-- >> we should kickstart what is mentioned in that agreement. >> but beyond that, we demand to have the time to discuss and put the agreement in front of the group. >> this is bloomberg surveillance: early edition with francine lacqua, matt miller and kailey leinz. matt: welcome to bloomberg markets on this monday, july 5. i am matt miller with dani burger in london. high-stakes standoff. saudi arabia and the uae ramp up the tension in their opec dispute over oil production. we will continue to cover that for you. china tightening its grip, beijing expands its latest crackdown on the tech industry beyond ride-hailing giant didi.

they pull others into national security concerns as well. joe biden's mission accomplished moment. the president all but announced -- -- the president all but announces an end to the pandemic in the u.s. is the mission really accomplished? we will talk about that as well. dani, what are you seeing in the markets? dani: we didn't get the number above 70% and then you had -- giving away free beers. how is it not mission accomplished if the u.s. is giving away free beers? matt: that is how they will spin it. dani: the vaccine rollout is going on, so that is good news. when it comes to the data, it really is all about opec today. the u.s. market closed for the july fit holiday. you have most of europe not feeling great this morning after celebrating the euros this weekend.

it is going to be the middle east that takes center stage and we are seeing brent at its highest since 2018, up more than 3/10 of 1%. you have two possible outcomes at the extremes. potentially you have not an agreement reached, and that is very bullish, or you don't have one and that is very bearish. looking at the csi 300, we have china continuing to crackdown on big tech, focusing in on didi. looking in europe, actually moving higher, it had been negative for most of the day, but now the europe stoxx 600, up with basic resources leading those gains thanks to stronger commodity prices. basically every growth stock is heading higher after what seems to be a bidding war. currently apollo looks like they might get involved and might put a bid in for morrison as well because the brits love their grocery stores, but private

equity funds in the u.s. love them even more. matt: it will be interesting to watch who gets that is the price continues to ratchet higher. let's take a look at what is going on this week. we have already talked about and will continue to talk about opec , not just because it is dramatic and exciting but also because it is so important to the markets. talks have already been halted twice. the standoff between the uae and the rest of the group has left markets in limbo over what further production is going to look like. on wednesday, you see allen and company's sun valley conference kicking off. jeff bezos mark zuckerberg, warren buffett, tim cook among those invited. it will be a huge guest list. also wednesday, we are going to get the minutes from the latest fomc meeting as well as the u.s. jolt

always exciting, but especially now. on friday, g20 ministers will meet. the deadline to wrap up talks on the plans for a global minimum tax. it is supposed to be the deadline, but we know how this works. if not everyone agrees, it won't be the deadline. surely they will continue to try. that is just how it goes, and there are some holdouts, those who have tax rates currently below the minimum tax rate. most to agree have tax rates above the global minimum tax rate. it seems like that is easier than pushing taxes higher. dani: i am thinking of the u.s., it might not be a sure thing because it has to get approved by congress. that is surely an obstacle in the u.s. as well. it is not just high tax

countries as well. sticking with the u.s., we saw jobs in the country jumped by the most in 10 months, despite a higher unemployment rate. >> this is a mixed report. >> for every positive thing you .2, there is something less positive. -- you point to, there is something less positive. >> supply-side bottlenecks are pushing up prices and impacting real activity as well. >> people pour over the jobs report because they're wondering what the fed is going to do with it. >> it confirms a wait and see approach. >> what happens if you let the inflation genie out of the bottle? >> it baffles me that they have

not started tapering already. >> there is just too much liquidity. >> lots of unanswered questions. dani: some of the views of our guests over the past couple of days. it's also get the view from kristin schulz. thank you so much for joining us this morning. is it a fair assumption to say we are in this goldilocks period when it comes to the jobs data coming in strong and suggesting the economy is recovering but not enough to move? kristin: enough to keep the fed on track for the tapering announcement. so on track, nothing that deviates up or down and therefore probably makes a good description.

dani: to what extent can we even trust the data at this moment. many people like the rbc point to the volatility in the numbers given seasonality effects. are we at a point where we can take the data at face value? christian: i'm not an expert on the u.s. labor market data. the one distortion i think we have to take into account is in wage growth where we have these compositional effects of different types of people have lost their jobs and it is mostly people in lower earning jobs who lost their jobs during the crisis and they'll returning to the labor market and that is distorting the wage data. what we really have to see is what degree does bottlenecks, distinct bottlenecks in the labor market beyond the effect of the higher unemployment benefits in the u.s. over the summer that is supposed to fade. that should give us a clearer

picture of where the economy really is and that is why the fed is not going to make a taper announcement before september, before we have more clarity on the distortions in the market data. matt: the ecb looks further away. we already heard villa roy say the ecb will be supportive at least as long as the u.s. they want to hold out a little bit longer than the fed. now we hear from isabel schnabel that overshooting would be ok. do you expect the ecb to change their close to but less than 2% target? christian: the ecb is in a period where lots of people have different opinions and we don't really have the one ecb view at the moment. that is very visible in the two you just mentioned. one stands out at the moment for having this perspective the

points to an exchange rate. he wants the ecb at least as dovish than the fed, which would suggest he wants the euro a little bit lower. schnabel's comments were interesting because she didn't say it was ok if we went over but that it was necessary and that was a fundamental question when it comes to the ecb strategy review. does the ecb target above 2% inflation, or does it just accept above 2% inflation? if it targeted, then it is taking its targets seriously and we have average inflation targeting like the fed has. more likely they accept overshooting inflation and just introduce this symmetry around 2%, which is a little less aggressive, and allows them to take the side effects of their policy into account. for instance, on the incentive

of governments to bauer -- to borrow or market functioning, risk-taking. that, i think is what we are going to end up with. tolerance of above target inflation but not targeting above 2% inflation. matt: in terms of the currency, you make a great point about villa roy's focus here. i saw a quote from him a couple weeks ago, saying that their main job is defending the value of the euro. not the stability of it, but the value of it, as in making sure it doesn't weaken too much against the u.s. dollar. i wonder what we are going to see in terms of other central banks. they don't like to talk about currency being one of the motives in their policy actions, but we all know they are. christian: they effectively are not allowed to.

of course the smaller the economy, the bigger the impact on the -- the bigger the impact the exchange rate is on inflation. you don't want the currency to throw an extra curveball. i think it is a traditional french view or southern european view that the euro is weaker, and that helps the inflation get back to target. -- the stronger euro is ultimately a positive thing. in the end, it is a side issue. the real issue at the ecb is how seriously do they take their mandate for price stability? is everything secondary to that,

or are they really worried about the side effects that they are just maximizing the probability of reaching their 2% target, subject to not distorting the markets too much? matt: i spent the weekend at beer gardens here in germany with some fairly conservative families, all of whom wanted to exile -- possibly banish him from all german-speaking countries of possible. the second topic of conversation, all of these people who want to vote for the cdu don't want of art -- don't want to vote for her. i wonder what your take is on that. christian: it is not the race of the most popular candidates at the moment. the conservative candidate, it is also the greens candidate who had a very good start when she was appointed but since then has been crashing back down to her

and that leaves the finance minister as the most popular candidate but the candidate of one of the least popular parties. it is a bit of a mix at the moment but one thing is clear, that voters are happy with a conservative greens coalition. but voters like that mix. that has been our base case for quite some time, and it has some potential because it unites the green ambition on the fiscal side with the cdu's muscle to actually get it through parliament because some of the things we'll to follow majorities and once the cdu is convinced that -- but also the european integration target, for extra public investment. they have the muscle to get it through parliament. dani: thank you so much for all

those insights. that is citi's christian schulz. the opec-plus alliance meets again today to try and resolve an impasse over future production. we will get the latest. this is bloomberg. ♪

matt: this is bloomberg markets. imf miller in berlin with dani

burger in london. the standoff within the opec-plus alliance as saudi arabia has pushed back against the uae's opposition to a proposed production increase continues. an unprecedented move, both countries have aired their grievances on television. first, uae energy minister spoke to our manus cranny in dubai. >> just to be clear, he has not threatened to leave opec and right now, you are not prepared to threaten to leave if you don't get a deal? >> no. i think if we don't get a deal, then we have an agreement -- we are not now close to walking away from that agreement. uae is not going to be an obstacle in front of anyone.

we sacrificed a lot and we will continue to sacrifice but beyond that, we have the right to discuss and we demand to have the time to discuss and put our grievance in front of the group. matt: responding to the uae, the saudi energy minister spoke exclusively with bloomberg. >> i would emphasize that the whole group, that is just one country. which is sad to me, but that is the reality today. >> how concerned are you that if there is no agreement, and potentially we could see what we saw last year, which becomes a price war? >> we have an existing agreement. i keep reminding people, unlike

what you had in march, we have an existing agreement. we would honor that agreement and we will continue with it. there agreement requires -- the agreement requires protection. we should kickstart what is mentioned in that agreement, which is we have to extend. the extension puts a lot of people in their comfort zone. it also addresses the market. check with all those who are participating in this market. >> fern agreement, it has no production increase for august. if not every member signs up tomorrow, what happens in august? >> your chance to have another

interview with me after tomorrow depends. >> are you worried we could see a massive spike in prices because the market is in need of more supply for the month of august? >> some people would like to have that, they can do that. is it our intent? no, because if it is our intent, then why would we work -- it has been a two-month affair. >> if you are on board with the proposal and russia and the rest of opec is on board and the only holdout is uae, can you increase without the uae on board? >> we cannot. because it is an agreement that is done by consensus. matt: that was entering horning -- anne-marie horrnen.

the spat dividing opec-plus. let's get more from bloomberg's middle east editor, paul wallace. i think the first question is, why doesn't opec simply caved to the uae demand? if this is going to drag out and is such a huge price risk, plus they are kind of friends. why not just say ok? paul: traditionally, they have been very lockstep and the saudi say they cannot accept the uae's demands because of the uae's baseline for production is increased, than everyone else will have to renegotiate there is as well, and it is a grouping of 23 nations. what has surprised some people

is how the uae has accepted this proposal and the uae is the only one saying hang on, we don't want an extension to this deal until the end of 2022, without renegotiation of the baseline. dani: paul, who has the most to lose if opec does adopt what the uae is asking? paul: to be honest, it is probably all of them all of them have a lot to lose if something goes wrong. few people are predicting something as extreme as an oil price war. we had goldman sachs on bloomberg tv earlier and they said that situation is extremely unlikely, and it aims as if neither the uae or the saudi's or the russians or anybody else want that. at the moment, it is a case of

how do they get a deal that satisfies all parties? the different countries in opec-plus could handle lower oil prices to varying degrees and they are any a good place as far as that is concerned, but no one within the group would be happy with the prospect of much lower oil prices. matt: paul, what if they just make an agreement that lasts a number of months, a mandate if you will, and then all sit down and do the hard work of renegotiating everyone's baseline? is that the necessary fix? paul: that is a possibility. that could be one thing we see that opec goes away -- goes ahead with the proposed increase of production in august,

something the uae itself agrees to, and then the baseline and the extension they discussed later. -- they discuss later. the saudi's are so adamant, as far as differing stances are concerned. as you said, they are airing their grievances in public. they are talking to bloombergtv about them. that is something extremely unusual for opec. they like to discuss things behind closed doors. they like to give the impression of being cohesive. they don't like spats going public like this. dani: definitely interesting to see, and then there is that offer to talk to bloomberg again. paul wallace, thank you for staying on top of this for us. looking at oil prices, still moving higher. coming up, we talk to the abn

amber research strategist about the view for europe and the u.s. this is bloomberg. ♪

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matt: this is bloomberg markets. i am at miller in london. we've got a lot going on -- i am matt miller in berlin with dani burger in london. we've got a lot going on. it is not the fourth of july, it is the fifth but like many nations, if the holiday falls on saturday or sunday, the government is kind enough to shift the actual day off to a monday or friday. to me that makes trading a little light everywhere else, and i wonder if that is what we are seeing here today as well . dani: volumes look light but one of the interesting things about this holiday market is usually over the summer, volatility tends to be lower over the summer, when you have these different holidays but i wonder if this year around, you have

all of these geopolitical concerns, yet opec moving the price of oil, the delta variant or what have you, maybe people will be more tied to their debt than usual. the dollar is also a little bit weaker. one place that had trading today, china and we had concerns over didi. the chinese government cracking down on big tech in general. the index ending the day higher. tech also ending the day higher. one area that continues to look pretty weak, however is europe. if you look at what is happening in the europe stoxx 600 and what is leading us higher and lower, it really is u.k. stocks outperforming the ftse 100 up 2/10 of 1% versus the dax which is down 2/10 of 1%. some of it has to do with merger news and some of it has to do with the oil story, carrying the

benchmark higher. despite the ecb, central banks on friday, you need to remain cautious when it comes to dividends. he can't play catch up with the u.s. just yet -- you can't play catch up with the u.s. just yet. matt: i've never heard of an actual merger, you know? dani: i knew as soon as i said it, you would have an issue but i did not stop to correct myself. it is not a merger. it is a company or private equity firm that wants to buy more -- morrison. not merge with it, buying it. matt: it is one company buying another. a buyer and a target. i can't think of a great example of two companies hitting together equally in emerging -- getting together equally and merging. the word just bothers me, but i

appreciate the report. concerns over the delta variant spread across the u.s., threatening to cloud recovery outlooks, putting a growing chorus of investors on edge. >> the delta variant. >> the delta variant. >> the spread of the delta variant. >> definitely it is the key tail risk to watch. >> it could potentially derail things. >> travel restrictions staying place in many countries. >> the economic growth forecast could lower. >> central banks are also looking at the economy and inflation. >> it is something we should all have on our radar. . >> that is still the big uncertainty. matt: now of course we have seen the restrictions, elongated in

the u.k. as a result, serious travel restrictions continue because of the delta variant, and fear around it is will they continue to see lockdowns? joining us now is tom kinmonth, abn amro research investment strategist. what do you think about this reemergence? are going to see europe go back into a lockdown situation, hurting the economic recovery? tom: that is a great question. it is still developing in the u.k.. they are taking a different path to reopening at the moment. obviously within the euro zone, the key questions, we've got so much supply-side of the economy, excess liquidity has gone up 100 40% and the focus would be on the demand and next year. essentially the ecb is trying everything it can to stimulate the economy.

