mhines, no expensive memberships. get off the floor with aerotrainer. go to aerotrainer.com to get yours now. manus: good morning from bloomberg headquarters in dubai. it's "bloomberg daybreak: europe." with your agenda. >> you see the economy opening, you can see ridership on airplanes going up. it shows what that can look like. manus: fed chair jay powell says

a taper will come before rate rise. market attention with the bank of america up on the slate next today. coinbase shares whipsaw on the cryptocurrency exchanges debut as bitcoin evolves from record highs. and the biden administration is said to be readying sanctions against russia over solar wind hack and election -- alleged election meddling. i know we have to stick to the powell script, the producer would be asphyxiating if we didn't. there's no doubt about it that jay powell in july of last year said he wasn't even thinking about raising rates, and here we are reeked track -- re-crafting the narrative, setting the conditions for anything to do with a paper. annmarie: basically he was saying before they think about

raising interest rates, he said that she said it will be well before we start the tapering conversation. it kind of puts a little more clarity into that timeline we've been discussing because we heard earlier this week from james bullard talking about that 75% vaccination, signaling maybe that's a time to start talking about tapering. clearly next year into next year is when we will see the fed pull back on that. manus: he did go on to say that the preconditions were unlikely to be met before 2022, let alone this year. so he's really trying to re-craft the narrative that we have a super easy fed. this tweet brought it to me, real rates and term premium, suggesting that taper is already in the price. we can debate that. annmarie: let's hear what he had to say exactly yesterday, jay powell talking to david rubenstein about the fact that the fed will scale back before

raising interest rates. >> we're going into a period of faster growth and job creation. the main risk is we will have another spike in cases perhaps in one of the virus strains over time and in the longer run. the u.s. federal budget is on an unsustainable path, meaning that the debt is growing meaningfully faster than the economy. it's a different thing to say that the current level of debt is unsustainable. it is not. the current level of debt is sustainable and there's no question of our ability to service an issue that debt. most members of the committee did not see raising interest rates until 2024, but that isn't something we vote on or act on as a group. it really is just our own assessment. annmarie: fed chair jerome powell their speaking, there will be a blackout on friday because we do have the upcoming

fomc meeting toward the end of april. one of the last few moments we will hear from jay powell. manus: what are we going to talk about? annmarie: when he stops talking, it will be bitcoin, which is up this morning 1%. we had that high yesterday and we will talk about the crypto mania. futures this morning in the green, the s&p 500 eased yesterday from a peak. the bank really wasn't enough given that tech way down the stock. chinese equity, concerns on tightening liquidity, let's discuss all this with ed smith, head of asset allocation. let's start with the fed, what did you make of what he had to say about bond tapering happening well before they talk about raising interest rates? ed: good morning, great to be

back on daybreak. that's a great question. we don't expect rate rises to come before late 2023. tapering is now well before 12-18 months before that. that's not what the market expects, a rate rise coming we think earlier in 2023. the fed has a credibility problem at the moment. the market doesn't believe in its average -- average inflation targeting mandate. market expectations are effectively following the old fed model. with think the fed will continue to talk down the market, 10 year yields make a little higher as growth continues to recover, but ordinarily longer-term yields have a positive correlation with equities.

so we're pretty sanguine about that, it short-term real rates we are really concentrating on. even as far out as five years. five your real rates are lower today than the bar at the start of the year. so we think equity markets should taper -- should take it in stride. manus: so equity market should take it in stride. let's pursue the rate narrative at the moment. we caught up with steven major and said look, the taper is already in the term premium and in the real yields. despite the debate about whether inflation is sticky and enduring, let's have a look at third-year breakeven and to your breakeven. that has gone steeply inverted, saying that the market believes a spike for inflation will spike, role, and drop. do you agree? ed: we are telling our investors to brace themselves. we will have some nasty inflation points in the spring.

