♪ anna: good morning from sydney -- london. these are today's top stories. the fed warns overstressed while you asian's amid rising risk appetite. a good time for the dow to hit another record. attention turns to the job report. the biden administration looks to keep the pressure on beijing

by preserving limits on investment in chinese entities. we have more on that bloomberg scoop. the german chancellor pushing back on a vaccine waiver, setting up a potential clash with the biden administration. a warm welcome to the program. breaking news coming through from other parts of europe primarily. industrial giant giving us numbers and raising full-year guidance. raising their 2021 net income forecast to 5.7 billion. that's interesting given that the previous range for a full year was 5.5. now we are looking at 5.7 to 6.2. the bottom end of the range appears to be above the previous top end of the range, if you get my meaning. fairly bullish from siemens. industrial businesses giving us the numbers that they've managed to generate. just a touch shy of estimates or

broadly in line. estimate of 14.1. that's interesting to watch. a china lead recovery gains momentum. that has been the focus. the u.s. and china driving the recovery for the global economy. that will be part of the conversation when we hear from the ceo of siemens who will be joining the program a little bit later on. that interview will be here on daybreak europe at 6:30 a.m. london time. let's get straight to the markets picture and tell you what's happening through the session before we get to the big top stories and discuss them. let's have a look at asia. the session looking fairly robust. i'm a ci asia-pacific now closing out the week on the front foot, up by 0.5% or so.

a strong rally in the u.s.. that seemed to boost sentiment. the futures picture continues to look positive. we look ahead to the jobs report later on today. copper. that rally continues. still well above $10,000. all-time high begin taken out on the copper price. that demand boom and recovery story continues. we wait for that payrolls number. we are buying stocks through the asian session. future success -- suggest we will buy stocks through the u.s. session. the yield is weaker at 1.56%. we are not up at $70 a barrel. we've been pushing up against that level. wti, the second straight week of gains. that narrative outweighing the state of affairs and what that does to the global economy where

we see outbreaks continue. of course, i'm thinking of india and other areas that are still very much in the crosshairs of fighting the coronavirus. let's get to the assessment that we've had overnight of the u.s. economy. the federal reserve has warned over asset prices and its financial stability report. rising appetite for risk across a variety of markets is stressing valuations and creating phone abilities. neil brain already said, vulnerabilities associated with elevated risk appetite is rising and the combination of valuations with high levels of corporate indebtedness has the potential to amplify the effect of a repricing event. let's talk to sarah hewin. really good to speak to you this morning. asset prices. maybe the fed getting as close as it can to warning about puzzles -- bubbles in some things.

that was interesting. i wonder what your take is on the risks that were spelled out i the fed around certain asset prices looking fluffy. how does that tie into your real economy world? sarah: what the impact is on the corporate sector. for example, the rise in indebtedness. we are coming out of an extremely difficult situation where companies have incurred debt. also in an environment where it has been very conducive for companies building up debt, costs are low. the fed needs to warn about the rise in asset prices and potential bubbles while at the same time easy monetary conditions have contributed to that.

we are not expecting to see a tightening of policy anytime soon. it does raise the question about how the fed can calibrate policy as it removes policy accommodation when the economy is looking so much better. anna: we heard about a range of concerns. one of them was corporate debt levels. many companies have borrowed to get themselves through the crisis. how do you keep -- see concerns around that in the united states? sarah: it is certainly something worth keeping an eye on. we know when we see debt levels at this point, it has been something of a warning sign. at the same time, as long as borrowing costs remain low, stresses are unlikely to become systemically problematic. we may see some situations where

the return to normality doesn't really help a particular sector. that may be a problem for some corporate's more broadly. the demand that we see suggests that the post pandemic time is going to be supportive and that most companies will be able to finance the debt that they have incurred. importantly, we are unlikely to see a systemic risk here. anna: let me ask you about the jobs picture. that won't be a systemic risk. you have to go back to the second world war to see payrolls moving in the way that they have around the pandemic. let me ask you about the current situation that we are seeing in

