banks of australia and new zealand. all of them are expanding. a pace far past any reasonable expectation of gdp and population growth. it is inflationary around the world and this is not going to go away. i will continue to say this is sponsored by the central banks and it is not going to stop. >> when i talk about the potential of inflation, rates might continue to move higher on inflation. why are they going up now?

you have the federal reserve buying a trillion and a half dollars in bonds a year. that is dampening the move we would have. i think it is there and economists are starting to pick up on this idea. inflation looks like something that is coming back we have not seen in years. >> jay powell said even if there is a rise in inflation, it is because of consumption. the fed might look past it. how do we know that when it is happening? the fed is telling you they are willing to let it run. annmarie: tim gratz at state street joins us now.

he says inflation is driving nominal rates higher a very good morning to you. happy friday. i know manus is jealous is not with us today. i want to get into what you tell us about the real yields. would that be the sell signal? >> if not a sell signal, a warning the best days are past. that is why we remain, because real rates have not moved. if they were to start to move appreciably higher, that would signal to me the end of a risk cycle. it usually requires the fed to be on board. as mentioned in the segment before, it is hard to be responding. annmarie: what is the timeline? what caught me overnight was yellen saying we could have full

employment by 2022. to me that is interesting because what does it mean for policy normalization at the fed? that currently front runs the fed projected stock. does this change the expectation we are waiting for on the fed? >> it does a full employment means wage earners have the power to demand wage gains. that is i suspect the real key to all of this. you're seeing inflationary pressures from reopening, from extraordinary policy measures, and that is not going to go away. it becomes embedded in wage expectations. we did have full employment prior to this crisis of what was considered full implement. -- employment. unless you are talking about the end of the cycle, it came down to wage pressure. the fed i don't think will be incentivized to act until they

see workers are able to demand wage gains. annmarie: of course, and if inflation is higher. a lot of chatter about derivatives. we are seeing that pick up steam. is this just a hedge for protection or are investors starting to take on that we will see inflation very quickly this year? >> you are looking at the movements in commodities, really all risky assets, and it speaks to some degree that inflation is coming. look at commodity currencies, the performance of materials. it does speak to the cycle rebounding. which is a natural expectation given how damaged the cycle became from covid last year. to some degree, this makes sense. let us just remember the hospitality industry, the airline industry, is probably

not going to get back to pre-covid conditions, especially in the u.s.. a significant portion of the labor market is going to take time to heal. i think the excess capacity will take time to wear off. that means expectations driven by an put prices may not -- input prices may not. annmarie: so far on holdings of treasuries, we have dropped by $17 billion again in december. given the spike in yields, do you expect this to continue or do you see a reversal because there are potentially opportunities for foreign investors? >> there is opportunity insofar as -- for the longest time, if you were a big exporter of capital, you could not buy treasuries and get any yield

pickup. you were giving up yield for a couple of years. that dynamic has completely flipped. there are hedge treasury yields investors in germany, in italy, can get a yield pickup. they can almost get a yield pickup for btp's looking at treasuries on a hedged basis. that also curbs the national -- the natural tendency in response to inflationary pressure. there will be strong foreign demand coming back to treasuries . annmarie: tim graff at state street stays with us this friday morning. let's get a recap of the first word news. >> happy friday. the biden administration says it is willing to meet with iran to discuss a diplomatic way forward in an effort to return to the nuclear deal president trump quit.

a step toward easing tensions that have ribbons that -- risen steadily. a state department source tells bloomberg the move are not a concession toward iran, but a concession toward cents. mario draghi has won cross party support for his priorities to focus on re-boosting the country's economy and fighting the pandemic. he wants to speed up italy's vaccination campaign and push for european integration. nasa is celebrating the landing of the perseverance, the largest and most significant -- sophisticated rover to get to the red planet. it is the trickiest landing nasa has ever attempted. the rover also carries a drone helicopter known as ingenuity which will the first craft to attempt to fly on another planet. global news, 24 hours a day, on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries.

annmarie: coming up on the program, you are doing a great job of wasting my time. that is the view from democrats as they grill executives. (announcer) do you want to reduce stress? shed pounds? do you want to flatten your stomach? do all that in just 10 minutes a day

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>> two identical orders. one is for robinhood, one is for fidelity. what happens? >> the quality of the execution varies by the channel of the order. a commonly understood phenomenon. for example, when you go get a mortgage, >> reclaiming my time, sir. who gets the better deal?

