look at me. it works, 100%. (announcer) find out more at aerotrainer.com. that's aerotrainer.com. ♪ manus: good morning from bloomberg's middle east headquarters. i'm manus cranny. annmarie hordern in u.k. hq. stocks look for direction after crucial inflation data and 30 year treasury auction today. china's export growth misses the forecast. this as janet yellen is said to decline labeling beijing a

currency manipulator. a leadership battle with angela merkel. the conservative bloc adds to uncertainty ahead of september's elections. very good morning to the show. there was no incident of crisis in the bond market. the auction went, but annmarie hordern, there is one chart we all coalesced around. it is not cpi. it is when will be hit an exit from the covid and james bullard set the agenda. what is the magic number? good morning. annmarie: good morning. it is to get to 75% of americans vaccinated. you said at the end of your program, around your birthday. it is not exactly august 8, it is august 9 where the data shows we will get to 75% inoculations in the u.s. and that is when bullard is saying we can start talking about tapering then

because that means the economy is on a better trajectory. manus: absolutely. he was very wary when he was talking about resetting the agenda. he would leave that to the generals at the top. it is about cpi data today. pti data, you are seeing the cost push come through. on the cpi, i think it takes a bond market to show some stoicism. if the bond market can see through this bike today without collapsing, then i think annmarie, we have a very different construct to this bond market. annmarie: it will be difficult today because we get that spike, but how much of it is base effect? that will be for months on to figure out. bullard also talked about cpi and says he expects to see more inflation in 2021 then recent years. bullard spoke to kathleen hays about how he sees the u.s. economic recovery unfolding.

>> i think that will be more inflation in 2021 than we have seen in recent years. i would like some of that to flow through to inflation expectations so that inflation expectations become better centered at 2%. we missed the inflation target to the low side really most of the time since 2012. so we want to read and center -- re-center and placed expectations at 2%. manus: we also heard from the former new york fed president phil dudley for his take on the potential impact of the fed policy in the coming months. >> we're running an experiment, basically. >> well said. >> we will see how it goes. this experience has more uncertainty than usual because it's never had a recovery from a pandemic like this, going back more than 100 years. anyone that tells you they will know how the economy will perform is not being truly honest with you.

annmarie: william dudley there. let's take a look at where we trade this morning. we are flat on the futures. s&p 500 hovering around the all-time high. there has been a little bit of push-pull when you look across fluctuations in chinese assets. up more than .3%. yuan is softer relatively right now. this comes after china's miss for march exports and trade surplus data. 30 year yield, as you mentioned, we had strong 10 year option. the world and how it looks for the 30's, that has decent demand. before that comes, it will be about the cpi data. 1 p.m. london time. manus: to assess that, all the analysts around the market will be checking it. monica, great to have you with annmarie and myself, setting the

agenda on the inflation discussion. said we were trapped in a psychosis, the bond market is trapped. what are they healthy, acceptable level of inflation that we should embrace? good morning. >> good morning. i think at this point, it is hard to gauge what is healthy. what we are going to see is multiple factors that are going to drive up inflation. we've got the stimulus checks and the boost from that. we've got the reopening of the economy. the low base effect. we've got confidence building in the economy. what's really going to be critical for markets and for policymakers is to gauge how much of this is actually due to fundamentals and is going to be a long-running theme versus the transitory. that will be the critical point. and i think it is going to take really months and probably

closer to the end of the year before we get a much clearer picture on this. annmarie: how do you begin to decipher inflation with today's print given the base effect? monica: absolutely. i think the month on month increases are going to be very important. there's going to be some noise around the data due to the supply chain issues that we see. of course, we have more of the economy building up. i think as we go forward, it is going to be the monthly print that's going to be important. and has to be seen in conjunction with the labor market as well. if you've got significant tightening of the labor market, a lot of the jobs that were lost due to covid, back is the economy open, as consumer spending leads to stronger investment activity -- all of these will have to be taken in conjunction, as well as the print of inflation as well.

