manus: good morning from bloomberg's middle east headquarters in dubai, i'm manus cranny. annmarie hordern alongside me. your top stories this morning. treasury yields are elevated. stocks look for direction ahead of the fed. jay powell's press conference follows upgraded economic forecasts. france and italy hit at lifting

suspensions on astrazeneca's vaccine. it hinges on european regulators. samsung warns of chip shortages, adding his voice to the growing corporate concerns over the supply chain bottlenecks. 6:00 a.m. in london, 10:00 a.m. in dubai. happy st. patrick's day. thank you for reminding me. i am waiting for my virtual invitation from the ambassador here in the uae. i feel left out. never mind the pint of guinness and st. patrick's day. inflation is going to scream higher -- guggenheim, talking about time for reality check. bridgewater says get ready for a turbocharged cpi. this is a debate, a quintet of voices, and the stoicism of jay powell.

will he be pushed? i am getting ready for screening higher inflation. annmarie: we will have to see what the fed says about this. investors are going to be scrutinizing potentially what the fed does and the projection of interest rates. what does that mean where they see inflation going? there are two camps. you either think we will have inflation, or what guggenheim says, a reality check. it is so subdued, it is overdone. manus: exactly, and whether it is the catch up spike. stephen major, i listened to the conversation, he wrote a paper on yield curve control, and as he said, the fed is grateful that we are living in average inflation targeting, and they do not want to pick a fight with the market unless they will win over the vigilantes. annmarie: we should get to the

former bond king, bill growth expects inflation to accelerate up to 4% in the coming months. take a listen to erik schatzker. >> inflation above 2% will not be 2% in the next few months. i see it up to three to four percent. annmarie: let see with the market straight ahead of the fed. asian markets, s&p 500 futures are dead flat. the 10 year, 1.60%, kicking higher ever higher. really treading water until we get the fed today. it will be 6:00 p.m. london time . then jay powell 30 minutes later. the dollar stronger. 10-year yield, the dollar, everything, this matters what the fed says where assets go

next. manus: one man sitting and listening diligently, bill street, cio, quintet private bank europe. great to have you with us. you say in reaction to bill gross, he is talking about screaming inflation up to 4%. fake news for investors? is it fake news? bill: good morning, manus. i think the answer is somewhere in the middle. we expect inflation -- supply bottlenecks are extreme as economies are opening up. if you think about the base effect where oil was a year ago, -$15.

we will probably swing on the upside on oil. we expect headline inflation to spike up and create nervousness for investors in the market. we probably see short-term inflation, headline level picking up to 3.5%. that will make people nervous. it will work out of the system quickly. the backend of the year we expect yields will calm down, inflation will calm down. don't forget we are in a negative real rate environment. investors need to see through this. it will create a degree of volatility. we expected to last up to four months. annmarie: you are very much on the transitory side. analysts covering say they see higher prices in the supply chain, but you think that is transitory.

what do you make of bill gross shorting the 10 year? bill: we keep treasuries in our portfolio as a ballast and diversification against risky assets. at this point we think when the pain trade on the treasuries from the fed is around the 2% level. i think the fed will be dovish today. one could argue the next move for the fed is an easing statement rather than potential hikes. when i mean easing, i do not mean traditional monetary policy in terms of interest rates, but more looking at the long and and slowing down the speed of potential spikes in yields. manus: is that yield curve controlled? do they need to be that

aggressive and think about yield curve control this year? bill: i think it is all going to be rhetorical, and they will be talking at the speed of movement in rates. they do not want another taper tantrum. we are still talking about 60 basis points. it happens a bit quickly, but given the headline inflation, it is not that surprising. on the other side of the channel , if you look at the european market, we are still -30 basis points. the ecb will be celebrating if they get interest rates to zero. annmarie: when you look at volatility in the bond market, many .2 capital requirements. the expect an extension of that. the end date is coming up soon,

march 31. bill: you are touching on a good point. not all things are bad for higher interest rates. we do see an extension on this. we have seen steepening of the yield curves. this is not bad for financial sectors and insurance companies and banks. the raising of interest rates, as long as it is done in a controlled way, and i expect the fed will step in with the rhetoric, is not bad for all sectors. do expect winners and losers in the energy sector on this. manus: just on that, they want to be long cyclicality and i am curious how that plays to you. we know value versus growth, we bang that drum every day. i want to understand what that value to growth trade means to you. bill: the cyclicality trade is