>> if it comes from a broker who is being paid for order flow and one not, can you testify that on balance, there is no difference, assuming the same sides of the order? -- size of the order? >> size of the order is one factor. >> you are doing a great job of wasting my time. annmarie: heated scenes from the financial services committee hearing as house democrats's with the leaders of robinhood and citadel. lawmakers pressing on whether they are profiting at the expense of retail investors. joining us now, bloomberg's west coast reporter. i want to get a sense from you what the focus for lawmakers was. it felt like a lot of political theater. mixed with every once in a while a serious question. >> it was less about the incredible surge.

more about what robinhood is, whether some of the accessibility in financial markets are u.s. equity markets -- most lawmakers acknowledged robinhood gives retail investors , people who might otherwise be excluded from financial markets, access to them. at the same time, these committee members came from the perspective of their constituents and accused robinhood of putting their money at risk. they wanted to know why robinhood took the decision to restrict trading on certain stocks. they want to know if the financial system was at risk because of the greediness of hedge funds. we did not get any answers as to what took place in those last few weeks of january when volatility was so high.

annmarie: did we learn about robinhood's business? >> the main item is that the bulk of robinhood's revenue is from payment overflows. soto securities pay robinhood -- citadel securities pay robinhood to carry out the orders retail traders are making the robinhood. it was about 50% of revenue. there are questions around the efficacy of that, whether citadel securities was going to get full price for a retail trader. the other thing is we learn about the behavior, the majority of orders placed our buy and hold transactions. but there is options trading going on. questions were raised whether the education level of retail investors is high enough where the platform is transparent enough about the risks involved in trading financial securities.

annmarie: that brief exchange we saw was with citadel ceo ken griffin and a democratic senator. was he painted as the villain in all of this from lawmakers? >> the robinhood ceo was painted as the villain. ken griffin got a lot of accusations of hedge funds being bullies. one specific he got grilled over was the idea of a tax financial transactions. he argued that would not be in the best interest of pension funds, the average american saver. the attitude from democratic lawmakers is that wall street is on the side of wall street and nobody else. ken griffin pushed back quite strongly. annmarie: ed ludlow, thanks for that. tim graf still with us. i want to get a sense as a macro

strategist, when we saw this gamestop frenzy, did you learn something from this? did this make you worried about other frenzies in the years to come? >> i guess i learned people are really bored. when you limit their options for entertainment, they will turn to things like betting on stocks. this is still a pretty small corner of the financial market, despite the headlines and the moves we saw in gamestop. i think it comes down a lot to -- there is a liquidity argument here. that the asset financial market, the barriers are lower than they used to be. people are taking advantage of that. that is potentially a good thing . i think it allowed us to relearn the lessons that were common in the late 1990's.

where you similarly had this notion of a changing dynamic and resale to take on the big shots of wall street. then, it was a very different environment. it was clearly a very overvalued equity market, susceptible to shock. we don't see that quite yet. not least because the monetary environment is complete lead different. nonetheless, it drew a lot of fun parallels. the memories i guess were the best part about that. annmarie: a bit of boredom. tim, don't: anywhere. -- don't go anywhere? the group recently added those coin futures to its platform. take a listen. >> i'm surprised elon is so gung

ho on doge coin. i strongly believe he is not really associated with dogecoin. tesla bought bitcoin. elon musk probably likes it personally. annmarie: elon musk responded to our interview saying, quote, tesla's action is not reflective of my opinion. what do you make of all of this, elon musk saying it is a less dumb form. what do you make of institutions and s&p 500 companies buying bitcoin? are you expecting to see more? >> following the crisis last