manus: i was quite surprised by james bullard's discussion with kathleen hays yesterday. he gave us a number. he give us what i would say is perhaps a new agenda. 75% to 80% coverage of vaccine rollout in the united states of america -- attainable by the middle of august if everything goes well. i know there's a big distance to go. that shocked me we could even begin to begin to talk about the beginning of the taper in the u.s. -- excuse me with all the puns from powell -- that is a very early read to begin talk abouaper. do you think we need to reset our minds? monica: i think the discussion about tapering will become more of a factor by the end of this year. i think the last few days has been very interesting from a fed communication point of view. last week, we had clarida

saying if it inflation remained elevated towards the end of the year, we have to reset how we look at tapering over the weekend. we had powell talk about the inflection point and now these comments about the vaccination program. critical words that the fed has said. it's substantial, further progress in economic recovery. that is really recovery from the covid impact. of course, inoculations are going to be important for that because that shows economic activity is returning more to a pre-covid normal. so, we are seeing all of these moves. it is going to be inflation, the economy opening. it is going to be vaccinations, the labor market. i think the communication is changing from very accommodative continuing to let startup about tapering towards the end of the year -- let's start talk

about tapering towards the end of the year and start a tapering process which will eventually in 2023 lead to the discussion of interest rates being moved up again. annmarie: one thing bullard also said to kathleen was when she pressed him on way stay so accommodative is the fact he pointed to the rest of the world. i look at what's happening in canada, they are surpassing the u.s. in terms of covid cases in canada. how reliant is the rest of the world for the u.s. -- how much of the fed is looking at the particular data point in terms of that recovery? monica: that is also a very interesting point, because historically, the fed would look domestically and over the last few years, they are looking internationally. the u.s. and china are really going to be the forefront of the recovery, with either the stimulus and the u.s. and the fact china has controlled its covid cases and exporter of the

world as well. we are seeing waves in different parts of the world. india, etc. while certain areas are managing the pandemic well, others are still very much in the midst of it as well. it is very much going to be a balancing act. the clip you had of dudley before -- this is something we have not faced before and we have to respond as we go along on that front. of course, u.s. starts raising rates or starts talking about it, the impact on emerging market rates at a point where debt levels have got up for governments. that is going to be a very important balancing act as we come out of this pandemic. annmarie: certainly is. monica malik stays with manus and myself this morning. let's get an update with the first word news. laura: president biden has told more than a dozen ceos he has

bypassed gun support for funding to worldwide shipping support. biden read the firm's letter from lawmakers supporting his $50 billion proposal for chip manufacturing and research. the u.k. has hit its target of offering a first vaccine to all over 50's ahead of schedule. it is a boost. prime minister boris johnson plans to a lot more of the economy. everyone over 50 and the vulnerable and health care workers have been offered a shot. in germany, chancellor angela merkel's secession leads to be -- looks to be in disarray. who should be candidate for the top job. the csu has backed its chairman, snubbing the larger sister party which is supporting its leader. the joint candidate almost always comes from the cdu. global news 24 hours a day on

air and a bloombergquint take powered by more than 2700 journalists and analysts. this is bloomberg. manus: thank you very much. coming up on the show, china's imports jumped 38%. that is in dollar terms. from a year ago. exports gained less than expected. we have the details live from hong kong. ♪

>> this growth we are expecting in the second half of the year will be very strong. >> i think there will be more inflation in 2021. >> headline inflation will likely move above 2%. >> we know there's going to be a price surge this year. >> seeing a rebound but we have a long way to go. >> we want to re-center in place expectations at 2%.

>> we expect the baseline for most of that to be transitory and inflation to return later this year at around 2%. >> we want inflation to average 2% over time. when we get that, that is when we will raise interest rates. manus: some of the stoic voices of the fed that we have heard from recently on bloomberg. to the key data from china this morning. on the export side, rose less than expected in march even if global demand continued to strengthen. chinese imports, they surged more than 38%. later this week, we will get the gdp and bloomberg economics predicts that will score at 20.1% on the first quarter. let's get to our chief asia economics correspondent now. the slower than expected export number, are you worried by that? >> well, there are a few wrinkles in this trade data