we've got so much liquidity. the demand has not been there recently. we don't expect a massive rebound. toward the end of this year, it could begin to suffer again. it is not the greatest story for the european come back. matt: what happens with all of this liquidity? i can hear it sloshing around, and yet the ecb isn't anywhere near pulling back on the taps. the fiscal side in europe hasn't been as supportive as it has in the u.s., but do we face the same kind of risks? tom: essentially, that fiscal discussion has not been one considered essential. absolutely massive liquidity pumped in, but the demand, especially corporate demand in

the last seven months has been very lackluster. that means we look at physical ability that the countries will have. that is looking very good. even if the ecb did get inflation, we are very dovish on core inflation. the ecb would want to let economies overheat and help economies. -- is going to need everything it can over the next few years and that makes it very dovish on flat curves, low rates for longer. dani: given that liquidity and the debt out there that both corporations and sovereigns have been taking on, can they handle that, given the debt picture? is that something the market could cope with? tom: essentially, the argument could be, could the ecb do more? in europe, -- could never reach

its target. on the other site, debt has become built up and that means lower rates for longer. we also have aging demographics. in the short-term, we have to have some of this be repaid and obviously, the interest with the banks is that banks need profitability. thank profitability in europe is around 7% r.o.e.. in the u.s., it is about 10%. fiscal unity will have to take over, but it is a tougher time for europe and very different from the u.s. story. matt: win is inflation going to be at a level that the ecb thinks it's ok to start reducing the asset purchase program, if ever? tom: the next three years, we

will have inflation below the target, that is the way it has been for a number of years now. really, we are beginning to unwind some of the items. that is going to be negative for the finance and conditions, especially to the real economy. there may be pressure on the purchase program and some of the hawks begin to reduce the purchase program down, but overall, the pressure will be for the ecb to do more, to help economies and really begin to feed that through. the problem now we are beginning to see, especially in europe is a lot of asset managers and pension funds taking risk. dividend yields on unilever is at 3%. we are beginning to see pension funds and asset managers taking far more risk than they should be and that fed into the

collapse and negative impact on financing conditions. this is causing a risk returned i note -- risk returned by lemma for a lot of asset managers and that will be a focus in the background of the longer-term for the ecb. dani: thank you syria -- thank you very much for joining us, tom kinmonth of abn amro. supply chain disruptions are raising costs for european countries as firms pass on higher -- as firms pass higher prices on to consumers. the french industry minister weighed in on this as well. >> the point is now, do you have the most people being vaccinated in the less time, and to ensure that we have -- and this is exactly what we are doing. we don't have issue with the number of vaccine doses. the people are getting vaccinated. we don't have a threshold yet,

but we do know that at this point in time, we may have this threshold of vaccination, and we would need to push more vaccination. >> it is possible that the delta variant could derail the very high growth forecast that france is enjoying at the moment. it is possible it could delay this forecast? >> i don't think so. as you know, we say 5% and now saying 6%. we will not move our targets up and down. we want to have a steady approach, but i am confident that we can reach 5%. >> the pandemic has also had a dramatic impact on the prices of world materials, causing inflation. do you think this will have an impact on french growth, and

this will have an impact, a lasting impact on the french industry? >> we have factories that have had to slow down production. they don't have the power to produce yet because there are huge delays in production and asia and other parts of the world. when it comes to pricing, by the end of the year, we believe the inflation should be an acceptable level. once again, this has to be closely monitored and that is why we aren't dissipating it by having some policies to re-implement, relocate. >> planning to revive the very controversial pension reform quite soon, before the end of his mandate and the presidential

elections in 2022. do you think it is the right time, even though it could create another very tense social climate and possibly return of the yellow vests protests? >> president macron has always been clear that he will not stop reforming the country because of covid or whatever. we need to transform france, and we will carry on implementing reforms. having said that, we need to have the pension reform because at this moment in time, the pension is not balanced. it is not finance yet. that means the younger ones pay for the older ones, but they don't have the insurance at home that they will benefit from the pension scheme at the level of the older ones and this is unacceptable, so we need to move

forward with what calendar, the president will tell but reforms are still important. dani: france's industry minister speaking to bloomberg. i think part of what this price hike discussion is really interesting about it is this idea of whether consumers are willing to play -- whether consumers are rolling to pay more. matt: there is a lot more liquidity, not just on wall street but also in savings accounts. the question is still, if they are willing -- just because if i had extra money in my bank account, which i don't because i spend even more during the pandemic than i normally do. even if i did, i still wouldn't be willing to pay whatever price i had to. i'm still going to make decisions based on what i think. dani: but if they are very incremental, maybe you don't

notice or you are ok with it? matt: i can be fooled as much as the next guy. coming up, joshua sharfstein, johns hopkins bloomberg school of public health vice dean talks to us about the delta variant. ♪

-- local economy guessing how much oil it will get next month. the saudi's want opec and its allies to increase production over the next few months and also expend -- extend the broader agreement to the end of the year. now china has expanded its cybersecurity probe beyond the ride-hailing giant didi. the government is now investigating two other chinese companies that went public in the u.s. in recent weeks. authorities want to tighten their hold over internet data in the interest of national security. the battle -- the vatican says pope francis is in good condition after he underwent surgery to remove half of his colon.

he is expected to be hospitalized in rome for about seven days. apple is wrapping up efforts to decentralize silicon valley. the company has been losing talent who has had they cannot afford the high cost of san francisco. apple is spending almost $2 billion on new campuses in texas and north carolina. it is also hiring engineers in canada, germany, new zealand, spain and here in the u.k. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am leigh-ann garrens. this is bloomberg. matt: leigh-ann, thank you very much. leigh-ann garrens with your "first word news." president biden took to the south lawn of the white house to speak in celebration of the fourth of july, independence day as we call it. i'm not sure if it is called

that in the u.k.. he hailed the u.s. vaccination program, and efforts to control the pandemic. >> we never again want to be where we were a year ago today. so today, while the virus has not been vanquished, we know this. it no longer controls our lives. it no longer paralyzes our nation. it is within our power to make sure it never does again. matt: joining us now is dr. joshua sharfstein, johns hopkins bloomberg school of public health vice dean, and certainly some kind of victory lap has to be granted to the president. he has done an incredible job of rolling out all of the vaccines that the previous administration gathered up. is there still a lot more work

to be done? dr. sharfstein: there certainly is more work to be done. i think it is appropriate, given how painful the last year and a half has been, for the president to stop everyone and say look how much we have accomplished. look at how we have gotten control of our lives back and together, we can finish off the project -- finish off the job we started. it is still true that many people are not vaccinated and with the delta variant spreading, people who are not vaccinated remain a pretty significant risk and this is a moment to keep going. last week, i went out and got vaccinated with the city health department in baltimore, and it was a library branch and a number of people wandered in and said they had been wanting to get vaccinated but they couldn't find a convenient place and could not get across town to the mass vaccination site and i

think the vaccine campaign still has a ways to go. dani: on that note, we do have l.a. strongly recommending people wear masks indoors now, given the spread of the delta variant. with that, does our calculation need to change about mask wearing because of the spread and potential cropping up -- popping up of these variants? dr. sharfstein: it is quite possible, particularly in parts of the country where the vaccine rate is low, that there will be a surge in cases, and when that happens, it is more likely that if you're in the supermarket, that you will bump into somebody who is contagious and if that is the case, wearing a mask is a not unreasonable thing to do because as we know, vaccines are not 100%. there is a small chance in an enclosed environment with somebody who is infectious that is going to maximize the chance of getting sick. i think we can predict that in certain areas, it is going to be

a reasonable thing to do, for people to wear a mask indoors and it also may be in certain times. that may be enough just for covid, but also for flu. masks are so effective at certain times of the year, it makes sense to sometimes be wearing masks. matt: i can understand saying you have a choice and you can decide whether or not you want to wear a mask, but especially in cities like new york and los angeles, where everyone is vaccinated who wants to be vaccinated, right? not only can you get your vaccination at any local doctor, but they will send someone to your apartment to vaccinate you, and in that case, the delta variant isn't very likely to get you terribly sick, is it? dr. sharfstein: what do you say to somebody who has cancer or somebody whose immune system is not responding to the virus? i think it is more challenging

in that situation and the delta variant is life slightly to get you sick, but it is not's -- it is not impossible, particularly for older adults. it really is a judgment call as the number of cases goes up. when is a very low number of cases in the community, it is probably an overreaction to mandate masks but as the chances go up and we consistently pump into people who are infected -- bump into people who are infected, policy should be considered. dani: i think what is happening in the u.k. right now, you have more talk from politicians saying we're going to start to ease some of the restrictions. it is going to become a personal choice, whether used -- whether you socially distance or wear a mask. is it kind of a judgment or where you need to look where the clusters are and have these restrictions? dr. sharfstein: i think it is really important for people to

take action for themselves and there is a lot in our health that is a personal choice and when the risk is so big, that is when it is appropriate for public health measures to be considered. people make all kinds of decisions for themselves about when they're going to drive or where they're going to try and you can't go through a red light. you have seatbelt laws and there are things that are in place because the risks are just so high and what i'm thinking is we don't know what is going to happen with the delta variant but there may be places where the hospitals fill up with patients and there are just so many cases that it is very likely people will be bumping into them. in that case, a reasonable public health measure is something that should be contemplated. matt: thanks very much, we always appreciate your insight and your time. dr. should -- dr. joshua sharfstein is the vice dean at the johns hopkins bloomberg school of public health.

michael bloomberg is also the owner of this network and bloomberg news. coming up, more bloomberg markets with myself and dani burger. we will be with you for a couple hours longer. this is bloomberg. ♪

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♪ matt: from berlin to our audience worldwide, welcome to "bring markets -- to "bloomberg markets." we also have dani burger with us. crude showdown. saudi arabia and the uae ramping up tension over output. president biden declaring america's independence from the coronavirus pandemic. and chinese tech stocks selling off as beijing strengthens its grip on cybersecurity. good morning, everybody. it is monday, july 5, a holiday in the u.s. i am matt miller in berlin. dani burger joining us from

-- we see some important geopolitical issues are moving prices. dani: we death of the do -- we definitely do. opec really the big one here. it has been so fascinating to watch this debate happen on bloomberg tv between opec finance ministers. energy minister's, rather. it is also making a difference in europe because the stoxx 600 is up zero point 1%. it really is u.k. energy, basic resources helping lift us further. you can see the u.k. outperforming, up 0.3%. we also have a deal, a possible deal of a private equity company bidding at the moment for morrison. socgen says maybe others will want to bid for that u.k. grocery store. let's roll it over and see what

our next board is. we have our asian data. one of the remarkable things is looking at what happened in china. we get china cracking down on didi, the ride-hailing app. china cracking down on data collection. still, chinese equities into the day higher. we also had tech ending higher. in europe, a pretty negative session. the hang seng down. in japan, equities doing a similar thing as well. some softness in the dollar versus the yen. a lot of geopolitical crosscurrents, and because it is july 5, none of them a really american. you have opec and china, so markets still giving us some volatility even though it is a lighter volume day. matt: we do have the victory lap from president

biden. some people wondering if that is a little premature. we have the delta variant in the u.s., in the south and in flyover country, where i am from. let's talk about the u.s. jobs report. payrolls climbing by the most in 10 months amid new signs that the economic recovery is picking up steam. >> 802,000 jobs gained in one month is a good, solid number. >> every positive thing you .2, there is something less positive. >> i'm a bit more enthusiastic about this data. i think there's some mixed points to this. i just think you have to step back and put some perspective. >> we are seeing more people looking for work. where are seeing growth in hospitality, leisure and restaurants. so it shows that the biden plan is working. >> it is mixed, which means the fed will say it confirms a wait-and-see approach. >> it could add even more if

there is this constraint on growth in jobs at the moment, which is the labor shortage. dani: federal reserve officials can kind of see what they want to see on this report. matt: joining us now is kit juckes, socgen chief fx strategist. i want to get your take first on the jobs report, what it means for the fed. we thought we had seen a pretty hawkish turn from the fed, and yet rates were still moving down. right now still looking at a 10 year not trading, but 1.423 8% seems incredibly low for a central bank whose members have been talking about tapering sooner than later and raising rates maybe even at the end of next year. kit: i think the last bit was the bit that summarizes it. some of them are looking at the end of next year. they moved a majority of dots to

the back end of 2023. it is july 2021 at the moment, so no one is talking about raising rates within 12 months. the market price is a rate cycle after the selloff in the first art of the year. it prices a selloff towards 2% at some point in the future, and what we want to know is how far is it going to go. don't think we learned that from the fed. or at least, we didn't learn enough to make more people jump at the idea of going short tenure notes and paying the negative carry away, or short any part of the curve because although the yields and rates are low come of the front end is even lower. what we didn't learn much in terms of that, we open ourselves up to see more of the debate between regional fed presidents and rich clarida, jay powell, and john williams when we see the minutes wednesday.