year, i thought it was a thought experiment. fiscal and monetary policy would be easy for a very long time. i think that is why it has sort of become part of the zeitgeist. there is this belief that monetary debasement will continue, whether that is well-founded or not. that is the per billing narrative. that gives rise to the notion of alternative asset players. other places you can park your money when so many economies at least until recently were near zero or below 1%. equity markets were overvalued and cash paid you nothing. i think from that perspective it is quite compelling. the practical use is still pretty nonexistent. the value intrinsically is really zero. it is what someone else will pay for it. but i think the narrative is

quite powerful. annmarie: you own it. you are not going to sell it anytime soon. tim graf stays with us this morning. coming up we are going to look at the technology super cycle. all part of a broader inflationary narrative. don't expect oil at $100 a barrel. so you're a small business, or a big one. you were thriving, but then... oh. ah. okay. plan, pivot. how do you bounce back? you don't, you bounce forward, with serious and reliable internet. powered by the largest gig speed network in america. but is it secure? sure it's secure. and even if the power goes down, your connection doesn't. so how do i do this? you don't do this. we do this, together. bounce forward, with comcast business.

annmarie: oil prices have been falling as production restarts in texas. what is the outlook for energy markets? juliette saly from singapore joins us. >> a lot of focus on the restart of shale production. anz think it is going to take a

week until we get back to normal levels. they are expecting any growth in shale output for the year would be subdued. the oil majors will be down. they are saying that could make opec more comfortable about using restrictions when it meets in march with output likely to hit low pre-pandemic levels. when it comes to their target for crude, they have a target for the first quarter at $58 a barrel, suggesting we still have this normalization trade, but you also have concerns amidst the rollout of vaccines, the fact you still have subdued air travel. they have listed their target for crude -- lifted their target for crude to $58 a barrel, global inventories expected to rise. there target for copper is $9,000 a ton. as my next chart shows, has industrial metals run too hot?

we have seen a sharp jump on the lma index above pre-pandemic highs after rallying souci percent since its march low -- 60% since its march low. commodities likely to remain buoyant amid talks of a new super cycle. you could see froth coming off when it comes to another call for copper. it hit a 2012 high this week. bank of america, hitting 1200 by the end of the year. annmarie: tim graf is still with us. commodity gains are part of the broader inflationary narrative, but he does not see a super cycle or oil gets to $100 a barrel. we have hard and soft gainers. it is not just oil. it is copper futures, 10, lumber on a tear up 92 prevent -- tin,

lumber on a tear up 92%. if it is not a super cycle, what is it? tim: we have never had a monetary or fiscal environment such as what we have seen ever. there is an element where we talked about bitcoin. everything looks a little bit stretched. is it being backed by demand? the short answer is yes because we are coming out of this covid induced slump. it is always the thought in my mind that the cure for heil -- for higher oil prices is higher oil prices. production will ramp up. the cartel will be incentivized to have members who cheat the production cut line they have had the last several years. you will potentially see things in the headlines today about the u.s. talking to iran, potentially supply coming back by that channel.

more supply. annmarie: we are going to have to leave it there. we continue the conversation on energy next, we get a live update from houston. ♪

annmarie: good morning. i'm annmarie hordern. this is "daybreak: europe." stocks fall as investors focus on the impact of rising yields. a jump in u.s. jobless claims offer fresh concerns on the shape of a recovery. u.s. vaccine supplies set to double in the coming weeks, according to bloomberg analysis. plus, robinhood's ceo bears the brunt of a congressional

hearing on last month's stock frenzy. happy friday. a very busy 24 hours we had. let's take a look at where we trade this morning. we are socked in. it is red across the area, down 0.3% on the regional benchmark. s&p 500 futures are lifting a little bit from what we had seen before. 10 year yields were back at 1.3%. that is the whole reflation trade narrative. nymex crude is up by more than 1%, as we do see that wells are starting to come back online. the question is when will we have full capacity? we will get an update in a moment from houston. to the economic data we saw yesterday, i want to run you through some of the applications. state unemployment insurance is at a high.