basically the opening out trade. the economies have been shut down by decree and are opening up. we talk about the inflation effective opening up, and part of this is cyclical trades. that is happening. we see the rotation between growth. a lot of growth stocks have been riding on the low interest rate narrative. i think we will start to see through cyclicality and smaller mid-cap sectors, what you will see is a little more rebalancing back into growth stocks. ultimately, the interest rate affect is marginal, 60 basis points, and we cannot forget every point on this narrative is good news. the only reason the bond market is moving, yes there is headline inflation, but it is because the

growth expectation is going through the roof as well. annmarie: bill street, cio, quintet private bank europe, stays with us. on a recap of your first word news. laura: the u.s. is setting expectations low for the biden administration's first face-to-face meeting with chinese officials. one point of tension is likely to be taiwan. the envoy to washington is confident the u.s. will work to increase ties. >> this is a critical time and our relationship with the united states. there is a lot happening in the geopolitical and geostrategic space. taiwan does continue to be a force for good. an important security and economic partner to the united states, and we will continue to seek opportunities to work together. laura: samsung voices concerns

about chip shortages spreading beyond the auto industry. they warn of a serious imbalance in a semiconductor market. they are one of the world's largest chipmakers, and expects the crunch to affect its business next quarter. 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. annmarie: thank you so much for that recap. coming up, hints of a u-turn, the latest on the astrazeneca controversy. live from brussels, next. this is bloomberg. ♪

>> the government clearly unequivocally absolutely supports the astrazeneca rollout . clearly, unequivocally, absolutely. >> the german government is suspending the astrazeneca vaccine as a precautionary measure. >> the decision was taken in accordance with our european policy to suspend vaccinations with astrazeneca as a precaution. >> we are still convinced the benefits from the astrazeneca vaccine is preventing covid-19 outweighs the risk of the side effects. >> the agency is carrying out an investigation linked to the events of blood clots. the number of such events in overall vaccinated people seems

not to be higher than the general population. manus: some of the differing views on the european response to concerns over the astrazeneca vaccine. let's get more on the story. france and italy could be headed for a u-turn on the astrazeneca vaccine. mario draghi and emmanuel macron said they could start using the vaccine again if european agency says it is safe. the eu drug regulator has so far backed the vaccine, but is due to give the definitive new assessment tomorrow. maria tadeo has the details. this is a mess. where are we? will we have astrazeneca back before the end of the week? maria: it does look like we have another u-turn coming when it comes to the astrazeneca

vaccine. the agency yesterday was clear that at this hour given how rampant coronavirus still is, the benefits would outweigh the possible risk. she did concede there had been incidents related to blood clots. in general, when you look at the situation, the cost-benefit analysis would say the vaccine is good. she also said that she worries a lot of commentators and questions around whether it is safe can undermine public confidence and trust when it comes to vaccines. when it comes to the policy review, tomorrow a decision will be taking. we are hearing from countries like italy and france that they will be ready to resume using astrazeneca if they get that cleared. the press conference yesterday, a major finding.

tomorrow they will say it is ok to use astrazeneca. annmarie: it might still hit european distribution targets. what would we know about the setback? maria: that is the obvious question, what will happen to distribution. compared to the united kingdom and united states -- what is interesting as we heard from the european health commissioner who said there are 20 million vaccines in europe that have not been used, just waiting to be given to people. we have news from pfizer. astrazeneca is not to the european union what it is to the united kingdom. the lead vaccine is pfizer biontech. pfizer will accelerate deliveries by 10 million to the

european union. when you look at this episode from astrazeneca, it seems a reputational crisis than a hit on the rollout. we are talking about a suspension of four days, so the material impact is probably small. but it may be a crisis too many. annmarie: a number of controversies from the beginning. thank you for joining us. bill street, cio, quintet private bank europe is still with us. the latest bank of america fund manager survey says covert is not the number one tail risk, it is taper tantrum. when you look at europe, does that make sense? shouldn't covid be the number one risk? bill: yes, we are not out of this by any means. the vaccination programs in the

u.s. and u.k. are going really well, but -- and that will allow economies to open up, and why we are getting what we get out of the bond curve. if you look at europe, to your point, this is uncoordinated. manus called it a mess. if they do not get coordinated and speed up the momentum, this potentially has an impact on the financial markets for europe. financial markets are about relative value. if you look how economies will open in asia and the u.s. and u.k., you are going to be twisting or tilting your portfolio to those regions, because there will be a significant difference between growth and the cyclical stocks across the different regions. manus: the reality of that

divergence, do you think it will manifest more in the treasury bund spread, equity differential spread, how do i translate the momentum of growth in america, five point 7% consensus, to a tougher outlook in europe? bill: it is a really good question, and there are two things. europeans will be celebrating 0% interest rates even if they get there. we talked about the pain trade and yield differential, if that differential will be significant and continues to widen, it will have an impact on duration assets but also the dollar. you will see this cyclical

rotation in the stock market. that will slow down in europe unless they can increase momentum. there will be sector dispersion. manus: good to have you with us. thank you very much. the one burning question, ann marie wants to know what kind of guitar do you have, and will you play some songs? bill: i will not play at this point. but i will have a virtual guinness with you, manus. manus: what do you want to hear, annmarie? annmarie: i play piano and manus sings. we can do a band. bill: let's get gigging. manus: she plays a mean piano.