today. the export figure was lower than economists expected and slower than the previous month, but still pretty robust growth. 30% in dollar terms. the thing about these numbers, we saw a cooling and demand -- in demand for work from home products. perhaps china's big trade or export boom may be plateauing at best, if not cooled off as that demand starts to ease off, at least people have stocked up on that kind of equipment. there is still a base effect going on as well which is flattering the numbers. we say there's good export growth. wto talk about global trade at 30%. that's got to be positive for china. under the bonnet, some economists are saying wait a minute, we want to keep an eye on it over the next coming months. annmarie: what about the surge

in imports? what is that telling us? enda: again, you would say that's a strong indicator. it is all about rebalancing, getting the consumer motoring again. the importance was skewed by higher commodity prices. factory producers we speak to are complaining a lot about prices for the goods they have to buy. everything from plastic resin to the price of containers, semiconductors that we all know about. that is skewing the commodity story. the consumer is recover in china and that is adding to the import story. i think the economy expects zero going forward. that would bode well for imports even of the manufacturing side of things starts to slow down. manus: w hat are the tech -- what are the takeaways for the global outlook from this data? you said let's get under the

hood, so what did you find? enda: i think it still has to be said that china's recovery remains broadly on track. it's impressive when you compare to where we were a year ago, as the pandemic was spreading. china is still benefiting from its global trade boom, no doubt about it. i mentioned the wto figure. they are forecasting a trade growth of 8%. that will help the trading nations. there will also being a dividend coming through from the big stimulus checks in the u.s. that will flow through two manufacturing economies in asia. this plenty of growth left in the tank. as i mentioned, it is one to watch to see how the manager factory -- manufacturing store in china plateaus and whether or not we see this idea of the world is buying less of the work from home technology and if that starts to become a recurring

theme weighing on demand on made in china goods. right now, it is a strong story. china's manufacturing stories on track, the recovery is on track. we have to look through the base effect and see what kind of signals we are getting. whether we will go to a plateauing recovery or something cooler than that. annmarie: certainly. edna curran, our chief asia economics correspondent in hong kong. monica malik is still with us. monica, let's continue the conversation with china. the picture edna's painting is that overall, the story is positive but are you worried about this miss? is this a harbinger for potentially more wobbles to come? monica: as we come out of the pandemic and we start recovering , we are going to see changes in consumption patterns globally and that is going to impact

china's export outlook. your colleague already mentioned the loss of momentum with the work at home. china has done very well with helping stop spread the covid. that will continue but it will plateau. a critical point with the pandemic is we had truck savings. a lot of the service sectors were shut down so a lot of the consumption went towards physical goods. as economies open up, as we have progress with the vaccination programs, we are going to see some of that spending returning back towards consumption of services as well. i think that's going to be a headwind as we go forward but the data is still very solid. there is the question of the commodity prices, how much

further they are going to rise at the moment. it looks like those are going to plateau. i think china's domestic demand is also picking up and that is a positive sign. yes, you had higher commodity prices boost the value terms but you are seeing some slowing and more modest the last few months. still healthy recovery and consumer demand in china. manus: it is interesting. one of the lead commodity stories is fast money dumping their commodity bets so the super cycle rhetoric meets the reality. bullish wagers on 20 commodities. maybe we are heading into the plateaus of. on the -- plateau zone. on the policy side for china. that has fallen to the high single digits. the balancing act is to avoid a hard landing with a goldilocks

level of stimulus. what are the risks to monetary policy tightening in china 2021? monica: again, it is that balancing act and we have seen some gradual tightening in certain parts of credit growth. overall, we are seeing it still comfortable areas of businesses an extension are still having access to the credit. it is going to be that gradual normalization, removal of the stimulus that we saw. these are going to be really global theme, as discussed earlier. manus: yes. monica, thank you so much. monica malik, chief economist from abu dhabi central bank. coming up, new rules for wall street's hottest trend. we discussed the changes in

store for the spac boom. this is bloomberg. ♪

annmarie: good morning. daybreak europe here. the sec is cracking down on spac's. they are introducing new accounting rules. regulators changing their guidance for warrants and that is an issue for early investors, allowing them to buy shares at a specific price in the future. it is aimed to disrupt new filings and a red-hot market and dani burger is here to discuss. the impact of these changes, what is that going to have on this red-hot market? dani: it definitely sounds something that is wonky. you have to say it is a key way spac's raise money. it entices new investors because it increases the potential for returns they could see down the road. in these new accounting rules,