it shows the bumpy ride for the labor market. it is the second straight increase after the prior week revised higher with claims declining to 4.49 million. we did hear some optimism coming from the treasury secretary. janet yellen saying the u.s. could hit full employment by 02022 if all -- by 2022 if all goes well. the good news comes in the vaccine front. bloomberg analysis shows vaccine supply in the united states could double in the coming weeks and months. that would be a huge expansion of doses administered across the country. about 4.5 million shots a day. that is what our analysis is showing. what does this mean for the economy with the ongoing debate with inflation? we have our guests with where they think inflation trade goes next. >> as long as it continues to be expansionary, and it is not just

the fed, the bank of england, the people's bank of china, the reserve bank of russia, the reserve banks of australia and new zealand, all our expansionary. all our expanding reserves beyond our reasonable expectation of gdp growth. it is inflationary around the world and this is not going to go away anytime soon. this is something sponsored by the central banks and it is not going to stop. >> when i talk about the potential of inflation coming, i understand there is a base of fact. rates will continue to move higher on inflation. the question is, why are they not going up now? you have the fed buying billions of dollars in bonds like year. that is probably dampening but we would have now. i do think it is there but i think economists are starting to pick up on this idea. the super cycle has turned and commodities are moving higher, and inflation looks like something that is moving back

that we have not seen in 30 years. >> even if there is a rise in inflation because of consumption the fed might look past it because what if it is just a reopening pickup in consumption? how do we know that when it is happening? the fed is willing to let it run. they want to see it be sustained before they start to communicate. annmarie: a wrap up of our top guests on the inflation debate. i want to get to the latest on the power crisis gripping the southern united states. the blackrock ceo weighed in on that, saying the u.s. cannot solely rely on written global -- on renewables without a national grid. >> we are going to be living with hydrocarbons. i think the experience in texas is a good example. we cannot be solely dependent on renewables until we have a national power grid. annmarie: the blackouts that

plunged millions of texans into chaos in the midst of an historic cold last are easing, but the crisis continues. about 350 thousand homes are reportedly without electricity. four of the largest refineries in the state are experiencing widespread damage from the deep-freeze. we go to houston now with our reporter. rachel, very good to see you. i think this is the first take you have had power since the start of this week. this has been going on for some days now. where are we now with where things stand? rachel: today, we saw a lot of people have power restored to their homes. the issue today was really water. my parents included do not have any water at all. major cities still under a boil notice. that was a challenge when you did not have power, if you had an electric stove. now some homes do not have any water supply at all.

the city is working hard to get water pressure up and running so that can be restored. it has been a long day and a long week in texas. annmarie: my cousin is in texas and he says the second he gets a moment of power coming on, he fills up his tub and every bull he can find for water -- every bowl he can find for water. what happens next? rachel: it is certainly becoming that. what was so interesting was to see how quickly it became politicized. as early as monday and tuesday, the conversation was wind versus natural gas. as the week went on, it became more nuanced. the folks i have been talked to this -- i have been talking to this we cap talked about the power market specifically. they think it is much more systemwide than looking at one feel source versus another -- one fuel source versus another. i was talking to some folks

today and they were talking about how they were so impacted because they rely on the grid to power production. they had natural gas, but they could not have power to the gas. the power plants did not have gas to produce power, and it became what this source called a death spiral. annmarie: in europe, there is a lot of high-voltage transmissions. texas has this exceptionalism in terms of their grid. for an international audience, can you explain why this situation happened in texas? why did it hit the texas power grid different than we could see anywhere else? if you could just explain those dynamics. rachel: in other places, you might be able to rely on other grids if you are in need or they are in need. but we are off in our own little island you're in texas. we also have a deregulated power