we will just move on to the next data, the jobs data this week. it will give us a better idea of how much tightness there is in the labor market, but we don't quite have the ingredients for the next stage, so we are hypersensitive to these numbers and not quite sure what to do when we get them. matt: given the lack of ingredients, i still wonder what your expectation is for an economic recovery right now and how that influences your year-end or 12 months, 10 year target. kit: i think part of the problem for me is i find it easier to think where markets are two years down the road then three or six months down the road, which is a really useless thing to be able to figure out in your head. but there's no reason to think this recovery in the states is anything more than very strong. it is going to run into some speed bumps along the way, but

this is a much better economic recovery than we could've hoped 12 months ago. at some point they feel the fed is going to hike. i don't know how high the fed is going to get, but if that happens, you will get higher 10-year note yields, and we will probably end up with a lower high in yields, a lower high in fed funds from the rate cycle, but that is not far enough away to turn around and say i'm going to put everything on bearish trades in the bond market without question, and mix it easier for me to say i think the dollar will be a good bit stronger in two years, quite a lot stronger in two years, but all i can do between now and the end of the year potentially is contrast the positive global trend if the delta variant doesn't slow economic every around the rest of the world, and at the same time, look at a

treasury market that continues to say somewhere in the distant future, the fed is hiking rates. dani: i remember back in may, you said the taper tantrum has already happened in the bond market. is that still your view now? is it still your view that that was where the drama lay, and we won't get any big reaction in the bond market from here on out? kit: i think the taper tantrum has happened. now the debate as -- the debate is about when the fed starts raising rates, and what makes you change from a view that this rate cycle won't see a higher peak than the last one. inflation is what can make that change, proper, lasting inflation. that can happen quite easily. but where we are now with that first rate hike, which the fed has really focused us on happening potential he in under

18 months, but not in 12 months, i think we focus on it a lot and we move the markets around a lot, but i am not quite sure how we get our arms around it properly that far away. we just change our minds every few days. i'm not sure how fast the rise in yields can be under that scenario. dani: what about the dollar? is there any surprise we haven't seen a weaker dollar given the recovery at hand in the u.s.? kit: i think the question for the dollar is the fight between expectations on what the fed does on the one hand. i had a really long conversation with client that said can you contrast and compare what is happening with 2004 onwards, when the fed was hiking. the raised rates before the ecb, but the global economic recovery gave us this we getting trend for the dollar the whole way through that period as

currencies like the australian dollar come the canadian dollar, all of these currencies got really strong, and what is the difference now was part of the question. i think today, one of the differences is we are not sure where we stand on and emerging-market economic recovery because they are behind , many of them, a long way on vaccination. steve got a sort of tricky fight. i think in a sense, the difficult piece is with the fed so far out, it may be that the rest of the world is more important for what happens next to the dollar than fed policy just for now because we talk about it all the time, but nothing is going to happen much, and a surprise rate hike in mexico has much more impact on global foreign exchange markets than perhaps it would at other times because that is where the

uncertainty lies. matt: kit, thanks so much for joining us. pleasure having you with us. kit juckes talking to us about what to expect in terms of rates , and terms of the fed and in terms of the economy as well. let's get a look at what is ahead for the rest of the week. another big week for a canonic data and global central banks as well. let's bring in bloomberg's emma chandra. emma: thanks very much. you're right, it is a big week for global central banks. we get a rates decision from australia tomorrow, and of course we are all looking ahead to minutes from the federal reserve after that jobs report on friday, and we also get minutes from the ecb coming out on thursday as well. if you want to take the conversation with will be very

much about inflation and where it is headed at the ecb, we are starting to see some disagreements there between members on how far or how hot they should let inflation run. on friday we get u.k. gdp figures. that is also when g20 ministers are going to be meeting in europe, but those figures will also help us focus on the direction of the economy here in the u.k. matt: excellent. thanks very much for that. in fact, kit is still here, and he's going to stay with us as well. why don't i just get your quick take on what to expect from the g20 in venice? aside from the fact that it has to be an absolute dream to visit venice without tourists, what do you think they're going to accomplish? no, actually we have lost kit. i'm sorry. my bad. dani: flown to venice. matt: when he comes back, we

will ask him about venice. no cruise ships in venice, so it is the perfect time to visit. i hope the cruise ships will never be back. when we come back, more from kit. we will talk about a division within opec as well. it is going to be incredibly important for oil prices. obviously tensions are rising there. the standoff holding at least two distinct possibilities for the oil market. i thought about a third possibility that we will talk about as well. the thing is they could make an agreement now. you could also see opec ravel. it is terribly unlikely. we heard jeff currie say it was a possibility. they could also just hold down and raise or lower, reevaluate everyone's baseline in opec, which would satisfy, you would have to think, the uae, but also

the others. it would take a long time, but that conversation is coming up next. this is bloomberg. ♪

♪ leigh-ann: this is "bloomberg markets."

president joe biden has all but announced an end to the pandemic in the u.s. he celebrated what he called a hero at campaign on the country's independence day holiday. the president missed his goal of having at least 70% of adults in the u.s. getting at least one dose of the vaccine. the total is now at 67%. in south florida, demolition crews have used explosives to bring down the damaged remaining portion of the collapsed condo building. authorities say they needed to do this so rescue workers searching for victims could gain access to new areas of the rubble. so far, the remains of 24 people have been recovered. 121 others remain missing. shares of british grocer morrisons have jumped today. apollo global management is considering whether to make an offer. over the weekend, morrison did agree to an $8.7 billion bid

from a consortium led by fortress investment group. earlier, the company rejected another offer. global economy is left to guess at how much oil it will get next month because the opec standoff between saudi arabia and the united arab emirates hasn't been resolved yet. saudi once allies -- saudi wants allies to increase production and make an agreement for the end of next year. the uae once a short-term deal. global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm leigh-ann gerrans. this is bloomberg. dani: thank you so very much. let's turn to tensions between saudi arabia and the uae, which at the moment are threatening to unravel opec negotiations.

saudi energy minister spoke -- the saudi energy minister spoke in a bloomberg interview. >> it is sad to me, but this is the reality today. >> how concerned are you, if there is no agreement and potentially we could see what we saw last year, which becomes a price

agreement. i keep reminding people, unlike what you had in march, we have an existing agreement. we will continue with it. the agreement requires that we bring more production, but to complete honoring that agreement, we should kickstart what is mentioned in that agreement, which is we have to extend it. the extension puts lots of people and their comfort zone. it brings volume in the short-term, but it is also addressed for the market and all those who participate in this market. >> for an agreement that is not extended and has no production increase for august, if not a very member signs up tomorrow, what happens in august? >> your chance to have another interview with me tomorrow depends on how we finish. if some people would like to have that, they can do that. this is not our intent, no.

if it was our intent, why would we work with our colleagues? it's been a two month effort. >> if you are on board with the proposal, russia is, and there's only one holdout, the uae. would you continue to increase production without the uae on board? >> we cannot because it is an agreement done by consensus. >> does this dispute have the potential to bring an end to affect -- to opec+? >> if we have 20 countries an agreement, why should it? can i give you a sequel number? in march we did not have an agreement, but the situation dictated that people can sit and talk about how to seriously

attend to the situation. very simple. >> but opec+ needs a consensus or it cannot work. so the uae does not set up -- does not sign up, they will not be in agreement. the you are also saying this cannot be the end to opec+. could we see a potential exit from the united arab emirates? >> what is speculative for all of us is why they don't. they've never had a complaint. they never dug in on an issue like this ever since. why now? why now? it is an extension of eight months, and there's a solid logic behind it, as i explained. and that is been excepted -- and

that has been accepted by everybody. >> that was annmarie hordern talking with the saudi energy minister. it is really fascinating that they are having this debate in public. i feel like it must bode poorly for what is happening behind closed doors if the way that they this out is by coming on and speaking publicly to markets right now. matt: it is very weird, especially considering the fact that the saudis and the emirates are typically more friendly, the uae and saudi arabia on good terms. so it makes you wonder what is happening. apparently they haven't spoken to each other personally, at least in the most recent bloomberg news, although of course, their staffs are probably talking to each other behind the scenes. to me it seems like the risks are pretty asymmetric for the price because if they do have an

agreement and they boost 400,000 barrels a day, that is not a huge boost, so it is not terribly bearish for the price. maybe it is bullish for the price if they extend their current production limits to the end of 2022, but not incredibly bullish. if opec unravels, which i know people have said is extremely unlikely, but if they do, that is very bearish for the price. so i think the downside risk is a lot more than upside. dani: right, and it is just such a tight market right now, and a market that gets really nervous. looking at the time spreads on brent and wti, you get this sense that the market is more or less coiled, but it feels ready to spring higher. we are looking at wti above $75. we are also looking at brent above $76 a barrel. that is a market that perhaps sees things moving higher. so the risks are asymmetric if

there is one that goes lower. matt: absolutely. we will continue to talk about that. plus, house democrats passing a $715 billion infrastructure bill. we will talk about what is going on in washington next with terry haines of pangaea policy.

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♪ pres. biden: we never again want to be where we were a year ago today. so today, while the virus hasn't been vanquished, we know this. it no longer controls our lives. it no longer paralyzes our nation. and it is within our power to make sure it never does again. matt: this is "bloomberg markets ." i'm matt miller in berlin, with dani burger in london. that was president biden independence from the pandemic and preparing to hit the road promoting his spending bill with infrastructure talks starting to slow down. terry haines, founder of pangaea policy, joins us to discuss.

biden adminstration made a lot of headway last week, and then promptly took a step back by threatening to veto the bipartisan bill if they didn't get everything else they wanted in a reconciliation bill. has that all been smooths over now? is everybody back to bipartisan joy? terry: the bottom line here is that biden and his folks made what could charitably be called an unforced error. i think they have rectified that problem. i have for some time been positive, not consensus positive, on infrastructure happening. even after that last little kerfuffle, i will keep it at about 80% that it happens. but the risk for markets here is

that infrastructure is one part of a four-part dance. not just the infrastructure bill, but also the so-called families package, which could add between $2 trillion and 6 trillion dollars to u.s. spending, including climate. if you take those two and add on the annual spending bills which happen at the end of september, and the fact that congress has to extend or suspend the debt limit, the debt ceiling to allow the government to borrow, what you've got is a situation where a lot of trains have the potential to collide in the early and congress will only be in session one out of the next three months, so it is likely that what happens is that we get greater uncertainty through the summer. when we come back in the fall, there will be still more uncertainty. then you have this four-part dance coming on.

i think that what falls away is that the families and climate package, which i only give a 30%, but the rest of it happens ultimately. matt: so how does the rest of it happen? don't they just push through what they want with reconciliation anyway? terry: it is not that simple. you've got a situation where not even 50 democrats in the senate, much less the four seat, five seat majority that exists in the house, are not going to come together around some of the more lavish proposals. senator manchin of west virginia, a swing democrat, has said that he is only going to go for as much as $2 trillion in the families package, which leaves a lot of democratic progressives really not happy about that. there's a large fight going on in the democratic party right now that is pretty much open for

everybody to see, and that is why it is going to take a little while to resolve, and while it plays out, i think you are going to have progress on infrastructure, and you have this natural deadline of the end of september, the end of the fiscal year, per spending and probably for the debt ceiling as well. dani: what happens if this accelerates the risks between some of the left? if you have infrastructure, you don't get some of the family first. what happens down the road when taxes are on the agenda? what does this brisk mean for that -- this risk mean for that? terry: that is a very good question. what it means is that the likelihood of tax increases in the united states is substantially less than 50% today. the infrastructure bill, as everyone knows, is about $1 trillion to $1.2 trillion, with $600 billion in new spending.