if they meet the criteria, some of these warrants cannot be recorded on balance sheets of companies as equity. instead, they are going to be liabilities. what that means if the price changes, these companies will have to keep track of that. and if the value of them changes enough, then companies are going to have to restate the financial report. you can imagine what a headache that will be for accountants, lawyers, anyone on these spac deals. it signals more scrutiny is coming from regulators. the sec has told accounting firms that until these warren rules are figured out, it is likely that will not approve anymore filings which means the pipeline of hundreds of spac's might be put on ice until these kinks are worked out. manus: 550 spac's expected to go public this year. i have no idea what the tax is

on warrants. i would be curious to know. dani, was the sec spooked into scrutiny of the spac's? dani: you would have to imagine. what you said. 550 -- three fourths of ipo's in the u.s. are spac's. it is not ipo's taking over the market. because of that, i think the sec needs to look at this. last week, they did signal they would treat spac's as they treat ipo's as well. they will not get any special treatment just because they are not the traditional ipo. manus: it all comes down to disclosure and whether you want to redraft the middle of disclosure. dani burger on spac mania. could it becoming to a temporary halt? the u.s. banks kickoff q1 earnings season. we discuss the numbers.

this is bloomberg. ♪

>> good morning from bloomberg's european orders -- headquarters. this is daybreak europe and this is what you need to know. stocks look for direction ahead of u.s. inflation data. china's export growth misses forecasts as janet yellen is said to decline labeling beijing a currency manipulator.

a leadership battle within angela merkel's conservative bloc as to uncertainty ahead of september's election. a lot coming out later today. we are going to get the 30 year auction. before that is the u.s. cpi number, 1:30 p.m. london time. we had a little more inkling of what the fed is thinking about in terms of tapering. it is about vaccines. manus: it is going to be very important to see how the bond market reacts to what has been guided to a reasonable spike in the cpi numbers. kenneth told us metal -- can it hold its metal rather than melt. the bullard bullet, 75% to 80% vaccination rollout will reset the agenda and begin talk about

tapering -- i put it to you, that is an accelerated timeline. it is my birthday so it is a perfect timeline. annmarie: it is your birthday. i learned this morning you are a leo, so that is good to know. as we continue our professional relationship. one thing that is interesting, something i know you are focused on, is the jackson hole symposium. that is the end of august. if we are at 70% inoculation by august 9, your birthday august 8, jackson hole at the end of august, is that going to be the moment for jay powell to come out? we are thinking about tapering at this moment. we are going to start talking about it. manus: the moments and august they start talking about the possibility of what we need for tapering. let's hear from the man himself.

james bullard expects to see more inflation in 2021, and of course, he spoke to bloomberg and kathleen hays. >> there will be more inflation in 2021 than what we have seen in recent years. i would like some of that to flow through to inflation expectations so inflation expectations become better centered at 2%. we have missed their inflation target to the low side really most of the time since 2012. we want to re-center inflation expectations. this is an ideal time to do that. annmarie: we caught up with bill dudley for his take on policy in the coming months. >> you are running an experiment. we are going to see how it goes. this experiment has more uncertainty than usual. we have never had a recovery from a pandemic like this.

going back more than 100 years. anybody who tells you they know how the economy is going to perform is not being truly honest with you. matt: -- manus: we are in one big experiment. e*trade survey says we are in a bubble. three quarters of retail investors say we are fully or somewhat in a bubble. jp morgan says there is another 10% left to the upside. we have a big bond auction. it went grand, it went fine. china down by 0.3% and dollar yuan -- janet yellen is holding back from committing to calling china a currency manipulator. a savvy move to take us off the boil. a little bit of a baby offramp

from the anxiousness between china and the united states. >> we will find out thursday when the fx report gets released, but also interesting because we hear the biden administration is nervous about if china starts to do a digital yuan. the other big story this week, we have to brace ourselves. first quarter earnings season. results are due from goldman, jp morgan, bank of america. joining us to discuss all of this is hannah gooch peters. very good morning to you. where exactly a year on from when we had those earnings calls and all executives said was we cannot forecast the future. we are definitely better off, but what is the main thing you're going to be looking at,