market since 1999. and we also do not have a capacity market. there are a lot of things that make the texas power market unique. all of those elements will be something that needs to be looked at as we try to figure out what exactly happened and how we can prevent it having forward. annmarie: i know you also focus on the permian. we have a number of refineries coming online. it was a huge blow to the market, 4 million barrels a day. when can we see full capacity restored? rachel: today, i heard folks who are reliant on the grid for their operations are going to utilities and saying if you give me eight megawatts of power i can 40 times that for what you would be able to produce with that gas i am going to give you. how on the way down there was this negative feedback loop where the power plants were

given supplies to the permian and the permian could not give gas supplies to the power plants. they are pitching it that we can bring power generation capacity back online by supplying you with natural gas, now that we do not have to divert all of our power to the hospitals and the folks who need it most. they are saying we can help the grid get up to speed as fast as possible. i think it will be interesting to see as operators work as a way to move forward. ultimately, it will take seven to 10 days, at least a week, for some of this to fully come back to normal. annmarie: rachel adams-heard, thank you so much for joining us. i hope your power stays on and you and your family are able to stay safe. coming up, allianz vowed to restore profit growth after the first drop in years. the cfo up next. this is bloomberg. ♪

>> we could already see a demand recovery in the second half of 2020, led by an extreme lee strong chinese market for us, but also in europe and north america things were picking up toward the end. this is in our case driven by a phenomenally attractive portfolio. annmarie: daimler's ceo telling us he expects significant earnings improvement as vaccines accelerate. allianz vows to restore profit growth. the munich-based insurer is targeting a profit of 12 billion euros this year. this after the pandemic handed them their first annual drop in years. joining us now is giulio terzariol, allianz cfo.

the big question on investors' minds is now that you are restoring this profit growth, will buybacks be back on the table? guilio: good morning. on your question about buybacks, i would say for the time being regulators in the sector still need to be cautious about buybacks. as we look into the first part of 2021, i don't think that buybacks are going to be on the agenda. as we go into the second part of 2021, we will see how the situation develops. on the other side, on the dividend payments, we have had a conversation with our legal department. it is definitely not an issue. but buybacks are currently a little bit cautious.

we from a liquidity position, clearly we have a very strong situation. you will spend capital in that we will see how we can deploy capital in a productive way. we will see what happens in the second part of 2021. annmarie: obviously 2021 is very difficult for you, but many economies or industries are facing tough restrictions. what kind of covid impact are you seeing for 2021? guilio: from our standpoint, we are seeing a covid impact on our travel insurance. clearly travel is still very limited, so from that point of view it is going to have an impact on the revenue side. also for credit insurance, it is going to have an impact.

this is all reflected in our outlook for 2021. we have reflected somehow these impacts in our outflows for 2021. when we look at other parts of our business model, we might see some movement coming from business interruption, but we believe this will be mostly compensated by the lower frequency that we will see. overall, we think the impact in 2021 coming from covid is going to be very much limited compared to what we saw in the course of 2020. but i would not say the covid situation is completely behind us. there are still some lingering effects as we go into 2021. and i would expect a normalization as we are in 2022. i think 2021 we are almost back to normal, and in 2022 i would expect to be fully back to normal. annmarie: you mentioned travel,

but what about the olympics? you are the official insurance partner for the olympics. we have seen them already postponed. are you on the hook if these games get canceled? guilio: the olympics in tokyo, if it is canceled we might have a small impact, but that will be limited. from that point of view, we do not have a major concerned about the postponement of the olympics in tokyo. they will be of a limited impact for us. we need to see clearly with the olympics in beijing and the soccer cup in qatar, events which will take place anyway in the course of 2022. i will be relatively positive that those events are going to take place. but no major exposure to tokyo. annmarie: you also mentioned the

covid impact on credit insurance. as governments start to withdraw some of this aid, what is the risk of support measures as they are withdrawn? could we potentially see a little bit of a credit crisis? guilio: first of all, the agreement is still running until summer 2021. we will adhere to the agreement with the german parliament and we will see as we go into the second part of the year. i also want to say that as of now the agreement with the governments is a nice profit for the government. from that point of view, it is a benefit from our side and we will continue to watch the situation. to your point, whether i believe we are going to have a credit crisis, i don't think so. i don't think we are going to see a credit crisis in the course of 2021, and not even