consumer prices could get up to 3.5% year on year over may. what we don't expect it to turning into runaway inflation. as you say, for all this talk about runaway inflation, there longer-term and brief -- doesn't support that. we think inflation will spike and then fade away. it will take two or three years before global gdp's of nasser passes the pre-covid trend and we have that wall of cash that was amassed last year and some of that will fuel spending, but one splurge doesn't necessarily translate into higher inflation. you've also got to consider who's been saving with that

narrative. wealthier households may not have that much need to draw down. think there's a bigger case for that wall of cash fueling more asset priced inflation. annmarie: could we dig a little bit deeper into what you think in terms of a nasty inflation print this spring, but not runaway inflation? everyone talks about transitory, but what does that mean? is it three months? are you starting to worry if it gets longer than that? ed: yes, we think the peak will come in may. looking at changes in prices, some of those supply chains coming through. a bit of a perfect storm of proximate causes. but the underlying structural causes of inflation we don't think are there. were not going to go back to the average of the last five years

because there was missing inflation there. that was the problem for the central bankers. we think inflation will stay around 2% or maybe a little above for the foreseeable, but we do expect it to stay from may toward that level. if it does stay around 3%, for whatever reason, we will start to get nervous, and that is one of the big risks to markets this year. manus: there's a lot of different moving parts, the banks are the core feature of the reporting season this week. we are waiting for taiwan semiconductor as well, that will be the chip sector. but the banks, the wall street crushes is what i've written down. jamie dimon saw long growth dropping, and also said people are paying off their loans, and

they don't want that. when you look at these results on the banking side, what did you take away as you read the narrative? ed: i think there's a difference between what's happening on wall street and what's happening on main street. some of the high quality names on wall street are continuing to do very well just as they have done for quite a few years now. we've had a balance across the board in banks, -- a bounce across the board. we still think there is actually some structural impediments to just having a generic habitation to banks. we do think more regulation is coming down the pipeline. if interest rates are going to state low for longer, than regulators have got to do more to ensure the interest rates create bubbles and that will

hurt some of the lower quality names. we are sort of on the same page and that we think the biggest rise in bond yields is behind us. think a gradual increase up to 2% on the 10 year treasury over the next year could benefit banks in general, but the big period of outperformance is the hind us. manus: goldman sachs earned more in one quarter than they did in any quarter in the previous decade. traders earned $7.58 billion, up 50%. let's leave it there and see what the bonuses reflect. our guest host stays with us. here's the first word news. >> sources said the u.s. is set

to impose sanctions on russia for the alleged involvement in solar wind pack and efforts to disrupt the u.s. election. a move could be announced as soon as today. sanctions on a dozen people and roughly 20 entities. the european union is still exporting more vaccines than it's giving to its own population, including 40 million doses shipped to japan and 15 million to the u.k., according to the commissioner, the block has now given around 100 million shots. the e.u. is still working toward its goal of vaccinating 70% of adults by the end of the summer. >> the vaccination certificate should be ready and the final proposal by june. citizen should feel they have a level of predictability that we can travel safely. >> 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. this is bloomberg. annmarie: just ahead on the program, the crypto debut, the biggest cryptocurrency exchange joining the nasdaq. coinbase shares in the session 14% below the opening price. details next. this is bloomberg.

>> what people call cryptocurrencies are really vehicles for speculation. no one is using them for payments, for example, like the dollar. it's a little bit like gold. >> expect tremendous volatility. is going to be unstable in terms of investors and analyst understanding what coinbase actually is. >> most of the people who are

most deeply invested in this new crypto economy are really long term thinkers about what's going to be possible. i think this is going to be a really interesting one for decades to come. >> is clearly successful direct lifting. a lot of investors view this as a watershed for crypto. there is a tremendous amount of enthusiasm. annmarie: all the reactions from the mega listing on the nasdaq. it set off a frenzy in demand for all things crypto. in the end, coinbase shares ended the session 14% below the opening price. that still leaves the company worth about $86 billion on a fully diluted asis. tracy, a really big moment for the crypto world. does this debut just give the