we will take you on one of those radios soon. bill street, cio, quintet private bank europe. we are a talented group. coming up, bill gross says he cashed in during the gamestop mania. the former bond king is betting against certain parts of the bond market. we have the interviews with the pimco co-founder, coming up. this is bloomberg. ♪

annmarie: good morning, this is "bloomberg daybreak: europe." i'm annmarie hordern in london with manus cranny in dubai. it was not just retailers who cashed in during the gamestop

mania, bill gross made $10 million shorting the shares. he says he is still selling gamestop options. >> i'm sure the tenure future which is a seven-year, short the long bond to a certain extent. erik: i heard you made a tidy sum trading gamestop. >> i got in too early, with auctions like a good robinhood trader. selling options, buying options, selling calls. around the 150 dollar level, it went to 400. i was not selling to the sleeping point but i managed to overcome my insecurities and hold on and ride it back down in terms of getting out. i am back in and selling call

options at 250 and 300. the volatility is superhigh and promotes an ability to make some moneye. . erik: you are still short gamestop? through the auctions market it is not like you have a short position on the cash market. >> it sort of is if the option comes through. and you are forced to short shares. right now the borrowing rate on shorted shares for gamestop is 1.5%, which indicates no real pressure. the volatility at 400% annualized, i think this is the

perfect opportunity for option sellers to take advantage. erik: how much have you made on those trades so far? >> i was in the hole about 10 million, but about the same amount above. manus: that is the pimco co-founder, bill gross. amazing how people can contextualize what is to be in the hole for 10 million and bounce back. it is small change to some people. annmarie: for him it probably is. you have to have nerves of steel to get into the mania of gamestop, lose 10 million, then get it back. he is shorting the 10-year yield, the conversation today. he sees inflation about to pop. manus: he is talking about

3%-4%. what would that do to the hand of the fed if it goes gangbusters? we will talk about that in a moment. coming up, banking on a recovery in the south african economy. ♪

annmarie: good morning from bloomberg's european headquarters in london, i'm and marine or with manus cranny in dubai. treasury yields are elevated and stocks look for direction ahead of the fed. jay powell's press conference follows upgraded economic forecasts. lifting suspensions on astrazeneca vaccine hinges on a

crucial ruling from european regulators thursday. samsung warns of chip shortages, adding its voice to growing corporate concerns over supply-chain bottlenecks. good morning to you, happy st. patrick's day. it is fed day. we will finally get the foc decision. what does jay powell say and there are two camps. bill gross says we will see 4% inflation, then guggenheim says there is a reality check and inflation will remain subdued. what does jay powell say that will shape this debate? manus: it is whether you turn yourself over to the bridgewater narrative, that it turbocharged cpi has ramped. are we at the beginning of a secular change and this is not an overreaction? if we get 3% or

4% inflation, what does that do to the fed? what do they do to re-grasp the narrative? you set up asia and that s&p, futures stalled, and we are expecting a 6% consensus growth in the united states. s&p futures back in the green slightly. you have the 10 year papers, i have seen deutsche bank say this could make it up to 1.9%. our last guest says he wants to be long treasuries. you may see it further run higher but it will run out of steam on the inflation narrative. let's talk about ned bank, they scrapped the dividend for 2020 and expect to resume payments at the interim stage later this year. nedbank set a target to improve

its return on equity in the medium-term. that is to a level better than 15%. let's get to mike brown. good day to you, let's talk about the dividend. we know the regulator has guidance, but is back of bit recently. what do you hope to achieve by the pause in the dividend? are you confirming that? mike: good morning. in respect of the dividend, we considered the spirits of the guidance notes from the regulators. we ended the year with strong capital and the liquidity positions, stronger than in june. the board decided to retain capital for potential growth opportunities on one hand, but

also for potential further risks in vaccine effectiveness and lockdown levels. we do expect to begin repayment of dividends normally. and as always, in this environment, if growth is less than we thought it would be, the risks to the economy and the virus are not more than we thought they were going to be, we retain the opportunity to return that capital to shareholders at a later stage. annmarie: what about building provisions like you did last year? where are you in terms of credit impairments? mike: we believe credit impairments peaked in the first half of last year. largely as a consequence of the forward-looking impairments we raised in the second quarter.