payrolls. what are your expectations for this time? how quickly will the economy get back to something that looks like for employment? sarah: we are likely to see substantial job gains. we are looking for payrolls today. around one million. it would not be a surprise to see that pace of jobs growth over the coming months as the economy opens up. the question is how quickly we get back to full employment. the fed is talking about for limp limit. it's not just looking at the unemployment rate, back to the pre-pandemic levels. also what's happening to employment more broadly across the population. the population ratio is 1.1% for

the people them at level. we are away from that. if we were to see job gains at one million per month over the rest of the year, we would probably get there. most investors feel that the big rush in jobs creation is going to be over the coming months. we will see something of a slowdown so that we don't actually get back to that full employment level until late 2022 or early 2023. anna: late 22 or early 23. bloomberg economics talking about a job deficit relative to pre-pandemic levels. you referenced the employment to population ratio which we will look out for. there's going to be easier wins when it comes to returning people to the jobs market. opening up hospitality and retail, for example in many

places. there will be the harder yards as we get laid around through the crisis. i wonder if we will be thinking about structural changes to the economy and types of businesses that simply won't go back or scale the sectors that simply won't go back. how much are you thinking about that at standard chartered? sarah: yes. it's a big consideration. in the near term, we are probably going to see big jobs gains in leisure and hospitality. that's no surprise. trade, travel, transport. how quickly sectors like transport, air travel, how quickly we return to normal there is a big question. at the same time, other jobs have been created in logistics, warehousing. i think that those types of jobs are likely to be sustained. what's interesting at the moment

is that many employers are cautioning that they are finding it difficult to attract labor. they are facing labor shortages. i think we have to be careful about saying that the experience over the next few months is going to be an indicator how it will be a couple of years time. anna: thanks very much. she stays with us. we get further shots -- thoughts from her shortly. let's get a first word news update with annabelle droulers. annabelle: there are doubts that a patent waiver for covid-19 vaccines has enough support. the german chancellor has come out against the idea with a spokeswoman saying it would create severe complications for vaccine production. the wto will take up the debate. officials warn that talks could take months. japan is said to extend it state of emergency until the end of may. the measures covered tokyo and

other major cities. they have been expanded to include two more regions hit by rising case numbers. they will now include 40% of the country's population. it comes less than three months before tokyo is set to host the olympics. bloomberg sources tell us the u.k. plans to offer under 40's and alternative to the astrazeneca vaccine. that's due to concerns due to blood clots. the decision could be announced today and comes as officials prepare to open vaccinations to those under 40. global news 24 hours a day on air and at bloomberg quicktake, powered by 2700 journalists and analysts in 120 countries. this is bloomberg. anna: thanks very much. coming up, keeping the pressure on china. the bind administration is likely to proceed with the investment bank -- ban imposed by donald trump. we bring you more, next. this is bloomberg. ♪

♪ >> the chinese are eating our lunch. they are eating our lunch economically. they are investing hundreds of billions of dollars in research and development. they will only electric car market. they will own homes. we have to compete. anna: that was joe biden speaking in the louisiana about his american jobs plan and how that will help the u.s. to compete with china. staying with the u.s. china story, we have a bluebird scoop for you. bind administration is likely to preserve limits on u.s. investments in some chinese companies that were imposed under president donald trump. bloomberg sources say the talks on the banner still per luminary. wall street has been urging the team to rollback those restrictions. joining us now is bluebird she

facia economic correspondent and or corrina. what does this news signal for the u.s. china relations? >> good morning. i think it is something of a continuation of a theme. it's one of the hawkish policies brought in by the last administration under president trump. it's a kind of investment blacklist. they pushed the tensions from china and the u.s. into new territory. china is planning legal action in response. as you mentioned, it is popular -- is not popular with wall street either. there was confusion about which companies would be impacted. the finance sector will be looking for clarity on exactly which companies were impacted and what it means for them. more broadly, it's a signal that tensions with china over human

rights issues, over technology, over economic competition, there hasn't been any change since biden took office in january. it looks as though it is continuing the hawkish path. anna: these hawkish controls remain in place. you wonder for how long. that's a conversation for another day. there's a lot of data out of china. we've had china reporting strong trade numbers. what are the big takeaways from that? >> really strong trade numbers. exports growing over 30% in dollar terms from your earlier. imports also very high. over 40% in fact. it reflects a couple of things. it reflects very strong global demand for merchandise goods that are being made in china. that's reflecting the global economic rebound that we see going on around us. exports to the u.s. from china

last month made up around 60% of all chinese goods sold abroad. continuing to shake off the trade war there. on the import side, it points to robust chinese demands. a lot of it is being impacted by commodity prices. these are bumper trade figures for china. it does signal more of a global story than a china story. with so much central bank and government stimulus through the world economy, people are buying goods as companies reopen. that is giving china a big lift. anna: thanks very much for joining us. some of the politics and economics dominating the u.s. china conversation right now. let's get back to sarah hewin. on the china story, we heard our reporter talking about the strong trade numbers coming through.