whole ecosystem some credence? >> it's definitely being cast that way by certain proponents. people are thinking about it as the cherry on top of what has been an excellent 12 months for crypto land, are the feather in its cap, choose whatever idiom you like. a big driver of the momentum has been the idea of crypto becoming increasingly embraced by wall street and traditional financial and payment architecture. for instance, we saw things like paypal allowing its customers to buy, sell, and hold crypto in their individual accounts for the first time. now we have the direct listing of coinbase at a valuation of, and one point come as much as 100 billion dollars. compare that back to 2018, that was the year when coinbase was valued in a private funding round at just eight going

dollars. also the year that jamie dimon famously called bitcoin freud -- a fraud. it kind of tells you how far we have come. manus: we have, barry long way. -- we have come a very long way. some say it drop by 14% on the trading day, but it's just about trying to find a level and understand, they've got to lean into the theory of bitcoin, but do you think it's a big shakeup in day one of trading or just finding the line, so to speak? looks like we have lost tracy for the moment. ed smith is with us. kathy would was buying coinbase on day one. i'm even thinking about putting

in, this is how we know it could be the top. if i'm buying bitcoin, it's all over. how do you look at it? ed: well, we are not luddites, we do expect cryptocurrency to become an increasingly large part of the payment landscape. were talking central bank issued currency, not necessarily crypto. for now i think bitcoin will continue to participate in that run, but it will be very volatile. coinbase at the moment is affecting lower plays on the value of these coins. it seems that's how it's being valued. but we don't think regulators will allow bitcoin to become such a large part of the payment

landscape, that it captures that monetary premium of which the most thoughtful investors rest. we used to have private unregulated money in the u.k.. that was banned in 1844 because of financial stability issues. central banks and governments want to maintain their monopoly on the payment landscape. we think that will prevent bitcoin from being used to widely. annmarie: volatile is certainly fair. i thought the top was the end of february when my sister call me and said i bought mom some bitcoin for her birthday. this morning i was reading over in canada, you can now buy and etf to short bitcoin. as that growth in the market? do you think the naysayers have already lost? ed: this is a very popular

investment. we've been asked a ton of questions about bitcoin. the financial services industry does what it does best and innovates to give investors all sorts of access. being able to short it, maybe that will lower some of the volatility at the margins. we don't expect bitcoin to completely go away. just don't think it's going to become this rival to fiat money that some people claim it will be. manus: it's a rip more of a story. for public disclosure, i have no -- here we go. do i want to own and exchange, a

currency, or piece of blockchain? what is the smart way forward in crypto? ed: we think the blockchain is here to stay. that can have all sorts of uses. we are seeing it used in collectibles, non-fungible tokens for the art world is going crazy about. if you can get investments that capture the various different blockchain protocols, that can be a really good investment. that doesn't just rest on bitcoin going to many trillions of dollars market cap. it doesn't have to do that for the blockchain to become a marketable and profitable platform for which payment

companies can leverage off annmarie:. thank you so much for that, ed smith, joining us this morning. just ahead, the biden administration is said to be readying sanctions against russia over the solarwinds hack an alleged election meddling. that story is next. this is bloomberg. ♪

annmarie: good morning, this is "bloomberg daybreak: europe." the biden administration is said to be readying sanctions against russian individuals and entities in retaliation for alleged misconduct, including the solar wind hacked an election meddling. what do you think is so interesting about this? a lot of it was expected, correct? >> i think a lot of it was

expected. you have some things that are sort of standard for a response. about a dozen individuals and government officials, roughly 20 entities. one of the things i'm interested in is the biden administration may seek sanctions -- that's an interesting market angle to this rather than sanctioning individuals and entities. this response was telegraph, biden told putin he was going to do it, now he's going to do it. manus: what does it mean for bilateral relations going forward? >> i think it's a good question. what i noticed that joe biden that same conversation said to vladimir putin that, i would

like to have a potential summit meeting with you in the future. so it suggests to me that the u.s. is not looking to break things off with russia entirely. they see a path forward. the u.s. and russia actually have a lot they are copper -- cooperating on from the space program on down. there is a lot of stuff here to move forward on. the fact that both of those things were mentioned in the same conversation at the same time tells me that one may not impede the other. manus: derek, thank you very much. china, u.s., russia and the united states of america, in a line coming through saying these debt sanctions will hurt the u.s.. these are the tail risks coming home to roost. geopolitics.

