manus: good morning from bloomberg's middle east headquarters in dubai with me manus cranny. it is daybreak europe. janet yellen throws stocks a loop with comments on rate rises. the nasdaq 100 has its worst day since march, but u.s. futures higher this morning. from fashion to renewable energy, it is a big results day,

we speak to the bus. -- to the boss. india needs wide-ranging action on the coronavirus. this, as a new research paints a devastating picture. more on the indian story in just a moment. the central bank governor continues to speak. she should have known better because she used to be the personification of central bank. four words that spooked the market, they are -- rise and a modest increase. janet yellen rolled it back but not before the tech sector took a wobble. futures barely moved. there was tech angst, but the rates market took it in stride. what this lady has done as treasury secretary is to open the bottle and let the genie on

taper and rate hikes to fly. that is the essence in the equity market, but there is somewhat of a stoicism in the rates market. she did walk it back. we were joined a few weeks ago, and it was said the cycle will be short and shocking, but 100 basis points, small in a relative sense. let me show you the markets. the tech rout took place, the biggest drop in the nasdaq since march. we reassessed the situation. nasdaq is managing to rally back, up 0.25%. there was a response in the rates market.

we have had language from the central bank governor of india. the rupee strengthened but they are b.i. is to give an additional support to key sectors. it is about being dexterous. let's check in, he is still speaking. this is about india flattening the infection curve and deploying all resources and calibrating the sequence swiftly. being swift afoot. crude is trading higher as well. we see the inventories drop. but the are b.i. governor -- rbi governor has been making unscheduled comments this morning, and he has reassessed the situation. vendors will make fresh loans for small firms. we will bring you more on that.

pressure on the prime minister of india mounts as the morning goes on. that is the context around india . we will return to that in a moment. martin malone, chief economic advisor, aphabook is my guest. let's reset to janet yellen. it was a faux pas. she played her mea culpa, but will we talk more about tapering than rate hikes more aggressively than we have done? martin: good morning. i think basically the important -- if we look at the entirety of janet yellen speech -- she made it at a conference held by "the atlantic." it is available online and goes on for 20 minutes. it is a wide-ranging speech. seven minutes in she mentioned that the economy could do very well. fiscal policy will be extremely

active. and gave a positive outlook. in that, maybe interest rates would move higher, which is our main call in 2021, bearish bonds. that is music to our ears. the actual speech in itself and its entirety is more balanced than those four or five words that shook markets yesterday. i think that is why she walked that back. they want to draw a line between the treasury looking out for the dollar and fiscal policy, and the fed looking after the interest rate structure, and not jumping into each other's area. manus: music to your ears, you are bearish on bonds. i would say what she has done is giving a moment to people whispering. i reflect on what adam posen said, it will be a 100 basis points, but not a paul volcker era.

if the debate becomes more live, why december 2023, futures not spike higher? this is what we were told a few weeks ago. do you think it will be 100 basis points when it comes? martin: i think the rates market repricing. a very clearly you need word that janet yellen is not treading into policy, it really is the fed and they have independence with policy. the fed policy is new because they will accept inflation levels way above 2%. coming wise, that is what we will see in april-june. inflation levels may spike as much is 3%, but most people are trying to push that it is transitory. inflation lester was 0%. -- it will go back toward low 2%

levels later this year and the fed will remain positive on easing. even on fiscal policy, janet yellen was more balanced than trillions and trillions of deficit spending. it is more nuanced, and that is why i would recommend people look at the entirety of the 20 minutes rather than a few seconds. manus: you are right. i chose four words and i know there are many more. we try to hone in on what is the message. part of the discussion i had yesterday about a multiyear multi-geography commodity spike, i put the two year breakevens up. are they beginning to get nervous about inflation?

2.8% on the breakevens. how do you trade this reflation narrative? do i buy breakevens? do i short bonds? what is the most judicious way to play your trade? martin: i think it is, keep it simple. if we see bond market rallies like we have seen already, we started the year around 1%, and we got up to 1.7 on 10 year bonds, we are now back to 1.60 levels, and we could see the next few month levels way above 2%. that is because of the economic traction. the economic traction in the most important issue about whether fed policy is working, biden policy, janet policy is jobs-jobs-jobs. we need to see continuation of almost one million jobs per month. that is coming from the hospitality of the airlines