berg economics talking about exports supporting growth often is him. -- optimism. do these data points add to your optimism about the chinese recovery story? sarah: absolutely. we are seeing very good data coming out of china. certainly on the exports side, on the trade side, it's encouraging. the worst of the pandemic is over for some large economies like the u.s. and europe. there will be a takeoff and exports related to the pandemic. electronic goods, computers, pandemic related medical equipment. what we are seeing is a surge in consumer related exports, reflecting the big stimulus in the u.s. and the recovery more broadly in the west.

for china, the domestic economy is in quarters. we are seeing encouraging signs there as well. i think it's important to remember for the economy as a whole, domestic services activity is something worth keeping an ion. anna: one -- how do you treat that? is that is meaningful as if it was driven by something else? i'm sticking about the price of crude oil. also, agricultural products, iron ore, metals. we talk about steel and copper daily as they touch new levels. what does that due to your thinking about china? sarah: it does have an impact on inflation pressures and costs. you're right.

there's a lot of import rising that we are seeing to do with the volume of imports. we are seeing an accelerated commodity prices. also, some shortages in general costs. all of these factors need to be taken into consideration. is not just the strong trade story. it's also a question of, are we seeing inflation pressures rising in china? how does that affect inflation elsewhere? anna: thanks very much. we will get her thoughts on europe shortly. we will pick up our conversation on europe. coming up, we will talk about the pharmaceutical injury. angela merkel is pressing back on the proposed ip waiver for vaccines. we have all the latest next. this is bloomberg. ♪

♪ >> it's really important to get the vaccine out there as quickly as possible. a major impediment is access to intellectual property. there's an urgency here. that's what the waiver is about. it's not changing the basic framework. there was always the right since the 80's. how to make it happen quickly? that's what the temporary ip waiver is all about. anna: clumpy a university professor of economics about the urgency over the proposed ip waiver. the german chancellor has a different view. she's opposing plans to waive vaccine producer ip rights. joe biden says it would help boost vaccines applied to

developing nations. the german government spokesperson said the plan could create severe complications for the industry. joining us now from brussels is maria tadeo. good morning. why are germany and france -- which direction are they pushing and? maria: yes. that's right. the two countries are now removing the ip is not going to solve the problem. it could be an impediment to innovation. the issue remains production. you need more production capabilities for the vaccine to be widely available. they argue that countries that are making the vaccine should be exporting a lot more. they argue with exports, more than 200 million doses. country like the u.k. and u.s. are nowhere near that number. yesterday, the chief medical officer for pfizer beyond tech says that the vaccine like the mrna vaccine from pfizer would take more than 5000 steps.

and needs the technology and also the know-how. she said that removing the ip could actually be detrimental and could lead to production chaos. you could argue the company has a vested interest. they say that if you remove the know-how that comes with production capabilities, that could be detrimental to making the vaccine in the appropriate way. anna: the wto is part of this conversation. the new leader caught up very much in the crosshairs here. this would end up going to the wto. we heard from the eu and the biden presidency. both of them want to talk about doing this. the wto not known for its speed in resolving these things. it would be involved because that's where the regulations sit at this point. what would be the plan with regard to the wto? maria: yes. any deal would have to be done in the context of the wto. i we could go, i did a panel with the head of the wto.