what have you got? annmarie: the e.u. health commissioner saying the block is still working toward its goal to vaccinate 70% of adults by the end of the summer. our exclusive interview coming up shortly. this is bloomberg. ♪

annmarie: good morning, it's 6:30 a.m. in the city of london. i'm annmarie hordern, with annmarie -- with manus cranny into by. >> you see the economy opening, people going back to restaurants. the march jobs report we recently got shows with that can look like annmarie:.

fed chair jay powell tells david rubenstein a taper will come well before any interest rate rise. bank of america is next up today. coinbase share whipsaw in the crypto exchange debut as bitcoin falls from record highs. the biden administration is set to be readying sanctions against russia over the solarwinds hack an alleged elections meddling. manus, good morning. before the blackout period begins on friday, a last dose of what jay powell is thinking and really the headline is just about what's going to happen first. clearly the bond taper. he said is going to be well before the time they even consider raising interest rates. so a little more clarity on the fed's timeline. manus: i think what he wants to do is shift the dial, from saying when you get the vaccination rate at 75% to be

the summer. i think he's trying to take the narrative back. i think he wants to reset the agenda. there's a lot of risks out there and we need to keep that in mind. the preconditions are likely to be met before 2022 for a rate hike. annmarie: we have discussed a number of times this week the jackson hole meeting at the end of august will give us a lot of clarity on where jay powell stinking is. today will get retail sales from the united states, there will be a lot more data. let's listen to what jay powell had to say to david rubenstein about the bad likely scaling back its bond purchase before raising interest rates. >> were going into a period of faster growth and higher job creation. the risk is another spike in cases perhaps in one of the virus strains over time and in the longer run. the u.s. federal budget is on a sustainable path, meaning simply

that the debt is growing meaningfully faster than the economy. it's different to say that the current level of debt is sustainable, it is not. the current level of debt is sustainable and there's no question of our ability to service an issue to that debt. most members of the community. c raising interest rates until 2024. that isn't something we vote on our act on as a group. it really is just our own assessment. manus: it's one of those moments on tv when nobody knew when to jump in. let's talk about taiwan semiconductor. we have some numbers to get through. 139 point $7 billion is what they earned. that means the margins were lower than estimated.

they came in at 52.4, a little bit lighter. net profit up 19% on the year. the gross margins, 52.4 versus 54% quarter on quarter. annmarie: also looking at some of the commentary from our team, the commitment to paying dividends will put the company on the hook for more than $110 billion in spending over the next three years. critically important also what is going on from a geopolitical standpoint. biden recently had the entire summit about the chip sector. tmc looking to build a massive factory in the united states. at the same time a biden delegation is in taiwan right now. the semiconductor market is getting tight. these results coming at a critical time.

better than expected net income coming out of tmc. manus: let's put some context around these numbers. the biden camp, 23 senators, 42 house members. he had a roundtable in the white house talking about how to build up american chip capacity. $50 million will be employed in that attempt to deliver a more robust response by the u.s. organization from asia and the chinese. intel will spend money on building two new foundries in the united states of america. we will keep an eye on those numbers as we go through the morning. let's have a quick flash of what's going on with the korean be markets and bond markets. were still well below 1.65%.

steven major would say the tantrum is well priced. oil is lower even know americans are driving 1% more than they were at the beginning of april 2020. it's all about this, i love this story. i don't know about the stock because i'm not that well knowledge is an analyst, but it's blistering. the exchange on which you exchanger cryptocurrency isn't utterly dependent on bitcoin. let's continue the conversation about jay powell. he joined david rubenstein on a platform at the economic club. let's get to michelle and see

what she thought of jay powell and the narrative. good morning, michelle. michelle: good morning, manus. i like the way you put it earlier that he tried to take back the narrative on the timeline for interest rates. the key highlight being that well before phrase. something consistent with that guidance this year but not something the committee had put to a hard vote yet. beyond that preconditions they're waiting on three things to raise rate, recovery in the labor markets to be effectively complete, inflation reaching 2% sustainably and that inflation is on track to run moderately above 2% for some time. he noted most members are pegging the timeline for raising rates.