there are a variety of things being put in place to pay for that. but beyond that, you are going to have the annual spending bill , the debt limit which increases borrowing, that is all going to happen, but the tax increases were really only ever going to happen with the so-called families package that includes the climate wish list. since that is not likely to happen, i think the tax increases also are likely to not happen. what you've got here is a summer/end of fall that has a lot of political risk attached to it, but optimally you've got a pretty market positive result in the sense that the things that the markets want to see are going to happen, and the tax increases are not likely to at this point. matt: which tax increases are you talking about, the capital gains tax increases? terry: yeah, the vast majority of what has been proposed in the

families package is going to include proposals on tax increases of all kinds. that has been part of the progressive democratic platform for quite some time. biden people have talked about that, but i think what is happening is you've got bipartisan agreement about the other things i've talked about, but so far, you've got progressive democrats agreeing that what they want is a huge ramp-up in spending on the other stuff, but at the same time, they don't have support from centrist, kratz like mention -- centrist democrats like m anchin, and they certainly don't have support from republicans. i pegged that last week at only about 30% likely to happen because it also has to be one of

the tax proposals that's part of the families package. i don't see a very closely divided congress passing something like that, frankly. in no small part because neither politicians nor markets look at that and think that it is some sort of ceiling. they understand it is some sort of floor. so there's market negative consequences potentially there as well. but i think politically, raising taxes like that and imposing a minimum tax most of washington sees as a political loser. i don't see it likely this year certainly. dani: terry, you're going to stick around with us. thank you so much. let's get to the first word news. here's leigh-ann gerrans. leigh-ann: saudi arabia and the united arab emirates have ramped up tensions in this standoff against opec.

that has left the global economy guessing how much oil that will get next month. the saudis want opec and its allies to increase production over the next few months and also extend its agreement till the end of next year. the uae wants a short-term deal. china has expanded a cybersecurity probe beyond the ride-hailing giant didi. the government is now investigating two other chinese companies that went public in the u.s. in recent weeks. authorities want to tighten their control over internet data in the interest of national security. the vatican says pope francis is in good condition a day after he underwent surgery to remove half of his:. the spokesman says the pope was alert and breathing on the phone. he's expect it to be hospitalized in rome for about seven days. apple is ramping up out of

silicon valley. the company has been losing talent, who have said they cannot afford the high cost of the san francisco bay area. apple is spending almost $2 billion on new capitals in texas . global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm leigh-ann gerrans. this is bloomberg. matt: thank you very much. terry haines of pangaea policy is still with us. let's get back to the tax increases because i think this is the most interesting aspect of it. think that the biden administration is going to have a very difficult time pushing any of the tax increases through

. what happens then with the amount of revenue that the u.s. government is able to pull in? terry: i think what's been shown is that revenue has been up in the federal government and state governments despite the pandemic. i would expect that trend to continue for at least a little while longer. but there's absolutely no doubt that the political situation i've described, one in which spending will continue in the next fiscal year largely flat, as it has in the past decade. i think the united states government ultimately comes up with a debt limit/debt ceiling limit or extension. there will be a lot of political angst and wrangling about that in september or so. i think the infrastructure bill is something that has about $600

billion in new spending, according to your reporting and others. that is something that ends up getting paid for. so all of that is largely steady-state. but what you have is a situation where a lot of these additional new proposals aren't going to pass, and since the tax increases are hooked onto those more lavish proposals, i think they ultimately fail as well. so -- government position. dani: given all that, when we finally get back to the debt ceiling conversation, is what we can expect republicans attack in government spending? terry: yes. the political attacks will certainly feature.

what has happened over the past decade plus is that anytime the party out of power wants to be critical, one thing it criticizes is the additional fiscal spending or tax changes of the other party. democrats certainly did this with republicans in 2017. republicans did it during the obama administration. i would absolutely look for republicans to criticize democrats for profligate spending at the same time that republicans will say more fiscal discipline is needed. they will point to centrist democrats saying the same thing while also saying i can accept $2 trillion in additional spending on the families package.

so it will be the usual fraught debate that has a lot of political risk attached to it. i think in the end, nobody wants to stop the u.s. government from borrowing, and i think that the debt ceiling and spending both ultimately get past. but eyes i say, that is three months away, and infrastructure, to some extent, will be hostage to that debate. dani: it did feel like some of that fiscal discipline may be was put off to the side a little bit in the beginning of the covid pandemic because we needed that spending to ramp up the economy. maybe i am just being overoptimistic, but do things like climate change, the building collapse in miami, does that fueled the conversation faster? terry: another good question, and i think it doesn't change very much. whatever else the server-side collapse is or was, it is seen as a local and state problem i and large.

climate is seen as certainly a legitimate issue in washington, to say the least, but what ends up happening is -- matt: paying for it is always the problem. got to wrap it there, unfortunately. terry haines of pangaea policy, thank you very much for joining. ou very much for joining.

♪ matt: this is "bloomberg markets

." i'm matt miller in berlin, with dani burger in london. china is expanding its latest crack on on big tech, tightening its grip on data. >> xi jinping has set china on a pretty picked it up -- pretty predicable and firm path. it is about growing wealth, growing power, economic and military and technological power. >>, stored nearly striking line which will no doubt be -- and extraordinarily striking line which will no doubt be in every headline tomorrow. the number of applause lines here that were provoked by calls to nationalism, strength, sovereignty, was really quite striking. >> it is a broader quality exposure, looking at these names across exposures, which will give you that much needed cyclical exposure. i think that is where china is quite uniquely positioned

because in most of the other regions, value is moving opposite. matt: terry haines of pangaea policy is still with us. i want to just get your take on this. i think it is pretty fascinating that china doesn't want foreign investors owning chunks of companies that have massive amounts of consumer data. i guess the u.s. wouldn't love it either, but it is that way for u.s. companies, so what is your take on china's clampdown on this? terry: well, there is an irony there, as you point out. i will leave that on the table. jan that, there is an increasingly worrying and public trend here that every time a chinese company goes for an ipo,

makes a bigger splash in the western markets, thinking of alibaba and ant group, as well as didi now, they get a little bit over their skis, and all of a sudden they are hit with regulatory problems and all the rest. i wonder whether chinese authorities understand the message they are sending. i assume they do. and if so, what the message is is that it is difficult to do business with chinese companies and difficult for chinese companies to break out into non-chinese public markets. if you are a rest of the world investor ex-china, that is not a good signal to be getting right now. dani: certainly the u.s. ipo market is going to be interesting to watch how that shakes out when it comes to chinese companies. thank you for joining us on this monday. that is terry haines, pangaea policy founder.

let's bring in patrick armstrong of plurimi wealth to get the view of what is happening here as well. thank you for joining us. when you look at the moves china is making against tech, specifically u.s. listed tech, does this bring into the fore geopolitical concerns? do investors need to be pricing this in? patrick: it is something you've got to be aware of. it has been going on for years, with what the u.s. did with huawei, and you have seen alibaba with their ipo, and didi now. it is something you've got to be aware of. it is something that i don't think is going to change, but i don't think it's got an overarching real risk to the macro back drop and risks to equities as a whole, but more specific stocks. i would not think you would want to be clamoring into any chinese company looking to ipo in the united states right now. dani: besides the individual

stock story, when it comes to the overall market, it feels like nothing can derail it. just looking at some bank of america data, the equity fund flow at the current pace this year will be greater then the past 20 years combined, which is absolutely mind melting. is this the point where you want to be concerned that it feels like it can continue on, regardless of everything that is happening? patrick: i look at the multiples and i am a value investor at heart or get the msci world has never been more expensive than it is today, but we are sticking with equity positions. the three pillars are there that are driving equity growth, and that is massive liquidity, negative real yields, which means expectations are higher for treasury yields, and we think it is going to stay that way for the foreseeable future,

and earnings growth is going to be strong. so as long as those three forces remain in place, it is higher for equities despite the fact that they are at very expensive multiples. matt: there's been a lot of talk about the growth/value rotation, although the lines are little bit murkier. what are your favorite value plays right now? patrick: that is really why i am comfortable in equities, with the msci world trading at 20 times forecast. the equities i'm holding are trading at about 14 times forecast, and that really pushed the equities to stocks that are benefiting outside of cash right now. the consensus is that those cash holds will fall off a cliff. i think those earnings are little bit longer than the consensus expects. on shipping companies, it is

trading at 4.5 times cash flow. all of the manufacturing that is coming back on stream, demand is strong. i think rates probably stay higher for longer as well. moderna another one, with the vaccine. we are going to have booster shots for the next decade. based on their earnings view that those will deteriorate rather quickly, i'm looking at companies that are at all-time highs on multiples. matt: of course, people have hope that mrna can do a lot more than just make a covid vaccine. are you in that camp? patrick: i think so. i am not a doctor or biochemist by any means, but i think what the ceos are telling us, the applications are that it is going to come out with a better influenza vaccine.

i actually think moderna, priced at $230 a share, is fairly discounting booster shots for the next decade. there still a lot of call options on the other technologies that the mrna can work in and many other areas. so i do think it is something that you're going to pay for what is there, but there's a lot of upside potential. dani: quickly here, what do you make of a vix that continues to knock on all-time lows, but a skew index of that tail risk that continues to go to all-time highs? what is the reason for the dichotomy between the two? patrick: i think because central bank liquidity and zero interest rates and buying bonds, all of that suppresses volatility, but i think the market is aware that markets are trading at record high multiples, so there's an above normal chance of an outside risk, so that is a high skew. the money put options for august

are trading with an implied vol of 12, and if you go 10% out of the money, those are divided 19%. so it is most likely you get a slow climb, but anytime you have record multiples, there's a chance of a downside, and i think that is what the skew is showing. matt: patrick, always great.

♪ matt: from berlin, for our audience worldwide, welcome to "bloomberg markets." here are today's top stories. saudi arabia and the uae ramping up tensions over an agreement. president biden declares america's independence from the coronavirus pandemic. and chinese tech stocks selloff as beijing strengthens its grip on data.

payrolls climbing by the most in 10 months amid new signs that the economic recovery is picking up steam. >> 850,000 jobs gained in one month is a really good number, a solid num. >> i'm a bit more enthusiastic about this data. yes, i think there's some mixed points to this. i just inc. you have to step back and put some perspective -- i just think you have to step back and put some perspective. >> we are seeing growth in hospitality, leisure and restaurants, so it shows that bidens plan is working. >> it is mixed, which means the fed will look at this and say it confirms a wait-and-see approach. >> it could add even more if there wasn't this constraint on growth in jobs at the moment, which is the labor shortage. >> there's a little bit here for everybody. the household survey was also mixed and a bit weak, so federal reserve officials can also see what they want to see on this

report. matt: joining us now is lothar mentel of tatton asset management to talk about what we sign that report, what it is going to do for the fed, and what it means for the economy. first off, the economy, the economic recovery, is it going to continue with this kind of strength into the second half? lothar: let's hope so. there are a few things that are currently clouds on the horizon, and here in the u.k., we are showing what happens when you get hit by a variant of the virus that is spreading easier against a mostly vaccinated population. that is going to hit europe and the u.s. in due course of the next couple of weeks. but from what we can see in the u.k., it shouldn't really set the economy back to much, and everything seems to be well entrained to go in the right direction. matt: what we see in the u.k. is

that although it spreads quickly , people are less likely to get very sick from the delta variant because they've been vaccinated, and hospitals aren't overflowing. the deaths aren't rising from this. does that mean fewer lockdowns across europe, that we won't be returning to that kind of thing in the u.s. either? lothar: hopefully come but it is also a good, interesting catalyst for other things. we have already seen in portugal, which was the first to be hit by the delta, that vaccination rates are through the roof. so it has been a catalyst in the u.k. as well among communities that perhaps weren't so keen on getting vaccinated. so that could be quite a positive element there. so just generally getting the health system up to speed and

everybody who has not yet had the vaccine to come forward, that could be a positive rising out of this negative, although there's also this cloud on the horizon that if this really starts to scare europe, it could be really undermining yet another summer season for the mediterranean holiday destinations, and that would be quite a negative. so it is a bit of a wait and see here. matt: it seems like travel and leisure, you mentioned the mediterranean, also sport must be a catalyst, if getting vaccinated makes it easier for you to watch the euros, then i am sure you are going to want to do that, even if england somehow manages to be germany. wimbledon as well is going to be a huge one, right? they are going to be completely full. are these kind of things going to bring the economic recovery to the forefront of what we are watching? lothar: i thick there is huge

demand amongst the public to catch up with all the things we haven't been able to do, and there seems to be not so much fear to actually get infected, particularly when you have been double vaccinated. everyone knows it is possible, but everybody can also see in the u.k. that actually, the likelihood that you get really unwell from it is probably at a similar level to what we would normally expect from a normal flu, and therefore, particularly the younger people don't seem to be particularly concerned, whereas the older people i think are a bit more cautious. matt: goldman sachs says england is going to bring the cup home. do you think that is the case? lothar: if they continue to play as they have, and it looks very german to me, the way they are playing, then why not? matt: we will talk about more serious stuff. actually, is there more serious stuff than european football? we will get back to the economy, back to the markets with you in

just a moment. right now i want to get over to emma chandra for a look at what is going on the rest of the week. it is a big week for economic data, a big week for global central banks. what have you got? emma: despite the holiday shortened week given the july 4 happy which is happening -- july 4 holiday which is happening today, it is a big week. a lot of delays, and clearly a lot of issues to work through with opec, and what that is doing to the oil price and the inflationary pressures we are seeing there. that also feeds into the global central bank news you highlighted. the reserve bank of australia has got a meeting tomorrow, and they will make an interest rate and qe decision then. the bigger one is the fomc minutes due out on wednesday. there will be a lot of people in the market parsing those, looking for any sign of any

further hawkish and us. the ecb minutes came out on thursday -- minutes come out on thursday to continue that theme, and we get new gdp numbers on friday. also on friday, all eyes will be on venice because g20 financial ministers will be meeting. we will get more on that global tax deal from them because that is something to watch, not least , of course, the gorgeous location. the sun valley conference is happening this week, too. that will be interesting in the u.s. because of who attends. we know that jeff bezos has been seen there, warren buffett, i whole host of big names, and a lot of peaceful -- a lot of people will be listening to what they have to say about the global economy and the global recovery from the pandemic. delta, that is another thing we are watching. we will get some news from the u.k. today.