she insisted that removing the ip was a good idea. she repeated that a few times. she said there could be a middle way so that everyone is happy. there could be consensus around it. instead of fully removing the ip from the vaccine technology, you would go into a licensing agreement with other countries in which you give some of the technology but not all of it. even though that could be a way forward and it's a middle way, european officials think that any agreement at the wto does take time and that this is not something that can be done from one day to another. it would take time. anna: thanks very much. sarah hewin. i wanted to get your thoughts on the voting that's taking place in the u.k.. it's one the market is focused on. the market doesn't seem to necessarily be focused on this. i'm thinking about the votes in

the scottish parliament in particular. how are you thinking about the results which would emerge over the weekend? maria: -- sarah: yes. are we going to see another referendum? if we have the scottish national party getting a majority which is possible. or if we see independent supporting parties overall getting a majority. that's entirely likely. it does raise the prospect of a second independence referendum for scotland. if we go back to 2014, markets will really be taken by surprise by the strength of support for independence. we did see an impact on sterling. in the end, the result wasn't clear -- was a clear vote for remaining in the u.k.. this time around, much more in

the headlines. markets are perhaps less concerned. if we get an independence referendum being proposed by scotland, we don't think that will happen until later this year. it would likely be pushed back to westminster. it is likely to take some time. markets at the moment are sitting back and surveying this rather than being too concerned about what a potential outcome could be. anna: there were still a few dots between where we are now and what would take us to a referendum. it's unknown. how would number 10 respond? would this end up in the courts? thanks very much. thought it was important to bring in thoughts on that subject before we close. thank you very much for joining us. let's get back to the corporate news agenda. siemens has rated its net income forecast for the year by 700 million euros after strong

performance across the business and the sale of its unit. boosted earnings. we've been speaking to the ceo as the company upgrades its net income range from five to 5.5 billion euros. up to a much higher figure, 5.7. let's listen to the ceo. star guidance -- we increased our guidance. the net income we guide now for 5.7 billion dollars. this is coming from a strong momentum in the first half year. our q2 results are encouraging. growth across all business. we had a conversion in profitability. we also had a very strong petroleum management and execution. q2, we booked roughly 900

million gain. this gave us the confidence and also momentum from the market that we can increase our guidance. matt: we have heard so many carmakers but also other industrial companies talking about the chip shortage having an effect on their production. and also on results. is it not affecting siemens as strongly? >> so far we are running our business very resilient. we have excellent supply chain management. they are extremely close to our suppliers. i am not saying we don't run danger. so far we have managed very well. we also see clouds in the market. we are watching very closely.

we talk about now the smaller ones which are the drivers. so far we have to say we see no real impact which would cut our revenue and our deliveries to our customers. there is a reason why customers trust in us. they know siemens is a reliable partner. matt: what are the key verticals we should watch out for her in terms of problems that could arise with the chip shortage? >> you named it, automotive. these cars are loaded with electronics. at the same time they are fighting for these chips compared to others. i think this is the point we

have to look at. other than that it is really the impact which we see from the markets, many many markets are putting up now. we see this can hit anybody. matt: what is your take on the possibility of opening up ip for those vaccines so that everyone in the world can start to manufacture them? the biden administration seems to be behind that idea. the merkel administration seems against it. >> i do believe the most important element is getting the vaccination of people as fat as possible. and in all countries. looking to india i think you can understand they definitely need it. i mentioned to you the example of beyond tech.

-- biontech. we shortened their cycle time and we can do that for any company during what we have learned. we can support any manufacturer in the world. matt: you have 292,000 employees at least. that is the latest number i have seen. what kind of return to work can siemens employees expect? back in the office? hybrid work model? what would you like to see as the new work experience for employees? >> we announced the strategy already in august. we said it is possible for some jobs. for some it is not. we will give our opportunity --

our people the opportunity to have two or three days in the office and two or three days remote work. anna: really interesting conversation with the siemens ceo talking not just about the upgrades to earnings, but what the business can do to speed up setting up factories to produce vaccines to fight covid-19. really interesting conversation. let me get to breaking news across the bloomberg this morning. bmw one of those companies reporting numbers beating estimates. the q1 ebit coming above the estimate. they are reaffirming the outlook. some interesting commentary below the surface with regard to chip shortages. we were hearing about that from siemens and how they remain in a different part of the market. they say they are handling it fairly well. in terms of the bmw story, saying the rising raw material

prices could dampen earnings. they are also saying they are expecting their operational performance to continue to develop positively. the targets can be met with a slightly smaller workforce. interesting commentary coming through about raw materials in particular from bmw. let me get to other corporate news. we are keeping it german this part of the show. we get numbers through from adidas. they risk their sales forecast, raising the 2021 sales forecast. the operating profit well above estimates. the operating profits for first quarter, 704 million euros against the estimate of 579. they see sales growing in the high teens already in 2021. the high teens rate for a business like adidas, sportswear manufacturer, casual clothing of course. let's get a first word news update. here is annabelle droulers.