as many fed chairs have worn, don't focus too much on the estimates because they will be outcome based instead of just focusing on the forecasts and the rest of the forecast that looks so rosy right now. we do have to be a little bit patient, and we heard from the vice chair echoing the sentiment as well. annmarie: i find that every time we hear from jay powell, he is kind of getting annoyed about the obsession of the market and financial journalists place on the dot plot. what do we know about when and how the fed will scale back? how they do it is critical. michelle: he did hint a little about that in the interview. currently buying bonds at about 120 billion a month. the minutes of the march meeting released last week said they will probably some kind of

substantial further progress made unemployment and inflation which is their benchmark for scaling back purchases. the owl noted that when purchase go to zero, the balance sheet is constant. he flagged that late in the last cycle, balance bond started to run out. he had not decided if they would do that or not this cycle. that remains to be seen. he said it would be unlikely that fed would sell bonds into the market. to put it all into perspective, you can see the surge from the start of the crisis and the balance sheet. the fed is buying up bonds at an annual pace of 1.4 trillion. they have almost doubled the balance sheet from then to now. there's a reason why powell is addressing the asset purchases and what it means to them.

will now be approaching the fed's blackout period on friday night so we will have a few more fed speakers to color the guidance with. probably the last we've heard from powell for the -- for a couple of weeks now. manus: in terms of the bond market, there has been a stoicism in the bond market this week. no blowout, no radical reaction to the cpi jobs number. we are doing quite well with the headline numbers. the bond market, and i've said it again, steven major said it, has already priced in a taper. michelle: part of that might be that there's a widespread view that investors on both side are feeling the inflation were seen in the second quarter, a lot of it is noise right now.

will have to be patient to see how much of the surge in inflation we were seeing a few weeks back is sustainable and something to be feared rather than something to be patient about. for now, powell has a bit of room to make his case. the layout that they're not going to be raising interest rates anytime soon and the tapering of asset purchases is some ways off. there is some calm in that view, but if things start to run hotter than expected and not in, then we will be in for some turbulent times. annmarie: that's what we're waiting for, whether it will run hot, or how hot, i guess. let's get a recap of the first word news. >> japan is joining the u.s. and urging china to accelerates its effort to reduce greenhouse gas emissions.

the u.s. envoy is visiting china to discuss raising global climate emissions. >> we're calling on china to move ahead of its pledge and to pick up emissions. we must have one voice to encourage china. >> a disgraced investor, bernie madoff has died at the age of 82. his home since july 2009 has been a federal prison in north carolina, where he was serving a 150 year term. many of his victims are still waiting on their share of the money he conned them out of more than a decade later. 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. this is bloomberg. manus: thank you very much, laura wright in london. the latest on vaccines.

the european house commissioner said the bbc is still working, the block is still working toward the goal of vaccinating 70% of adults by the end of summer. >> this will bring the amount to 250 million doses in the second quarter. we're moving quickly with our vaccination strategy and we aim that we will continue to have vaccinations picking up at >> >> speed across europe. i'm curious to know whether this contract with pfizer, is that a response to johnson & johnson? is that something you were working on? >> i would say it's part of our general vaccination strategy to have the largest amount of vaccine for european citizens as quickly as possible.

in terms of johnson & johnson, as you know, the company decided to haul deliveries in the e.u.. for us, safety of vaccines has always been a cornerstone of our vaccine strategy. we follow a science-based approach, so we are waiting to see how this develops. >> something that caught my eye, talking about technology. it is an acknowledgment you favor over others? >> i think we need to focus on technologies that have proven well. these technologies are an example of this. looking to the future, we need to be prepared in case we need vaccine boosters, looking at variance. so we would be looking at these kind of technologies as we move

forward. >> the european health commissioner speaking with maria today. first day in office, and the ceo is already facing a shareholder vote on his 7.5 million euro pay package. will bring you our interview with the wells fargo cfo. all that, coming up next. this is bloomberg. ♪

