acnes, no expensive memberships. get off the floor with aerotrainer. go to aerotrainer.com to get yours now. manus: good morning from bloomberg millie's headquarters in dubai, this is "bloomberg daybreak: europe." the stories is that your agenda. and downgrading the outlook for credit suisse, jp morgan says a total hit for banks in which $10 billion. futures trade mixed in the last

session of the quarter. strong data out of china. is it enough to stop shares sinking? plus, our exclusive conversation with christine lagarde, that hits at 9:00 a.m. a very warm welcome to the show. these markets are drunk with risk. good morning. who is responsible for the risk environment at credit suisse? is it the lady in charge, lara warner? she was promoted to chief risk off -- risk officer. i put it to you as a credit quality is worn for credit suisse that moved to negative.

this is about a wholesale navelgazing on risk environment and institutions. annmarie: do the firms have a handle on risk? look at credit suisse, you have to think this is on the heels of a very turbulent year or year and a half or so, as well as a look at what was once described as a dream client. there's a lot of worry when you look into credit suisse. if you look at the markets and what is going on, at the moment it's muted in terms of the contagion from what is going on at archegos. overnight coming out from mitsubishi a usg, they're the lead is to be added to this. futures are flat, the market looking forward to what biden has discuss tonight.

the dollar index up slightly, but the bloomberg dollar index is bumping up against the 200 day moving average, wrapping up the best quarter in a year. manus: let's get a closer look, there's lots of tangibles to the archegos debacle. the reassessment of that keeps changing. dani burger was with us yesterday. it has multiplied by five. good morning. dani: it is a case where contagion -- it is contained, but where you see the real pressure will be the base. we have to differentiate between american and european and japanese banks. you have to believe they were able to get out without too big a loss on some of these stocks with some chinese adrs as well. there's a bit of irony because

you had the other banks who are facing bigger losses. nomura being one of them. yes yesterday downgrading nomura stock saying concerns about the risk management, so there is irony in that. previously there high-end was five billion. credit suisse might be contributing half that much and losses alone. mitsubishi saying yesterday about $300 million. these are huge numbers for just one client for brokerages to be seeing losses. annmarie: let's hold in for a moment on credit suisse. what specifically are the issues following that, given the fact that this is a long-running number of crises the bank is dealing with. >> you could say this is an

idiosyncratic incident. perhaps it all lends to the greater question of risk management which was laid out nicely in saying who is to blame for all of this? the reaction in protection against people for credit suisse, their five-year default swaps are highest among any of the investment banks. all point to the s&p downgrade, saying there's a question about risk management. the financial losses they can manage because of strong capitalization and strong underlying earnings. it might take away the dividends, but at the end of the day, it's nothing like we saw in the financial crisis. it isn't something that's going to threaten general solvency for

credit suisse and other banks like nomura. annmarie: thanks for that wrap up. something else investors will be watching closely is the plan for a mass ramp-up and infrastructure spending. one advisor said the package will amount to about $2 trillion over eight years. joining us is a senior economist, overall the market is waiting on what biden is going to announce this evening. where do you see the infrastructure plan starting? >> the big headline number, what matters is to detail. we know the u.s. is committed to a stimulus. what u.s. fiscal policy now needs to focus on is adding to supply to make sure that all that demand doesn't add to

significant price pressures. it's the details from the big number that matters. you can be wasteful with a lot of spending are you can be very purposeful with a little bit of spending and see what the details say. manus: good morning. when i see the bloomberg team go for upmarket consensus for growth, now i know to pay attention. i love what you say, we're going back to pre-lehman, halcyon days. that means higher rates, doesn't it? >> it does mean higher rates, over time. more productivity, and markets with a bit of volatility will feel a bit more comfortable in that environment. but you are right, interest rates need to rise.

over time the market will need to adjust to it. the key point is the high interest rates, despite better economic performance, it should not be an obstacle to it. so long as they don't allow inflation to get out of hand in a serious way. annmarie: why are so many global policymakers really unfazed by inflation? are they wrong? >> we shouldn't be too worried about inflation in the near term . central banks will probably get what they want, so in the u.s., the u.k. may be the same, the eurozone may take a bit longer on the back of decade of disinflation. much more supply potential under the hood that was untapped over the last decade.