the main driver in this earning season? >> good morning. it is going to be interesting to see the follow-through, the effects of the pandemic on earnings and companies. those companies that have been beneficiaries of the pandemic, it has been very interesting the last year. what we have seen is following on from the big drawdowns, we saw covid beneficiaries, microsoft and so forth, zoom, big software companies, even staple companies, it is interesting. they did very well subsequent to market drawdowns. what we have seen toward the end of last year is a rotation in the market following from vaccine news. going forward, i think it is going to be very interesting because you are going to start to really see the pressure on companies such as airlines,

software companies for example. earnings have not been there, but prices have moved up on the back of expectations of a recovery that perhaps is not really the case yet. manus: good morning to you. welcome to the show. i like your notes. to the point. we look for great businesses with good valuations. great notes. you look for opportunity. a steeper yield curve. >> we don't actually invest in banks in our portfolio. we have historically stayed away. look at returns over the last 10

years, they have largely been technology driven. mostly in the u.s. as well. financials have underperformed. what we have seen this year is a real change. they have very much moved up this year. 30% dollar return, which is really interesting. it is a large part of the world equity index. we could see a relative drag on your portfolio. what i think will be more interesting for us is looking at a company like fiserv, an account processing and payment for example in the united states, and that benefits from the shift from cash to online transactions. much the way we would get exposure to a sector like that instead of investing in a bank. >> the other thing we have seen

do very well is small caps. that was based off of when we started to see the vaccine rollout plan come to fruition. now they are starting to falter. do we see repositioning between the big and the little guys in the united states? >> it is interesting. a lot of the market last year traveled on hope. now what we will st his companies with strong fundamentals, very obvious cash flows, strong barriers to entry, especially strong balance sheets , you really saw big drawdowns in companies including the banks, energy companies, that did not have the strong balance sheets to support them last year. there is that lack of support. you will see companies that don't have that tangibility, if you like, start to come under pressure. you certainly saw that in mid february when we had technology

companies in particular, ones that were perhaps -- a hard run up recent, substantial fallbacks. very much admired by investors the past six months. perhaps the support is not there anymore. manus: around this conversation, i was surprised -- i would have thought naively that curve would have revalued. you say there are still opportunities in health care. >> something perhaps different is a company, they have the biggest digital platform for health care insurance. what that means is they can really target customers such as

ones that are underinsured who do not have health insurance. they have a plan coming out later this year. it is not just about being able to target a bigger customer base. having a digital platform means they are able to offer cost efficiency and more efficiencies in the way they operate. this has been perhaps a little miss by the market. it is trading on price-earnings ratio. trading at a big discount. it is one of our biggest positions. it is something a bit different on the health care side. it has done really well of recent. manus: hannah, stay with us. hannah gooch-peters.

let's get your first word news. >> nvidia plans to make its first microprocessors. taking the fight to intel. new chips are based on technology from a u.k. firm it is trying to buy from softbank. nvidia says it will be available from the beginning of 2023. japan plans to release treated radioactive water from the fukushima nuclear power plant. the u.s. says the move is in line with global standards, but japan's neighbors are critical, with south korea expressing grave concerns. president biden is calling for calm in minnesota after a police officer shot and killed a 22-year-old -- a 20-year-old black man during a traffic stop. it sparked a new round of

violent protests over excessive use of police force as derek chauvin, a white police officer charged in laster's killing of george floyd, stands trial in minneapolis. 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. this is bloomberg. annmarie: blackrock's ceo says he is constructive. take a listen. >> constructive today as it was two years ago and five years ago. i think the innovation we are seeing from capitalism is transforming how we live, how we work, how we are educated, how we apply medicines. that does not mean we do not have problems.