>> the team i have built over the last few years will gain from his experience. >> that's what santander wanted to get hold of when he offered the ceo job back in 2018. >> he's very good at managing across cultures. >> so he quit ubs, leaving for a

competitor also meant leaving nearly $60 million in pay on the table and switzerland. when that number hit the headlines, improved a little rich for santander and they dropped him as ceo. he is now suing sent and are for one hundred $33 million. some ubs compensation is still not being discussed, though that banks chairman has made his position pretty clear. manus: there you go, not a man to let go.

he credits the ceo job which starts today. a beautiful package there, staying with the banks, wells fargo jumped the most in almost two months after the profit stored -- sword sevenfold, giving scandal weary investors. romaine bostick spoke to the group cfo. let's take a listen. >> it's a good thing for the overall economy and the country. they have more money than they did pre-pandemic. it's impacting the short run long balances. you're seeing prepayment levels in the credit card business that are high. are seeing less need to borrow money on the consumer side but also the corporate side. as the economy starts to gain momentum you start to see a

little more normality in life. >> the wells fargo cmo speaking about the health of the u.s. consumer. three down, more to come. beating estimates thing to a boom in investment banking. next up, bank of america and citi before the u.s. open today. joining me to discuss is dani burger. what caught my attention was a credits we sent analysts who said about goldman, wow. jp morgan shares drop yesterday. what is that all about? >> there were big numbers. part of the reason shares fell, there are two schools of thought i've heard from analyst i've spoke to. the market is weird and fickle. expectations were really high.

it wasn't surprising, i talked about it yesterday more people are depositing money on banks and paying off their loans and not taking them -- not taking out new ones. the government stimulus is working. when it comes to goldman, that doesn't matter. their investment bank absolutely just demolishing expectations. let's hear from goldman sachs. he spoke about this on the call yesterday. >> the supportive environment we operated during the quarter. we develop the best performance of global markets in a decade, driven by solid client activity across our platform and reinforced by last week's market share gains.

we continue to deploy our resources to support clients amid an evolving, dynamic market backdrop. manus: hearing from bank of america and city today. >> the bar is set extremely high when it comes to trading numbers. here we are, they were able to beat. also for bank of america, the consumer picture is somewhat concerning considering the slowing on growth and bank of america, a large exposure to the consumer. annmarie: also, one thing at least jp morgan said, or both warning about trading and currency which is important for city. we will see how that shakes up today and morgan stanley on friday. dani burger, thanks so much for joining us. later, an in-depth conversation with the bank of america ceo

brian moynihan, at 10:00 p.m. london time. you don't want to miss that conversation. more coming up next. stay with us. this is bloomberg. ♪

manus: it's "bloomberg daybreak: europe." a quick check on the agenda for the rest of the day. earnings season continues, as we've been saying bank of america up first, citigroup, what will they say about lending? goodness knows many will repay a little more debt. apparently the system is awash with cash. annmarie: u.s. treasury secretary janet yellen will deliver her semiannual foreign-exchange manipulator report. she plans to spare china from the label of currency manipulator's.

potentially more sanctions coming down the pipeline as soon as today. manus: saying it will be more injurious to the united states than us. we've not done a great deal of geopolitics as we reflect to the first one hundred days of the trump administration and the biden administration. it's all about foreign policy and terror risk from that. i quite like the idea of checking in on bitcoin because coin base has set the agenda. jay powell did his job, no explosion in the rate market. annmarie: it's been a snooze fest in the market. let's quickly in the day on the zeitgeist story in the market, what a whipsaw coinbase was.

what did our guest say earlier in the program, a lot of investors are asking about it, but at the moment it's hard to touch.

anna: the european open -- welcome to bloomberg markets "the european open." jay powell tells david rubenstein a taper will come before any rate rise. market attention stays with corporate results back in america.