the u.k. government expected to confirm that it will go ahead with its full reopening plans on july 19. of course, the biggest thing in the market is debt big semifinal match on wednesday, which i will be watching very closely, when england takes the football pitch once again. matt: even i will be watching. normally i would rather watch grass grow then a soccer game, but this has been fascinating, ever since england beach germany. emma: football, matthew. matt: i can't believe italy was missing penalties like that, allowing spain to go through. now england will be my focus as well. but i think venice will be really interesting because there are a few countries still against this global tax deal. what are the chances they are going to have to push even further past friday? lothar: i think the -- emma: i

think the chances of pushing further are quite high. we are looking to get confirmation from the full g20 later into the summer, if not the autumn, and terms of that tax deal. but of course, they are in a very strong position going into this meeting on friday, certainly from the headlines late last week on this, and there does seem to be a consensus forming, and that should be a very big win for the biden administration. matt: you've got some neighbors to the north that are not for it. emma chandra, thanks so much for that area setting out the calendar for us for the week. lothar mentel of tatton asset management still with us. quite a few central-bank activities highlighted this week, not the least of which and australia, but we also have the minutes coming out of the fed after the big jobs number last

week. are we going to start seeing a more hawkish turn for central banks? is this the turning point for global central banks? lothar: i think that turning point has already happened, and the markets were surprisingly benign in their reaction to it because when we saw those dot plots move the other week, that really to my mind was the turning point. but with the markets have told us is that they also believe the central bankers when they are saying we will actually stay really easy for quite a while and let that inflation, which they call transitory, run even if it goes a bit beyond what they would normally accept. so i think the important point here is that that persists, and the central banks aren't going to budge from their narrative from before because that is really important in the markets at the moment, that yields stay

stable and we don't get an upset to the general recovery from financial markets. matt: how do you juxtapose the inflation situation we have here in europe generally with what we are seeing in the u.s.? americans are worried about 3% and 4% that they are seeing now. for the ecb, 2% would be a dream come true, and it is not likely to happen. lothar: the u.s. is a bit advanced in the recovery compared to europe, so i'm expecting similar things to happen in europe as well, and in order to see it in the pipeline with so many things not being available because of supply bottlenecks at the moment, that pushes up prices. that's the thing also that usually removes supply

bottlenecks, and we didn't see any structural issues before lewin to do the prices. there's -- before we went into the prices. i'm with the banks when they say this is transitory, and this price upwards push is probably going to mobilize the supplies that are currently being so much demanded by the consumers and by the industry. matt: the one thing you've got to watch for, i guess, especially in the case of the u.s., is wage increases. do you expect to see that continue to come through? real wage inflation for the u.s. worker? lothar: well, that seems to be one of the interests of the u.s. central bank as well. the fed seems to want to see wages rise in order to get more demand into the consumer side, and yes, i think with where we are on the labor front, that is quite likely to continue. i don't necessarily think it is

going to get out of hand, but certainly that rebalancing of capital invested labor seems to be something of late that investors are focusing a bit more on, perhaps to stabilize the political side. matt: it is pretty interesting. always enjoy talking to you. thanks for being with us. you are going to stick with us for another block on bloomberg, who don't hang up. lothar mentel is going to continue talking with us. we will cover the victory lap the president biden has taken about the immunizations that have happened, declaring independence from the pandemic. infrastructure talks there as well continue in washington. maybe they look like they are stalling right now, but it does appear to be an issue that both republicans and democrats want to tackle, roads and bridges crumbling, airports and ports

need updates, broadband coverage is still spotty over the richest country in the world. we will have that conversation next. this is bloomberg. ♪

leigh-ann: -- laura: this is

"bloomberg markets." president biden celebrated what he called a heroine vaccination campaign on the country's independence day holiday. the total is now at 67%. in south florida, demolition crews have used explosives to bring down the damaged remaining portion of the collapsed condo building. authorities say they need to do this so rescue workers searching for victims can gain access to new areas of the rubble. so far, the remains of 24 people have been recovered. 121 others remain missing. shares of british grocer marson have jumped today. apollo global management -- grocer morrison have jumped today. apollo global management as said it will put in a bid.

the global economy is now left to guess how much oil lit will get next month because of the opec standoff between the saudis in the uae that hasn't been resolved just yet. the saudis want opec and its allies to increase production and extend a broader agreement to the end of next year. the uae wants only a short-term deal. global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm laura wright. this is bloomberg. matt: thank you very much. president biden is declaring independence from the pandemic, preparing to hit the road promoting his spending bill with infrastructure talks starting to stall. pres. biden: we never again want to be where we were a year ago today. so today, while the virus hasn't

been vanquished, we know this. it no longer controls our lives. it no longer paralyzes our nation. it is within our power to make sure it never does again. matt: president biden talking about victory over the pandemic. with a politician-sized grain of salt, it makes sense. tatton's lothar mentel is with us. with the infrastructure bill, not only does the u.s. need to fix its crumbling infrastructure , the spending has to be vital for the continuation of the recovery. or is the recovery already self started and on its way? lothar: there are two parts to the recovery. there's initially the bounce back, and that has already happened to some extent in the u.s. the consumer coming back, wanting to spend what they have saved. that is almost an automatic

recovery where governments don't have to put that much more physical effort into it. but to make that sustained, that is where we need the longer term investment, and that is where the fiscal side is very crucial, just as crucial as the noises coming from the central banks over the next coming months because otherwise, we might just fall back to that slow growth environment that we had before the pandemic struck, and that was certainly not something that seemed particularly sustainable. so that infrastructure investment for the u.s., but also in europe, those programs are really important because they could serve as the catalyst to make this bounce back into a sustained recovery running at a higher gdp growth level and what we had before we went into the pandemic. but as usual, and the past, the fiscal side is way too slow and under delivers compared to the original expectations, and could also be a negative.

dani: i am glad -- matt: i am glad you bring that up. in germany, they think all of the audubons are smooth -- the autobahns are smooth and perfect , the trains must run on time, everything is automated, and it couldn't be further from the truth. are we going to see more spending in germany, spending on things like infrastructure and broadband that is so desperately needed? lothar: yes, i do think we will see quite a bit more. i think there's less catch up in germany to do then and some other nations. if i remember all the bridges that are being closed and have been refurbished over the last five years, there's still a lot of potential for catch-up elsewhere. but i think it has been a really positive to see the eu heads of state rally together and say we are going to do this, we are

going to really raise money together to create that european united bond market for once and finally, and really address the challenges of the future. so that is really one of the big challenges of the past. so we have to see whether they can actually really deliver on that promise. matt: if you step back and look at the eu, what does it look like after from merkel -- after frau merkel is done here? she's been such a strong leader not just for the eu, but for the g20. when i was in hamburg, she was applauded by all of the other world leaders as kind of the head of the group. and that's really happen if we have another cdu leader or a green leader in place? who is going to take charge? lothar: i think she will be

sorely missed. her experience, her keeping things calm and steering her colleagues through difficult waters, but that's not forget those -- but let us not forget those politicians that are going to step up aren't entirely inexperienced. i don't expect they will have a green chancellor. far more likely that we will have an armin laschet or olaf scholz as the next chancellor. he will also maintain that german stance of moderating things and steering things clear of the extremes. and let's not forget elsewhere in europe, things are also a lot more stable with draghi in italy, for example. i think that bodes well for that transition phase two happen. but she will be sorely missed. matt: what are the biggest headwinds to growth, to gains in this market? lothar: i think it is still a

lot of virus and pandemic and how we react to it, how will we go through this transition phase now of weaning off all of government support and going back to a full market economy, or at least as much of a market economy as we do have. that is going to be a real challenge for the next couple of months. how is europe and the u.s. going to react to the rise of rates of infections? however going to get our heads around that with the vaccinations? we are safe, even though we have high rates of infection, but they are not affecting the health care system is much as they did, so those things are all going to make this summer a little choppy or i think because we know that -- a little choppier because we know what equity markets have priced in, and any sentiment will be negative. let's not forget the pmi's we are seeing everywhere around the world are really high. matt: lothar, thanks so much for

joining us. lothar mentel is the ceo and founder of tatton investment management. coming up, tensions rising over oil production agreements, with divisions big at opec. this is bloomberg. ♪

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matt: this is "bloomberg markets." i am matt miller in berlin. tensions between saudi arabia and the uae are threatening opec negotiations. >> i would emphasize it is -- it is sad to me. this is the reality. >> how concerned are you if there is no agreement and potentially we saw what we saw last year which becomes a price war? >> we have an agreement.

i keep demanding people, unlike what you had in march, we have an agreement. we will continue with it. the agreement requires we bring more production. to complete the agreement we should kickstart what is mentioned in the agreement. the extension brings volume to the short-term -- check with all of those who are participating in this market. annmarie: the agreement has no production increase for august. not every member signs up tomorrow. what happens in august? >> your chance to have another interview with me

[indiscernible] annmarie: are you worried we could see a massive spike in prices because the market is in need of more supply for the month of august. >> if some people would like to have that, they can do that. is it our intent? no. if it is our intent, why would we -- annmarie: if you are on board with the proposal, russia and the rest of opec is, there is one holdout, that is the uae, will you continue to increase without the uae on board? >> we cannot. it is an agreement that is done by consensus. annmarie: does this have the potential to bring an end to opec-plus? >> if we have 20 countries in

agreement, why should it be? [indiscernible] in march we did not have an agreement. the situation dictated people can sit back and talk about the situation. very simple. annmarie: opec-plus needs a consensus or it cannot work. if the uae does not sign up you say that will not be in agreement. you also are saying this agreement cannot mean the end to opec-plus. does this mean we could see an exit by the uae? >> what is speculative for all of us is why they do not. they've never complained before signing the agreement. they've never dug their feet on

an issue like this. why now? it is an extension of eight months, and there is a solid logic behind it, and as it has been accepted by everyone. matt: great interview there. hopefully annmarie gets the equal to that as well as she was offered. bloomberg's will kennedy joins us. i should say hopefully they come to some kind of agreement. for markets that is what we would like to see, that the uae gets in line with production extension or opec grants the uae some kind of solution. could they come up with a band-aid and then try and deal with not only the uae but also

everyone else? will: opec normally is a compromise as you suggest. right now it is looking quite far off. we are due to start talking again in 90 minutes. i think you see in those tv interviews with the prince and his counterpart that the positions are quite -- the uae position is everyone wants more oil, the market wants more oil, let's put more oil in the market. what we can't countenance is an extension of the deal beyond its original length of april 2022 that is because the mri these -- the uae insists that with what they signed up [indiscernible]

a bigger burden that other producers. there's not much appetite to reopen that conversation among other members because the plan suggests it will be some members, notably russia that should produce that quota and that will not be on the table. matt: excellent insight. thanks so much for covering this for us. will kennedy covers oil and energy for us at bloomberg. tom petrie joins us on the phone for his take. what do you think about the stalemate that opec finds itself in right now. what kind of solution can you see? tom: i think first and foremost, the uae has high confidence in its ability to bring on more production. they are making this bid at this

time for several reasons. number one, saudi leadership is somewhat in doubt compared to times past because of the legacy from the war in yemen, which is a debacle, and the jamal khashoggi embarrassment that occurred. secondly, iran is looking to come back. they recognize iran coming back could be a market share challenge for them at their current level. most importantly, they are motivated to establish themselves as getting a better quota than they have had historically because they have a better ability to meet future production needs. you talked earlier about a possible short-term deal, and opec breakup, or a realignment

of volumes. what they are going for is a realignment of volumes. this is the opening bid for a discussion. it may well turn into a short-term deal while they have that. they are not fighting over price. they are fighting over the re they will play over the next three to five years, really a decade. i would say climate change enters into it as well because there are real questions about what the real long-term planning should be for opec given the nature of what is happening in the western markets, the global markets for that matter. matt: in the western markets, the integrated players, they have come in a sense, structural supply constraint. you've seen these activist shareholders jump up and say on

the one hand you have to lower your carbon footprint, but on the other hand we want bigger payouts so we do not have as much money for exploration anyway. what kind of questions and answers is opec going to have to the climate change issue? tom: they are beginning to rethink what they want to get done and it has become clear to them that they have a period from now until maybe 2045, 2050 the harvest their petroleum resources and figure out what the nature of their economic positioning is in a totally different context and the second half of this century. that is behind some of this. the uae is probably the one country that has an ability to almost double output.