2022. if we are going to see any, it is going to be more down the road. but not as long as we have in general the supportive economy we see right now. annmarie: and no risk of a spread into sovereign risks? guilio: we see spreads going down. this has been the case for spreads here in europe on the government side. also, the spread has gone down significantly. as of now, we do not see pressure mounting on the credit side. annmarie: and i think the financial community is thinking mario draghi for that. a final question. i am sure you have seen the report about aviva looking to sell italian operations. his allianz interested in -- is

allianz interested in getting in on that? guilio: i cannot speak about clearly m&a looking forward. i can tell you about what we did. we have completed a transaction in australia right now, which is a transaction in the market share of 50%. -- of 15%. if we can find acquisition that can strengthen our franchise, our footprints in the market, we are going to look into this. but i cannot speak about specific transactions in specific countries. annmarie: if it does happen, we will have to get you back to the program. giulio terzariol,.thank you for joining us staying with corporate result, air france, klm ceo is telling us about a rescue package with guy johnson. >> when you are obliged

capacity, more than 70% in the last quarter, just as a company you have to admit you are in probably the most crisis in the industry since the beginning of civilization, which is a terrible situation. we are obliged due to the travel restriction to have more difficulty for having people on board, and you have seen q4 and the full year. for the full year, it beats companies operating for the full year. the big players are -5 billion euros. it is a net result of -7 billion euros. a difficult year for air france klm.

but also for the whole industry. >> you said on the call it is days or weeks, not months, before you will meet to announce a recapitalization. the conversation seems to be at the moment between the nations of the netherlands and france and the european commission in brussels. can you give me a sense of the size of the recapitalization that you think you are going to need? and can you speak about what that is going to mean? is that an effective defect own nationalization of air france klm? guest: clearly not. i think it has been made public by the ministry of finance. there is an effort to nationalize the france klm group. it is not in contention. what we try to do is to try to correct something which happened

coming from the states in the middle of 2020 where contrary to some companies the support has been low. it was a combination of equity. there were some things specific in the support. we appreciate it. we tried to correct that by giving more equity content. then you would have to go to the european commission to discuss what are the targets, what is the plan, and if there is anything to bring. that is where we are today. it will be solved one day. we need some time, but it will

come soon. annmarie: the cfo of air france klm speaking to my colleague, guy johnson. coming up, we will talk the inflation debate. this is bloomberg. ♪

annmarie: just over 60 minutes to the start of european trading. we will be getting economic data out of the eurozone and the u.k. retail sales will be out today. any sign of light at the end of the tunnel? i feel like it is hard to judge this, given you and i know we are still deep in lockdown. dani: it is true. there is a light at the end of the tunnel, but it is for a rather grim reason. it is because the numbers we are expecting today are going to be so low, so low in terms of spending that it means when the economy opens up, there will be a lot of pent-up demand. one of the issues when it comes to retail sales, the sentiment

around consumers, some of the ons data we have gotten when it comes to credit and debit spending is low as well. that would suggest people are not only not going and shopping because most shops are closed, they are also not really online shopping either. they will bounce back when things open up, but it highlights this picture that the u.k. has such a long way to go for the economic data to recover. annmarie: we also have pmi's as well, not just the united states, but europe. are investors seeing price pressures them alert to what we are seeing in the states? dani: there are some just a bit. a german yields are turning positive for the first time in months. that is not any lasting price increases. we see german breakevens and the u.s., the lowest on record. that shows us that the bet is one where price inflation and price pressures are not there.

it is hard to see how the inflation story could take a hold here as it is in the u.s.. annmarie: thanks for that recap. we will look out for that eco-data. thank you for joining me this friday. u.s. futures are lower, but european futures looking brighter. this is bloomberg. ♪

matt: good friday morning. this is the european open. i am matt miller in berlin. markets say, retreat. wall street declined. a gauge of global shares heads for its first weekly ball since january. futures are up in europe.

the cash