policymakers are using it to forecast inflation. what we will find is once the inflation gets above 2%, it will probably stay there, rather than continue to rise on trend. manus: how much above 2% can we tolerate before we all wobble, and from an economist point of view, completely shutter? >> it depends on what the real growth number is. central banks will probably tolerate inflation around 2.5%. may be edging toward 3% occasionally. as long as real economic growth is strong, then that is fine.

if we get real economic growth and high inflation, ultimately they will need to raise interest rates to curb inflation. they will be doing this at the risk of damaging underlying real-world momentum. annmarie: one of the most important data points will come out on friday, and that's the nonfarm payrolls. the survey is for 650,000. quite bullish. where do you have payrolls coming in friday? >> on a monthly basis, i go with the market consensus. the key point is that the markets have not been hit nearly as badly as you might have imagined this time of year, staring down the barrel of a historic recession. the upswing in most parts of the world, you have high employment,

and on top of that, the huge excessive savings, a reservoir of excess demand that households are ready to go out and spend. a far cry from the financial crisis when we looked at significant increases in employment around the world and it took many years for those headline rates to come down. much more fiscal activism, stronger labor market, and i largely agree with the bullishness and markets. the next two years will see much more rapid growth and we been used to over the last 10 or even 20 years. manus: will that add to the dollar? the best run on this quarter and year. it seems that nobody really cares about deficits.

is it ingrained, entrenched? >> we probably are experiencing rally reflecting the fact of global exceptionalism. over time, probably the dollar weakens on trend, because it will become more risk on on a consistent basis if you go into a higher gear growth. will buy riskier assets elsewhere. it will be a bit like 2017, with higher rates in the u.s., but the dollar weakening because of becoming more excited about risk assets, offering better returns in the u.s. and giving investors a bit more risk.

manus: so global risk management and differential trade. we have more work to do on risk in the market. our chief economist days with us. here's our with the first word news. >> the international monetary fund will upgrade his forecast for global growth. the changes driven by the u.s. and china, but set to recover more quickly than most countries. there is still a high level of uncertainty about virus variance that threaten the whole rebound. a new cases of rare blood clots emerge, mainly occurring in younger women. is the latest blow to the european vaccine rollout. it's also you turn for germany and other e.u. company -- countries. hong kong's new electoral system will help it tackled key issues

for citizens, including a lack of housing. that's according to a former leader of the city. meaning his view still carry weight. >> it led to for decades very high and still rising prices. >> global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. annmarie: thank you. just ahead on daybreak, gaining momentum. china's rebound picks up speed as pmi beats expectations. more on that dated next. this is bloomberg. ♪

manus: the early edition of "bloomberg daybreak: europe." china's economy is picking up speed in march with industrial services, construction, after the lunar new year holiday. pmi rose 51.9. nonmanufacturing gains. i'm almost breathless with the numbers. but you would almost hasten to chasten me. above are previous estimate of eight point 3%. are we overly optimistic and are we at the top of the china

growth hill? >> we are pretty optimistic on china too. china did a fairly good job last year keeping the virus under control and stimulating is to mystic economy. it's one of the few regions of the global economy that is now pretty much at or above pre-pandemic level of gdp. all the growth the market is projecting from here is additional growth that takes china well beyond its we pandemic level of gdp. in the long run, china has some pretty significant problems that will -- the growth would not be sustainable. annmarie: this evening president biden to layout and infrastructure plan and many of the details are to keep up or take over china. where you see these two going?