>> bloomberg sources telus president biden's likely to stick with the investment ban on certain chinese firms. banks and investors have been urging the administration to rollback restrictions. the so-called investment blacklist has targeted links to the chinese military including three of the country's biggest telco companies. increased regulations and a number of areas. the security exchange commission bosma his first appearance before congress since being sworn in. he pledged to look into cryptocurrencies and the derivatives. voting has finished in the first electoral test of prime minister boris johnson since the start of the pandemic. gathering ballots will take place in the coming days. the contests for parliament in scotland and wales, the mayor of

london, and local councils across england. the first result are likely to be from northeast england. global news -- 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. anna: now over to the bank of england which is slowing its emergency bond buying, signaling its on course to end crisis support for the u.k. economy later this year. . governor andrew bailey also said the bank of england would need to see some kind of negative shock before it would consider expanding qe next year. >> we have not changed the stock quantities we are doing this year. what would change is the pace at which we achieve that. but actually we have not changed the end date. we will ended around this year. back in november we were in the

midst of an upsurge in covid. we were concerned about financial markets. the performance of ensuring financial markets continue to be robust and performing. it made sense in terms of market efficiency to frontloaded. we think it makes sense to now move back to the actual target. >> you made that clear. given the way the markets initially reacted, what does it tell us about how much focus will be on tapering? >> i fully expect to be having discussions like this. it is reasonable for markets to ask the question. there is this question about fixed qe programs. anna: -- >> what are your expectations

for qe next year? >> no expectations for the moment at all. today the move was to say current policy is appropriate. >> but what trend are you expecting? if you look at your forecast, two rate hikes the next three years has inflation just that target. is the next move tightening? >> our forecasts don't validate the markets in that sense. we use the market profile to construct forecast used as an policy process. it is quite interesting, we also publish a constant rate forecast conditioned on constant rates. the difference in inflation terms at the terminal point of the forecast between the market path and the constant path is pretty small in inflation terms. just to reemphasize, it is a

convenience for us to use the market curve. it is helpful, but it does not determine policy emphasis. it is not mechanical. >> how do you manage market expectation? is that something you worry about getting where we are? >> obviously we think quite hard about how policy will be interpreted. we watch very carefully how markets to respond. at the end of the day, it is one input. it is by no means the only one. to reemphasize, we are not validating the market curve at this point. >> can you give us an indication of how you tighten? rates first or qe? >> the mpc adopted guidance back in early 2018 and said they would tighten -- they would

increase rates up to 1.5% before they considered reducing the stock of assets. what i would say is an awful lot has happened in the intervening period. the quantitative easing has her substantially obviously as opposed to covid -- it seems therefore appropriate to come back to that question and say does what's changed in the meantime cause us to adjust our view? anna: 6:42 in london. we look at the winners and losers at this earnings season as it draws a little closer to a close. the first quarter review is up next. ♪

>> china has proven it is willing to be anticompetitive, coercive, violate human rights, steal our technology, use it against us. the first thing you need to know is that we are taking it seriously and we are going to be as tough as we need to be. anna: the u.s. commerce secretary giving remarks on china and relations between the u.s. and china. hey big theme of our coverage. with the european results season mostly done, let's look at the winners and losers this quarter and the themes that dominate the market. joining us with an earnings wrap is tim craighead. what does the current scorecard

for the first quarter look like? where do we stand on beats versus misses? >> a few vital statistics to think about. first is we now have something on the order of three quarters of the market cap of the stoxx 600 having reported. about half have beat on sales and two thirds have beat on earnings, which importantly to us might be the biggest theme coming out of the reporting period. flat-ish sales generating 50% earnings growth, which compares to the earnings expectation coming into the quarter of about 25%. who is leading, its cyclicals. part of this is coming back. part of it is reflation and driving operating leverage.