and from that peak of around 190 basis points, we finished the year at 161 basis points, and expect our credit loss ratio to trend downwards in 2021. manus: what kind of growth are you looking for? is it contingent on south africa's vaccine rollout? mike: for any country in the world, 2021 vaccination rollout is the best economic policy they can pursue. our current view is having shrunk by 7% in 2020, the south african economy will grow at 3.4% in 2021. if that plays out, we have said we expect our earnings in the interim stage two june be upped by 20% on the prior period,

which had the peak covid impact. annmarie: what about the jobless rate in south africa? it is deteriorating somewhat. how do you see is having a meaningful impact? what should the government do? it will deteriorate your customer base. mike: the jobless rate in south africa is an enormous concern. the way we think about it and talk to government is that there is a cycle of confidence, investment, growth and jobs. what is really important is the front end of that cycle around confidence and investment. to get that cycle going, we need energy security and the fastest possible rollout of vaccines. if that is able to take place,

growth rates will be boosted by investment, and unemployment levels will reduce. manus: we are debating about the risk of inflation and higher rates in the united states from the fed. how are you monitoring and assessing risk from the spike in rates in the u.s., and the risk it could bring to markets? mike: certainly it is something we watch carefully because it is a key driver of global risk on risk off trade which impacts emerging markets in general, and also south africa. our current view in the domestic environment is that domestic inflation at 3% and will pick up slightly the next few years but remain within the reserve bank target range of 4%-6%.

annmarie: mike brown, ceo, nedbank, thank you for joining us. laura: uber is reclassifying all 70,000 u.k. drivers as workers. it follows a landmark ruling from the supreme court last month to change to minimum wage, vacation pay and benefits. change is limited to the u.k. but raise questions about their business model in other countries. we will speak to the ceo at 9:00 p.m. london time. the ecb is shielding the euro zone economy from higher bond yields partly because stimulus is too slow, and the delay means the effects and europe may take months or years to be felt. the world top oil trader smashes profit record in 2020. $3 billion last year helped by dramatic moves in the energy

markets. the firm made a chunk of its profits in the second quarter when oil demand dropped. they locked in profit by selling it on the futures market. 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. manus: thank you very much. coming up, france and italy can't at an -- france and italy hint at an astrazeneca u-turn. this is bloomberg. ♪

>> it is going to take another three to four months to pick up in the large amount of doses they will get from different

manufacturers, because of vaccine nationalism, and a new thing, raw materials nationalism. what the u.s. has done, and i send this message to the decision-makers in the u.s., please not put a ban on critical raw materials other global vaccine manufacturers need. manus: that was the ceo of the india company speaking about equality summit. melinda gates -- melinda gates says there will not be a recovery if the covered -- women and minorities have been disproportionately hit. she spoke to emily chang as part of the bloomberg equality summit. melinda: it is working in some high-end countries, we are seeing broader distribution in the united states and some

european countries, but it is not working yet for middle and low income countries. those are places where people are struggling and have loved ones who get ailing cannot get them to a hospital. they are really struggling in many countries around the world. emily: there is a moral case for vaccine equity, but what about the economic case? why should someone in new york care when someone in africa gets the vaccine? melinda: it is the right moral thing to do, but economically we will not have as swift of a recovery if we do not make sure everybody gets vaccinated. what will happen, we know this disease crosses borders. as variants break out, they will come back into the united states and europe and japan. our supply chains will not be up and running fully.

we will not get our travel and leisure up and running. economically, if we reopen the global economy, we have to take care of this everywhere. emily: if vaccines are not distributed equally, there are economic consequences, and there will be more deaths. what are the consequences of that? melinda: more death is a tragedy for every family that experiences a loss. it is wreaking havoc on the health care systems of these countries. a mom who is pregnant does not go in for her visits, she does not go in for delivery and has an unsafe delivery at home. we have 40 million women who will not get contraceptives, that means 15 million unplanned pregnant sees in one year. that is like adding up chicago, new york and l.a. and have 15

million unplanned pregnant sees. annmarie: the domino effect of covid-19 around the world. do not miss other keynote speakers, including sheryl sandberg, coming up. france and italy hint at an astrazeneca u-turn. they could resume using the vaccine if the eu drug regulator advises it is safe to do so. they will not issue a definitive assessment until tomorrow, but has said the benefits outweigh the risks. joining us now is oksana pyzik, virologist, ucl. is the damage already done when it comes to astrazeneca when you look at europe? will people be more nervous to get this shot? oksana: good morning. i think you hit the nail on the head. we have seen hesitancy from the