are they diverging? >> the u.s. is well ahead of china in gdp per capita terms. if you compare the economies, the only reason the gdp number is so we can china is because the population is just huge. china is many years away from reaching u.s. levels. what the u.s. is really doing is preserving that distance, with biden spending promises for a while, that's probably doable. the divergence you mention is an interesting one. it probably won't necessarily be in growth terms as much as business that economies do together. for the last three or four decades you've seen an increasing relationship between u.s. and china in the western china in good -- good straight. but in services trade, we have

increased globalization essentially intellectual services and property services. this brings political challenges, even if you don't necessarily trust your trading partners, it's very easy to exchange durable goods and the like. but when there's no trust between trading partners, it becomes a challenge. so we are likely now seeing to emerging spheres of influence in the global economy between the west and china, and they may not be trading services as much as much as they traded in goods. annmarie: a very interesting take in the bifurcation of trade. thank you so much for joining us this morning. that sets us up very well for next conversation. tensions between the u.s. and china continues to escalate. the latest battleground, retail. we will look at what it means for the fashion brand forced to

pick size. -- pick sides. this is bloomberg. ♪

pres. biden: america values human rights. we don't always live up to her expectations, but there is a value system. no american president ever backed down from speaking out on what is happening to the uighurs, what's happening in country. that's who we are. china has an overall goal, and i don't criticize it for its goal, but they have an overall goal to become the leading country in the world. the wealthiest country in the world, the most powerful country in the world. that's not going to happen on my watch. manus: president joe biden there. while the trump administration focused on the relationship with china, biden seems to have

expanded that dispute to human rights and values. the conflict is playing out across the geopolitical and financial arenas. nowhere is that more clearly seen then the retail world. annmarie: certainly, western companies operating in the country make a difficult choice between appealing to the values of the west and its consumers, and at the same time appeasing china and its consumers. h&m is refusing to use it over concerns of forced labor. that led to a state back or caught that is clouding investor sentiment. tom mackenzie joins us now from beijing. that's kick it off right there with h&m. what is the challenge for the company? tom: really h&m is bearing the brunt of this backlash, instigated by the chinese communist party, by the people's liberation army and the military here as well. you are seeing stores that are largely empty around the country. there's one in shanghai and here

in beijing as well. all six stores in the country are being close. on the e-commerce side, the amazon of china, you can find h&m when you type it into the search function. you can even find it on apple maps, it has been removed from apple maps. it's not alone, hugo boss, three chinese celebrities have cut ties with the german retailer over their comments on trying to avoid sourcing product. anyone that suggested -- on the flipside, chinese companies, like to be exports brands have seen their share prices rally on the back of this news. manus: you've force me to use thefa function in the middle of what your saying there.

china is number three. that's the scale when you close those shops. why are these brands specifically being boycotted? tom: part of it is linked to the e.u. sanctions you saw put in place on china last week, and that really riled the chinese leadership. that comes down to what's happening in chin jang, where you knotted nations, where ngos and think tanks say they are human rights abuses taking place. some suggesting and alleging there are forced label in a region that's responsible for 80% of china's cotton. in a big chum -- big chunk of the global supply of cotton. it's been described as genocide. china has vehemently denied the allegations saying it's trying

to curb terrorism and there are schools set up there to help children. is becoming more difficult in an increasingly politicized atmosphere for foreign companies to operate, that they can be true to their values back in the domestic markets and not anger the people of china. manus: tom, thank, tom mackenzie. we will see how the story evolves. great to have you with us as always. coming up, the archegos scandal grows. jp morgan now warns the potential damages 10 moving dollars. this is bloomberg. ♪

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oh, good one. move your xfinity services without breaking a sweat. xfinity makes moving easy. go online to transfer your services in about a minute. get started today. ♪ annmarie: good morning from bloomberg's european headquarters in the city of london. this is daybreak europe and here's what you need to know. the fallout continues. s&p downgrades its outlook for credit suisse. the total hit for banks could reach $10 billion. futures point lower in the last session of the quarter as investors await president

biden's massive spending plan. strong data out of china is not enough to stop shares from sinking. don't mise -- miss our exquisite conversation with christine lagarde. sitting down with francine lacqua. very good morning to you. 90 minutes until the start of european trading. this morning, it's all about risk. are these banks taking on too much risk? at the center of that is credit suisse. credits -- s&p is down lighting their outgrowth -- outlook. at one point, they described it as a dream client. turbulent times ahead for the bank. manus: yes. if your goal is a bank, your job is to grow the books, grow the leverage. who drove that proclivity for risk? we are seeing the names out.