economies are not fully balanced. sectors of the economy are not functioning because of covid. but i believe strongly that markets are in a very good position to continue to grow. we have a record amount of monetary policy, record amount of fiscal stimulus. i have never seen more cash on the sidelines. we are going to live longer post-covid so the liability of retirement is getting longer there is a need for long-term investing. all the foundations for long-term equity holdings is strong. that does not mean there is not inflation risk. that does not mean i am not worried about our deficits. you cannot deny, the market is

evolving and changing. i would say just -- interest rates need to go higher and i do believe they will, but i don't think interest rates are going to go high enough to discuss -- disrupt equity valuations. the real opportunity, if we can tackle climate change, the investment opportunities are going to be enormous. i look at this is one of the great investment opportunities of our lifetimes. my conversation with some ceos, they believe for their companies it is, too. you know, i spend so little time focusing on the tick tock of the markets, the up-and-down, but long-term investing is strong. it tells me markets are going to

beout two more years. manus: focusing on the tick tock . chief executive officer at blackrock speaking exclusively to bloomberg. coming up, the showdown to succeed angela merkel continues, splitting the german conservative bloc. we get the latest from berlin.

>> this is an issue that has broad support in the united states. both sides of the aisle are strongly supportive of what we are proposing.

where i think we can get things done for the american people. annmarie: president biden reassuring ceos at a semiconductor summit his administration has bipartisan support to secure funds that will address the global supply shortage. now to germany, where the showdown over angela merkel's succession continues. joining us now for more, can you explain where this division comes from? >> the cdu and the csu are distinct parties. when running for the national election, they run is a bloc. the cdu is the party for 15 of germany's 16 states. they usually are the one that steals the chancellor candidate

for both parties. this time around, the options for the cdu is faring poorly in the polls. one of the most popular politicians in germany is the csu leader. when yesterday the cdu chose to back their own guy, the bavarians turned around and said they would be willing to support instead. manus: interesting nailbiting finish in terms of who is going to take that position. let's get back to hannah gooch-peters. we are curious to get your positioning for europe.

there is the mother of all recoveries coming for europe. get ready for the miners, banks, the autos, and the oil producers. this is about the upgrades to earnings outpacing the downgrades by the most on record. are you ahead of the curve on this? >> we have been by and large increasing our european equity weight in our portfolios. what you have seen the past 10 years is a real outperformance by the u.s.. valuations moved up with that. what you have seen is an increase in our european weight. what we are doing is a company like sap, the leading enterprise resource planning software company, they are performing a transition to cloud. that will increase customer retention rates. you saw the selloff last march. we got a fantastic opportunity to invest. there is a subsequent price

rebound at which point in time are overly kicked in. what we saw happening last year is a really good example of what happens with the pandemic. toward the end of last year, they reset their medium-term growth profit warning. we saw a dramatic selloff which also gave an opportunity to reenter that position as a more attractive valuation level. if this company can complete the transition, we could see a two to three times revenue over the near-term. it is a long-term story for us. that aligns very well with our investors and our client base. manus: we will keep an eye on s.a.p.. those pesky risk models. hannah gooch-peters. thank you very much for joining us this morning. coming up, it is anticipated,

the cpi that is. . we will have that data for you. beautiful day at home in london. this is bloomberg. ♪

manus: it is "daybreak europe." we have not talked much about oil this morning. we are in the sweet spot. opec will release their monthly oil report this afternoon, including the demand forecast and the production estimates. that is the much-anticipated u.s. march cpi. that hits 1:30 u.k. time. it is expected to show heavy acceleration from last year. 2.5% on the eft. annmarie: it is going to be give

-- interesting to give analysis. lvmh reports its q1 sales later in the day with estimates adjusting the fastest rise in sales in six years driven by demand in the u.s., and china, which are opening their economies. jennifer granholm and jenny mccarthy will speak at tonight's summit. you don't want to miss that. bloomberg briggs together -- brings together voices in technology and government. we are over an hour away from the start of european equities trading. futures a little bit softer this morning. fluctuations in china. all of this is about the trade surplus. manus: we are going to leave you with a live shot of london. it is absolutely glorious. let's see how the reopening takes hold. the pubs, the bars, the restaurants.

that is the pantry at london hq. a resplendent city of london coming back to life, getting back to work, returning to some level of normalcy. ♪

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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 bloomberg markets "the european open." the cash trade is less than an hour away. here are your top headlines. stocks look for direction. will cpi data be the catalyst for more record highs?