sectors which were beaten up last year, and we are seeing a rapid recovery in those sectors. manus: martin, i'm going to shift gears because we have had these breaking headlines from india, from the central bank governor. the rupee and it shall he rallied, but the central bank governor, adding liquidity, 500 billion in rupee. we are in the eye of a vortex in india. one million deaths by the middle of summer. the indian modelers safe potentially 400,000 people could lose their lives by the middle of june. you have a different interpretation because you're looking at vaccine rollouts. your analysis of india in the covid vortex? martin: first of all, it is terrible. it is not as bad as people make out. the death rate in india per year

is 10 million. the very good news for india is that only 5% of the population is over 65. half the population is less than 25. they should see minimal impact. we have had already 160 million vaccines pushed out in india. we will see a rapid acceleration. that is what the governor did today, ordered banks to create and lend money to the health care sector, especially ones producing the vaccines. this will be a aggressive accelerator process. it is only around 35% of the population that need to be vaccinated out of 1.4 billion. you're talking around 400 million, and they have done around half that. i think the situation will look better within two months. manus: thank you very much.

martin malone, chief economic advisor, aphabook. first word news, let's get to hong kong. >> in the u.s., president biden wants 70% of u.s. adults to release eve at least 1 -- to receive at least one dose of the vaccine by july 4. in the u.k. the government is setting up new labs to speed up vaccines to tackle new variants of covid-19. predictions for the pandemic in india, the coronavirus death toll could double in the coming weeks. a team at the india institute of science is predicting 400,000 deaths by june 11. that is if current trends continue. a modified the university of washington forecasts one million deaths by the end of july.

a roadblock in the return to normal -- the fight over 60% of the population being fully vaccinated. they are closing schools, canceling activities, and a ban on mixing. it comes after a surge in cases on the island nation. global news, 24 hours a day, on air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. manus: thank you very much. coming up, keep it simple, short the bonds. janet yellen spooked the street. more through the hour. but this is the line from janet yellen. >> it may need be interest rates will have to rise somewhat to make sure [indiscernible] even though the additional spending is relatively small

relative to the size of the economy. it could cause modest increases in interest rates to get that reallocation. let me be clear, it is not something i am predicting or recommending. if anybody appreciates, i think that person is me. i noted the fed can be counted on to do whatever is necessary to achieve their mandate objectives.

>> we are here. that balance started to slip the other direction. it is one of 10 or 12 different initiatives that will launch

into every corner of the state. we think we need to be in a proactive mindset to meet our objective. manus: nobody offered me a beer. that was the new jersey governor on the state's efforts to get people vaccinated. joe biden wants 70% coverage of all adults by the middle of summer. the u.k. campaign had been successful but how would that translate in the local elections? they will take lace tomorrow, seen as a referendum on boris johnson's handling of the pandemic. key battlegrounds, in a northern town, a former labor bang stronghold -- labour stronghold could cause an upset. with me is our bloomberg government and politics editor. how significant is this a vote

going to be? >> it is on depending on where you go and who you are. they will potentially determine if they have a referendum after the previous one in 2014. that could completely reshape the future of the country. manus: the headline on our top u.k. story is scottish independence could be worse than brexit in terms of markets and assets. i'm talking about the renovation of the prime minister's flat, who paid for the cushions and the wallpaper? this is about scandal around that. does the country care about cash for cushions? >> we have been looking at the

polling evidence, and the polls have narrowed a bit. the question really is will it have enough of an impacting key areas. if the tories can take an area that never votes for conservatives for up parliamentary seat, that will be a big sign that that area is focusing on brexit and the future, after the pandemic. johnson's success will be a boost for him. equally bad for the new labour leader. we will find out if the lead scandal as it is known in the u.k. has cut through, but for now i think the focus will be on politicians making their case in these key areas.

manus: absolutely. thank you. martin malone is my guest post this morning, chief economic advisor, aphabook. some people are saying a scottish referendum and departure by scotland could be worse than brexit and cause u.k. assets to seriously implode. how do you assess scottish referendum risk? should i be hedging now? martin: not at all. that is a decision that can only be met by the central government in london, and they will not allow another referendum to take place in scotland. the most important thing about the election tomorrow in scotland is how many votes or seats will come through for the snp, who have basically controlled scotland and had the majority. the latest polling as of

yesterday is they will only get 42%, and around 59 mp's back to the parliament. we will not know the results until friday, but the shock may be that the scottish national party actually comes up short. there are two reasons for this. one is the vaccine rollouts. two are the fiscal largess. the former snp head has a new party, and could steal votes from the snp. it is a complex vote, and the shock may be that the snp fails to get a majority. we will know friday morning. manus: they could code join -- co-join if they do not get the mandate. do you expect sterling to rally