they build up a number of years of risk appetite within the institution. is it the lady who was promoted by gob steam into the lead position on risk? either way, the market is looking across the spectrum of names. buybacks at risk. dividends at risk. a whole plethora of issues for the bank. we want to get benham on in just a moment on this one. s&p futures are higher. $2 trillion worth of stimulus coming down the pike. the market has already absorbed that. the dollar is rising this morning. king dollar. the differential is just too hard to ignore. credit suisse says that the growth engine is operating at full capacity. i love a bit of dollar-yen. absolutely rampant. it slice through 1.10. it breaks hard and aggressively. yields differential.

money will leave japan but it won't go into treasuries. it'll go into m&a. oil is up 0.5%. jp morgan says that the banks may see a total loss of up to $10 billion. it also expects to see full disclosure from other lenders by the end of the week. joining us now is ben emons. good to have you with us. help me understand where the spark for this implosion was. a short basket by our checo's is the founding of this risk event. how big is that and what are we not talking about it? what are we missing it -- missing? ben: it's interesting. if you think about the secrets of how this occurred, last year,

softbank had a major book of options on back stocks and cross volatility. we saw the gamestop saga in january. now we are seeing this event. each time, the parallel is strong. don't bet against a recovery or reopening. don't bet against the fact that you have been normalizing. if you think about positions in this case, it was a bet against the reopening, the global recovery trade. at some point, you get an unwind. the real specifics look to be that really concentrated basket of u.s. media stocks and china media stocks. levered eight times or so using these derivatives. that's quite common to use but it's a new sort of way of playing this anti-recovery trade. at some point, it breaks down and he gets unwound and the

margin comes. that's what we learned on friday. ultimately, the banks cooled off this hedge fund. it's time to pay. it had to be unwound. this is the ramification we have from this concentrated position in a changing dynamic. annmarie: is there going to be systemic risks to the bank? ben: that's always the interesting question. every time was ideal -- every time i deal with a hedge fund change, the first word that comes to mind is systemic. we learned a lesson from the capital management episode in 1998. that was close to systemic. we have learned from lehman how that was. in this particular case, with a family office which is really money that they have given themselves, they really take the hit first and foremost. it's the family of the head trend manager itself. the question is, among those banks, who is most exposed?

you can see from the share price for performance, the european banks were more exposed. all the banks may be looking at one another. a little bit of that 2008 game of, who is positioned what way. it would not be such a big deal in that way. systemic, not really. manus: ok. we understand that goldman pulled the ripcord first. goldman went to the loan and pulled the plug and divested first. that's what we understand from our sources. that's very much a natural position, protect yourself and your bank. isn't it? ben: in a sense, it is. if you don't get to the point that you have to unwind the position, it reminds you of some of the moves that have come out. we think about what happened during the time with j.p. morgan. that whole same thing played out

the same way. at the end of the day, it's their own risk. each bank is involved with their own risk budget. the risk officer says no more in they pulled back. the peak news is that it's interestinyou do these major block trades on a friday afternoon and not have a real spillover effect the following monday on major markets. it was really contained. the liquidity in the markets was really good at handling this particular situation. annmarie: that was going to be my next question. is the system working it is supposed to? the contagion has been specifically idiosyncratic to these exact stocks. the follow-up would be, what is the next step? is there a need for tighter regulation? ben: if you think about the way the u.s. is set up, if you are a family office, you are not the

same as a registered investment advisor. that's an entity with the sec, licensed, all types of clients around how to manage money. fiduciary rules. a family office doesn't have that. think about a change there, how the family office can operate given the risks that they took with their own capital. let's not forget that the shares that were unwound or held in major regional funds. there could be impact on retail investors as a result. that is the focus here in the coming months from the sec review side. i would not expect a major action by the office of currency control or the federal reserve. they are subject to leverage rules. it's more in sec review that we will see in the future. annmarie: ben emons.