first incorrect claim made by president macron, unfounded on evidence on efficacy levels. to the extent health care workers, doctors and nurses, threatening to go on strike if they did not receive an mrna vaccine. this is prior to any of the issues that have been flagged by eu regulatory bodies. although the suspension has been defended by abundance of caution suspicion around the vaccine for various reasons across the eu have had a sluggish vaccine rollout and other problems around hesitancy. and a third wave descending on many populations, just terrible timing. manus: that abundance of caution

that you put forward as part of the reasoning the political elite put forward, you would say data in united kingdom, it would be difficult to reach that level of caution. talk to us about the factual data. oksana: if we look at the u.k., we have had over 11 million astrazeneca jabs already administered. it is fertile ground for evidence based around picking up on these anomalies. doctors and pharmacists in patients can report problems they may encounter. across the u.k. in europe we have had 17 million jabs administered and 37 cases investigated.

in germany, a rare form of blood clotting in the brain, there have been higher incidents we would see in the regular population. this is difficult because we see covid itself being exposed has a role to play in clotting, enhancing cardiovascular diseases. from this instance, the u.k. is not finding any higher rates than normal within the general population on blood clots. it is the unvaccinated population that will be at greater risk for this. this has been trouble for epidemiologists and public health experts across the world because we know the risks posed by covid.

2.7 million deaths globally. we hundred million vaccines administered so far. zero deaths directly linked to the vaccine in a definitive way. and it is interesting some data on pfizer and issues around adverse events are not picked up in the same way. annmarie: a lot of virologists say it is more worrisome to get covid than worry about a blood clot from the vaccine. in europe, controversy from the beginning with astrazeneca, how do we restore confidence in europe? oksana: yes, again, incredibly important to emphasize the risks from covid, a known risk is much higher, not only from a hospitalization and death, but

we are only one year into this to see what the disability burden will be versus anomalies around blood clotting. we will hear more about it tomorrow. the regulatory expertise has been pooled together and data scrutinized further. in some counterintuitive way we can see these regulatory bodies in germany and other countries are scrutinizing the data. they are doing their job, but to an extent when we are in the middle of a pandemic. we have heard from the who the more that we allow community transmission to carry on, when we suspend vaccinations, other countries do not have vaccines in their hands -- that is another issue -- this promotes

the variants. we have to be extremely cautious around this, and i feel the damage has been done. manus: should europe export the astrazeneca vaccine that they are left with that people do not want? if they do not want astrazeneca, is it a political responsibility to export what they do not want to use? oksana: that poses another ethical quandary. what message that sends to low and middle income countries -- we do not want it but it is ok for other populations to have it -- unless they turn around in the regulatory bodies and aligned themselves with who. what that will do is take that

hesitancy and export it to another part of the world, then further breed mistrust, when we need to eradicate this pandemic. the vaccines are the way out. it makes little public-health sense to be executing it in this way. we can review this data without going down the suspension route. there are many ways to monitor adverse events. manus: thank you so much for being with us, oksana pyzik, virologist, ucl. coming up, samsung electronics says global chip storage will pose a problem next quarter.

we will bring you the details. this is bloomberg. ♪

annmarie: it is "bloomberg daybreak: europe." i'm annmarie hordern in london with manus cranny in dubai. a serious imbalance in semiconductors. juliette saly has been looking at this for us. what do we know? juliette: there has been speculation there could be delays due to this, but samsung sending a warning, the latest and one of the largest voices that this chip shortage could be on the automakers into the likes of phones and consuls. one of the analyst telling bloomberg it is a concerning issue when you start to see samsung warning of concerns. this sets up a sour note across the asian equity space. supply chain issues, and

weighing on on the kospi and setting up u.s. stocks for a sour note, apple in particular goes in correlation with what you see in samsung. this is a company investors believe in. also of interest was commentary from our bloomberg opinion columnist who said perhaps this is a head fake to get others to build up capacity, and then they would be caught out with oversupply and get billed with the cost. if one company could find its way out of a chip shortage, it is samsung. manus: thank you very much, juliette saly in singapore. warning shot from the supplier of the samsung brand. it will be a fascinating evening . tomorrow we will know whether the dots moved and who blinked

first, could it be powell? annmarie: central bankers to watch this afternoon. anna and mark are up next. it is all about the fed. this is bloomberg. ♪

♪ anna: good morning. welcome to bloomberg markets. the european open. i'm anna edwards live in london. mark joins me from singapore to take a look at all of the market action this hour the course of action trade is just an hour away. the fed gets its say. treasury yields near their highest in over a year. how long will powell stay patient? fran i