higher? euro sterling rather than cable? martin: i think the euro is basically sequencing. we spent a lot of time in january and february about how bad europe was getting the vaccine ready. the vaccine is getting a dramatic acceleration across the eu, 27 countries. we see european bonds yields rising much faster than what we have seen in the u.s. over the last four weeks we are seeing the currency solid. it is a relative basis we are saying that european situation, and recovery funds will kick in in july. the european union must get tourism back because it contributes 23% of the european economy on gdp terms. draghi said they will not wait

for a european passport. it is an italian passport, and we were prefer people to travel to italy to boost tourism from the middle of may, a few weeks time. that is an aggressive push to get tourism and tourist season in the summer pushed ahead. manus: then you look at other countries about to go into a rolling curtailment again on the back of the reopening. thank you for being with us this morning, martin malone, chief economic advisor, aphabook. coming up, diplomacy in focus, g-7 ministers continue their meeting in london. what will be the future relationship with the group and china? we discuss. this is bloomberg. ♪

manus: it is "bloomberg daybreak: europe" with me manus cranny in dubai. the g7 is considering a u.s. proposal to counter what is seen as china's economic coercion. the u.s. wants a mechanism that would involve the g7 and other key stakeholders to ensure a court nader response to china's moves. -- ensure a coordinated response to china's moves. what can we expect on the second day of the meeting. this is an emboldened u.s. that is corralling everybody together. that is my first take on it. >> that is right, it is the u.s. working with the u.k. to bring other countries in line.

it was very much dominated by china. there will be further discussion on that today. at the same time there will be a broader conversation around what is seen as global priorities including climate change and the pandemic. china has set very ambitious goals on carbon emissions. today could be more about the ways countries can cooperate with china rather than compete with it. we have seen the biden administration talk about that. he put the relationship with china into compartments, working against them on some things like human rights, and working with them on others. the difficulty is keeping everything separate. manus: what are the conclusions? what conclusions will we end up with? >> there will be the closing press conference, and the big questions, what makes it into the document? it does not mention china by

name. you expect it would. this is not a g20 with china involved to ensure it does not get mentioned, but it has countries to go here that talk about the global order. the big question is thus specific mechanism included the comedic a coordinating on china, and how do those mechanisms work? how specific are they? is it about expanding the g7 to include the other countries? either way, whatever happens, you can expect to hear from beijing once the communique comes out. manus: thank you for joining me this morning, our executive editor with the latest on the g7. coming up, barclays making a fresh climate proposal.

activist shareholders want the bank to stop financing fossil fuels in line with the paris agreement. staying in the green narrative, siemens has its forecast after it has seen a shrink in f (announcer) do you want to reduce stress? shed pounds? do you want to flatten your stomach? do all that and more in just 10 minutes a day with aerotrainer, the total body fitness solution that uses its revolutionary ergonomic design to help you to maintain comfortable, correct form. that means better results in less time. you can do an uncomfortable, old-fashioned crunch or an aerotrainer super crunch. turn regular planks into turbo planks without getting down on the floor. and there are over 20 exercises to choose from. incredible for improving flexibility and perfect for enhancing yoga and pilates. and safe for all fitness levels. get gym results at home

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manus: good morning from dubai for "bloomberg daybreak: europe." janet yellen throws stocks a loop with her comments. u.s. futures set higher this morning.

from fashion to renewable energy, the results rolled in and we speak to the bosses in the next couple of minutes. and saying india needs with footed and wide-ranging action on the coronavirus. it is taking and in human toll. this is what the former -- and the fed had to say in her role, janet yellen said that rights may need to rise somewhat. stop taking the words in splendid isolation. she said she did not intend the take away to be that we needed higher rates. but these four words rocked the stock market in terms of tech and tech kind of wobbled. i would say that the rates

market decide to show a phlegmatic response, in other words, still presuming, the tech companies got anxious. the treasury secretary, her comments and subsequent clarification that came back to back on this difficult day for ms. yellen. let's take a listen. >> if we see that interest rates will have to rise somewhat to make sure the market doesn't overheat, even though additional spending is relatively small relative to the size of the economy, so it could cause some very modest increases in interest rates to get that reallocation. that me be clear, this is not something i'm predicting or recommending. if anybody appreciates the

independence of the fed, i think that person is me. and i know that the fed can be counted on to do whatever is necessary to achieve their dual mandate and objectives. manus: janet yellen there with both sides of yesterday's debate. how did it play out in the markets? the nasdaq had its worst day since march. hedge funds art dumping stock at the fastest rate on record. equity volatility, hardly a blowout. von volatility on the others disquiet unchanged. wells fargo said have a cathartic debate on terms of when the first rate hike micon. could it be that the taper and hiking come sooner than expected?