thanks for joining us. i'm told you are joining us again in two weeks. i look forward to that conversation to see where we are with the fallout with archegos. your first word news with laura wright. laura: the chief of the world health organization is criticizing the report into the origins of coronavirus. he says it was too quick to dismiss the theory of a leak from a lab, adding it did not adequately analyze the possibility. it adds to criticism of the report from the u.s.. british chipmakers are planning the biggest overhaul of its tech and all most a decade. it's planning new designs to take on intel. the blueprints aim to help them handle machine learning. more capacity coming into the industry to help get past the

current chip shortage. >> the last year has been very difficult to deal with. no one knew which direction demand was going to go in. we saw sharp moves in different industries. it will right itself and there will be investment in capacity. ultimately, we will get back to the vision where supply and demand are matched. laura: global news 24 hours a day on air and at bloomberg quicktake, powered by 2700 journalists and analysts in 120 countries. this is bloomberg. manus: thank you very much. coming up on the show, a new report says the pandemic has seen progress towards gender parity stall. we speak to the world economic forum on the report. this is bloomberg. ♪

annmarie: good morning. progress towards gender parity is stalling and industries, that's the finding of the world economic forum. according to the web, another generation of women must wait for gender parity with an extra 36 years now added to the time remaining to close the gap. the report says there has been progress in education and health but political participation has fallen. joining us now is saadia zahidi. what struck me is the 135 years fermented women to earn the same amount of money for the same amount of work. what could be done to change this really dire math? saadia: i think we have to look into the reasons for why this happens and why the pandemic had such a big impact. one is that care responsibility

is still largely the domain of women. in a year where more than a billion schoolchildren were at home, that burden fell on women. the second reason is that there's a lot of segregation in the labor market. overall, across various industries, there are some industries that are much larger employers of women than others. when the consumer and retail sector shuts down or when the travel and tourism sector shuts down, that has a massive impact on women's employment. looking outward, what to do, one element is building a care system, care infrastructure that works for all working families. the second element is working towards a future in which women are able to go into the jobs of tomorrow as much as men are. those jobs of tomorrow are concentrating a lot of talent from science, technology, engineering, and math.

those happen to be fields where women are less present than men. the strategic approach is needed there. manus: good data you. there's this whole debate around the banks and institutions that we speak to every day. less physical presence in the office, more working from home, more flexibly. do you think more working from home, do you think that when we come out of this and there's more work from home, that is detrimental to women's opportunity and closing the pay gap? saadia: it's interesting. we partnered with linkedin and others for this report. one of the findings is that stress and anxiety amongst working women actually shot up over the last year. yes, working from home but they are working a double shift.

men didn't necessarily have that. all working families had much higher stress levels given everything that's happening around the world. of course, it was a deeply challenging year. there's a discrepancy in terms of what famous -- women face. looking outward, flex ability is good. businesses will have to make sure that in addition to flexibility, there is very clear ways of evaluating talent. there are clear ways of giving people the right kinds of skills. ensuring that a gender lens is applied to that. monitoring the data and understanding who is working from home, who was working in the office, who is being promoted, where his progression happening, who is being hired. annmarie: when you look at the progression, it seems it was in health and education. women are catching up in the space. this is very much state provided money. what deprive meant firms -- do

private firms need to do beyond lip service? what can they do to get these numbers at parity? saadia: this is a great moment for companies to think differently about this entire issue. if companies want to have the kind of innovation and creativity that will help them get out of the crisis and thrive in this economy, that's going to require diversity. that's going to require very different sets of views than they may have had before. this is a great moment to think about committing to parity and hardwiring it into their policies. that can be everything from ensuring that our hiring picks up again, it can set very specific targets for specific roles. there can be a focus on senior management positions. related to the point we just talked about, there also has to be a focus on how this balances with the home.

that's where businesses can work together with each other and with government to see what supports can be provided in terms of care. manus: do we need something slightly more radical? employees can request information, freedom of information from the global head of hr. show me the bandwidth of what men and women are played. -- paid. saadia: it's absolutely shown through study after study that when companies are transparent with their salaries and practices, that leads to greater equality in terms of wages between women and men. around the world, what is quite clear is that we surveyed ceos and more than 150 countries around the world. a lot of the data is anonymized. we are asking them, do you think that for the same work, women

and men are being paid equally? there isn't a single country in the world, even in the nordic economies, where that gap has been closed. this is a major issue. radical transparency around salaries would certainly help. there's more than that. there's also a larger structural issue which is way to quality across the entire labor force. women tend to be concentrated in lower paid sectors. men tend to be more concentrated in higher paid sectors. that's where government has to step in. they have to put in corrective efforts. manus: indeed. show me the receipts. inc. you very much. thank you for your time this morning. coming up, bloomberg programming is this. you don't want to miss it. we talk about the future of work.