saudi, there are reasons to wonder, given other issues that are going on. the challenge of iran is revealed. they know iran will want to come back. in fact if they do enter into another nuclear agreement. i think you have this other opec member staking out its position in future negotiations. how tough they stay on this versus willingness to embrace a short-term deal, they have all but conceded they will do a short-term deal, but they have signaled they really want to talk about a more comprehensive realignment of quotas coming out of that. matt: it is clear world wants to

do another nuclear deal. now we have this political ranch thrown into the works in the form of the recent iranian elections. can opec get a realignment done in time for iran to come online as well? tom: don't know. it is a hard one to call. i think that is one of the motivations for the uae to surprise everybody. you heard it in the saudi oil minister. they have never done this before. why now? several reasons. saudi leadership in the gulf region is not as robust as it has been in the past for a variety of reasons.

this is not a desire to break it up totally. this is a bid toyou've not prova solution for that one. they are thinking more independently because they can see their opportunity in their development of their resources needing to be accommodated by other opec members. matt: great to get your thoughts on this. tom petrie talking to us about oil. let's get to bloomberg first word news with laura wright in london. laura: saudi arabia and the united arab emirates have ramped up tension in their opec standoff. that is left the global economy guessing how much oil it will get next month. the saudis once opec and its

allies to increase production and extend the broader agreement through the end of next year. the uae once only a short-term deal. prime minister boris johnson is urging britain to exercise judgment when coronavirus restrictions end. the government is preparing for the final unlocking of the economy does go weeks. at the press conference boris johnson will say -- as it does with the flu. the vatican says pope francis is in good condition a day after he underwent surgery to remove half of his colon. he is expected to be hospitalized in rome for seven days. 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. i am laura wright. this is bloomberg. matt? matt: coming up, mounting optimism surrounding the state of the global corporate tax deal. that conversation next as

ministers meet in venice. this is bloomberg. ♪

matt: this is bloomberg markets.

the u.s. is gaining international backing for a global minimum tax rate. german finance minister olaf scholz sounding optimistic about eventual support. >> optimistic about the agreement -- we have made already the first step for this decision in london and we are now, knowing we agreed on the oecd and we will continue to work on it in g20 in a few days. now i think we will have a good chance this will be supported by the parliament, in the united states, and other places. we will have a fairer way of taking your own decisions from taxation and we are not anymore and forced at what the others do. >> janet yellen, yesterday i

know you met with one of the democrat chairs of the ways and means of committee, democrats, they think they can get republicans on board to pass this? republicans do not like an increase in taxes. >> what is true is united states already has a tax guilty which is similar to what we agreed on the global level. i think there would be good reason for many members of the congress to support this new international agreement because it is something which is a continuation and making a good agreement on the global level. now it is a good reason, also for the congress. it would mean they can take their own decisions on taxation and not be afraid because in some countries there is a lower taxation, as it is in the united states, this has negative impact

on the strategies that could be followed. >> let's talk about some of those countries in the european union. ireland, hungary, estonia, they are not on board with the minimum global tax. how will you get them to sign up? >> 130 states agreed, more than 90% of the world gdp. this is something. i know even in the past many countries are not supporting the proposals right from the beginning supported them later. there is a train on the track and i think it will continue to go. annmarie: anything you're willing to give to the countries to get them on board? >> the experience in europe was all of the global agreements have been affected by all of the member states. annmarie: all of the member states. do you think at some level this is not fair for countries like estonia, ireland, and hungary.

this is their leverage to compete with powerhouses like france and germany. do you think they will want more from the eu? >> the eu is very solid union. we give a lot of money to those member states who have the need for a better development, and even with this crisis we developed a recovery program for the first time, a big figure of european bonds and use this money for grants to those countries that need support in the crisis. there is a corporation which is something. all the countries you could rely on. on the other hand, it is not about the taxes a country has to raise. it is about making a business of the fact that of taxing corporate's no business of their own but helping them avoid tax in countries where they have the business. matt: that was german finance

minister olaf scholz speaking with annmarie hordern. joining us is jamie cox of harris financial to talk about what to make of these markets. we have so many moving parts for a holiday. it almost seems like it is not. what you expect to happen out of washington? it is so important to continue to get funding. james: i do not think you will see much in the way of stimulus. if you take any information from the latest negotiation regarding the infrastructure bill, it will be very difficult to get anything through the heavily divided congress. i think tax policy is something investors have been worried about for the last couple of months, maybe even since the new administration has been elected. i do not think they will be able to do a lot in terms of changing

tax policy. on a talk about the minimum tax for global corporations. in the u.s. it will be a very tough sell to get anything through, even the house financial services committee. then we get into the senate, good luck. with senator joe manchin and senator kyrsten sinema, they are in a terrible spot. i do not think you will be able to do much in terms of tax policy, which is probably a good thing for markets. taxes and the changes will be a 2023 item, the same way as the rates. that will be pushed off to the future, which means markets are in a blue sky area where you have low rates, plenty of stimulus, and the global reopening of the economy where it is flowing from country to country as things get matter -- as things get better. not a lot in the way of taxation

so it will be good for investors and will be for probably a year. matt: with regards to the global minimum tax, good luck getting it through the european union as well. they have 27 countries that need to ratify this. at least three are against it. in terms of the u.s. specifically and the fiscal stimulus, at what point did it start to worry you that we get to that cliff and there's nowhere else to go? james: with stimulus it is an interesting thing. what you hope is when you introduce stimulus it gives way to a maximum economy. that is where the fed is. they do not know if the stimulus will be this one-off thing where you get a major falloff in demand after the stimulus, or is the economic recovery durable enough to be able to pick up

once the stimulus has waned? that is one of the reasons they are being very patient on interest rates. i do believe a lot of people are missing out on the durability of this recovery. people take a look at prior instances like the global financial crisis and try to use those as their base case for what the next couple of years looks like. i think the fed is missing the point. there is an enormous amount of economic activity pushing through the system. in addition to that you have big global themes that have come through that have happened during the period of covid-19. the innovations in health care, some of the innovations in productivity from working from home. we have not seen the benefits of the productivity yet. we will see may be surprises to the upside people are not necessarily thinking -- maybe not as good as they really are. you will see that throughout the world because you see israel,

china, the u.s., europe. matt: james cox from harris financial group. more bloomberg markets ahead. i am matt miller. this is bloomberg. ♪

>> from the financial centers of the world, this is "bloomberg markets" with alix steel and guy

johnson. guy: live from london, i'm guy johnson. alix steel is off today. this is bloomberg markets. we will discuss the latest from opec-plus. talks may or may not be about to resume. sebastien galy will be joining us. we will also update you on what is happening in china. china cracking down on the ride-hailing app just after its u.s. ipo. and we will preview a meeting between xi jinping and european leaders later this week. it is monday, july 5. what does that tell you? u.s. markets are close. fourth of july yesterday, as result of which we have too

polite volume in united states, i.e. none. very light volume session. in terms of clues as to where we are going next, probably best to wait until tomorrow. european stocks are at session highs. a briefing from boris johnson at 5:00 london time talking about the reopening in the u.k. he is pushing on with that with brent not knowing what to do. we will talk more about the oil market throughout the hour and i want to highlight one of the big deals roiling markets in london. we are potentially looking at apollo stepping in. there is an offer on the table. let's get back to the main story. opec-plus talks may or may not be resuming right now. we do not know. no signs the healing the group

is looking for is happening. they are trying to resolve a baker split between saudi arabia and the uae blocking oil output. over the weekend we heard from both of their energy ministers. listen to what the sides have to say. >> we will continue until the end of the second [indiscernible] beyond that, we have the right, we demand letter time to discuss and put our grievance in front of the globe. >> the agreement requires we bring more production. honoring the agreement, we should kickstart with as many nations that agree. guy: that is where we are. that is where the two sides are. normally saudi and the uae on the same page, they're

definitely not right now. let's bring in bloomberg's emily lost thomas -- emme ross thomas who leads our commodities coverage. we do not know where this meeting will be taking place. emme: that is right. the meeting is meant to be restarting now. these meetings often start late. what we are hearing from the delegates is an effort to find consensus has not yielded anything. we think the meeting is about to restart, though there is question a if there is any point of sitting down to a meeting if no progress has been made on the sidelines. as you said earlier, it is rare to have such an in the open spat between these longtime allies

that suggest they promote combinations among long-term opec watchers. we have the price war last year, russia versus saudi arabia. this time it is saudi versus the uae, or in the words of the saudi minister opec-plus against the uae. guy: yes. i am sure that is the words he used on that side. the question from the market point of view is a tricky one. the markets seem like they are caught in the headlights at the moment, because on the one hand you will have a lot more oil or significantly less coming onto the market. emma: that's right. one option as they reached some kind of consensus. if there is no deal, then a fallback option is the current deal, and that would mean no extra barrels in august. the alternative, the more dramatic alternative is a whole

deal unraveled, and that means a free-for-all. that would be very bearish. last year the uae did float the idea of leaving opec. never on the record. they did not deny it. we will have to see whether that is part of the discussion now. no one has forgot that was a threat last year when they first started talking about the baseline, which basically means the uae's share of the production cuts, which they argue was unfair to them. they are happy to increase production in august but they do not want to extend the current deal to the end of 2022 unless their baselines are renegotiated. guy: emma, we look forward to the continuing coverage. there is a live on your

bloomberg comment is highlighted in red. the opec-plus meeting on outputs. whether there is a meeting we still do not know. let's get more on this story and the economic invocations. -- the economic implications. sebastien galy joining us now. emma laying out, you can have the fallback position where we get less oil than the market was anticipating, or we get a breakup, we get some sort of everybody going in their own direction kind of scenario, that could been oil going down quite sharply. how do you deal with this situation? do you sit on your hands and wait for one of those things to happen and then react? sebastien: a very uncertain situation. what is most likely to happen is you're dealing with two close allies in these allies are in conflict, they go in public. that means the population is being brought in and that means an escalation process and then a

de-escalation process. a de-escalation process can take a week or two weeks or three weeks so we know the deal will be dramatic in the sense it is unexpected. the more likely scenario is does go to three weeks down the road, we will get a deal with the uae and saudi arabia. for now the value is too strong. it is a dangerous moment. next weekend, probably we will get a deal and we'll be able to deal with the summer season thriving in the higher demand. guy: in the interim period, that is a huge period of uncertainty. do we stick where we are? do we go down? i'm assuming there'll be a lot of volatility. sebastien: people say there might be a breakup. a breakup is much more dramatic than this.

oil will test new highs and that will create a reaction function to try to get a deal because they do not want to kill the oil market. there is too much inflation. it is negative demand. they need to maintain levels around $80 or $70 phrasing to get amount of time. guy: in the interim, you say we could move the upside. is that up to $80, beyond $80? how do you play this? sebastien: probably looking at somewhere around $80, maximum $85. it can go very badly very fast. of course what you hope for is it goes down much lower and it helps a lot of assets that depend on lower oil prices. guy: that was my next question. what is the derivative trait of this? if we will have this period where we see oil prices drifting

up, is it buying the majors? sebastien: if oil prices go up, if inflation goes up it eats until your disposable income which is negative -- it eats into your disposable income -- think of japan, there's different ways to do it aced on the metrics around the world, but it is a negative shock. $10 is not the end of the world but psychologically it can matter a lot. when ghastly prices constitute four dollars in united states there is a hit on consumption and that will be negative for the equity market. if oil prices go to $85 to $90 you will see a stock market down. guy: you need to subdivide and be more nuanced than that, don't you? the u.k. is heavy with oil stocks. would europe be a beneficiary?

what happens in the united states? what happens to the oil patch there? we could see some of them were medium-size shale started to think about piping more. walk me through how it plays out. people are wary about owning the oil sector. could this be a catalyst? sebastien: -- until now so uncertain about the prices to give back money to investors to improve their balance sheets. eventually what would happen is oil prices become more profitable and production does increase, but increases a month or two months down the road. it is very positive for this, it is very positive for equities, very attractive from that point of view. other places such as the philippines, not at all. guy: in terms of how this will affect people's view of the inflation debate, will people view this as a transitory

factor? sebastien: it is transitory in the sense we know opec needs to maintain oil prices at a certain level. it comes online and benefits it strongly, and as prices collapse we know they are looking at shale oil and how shale oil production increases. they need that production to stay not dominant, and generally speaking it is an interesting phenomenon we have from the inflation point of view. based on the fed, they will look at this is a transitory factor, not a permanent factor come and ignore at. if it becomes an issue, then you could have the fed becoming less hawkish on the fact inflation has risen, which is a strange thing to do but a rational thing from the point of view of the fed. guy: you cannot drive halfway to work.