the rupee trying to find its feet as the central bank governor reassure the market that there is a backstop with policy and that there will be special lending mechanisms in the indian market. the oil market up .8%, despite the covert crisis in india. you're seeing inventories in the united states almost 7.7 million barrels. united states same to have -- you need 70% to get vaccinated to be done by july 4. so that's the latest in the oil market. siemens energy missed on some of their estimates for the second quarter. they've trimmed the full year forecast. the latest sign that the world is going green. the energy ceo, good morning, good to see you. this is a little bit of a wake-up call from the world.

is it going to get harder and harder for you in terms of your order book on the fossil fuel side of the business? good morning. christian: good morning, thanks for having me. i think it demonstrates exactly the path we are on, solid performance on the fossil side. we see a very strong order book on the renewables. this is exactly along the lines of what we said last year on how we are transforming ourselves. we believe we will need some fossil fuels and gas over a transitional period of time. at the same time we are really banking on leading the energy transformation with new technology, with combining renewables and storage, so all in all, i have to say along the

lines of what we expected, and i'm satisfied in particular with our second quarter. manus: some of the analysts described her guidance when we caught up in the last quarter as conservatism. are you still in a conservative guidance mode? christian: we reviewed our revenue guide and i think we -- i would call it conservative in a period of time when we see volatility driven by covid. we all are in recovery from it and we all expect it's going to get better for the second half of the year. at the same time, we're seeing -- were cautious seeing local development in parts of the world. i would still call it conservative and where fairy confident were achieving the targets we communicated before. manus: some guidance to the

market on margins, do you see them being squeezed? is it going to get more difficult for the rest of 2021? christian: from what i can judge today, i really have to say we've kept the margin guidance we gave up before, where fully on track with everything were doing and in this regard i feel comfortable to keep the guidance where we had originally, and we obviously, our costs and competitive improvement programs are running as expected. all in all i had to say i'm relatively confident for 2021. in this regard, i expect also over the next quarter that we will keep our full year annual guidance as communicated before. manus: trying to pass price

rises on across various industries, what can you tell me about price pressures and the consequential price rises that you are able to effect? christian: you have to see that we're little different and what were doing. you may have seen that we had some headwinds where we see increasing material prices. it's too early to

we are suited to pass it on, especially on the conventional side. manus: where are the tightest input pressures for you? christian: one thing is the pressure coming from the raw material side, coming from the materials we saw ourselves as we see increases on the commodities. at the same time, if you look on the onshore prices, this quarter where little bit under pressure. on the conventional side, i see it stabilizing on a low level. we came down over the past quarter anyway, but i see stabilizing where we are at the moment and we expect stabilization on a relatively low price level. manus: it's difficult in your world to let people work from home with a huge swath of the company, what can you tell me about your ambitions to deliver a more flexible schedule and to decrease your footprint in terms of office space around the world? christian: first of all, have to sam super proud of what the team

did, more or less from day one for the ones who could work from home, we've been ready to work from home. we still have the vast majority working from home and it works relatively good. we're doing a concept called better together, which is a flexible working concept which will have an impact on her office space. we had a big survey in our organization on how did they want to work and we are about to implement more flexible workspaces. one forward i myself will not have an office anymore. i will work in a flexible workspace and we will not need an office space for everybody in the organization, combining it with working from home. at the same time, we always have to remind ourselves, we have to make sure we get people out to the sites, doing commissioning

of construction sites and so forth. we have people at the workshops who really have to stay healthy and save, and this is obviously the balance we keep. we do a lot of testing ourselves and we are ready to vaccinate people here in germany now where the company doctors are allowed

onwards. but as a company we will definitely have a different working style going forward. manus: thank you very much for being with me this morning with your flexible guidance on working. to barclays, which aims to convince the bank to dial back on fossil fuels. the plan would bring it into line with the paris climate agreement. barclays has its own net zero framework and that has historically resisted letting go of polluting assets. good morning to you. how much pressure is this putting on barclays and other financial institutions? >> it is pretty significant and i think it significant that it's getting to the level where these resolutions are being brought up with agm's. in order to have about, you need to pass the threshold of shareholders. it gives the activist groups face time with bank