anna: we did not see all companies who beat rewarded. i wonder if supply chains are the reasons. >> it is an interesting thing. i would rather be worried about this looking ahead than have it blindsided out of the blue. that is sort of the case. it is the biggest point of concern for the reflation and recovery theme. sales should recover in q2 and the second half. they could be cut short if you don't have supply of chips and steel. margins should rise significantly, but they can be short-circuited if your input costs jump too much. it is interesting point of reference. if you look at guidance coming through the first quarter, about half, a little more than half, are positive and raising guidance.

there have been 25% or so that have marked things down in part, large part, because of these issues, supply and costs. and you are right, those that have bumped up their guidance have been rewarded with excess returns on the day. those that have disappointed on this front have taken more, and even bigger hit. but it is still a minority. we are watching it closely. anna: as is so often the case. i know you have been thinking about plans president biden has for tax hikes. does that have an impact on the amount of share buybacks we see? what are the other impacts? what is your focus when it comes to the impact of these proposals? >> it is an interesting thing. it is probably the other big risk we are thinking about. as important as stimulus has

been for supporting the economy through the pandemic and it is critical for the recovery trajectory we end our economist expect, all of this has to be paid for. that creates a concern. however, our initial analysis is if it went from 21% to 28%, it is only going to hit stoxx 600 earnings a couple of percent. in this instance, to contrast with over 30% earnings growth and 15 plus percent next year, it is only a marginal hit to earnings. more impactful for some groups that grow less robustly and have u.s. exposure. it is interesting to know if you look back at 2018, after the big

trump tax cut, the effective tax rate did not really change that much. the big anticipated benefit did not play through. could be the same on the other side. anna: that is something to watch. are you a guy who likes an old-fashioned market adage? should we consider the old saying sell in may and go away, or is that too much of a cliche for an ordinary year? >> it is a great old investment adage. early in the year, optimism does tend to fade in a quote normal year and activity drives up during the summer holidays. our analysis shows a couple of interesting points. the first is that indeed, the 10 year average return for most european markets is negative in

may, june, and august, it is actually substantially positive in july, but, and it is a really big but, the variation is just huge. if you look at a chart that overlays 10 years of ftse performance during the summer months, it looks look a bowl of spaghetti. if you go year by year, this year we have had positive earnings and we think we are having more revision as we look into the second half. anna: we will keep your words in mind. coming up on this program, a doge and pony show.

i a comedy show is shaping up to be a market event for crypto traders. ♪

anna: this is bloomberg daybreak: europe." let's turn our attention to crypto. every doge has its day and this week it could be saturday when the self proclaimed doge father hosts saturday night live, elon musk. i can tell you the person who did write that this morning, that's dani burger. she spent her time doing market analysis and writing bad puns for me. are we at really at a point where saturday night live is a market event?

>> first of all, guilty as charged, i apologize. i am much more comfortable telling you about some esoteric options trade people are doing. i am less used to putting up and elon musk two-week calling himself the -- tweet calling himself the dogefather. this is a market event for anyone who is into doge coin. you by doge coin because it is funny, you have this community behind it. one of my favorite things about doge coin as you have serious people giving takes on it. i just want to show you a comment from one analyst, one strategist, who usually just does macro stuff who said we have to look at saturday night live. he will undoubtedly have a sketch on crypto's that will

motivate his army to send doge coin to the moon. anna: we heard from the fed talking about what they see as risks in certain asset classes. they did mention meme stocks, not so much on crypto's. what does the fandom of elon musk mean for other cryptocurrencies? >> bitcoin wants to take itself seriously, and wants to be a serious store of value. but how do you explain that when you have this huge run up in doge coin? it takes away the value. you look at coinbase, exchanges that don't offer these all coins, that has been falling. it is really all about doge coin. anna: something to watch out for saturday night. back to where we started, thinking about the fed warnings about asset classes and risk

appetite for them. thanks to danny for that. i will be back with the european open up next. mark cudmore will be joining me for the first hour of that program live from singapore to take us through the market action. the jobs report coming later today. ♪

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anna: welcome to bloomberg markets, "the european open." our markets live managing editor joins us to take us through the market action. cash trade is less than an hour away. the fed warns of stretch valuations amid rising risk appetite. the dow hits another record. germany'