stick around. plenty more to talk about. sebastien galy. he will stay with us. more we need to discuss. it is a fairly busy week. fed minutes, ecb account, lots of talk about that. this is bloomberg. ♪

guy: fourth of july celebrations at the boston hops -- at the boston hops. -- at the boston pops. u.s. trading back tomorrow.

we wait for the u.s. return. let's look at the week ahead. we have the fed minutes coming up. sebastien galy still with us. we finished the fourth on the fireworks. any fireworks from the ecb on the bed this week? sebastien: i think the fed minutes will be interesting because you are seeing us low 50's from a duck -- a slow drip from a doctor stance to a more prudent risk management strengths -- a slow drip from a dovish stance to a more prudent risk management stance. as it slowly prepares the market for a drift, we note we will eventually talk about more tapering before bond tapering. the slow process has started with voices for public consumption, and that transition will have -- will have an increasingly. not a hawkish fed but a fed

transforming itself like a butterfly, that process is starting. the minutes will reveal some of this. guy: you think there will be concern voiced within the minutes about what is happening in the housing market, which is superhot in the states and the fed is feeding that feat at the moment, many would argue, by what it is doing at the mbs. you think there will be a hint the mbs taper will be coming soon? sebastien: i think we are seeing the first signs it will be targeted towards the real estate market. it is doing well for good reasons. securities very tight. behind that is the fact that funding is extremely cheap and the bond purchases of mbs. it is a great story economically. what they need to do is do something. the first discussions have happened. i think that will be revealed more in the fed minutes.

there probably rising concerns regarding this. that is part of the slow preparations. the change will probably happen in september. guy: we have a vic's at 50 -- we have a vix at 15. will we see any volatility? sebastien: no, it is a preparation, it is subtle shifts, but the actual shift will happen much later. people are off on their holidays. we lacked a trigger for something bearish. i think the vix can stay at these low levels. we are at absurd levels from an economic point of view. we know the fed has made everything very expensive, including volatility -- or very cheap, conversely. that is unstable. it can have a beautiful

narrative for many weeks to come. guy: really appreciate your time. sebastien galy. greatly appreciated. still ahead, china expanding its latest crackdown on big tech. beyond meat big headlines over the weekend. both countries -- both companies recently listing on the new york stock exchange. what is happening, u.s. investors are looking at this and scratching their heads. we will talk more about this next. this is bloomberg. ♪

laura: it is time for the bloomberg business flash. a look at some of the weakest business stories in the news. i am laura wright. the unit of canadian investment firm brookfield has agreed to

buy recreational vehicle supplier for $3.4 billion. deck soap makes axles for rvs. recreational vehicle manufacturers have got a boost from vacationers looking for safer means of travel during the pandemic. shares of british brochure more since jumped today. -- shares of british grow sure -- grocer morrison jumped today. the company rejected offer from private equity firm -- that is the bloomberg business flash. guy: china's crackdown continues. beijing has bailed ride-hailing giant didi from app stores. last wednesday didi had its u.s. ipo. let's talk more about this. bloomberg opinion columnist joining us for her take on this. my first instinct was are u.s.

investors being taken advantage of here? >> i feel like the chinese have a saying, basically taking advantage of unsophisticated retail investors. [indiscernible] just does go days after this disclosure from the cybersecurity watchdog. there is a sense of didi -- so to speak. the implication is didi knew something was coming. is that the correct assumption? >> didi knew it had a lot of regulatory issues because in april after it was shaman -- after it was summoned with various watchdogs and

cybersecurity -- it doing had a lot of issues. [indiscernible] this is as good a time to go public as ever. guy: what you think the implications are for future chinese ipo's? >> this comes in a very bad time because if you look at the chinese ipo, june was a very busy month. chinese companies raised almost $8 billion from the ipo, the most since september 2014. investors are going to take a second look and say perhaps the u.s. government is correct. chinese companies do carry a lot of risk. guy: what you think that

regulatory response will look like? regulatory authorities in united states have been morning and have been pushing back a little bit. do you think we get a more sustained pushback from regulatory authorities in the united states about what has been happening? >> i don't know if the u.s. government will move that fast. the sec is still waiting to approve bitcoin and so on and so forth. the u.s. investors will do a little bit of pushback. this didi issue is quite new. in the past we heard about antitrust regulations and we knew the antitrust watchdogs would basically slap to present a 3% of your annual sales. the cybersecurity watchdog is brand-new. it could be anything. the cybersecurity law is big. the fine can be 10 times the

so-called illegal proceeds. i think u.s. investors will have to take a step back themselves. guy: we will leave it there. bloomberg opinion columnist shuli ren. we will continue the theme next and talk about what is happening with the eu and china. there is now a meeting slated between emmanuel macron, angela merkel, and xi jinping later this week. a videoconference. we will try to figure out what that means in terms of the eu relationship with china. we will do that with carsten nickel. that conversation coming up. this is bloomberg. ♪

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matt: -- guy: live from london, i am guy johnson.

it is monday, july 5. u.s. markets are closed for the fourth of july, as a result of which, like volume. some interesting turbulence beneath the surface in terms of the sector story. the stoxx 600 not doing anything. up around .4%. below it, look at what is happening. banks catching a bit, up 1.7%. barclays one of the stocks they did not charge. he also of the basic resources tracking higher -- you also have the basic resources tracking higher. then you have the travel and leisure sectors, which is certainly bouncing back. yet the airlines beginning to track higher, more positive news in terms of reopening out of the u.k. that is something to watch out for. the delta variant, we still do not know what is happening in terms of its trajectory and what the implications will be.

cases are rising but hospitalizations and mortalities still an open question. it was a subject discussed a great deal this weekend in the south of rants -- in the south of france. the economic conference taking place this weekend in person in the south of france. the french and european business leaders meeting in person to discuss the recovery and the political impact of the pandemic. karen kearns was there and spoke exclusively to the french industry minister, the german economy minister, as well as the ceo of michelin about the risks that remain. >> we need to be cautious. >> we are still in crisis. india is still in massive problems. south america is in big trouble. southeast asia, excluding china, they have started only a few days ago. >> the crisis is not behind us.

the fundamental drivers of recovery are there. >> monetary stimulus, the strong surprise in how the machinery of the companies have been preserved. >> the point is now to have the most people being vaccinated in the less time possible and to ensure we have a close monitoring of the circulation of the variant. >> a combination of fundamental growth, vaccinations, very positive trends to see the months ahead of us. >> the economic recovery, i'm not anticipating anything happening before 2022. gu france. carsten nickel joining us now.

at the moment it feels like europe is on track for a recovery. we will get news for boris johnson later on despite high case counts in the u.k., despite the delta variant picking up, the u.k. will continue to reopen. is that the model we will see across the rest of europe? carsten: it is the model the rest of europe is aiming for. obviously what we have to keep in mind is looking at the difference between 20% to 30% in terms of share of the population -- the u.k. is leading in europe. that is what we are seeing reflected right now in terms of the difference in tone coming out of london today from the prime minister and then comparing that with the news we've been hearing out of places such as spain and demon germany

where cases were extreme -- and even germany where cases were extremely low but it remains a race against time with the delta variant. u.k. and europe perhaps heading in a comparable direction but the u.k. is far ahead right now. guy: we now have the vaccines in europe. people are traveling once again. what is the rest of the summer going to look like from not only virus perspective but an economic perspective? the two are heavily linked. carsten: the two are heavily linked. i think the fear of causing large parts of common or europe -- it is we are losing the race against time with a view to the september target that has been said by many member states of the european union for having sufficient levels of vaccination in place, situation the u.k.

probably finds itself in already. in terms of social and political risk we are looking at, it would make sense for politicians to look back at a situation we had last summer. we were forced to go back into the second lockdown scenario across europe afterwards, something everybody hopes we can prevent this time. in terms of social cohesion and the political ability of making that happen, i think we could always see -- we can already see the ability was much lower in the second half. guy: is that politically palatable? if you are angela merkel or emmanuel macron, you have elections coming up. are you going to allow yourself to be in a situation where it gets out of control again on the eve of an election? carsten: that is precisely the concern. are you the one who allows that or are you the one with a couple of weeks ago brings the news we

are headed for a third type of lockdown? that is the big fear, looking back at last summer, last year, how difficult it was engineering it for a second time. my concern is the ability to engineer that for a third time is it would become necessary would be even lower than it was last time. i do not see any serious preparations going on, at least visibility among european leaders. nobody wants to be associated with discussing such a scenario at this point. guy: you talk to investors in the states. they firmly see europe on the same trajectory as the one we are seeing in united states. can we compare the two? carsten: i don't think we can at this stage. still looking at a couple of weeks to three months of real risk where we need to see whether continental europe

manages to catch up with the u.k., much more comparable to where we are in the u.s. it is looking positive overall, but if you look at political reactions over the weekend to these increasing news about the spread of the delta variant, we are not out of the woods yet. guy: i want to pivot and talk about another subject. it looks like we will have a meeting between emmanuel macron, angela merkel, and the chinese leadership, xi jinping leading that conversation. how would you characterize the way you think europe will progress with this? it is under considerable pressure from both sides. the united states, more hawkish stance, from china to try to find more middle ground and not focus on human rights. can angela merkel or emmanuel

macron thread the needle with this, because it is pivotal for german industry? carsten: and will they be around in about a year from now? in the case of angela merkel we know this will not be the case, and looking at the outcome of the election in germany, you're looking at a green chancellor or a green foreign minister and finance minister. we know they are looking at a much more balanced approach in foreign policy which would not make things easier when we are looking at the relationship with china. in terms of characterizing the relationship and where we are, i think it is incrementalism. against the backdrop of what we have seen between europe and china, is already positive news if we can see both sides keep talking at this stage. guy: cap easy at developing? it -- how do you see it bella paying? -- how do you see it developing? german leaders trying to urge

their political leaders to take a stance when it comes to china. do you think that is possible or do you think we are heading towards a new cold war and where that would lead europe? carsten: i think it is possible but it will require a lot of political management and that is very crucial at a moment in time where at least in germany we will see a real transition of power. balancing between these two competing demands you were just pointing to. then obviously for domestic journalism. at the european level, there is a lot of talk about coming up with the china strategy and all of that stuff. the problem remains many member states do not cii when it comes to china, balancing between the human rights concerns on the one hand and economic concerns on another. guy: jacob ballpark a huge industrialist in sweden talking

about the fact that we have to make this work. business is getting concerned about how this relationship will evolve. what do consumers think about what is happening? how engaged you think they are? how do you think that ultimately filters into this process? carsten: i think we have to differentiate. we are looking at our rising consumer class and you see the equivalent of that in the polls across europe in support for green party, modernized liberal parties such as emmanuel macron's in france, modernized center-right parties like angela merkel's in germany where there is growing pressure for more of a conscious -- at the same time, especially in smaller economies of europe, there remains a strong core of manufacturing

where employees and voters will have a strong interest at close ties with china. guy: we will leave it there. always interesting. carsten nickel. thanks for joining us. coming up, ransomware, thousands of companies falling prey to another ransomware attack. robert lee telling us what is behind the latest attack, basically a string of cybersecurity attacks. vulnerabilities clearly exist. we'll talk about all of that, coming up next. this is bloomberg. ♪

guy: here we go again. a massive ransomware attack has hit -- another ransomware attack. the group blamed the may 30 attack on meat packing giant jbs is believed to be behind this latest round of attacks targeting companies. going is now is robert lee, dragos ceo and cofounder. specializes in this area advising governments and industry. robert, thanks for your time. talk me through the level of sophistication, what was targeted and what we can learn from it. robert: absolutely, like you said. what that means is that company is providing services and software to companies that will then provide additional services. when that company gets hit, the

initial 30 to 40 entities getting impacted does not seem that large, but when you realize each of those have hundreds of customers coming getting into hundreds come upwards of a thousand victims across the world. as we saw in sweden, co-op got hit and they had to shut down 500 stores. this is one of the largest ransomware attack's we have ever seen. guy: is getting money the objective or is there something else going on? robert: by and large it is absently criminal in nature for financial purposes. the payments, which used to be $500, $5,000, now we are seeing $50 billion payments. in this case they have asked for $70 million to unlock all of the systems impacted. when you see criminals operating out of countries as a safe haven , with no real consequence,

getting paid in tens of millions of dollars, you're absolutely going to fuel those operations and we will see more of these cases. guy: if the bill is paid, how quickly to the services come back? robert: generally not very fast. the decryption keys usually work. they need to have confidence with the consumer the keys will work. there is some issues getting the keys to work to get access back to your system. more importantly, even if you get access to your system comey still to restore the networks in the biz -- you still -- even if you get access years dissed him -- even if you get access to your system, you still have to restore the networks. we see this with many companies, where they pay on day one or data scope the attacks and filters down for months.