decision-makers. financial institutions are becoming a bigger focus of the question. it's not just shell that is facing these resolutions, which also has a vote on a climate resolution but we have both barclays and hsbc this month, barclays is today, facing these boats by shareholders. manus: how likely are these resolutions -- the question is, these are huge companies in terms of lending. the question we should begin to ask the ceos, are you finding it difficult if you're not green enough, are you paying penalty rates if you are not green enough? >> that's an interesting side to the debate. barclays, as you said, is the biggest european fossil fuel financer. disentangling that is difficult. i think banks want to do this on their own terms because it is

complicated, but let's not sugarcoat it. just this week and berkshire hathaway voted down a climate resolution and that was just about disclosure. it's different about winding down their financing activity to fossil fuel makers, and often shareholders will vote in line with that the company wants. last year when our place first faced a resolution, it only got 21% of the vote. the hsbc boat is a resolution they bought up themselves, so it is likely that that one will pass. manus: thanks very much, dani burger on the latest challenges for the agm. and this year's expo 2020 is live on october 1. we will speak to the -- one ceo

on the numbers for q1. this is bloomberg. ♪

manus: it is "bloomberg daybreak: europe." the results are rolling in across the bloomberg, the chemicals company planning for further investment, the energy transition moving away from coal. we have the ceo, friend of the show with us. you are the personification of recovery and ravaging. talk me through how the business is doing, how are things?

are you reopening and reemerging stronger? >> thank you very much for having me. resilience, recovery, and rebound. our q1 performance reflects many of the markets we serve. we had volume growth in q1 on haircare, home and personal care. there has been accelerated growth from quarter one to quarter four. we do have some challenge areas, like oil and gas, which are still challenged and will

recover later, by 2023-2025. but we've seen improvements. manus: where would you say the biggest price bottlenecks are in your business? this is a theme i am pursuing with ceos. i'm told by some that the inflation i'm seeing is social inflation, it will be short and transitory. do you believe that? >> we didn't see much of the cost headwinds in quarter one that we expected to see headwinds starting in quarter two and we already began our price concessions. our business -- businesses are looking for pricing solutions

and we do it very well. we are expecting to offset as much as possible the increase in the coming quarters. manus: can you give me a sense of the kind of percentage price rises that you will push through? >> anywhere between 1% to 5%. also the scarcity of logistics combined, we have -- we're pushing prices like we always do. manus: i know you have raised the soda as business and what

the market wants to know is have you any active buyers, are you talking to anybody in particular, are you close to a deal? what valuation to the market do you attribute to the soda ash business? >> we just started in march, the car about -- carveout, and it will last anywhere from 12-18 months. we just announced the first coal exit in germany away from coal, scrap waste would will be using for producing electricity and will make it a global benchmark.

manus: do you think the carbon footprint in that business is ultimately a serious headwind valuation? >> you have obviously like in the chemical industry, some businesses are more heavily -- that's why we have a roadmap on the exit for coal which is key. we started 160 years ago with soda ash primarily. it's a business case, by putting the right effort, collaborating with the authorities in germany, creating an echo system, to exit

coal and show that it's good for the planet and also good for profits. we have other plans or so -- which we shared with you in q1. manus: you'll have to come back and speak to us soon. always good to have you with us with refreshing updates on the global economy. a quick snapshot, oil has been ravaged by janet yellen when she struck terror into the heart of all people who were long tech equity saying modest increases may have to be had in interest rates. that compounded the selling of stocks at the fastest pace on record. stocks get a reprieve this morning. the banks index hit a record yesterday. wells fargo said the debate is live on rate hikes and tapering.

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manus: live shots of london, a great deal of focus because the s&p, can they grab enough seats to warrant calling for a referendum? don't be so sure the s&p will carry the day. if anything, if that failed to get a majority in parliament, they may well see the pound rally because that referendum, according to our story, could be worse if there is a scottish independence, he could be worse than brexit.

i leave you with the live shot of the united kingdom and london. a beautiful day. get out and vote. this is bloomberg. ♪ wanna help kids get their homework done?

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anna: good morning. mark cudmore joins us. here are your top headlines. the nasdaq 100 has its worst day since march but u.s. futures point higher.