what is that? annmarie: what does it look like? that's the question that anna edwards will be diving into. we have special coverage on work shifting come of the future of employment, work from home, changing trends. that's from 8:30 a.m. tomorrow morning. you don't want to miss it. this is bloomberg. ♪

>> london wants to redefine itself post-brexit. the city is squaring up against hong kong and new york for the hottest ipos. >> london is very much focused on being the most attractive listing destination it could possibly be. >> we are known around the world as the best place to invest into business. >> london's ipo market is seeking a good start to 2021 after years of being stopped for the biggest listings. to get back in the game, the u.k. is giving founders greater

control by letting them issue different classes of shares to retain more voting power. it's been a draw in the past. in 2014, alibaba stated new york because it wanted a dual listing. hong kong change the r and is now raking in the big tech names. london also wants to cash in on the founder's favorite trend. >> spac's. >> it's changing the rules so blank check company will have to suspend their shares when they find a target. does the revamp mean looser standards? the lse says no. >> there are ways to make these changes law maintaining very high standards of corporate governance. annmarie: dani burger looking at the proposed new rule for london ipos. an hour away from the start of european equity trading. let's take a look at the events we are watching today. glib root its trading debut. there listing a set to raise 1.5

billion pounds for the food delivery company. 10:00 london, we get the latest euro area cpi data. headline inflation is likely to resume its upward trajectory in march. manus: keep an eye on how much of an input comes from china. we will be watching for the latest eia crude oil inventory report. opec-plus downgrading their demand outlook. the fed fl or exemption expires today. the relief measure that analyzed banks to hold extra bonds and deposits without setting aside the extra capital. let's see how that plays out. we are tracking the archegos crisis. s&p downgraded the credit -- rating for credit suisse to negative. the losses. let's get to candace acharya's, great to have you with us.

archegos is at the top of the agenda. what is the latest on the hit to credit suisse? candace: the news here keeps getting worse for credit suisse. late tuesday, the s&p downgraded its outlook on all credit suisse entities to negative from stable. setting its exposure to that faced -- family office you just mentioned. this isn't going to come as a huge surprise for most people. bloomberg reported overnight that the swiss bank could see its loss run into the billions. the bank itself has warned that it faces significant losses. you need to remember that all of this, credit suisse was already battling explosion -- exposure to the loss of a firm. the ratings agency, the quality of risk management, the group risk appetite, and the adequacy of the risk return profile.

annmarie: certainly a lot of questions being asked. bloomberg's managing editor for asia, thank you so much for joining us. when you look at credit suisse, you covered banks for years, do they have a handle on risk? that's the big question. credit suisse less hurt then goldman because they weren't able to get out quick. you want to be out there first. manus: absolutely. it's about deconstructing a leverage book. if you do that in liquid names, as i have done, it is gruesome. it is every man and woman for themselves. stock is down 16% at one juncture. buybacks, dividends, the overall banking landscape. annmarie: certainly. broadly, markets have been pretty muted. looking forward to tonight, bidens infrastructure plan. the financial world is attached to the archegos story.

coming up 9:00 london time, don't miss it -- and expose of interview with christine lagarde. anna and mark are up next for the european open. this was daybreak europe and this is bloomberg. ♪

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that means better results in less time. and there are over 20 exercises to choose from. get gym results at home. no expensive machines, no expensive memberships. go to aerotrainer.com to get yours now. ♪ anna: good morning. welcome to the european open. i'm anna edwards. mark cudmore joins me in singapore. the cash trade is less than an hour away. here are your top headlines. the follow continues. s&p downgrades its outlook for credit suisse over its exposure to the archegos situation. the total for banks could reach $10 billion. don't