people getting turned away, hospitals with different attacks. we saw the colonial pipeline attack that stops you will delivery to the east coast of the united states. it is getting untenable and governments will have to take a more strong approach on these criminals. guy: what does that look like? robert: the first thing has to be some level of international cooperation to make sure the countries these criminals are operating out of cannot be a safe haven. sometimes we talk about russian based, sometimes european-based, but there are a lot of groups coming out of that region. you try to get to some agreement were criminals operating against foreign countries and foreign businesses do still get prosecuted and do still go to jail. president biden and president putin tried to talk about this in their latest meeting but i do not know many people in the security community are holding a

lot of confidence in discussions at this point. guy: you do not believe those discussions will go anywhere. i'm a ceo of a company and trying to figure out -- i'm seeing everybody else getting here. what you do? robert: the very first thing is have a plan. it is likely going to happen to many businesses. for all of these companies, they need to think about how they will respond. are they going to pay or not needs to be one of the first conversations. where are security gaps and how the -- and how can they invest in security to reduce the frequency and the impact of these attacks and how will you restore it? if an attack happens, regardless of how takes place, what is the disaster recovery plan, are we actually going to be able to get back up and running and how you communicate your consumers, especially for some of these businesses that provide services like grocery stores and health care providers, how do you get

that message out to everybody about what has occurred and what to expect next? half the time is the communication piece that lags the most. guy: are companies spending enough? i do not mean on paying the ransomware attack's, i am talking about making sure their systems are hardened to these kind of attacks. a lot of these seem to be coming in through third parties, subcontractors, would you do not normally expect trouble from that direction. robert: absolutely. generally speaking there are those companies that have done enough and you never hear about them. they plan very well, they have good response plans, they have thought through this, they are ok. the vast majority of companies do not fall into that community. there are a lot of companies that are not investing enough. it is not that they are incompetent.

you look a lot of the guidance the companies have received, a lot of the guidance is how to prevent attacks and eventually prevention will fail. not a lot of the guidance on how to respond to these incidents when they occur. that is where we see a lot of the gaps. where these companies have not plan for the incident or thought through how to restore. sometimes the measures put in for security are misaligned with where they need to be. that doesn't count for most of the cases we have seen. -- that does account for most of the cases we have seen. the small and medium-size businesses are not going to have the resources to invest in all the different security efforts they have to do so they should be using service providers. the service providers and the people with more privileged access do need to think very closely about their responsibility and how they are taking care of their customers to make sure the impact of these incidents are not as big as we are seeing now. guy: all useful.

robert, thank you very much for your time. robert lee, dragos ceo and cofounder. more on this over the next hour. we will get more as we work away through the program. this is bloomberg. ♪

laura: let's check in on the bloomberg first word news. the global economy now has to gas how much oil it will get next month after a standoff between saudi arabia and the united arab emirates has not been resolved. the saudi ones opec to increase production and also extend a broader agreement to the end of next year. the uae once better terms for itself and argues the proposed agreement to extend limits to the end of 2022 is unfair.

in south florida demolition crews used explosives to bring down the damaged remaining portion of that collapsed condo building. authorities say they needed to do so so rescuers searching for the victims can gain access to new areas of the rubble. so far the remains of 24 people have been recovered. 120 one others are still missing. president biden has all but announced the end the to the pandemic in the u.s., celebrating what he calls a heroic vaccination campaign on the country's independence day holiday. the president missed the goal of having at least 70% of adults in the country getting at least one dose of the vaccine. the total is 67%. 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. i am laura wright. this is bloomberg. guy: thank you very much. let's pick up on what laura was saying about what the president

was talking about over the weekend. certainly celebrating the fourth of july weekend, there was laura was saying missing some of the targets. i think that could come back quite significantly. we are looking at how the delta variant is evolving in europe. today markets tracking higher. equities getting a lift in europe. with u.s. closed on the fifth of july, very light volume in europe. the equity market, the stoxx 600 up 3%. -- up .3%. the pound up a few percentage points as well. we are waiting for boris johnson to make an announcement later on. banks are higher, basic resources higher, travel and leisure higher. back to the opec story in a moment. this is bloomberg. ♪

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>> from the financials enters of the world, this is "bloomberg markets," with alix steel and guy johnson.

♪ guy: monday the fifth of july. i'm guy johnson. this is "bloomberg markets." a quick look at where we are with the markets. a little bit less of a focus on what is happening today. very like volume. the u.s. is out. it is the fourth of july, fifth of july holiday. as a result, very like volume. the dax fairly flat. the cac catching a little but of a bid. i think that is the narrative area and you are watching what is happening in the commodities with a great deal of interest today because that really is the story that everybody is watching out for. as a result of this split we got at the core of opec, opec less, it shows no sign of healing at this point in time. we simply got a better spat between saudi arabia and the

united arab emirates. it continues to so no sign of healing at the moment. they are taking to twitter. over the weekend, the energy ministers from post-abu dhabi and riyadh talking to bloomberg. let's take a listen to what they had to say. >> we will continue to sacrifice until the end of this agreement. that is our commitment. but until then, we demand to discuss and have the time to discuss and put our grievance in front of the group. >> an agreement requires that we bring more production, but to complete honoring the agreement, we should kickstart with that agreement which means we have to extend. dani: the view from both set --guy: the view from both sides. they are really making it clear where their positions are. let's get a take on how the oil

market is dealing with this. julian lee joining us. let's focus on the potential outcomes here and how the oil market should be thinking about it. we've basically got an oil price that is fairly stable. no one knows quite which way to jump. what is your assessment of the price of oil? julian: i think the market is really struggling at the moment because things could go in any direction. if we get an agreement, it looks like we will be getting 400,000 barrels a day more in august and september, and go on either until the end of this year or but didn't really until september next year. i think they agree on something

all the way up to september 2022. that is going to get revised as we see whether iran comes back or not, and how demand materializes over that period. but there is this possibility if a deal can be reached that we will get more oil. at the same time, there's the possibility that if a deal isn't reached, we stay where we are at the moment. the increase they had already agreed for july of about 850,000 barrels a day, that goes through. but then after that, no more. if the projections of strong demand growth in the second half of this year proved correct, then we are going to see a world short of oil. stockpiles are going to continue to be drawn down, and that is going to be quite bullish. the third possibility is that we don't get an agreement, everything falls apart, the

opec+ group of countries ceases to exist as a cohesive unit. everyone is then free to pump as much as they want. the uae moves production towards its claimed capacity of close to 4 million barrels a day. saudi arabia opens the taps and we are back where we were in april 2020, with prices crashing. i think everybody wants to avoid that, they are so scarred by what happened last time. but things could go any way from here, and i think that is why the market is doing, which is moving very little. guy: really hard to get a read of what is happening with prices at the moment. everyone struggling to understand what is going on behind the scenes. thank you. let's get another voice on this. rita send -- amrita sen, energy aspects.

you can get into the weeds with what is happening with the oil market and how many barrels we are going to have, who is going to be pumping them, and where baselines are. what i am trying to understand is what is this argument about? is it just about oil? is it about baselines? or is it something more? if it is, it almost makes it more intractable. amrita: i think you are asking the right question because it is clearly not just about oil. remember, late last year there were similar concerns raised by the uae. there were also voices from within the uae, even bloomberg ran stories about how they wanted to leave opec. this is wider. this is about slight differences in foreign policy between the two leaders, about the importance of uae in the region. uae obviously wants to be taken a bit more seriously. your point, it does make it more difficult because this is not

just about oil. guy: if that is the backdrop, what do you see happening here? amrita: it is a really tricky one to call because like you mentioned, both ministers have now gone on record. it has become quite public, this spat. you need a deal which is also face-saving for both parties. i think that is where the difficulty lies. both sides need to be able to go home and say this was a win for me, and right now, neither side is willing to move. i agree with julian in the sense that neither side once a collapse -- another side wants a collapse. everyone remembers it very well. but this might take longer. i am not 100% confident that we

will necessarily it a decision today. guy: brent crude, $76.07. it is going nowhere. what is the plus and minus on that number depend money potential outcome here? amrita: the tricky thing is there is a deal in place right now. we've never had opec come up with a two-year deal in the past. so what this means is that if there is no agreement, the fallback should be the existing deal for no production increases through 2022. on paper, that is extremely bullish. the market is already tight, so there's going to be no incremental oil, and iranian barrels don't look like they are coming back anytime soon either. we don't think it is going to be before q4. that should take prices well above $80, but i think the market is going to be quite worried about what does this mean for opec plus, what does this mean for the future. could it be a free-for-all?

that is where i think it is going to be tricky. we will get much steeper backwardation, but prices might just stay here because the market will have those concerns. guy: if you get that second scenario, depending on where the baseline is, there's the fallback position, but there is that third scenario of everybody just going out on their own and pumping as much as they like. in that scenario, what does the oil price look like? amrita: i think then you're going to go back into the safeties. but the 5.8 million barrels a day of spare capacity that everybody talks about, that is just on paper. we've done a lot of detailed work on this, and we don't think there is much more than 2.5, 3 million barrels per day. there's been a lot of production capacity lost.

we think it is really going to be 2.3 the comes back. that's why i don't think the downside is going to be as dramatic, and demand is going up. there will be a knee-jerk reaction, but we shouldn't be going down much further. and iran keeps getting delayed, and the man has definitely -- and demand has definitely improved. guy: does opec+ believe the big shale producers when they say they are going to be disciplined? if they are, they could push prices up a little more without shale coming back aggressively. amrita: i think they do believe the bigger shale companies. the problem is that the privates have been increasing rates of production and taking higher. they are keeping an eye out, and russia has made it pretty clear that they shouldn't just forget about the fact that u.s. production is rising, even though they are keeping rates pretty stable. but yes, i do think it gives opec a bit more wiggle room, and

this is why saudi is saying let's extended to the end of the year. that is with iran coming back, potentially shale surging, or demand we can. they need that flexibility. that is why they are pushing for the deal to be extended to year-end next year. guy: coming back to how the market is structured and shape, are you expecting a significantly more volatile energy price going forward? amrita: yes, absolutely, given the lack of spare capacity. we think global oil capacity goes down below 2% by the end of next year. that is an incredibly thin margin at a time when shale production isn't as responsive. we haven't had that in lover it to kate. so i think you are going to see very volatile prices. guy: always a pleasure. thanks for jumping in and giving us your perspective on this. amrita sen of energy aspects,

thanks very much. we will talk about the economic implications of what these higher oil prices might infer the global economy and europe's economy. simon wells, hsbc chief european economist, joining us next. this is blue. -- this is bloomberg. ♪

♪ guy: let's get back to that will story -- that will story. if we do get -- that oil story. if we do get significantly higher oil prices, what is that going to mean for the economy? joining us to discuss that and

more is simon wells, hsbc's chief european economist. we don't know what is going to happen with opec. the market is very much sitting on its hands. we've got a $76 oil price on brent. what would $10 a barrel on top of that mean for your economic models? simon: everyone loves a rule of thumb, and the rule of thumb for europe is that 10% on the oil price probably adds 0.2% to the annual inflation rate in the euro zone and 0.1% in the u.k. we had a near 20% rise from the end of q1, so we are looking at navy 0.4% -- looking at maybe 0.4%. it is another 0.1% for every $10

we move up. it is only a rule of thumb. guy: usually you would look at europe and think it is relatively insulated from things like this, inasmuch as there is a high degree of taxation that is applied to gasoline, and as a result of which, price rises at the pump doesn't actually have an impact when you are filling up your vehicle. is that the case? when you look at what is happening broadly with europe, is it going to be more insulated? when we think about the european recovery, this is something that is not going to knock it significantly off track? simon: i think it is right. spain is a bit different. but i think we have to look at it in context. if you take out eurozone inflation, for example, we've got a do .9% peak in november

now on headline cpi. if you start adding 0.2 that, you are suddenly at 3.1. this is coming up ahead of a german election. that's the sort of thing that could really make ecb's lives very difficult. it is probably not going to affect the growth outlook that much, but if you are a central bank at the moment, trying to persuade everyone that inflation is going to be transitory, that result of an oil price, i am that the ecb is praying it doesn't happen and that agreement is struck. guy: can i get another piece of the puzzle and your take on it? we just had a virtual meeting between emmanuel macron, angela merkel, and the chinese leadership led by xi. the data out of china are showing a slowdown. we've got a tense relationship

between the eu and china. apparently they discussed trade climate and biodiversity, but let's talk about what's happening with trade and the economic data. how carefully are you watching what is happening with the chinese data in terms of the way it is going to impact your thoughts on the way that particularly the more trade oriented economies are going to be positioned going forward? are you starting to get concerned that the chinese slowdown or the rate of change could have a material impact here? simon: yes, it could. first of all, one lesson from china is that we get this inflation data out on friday. although ppi is likely to remain elevated, we are seeing some limited pass-through from the current commodities into chinese consumer price inflation. there are lessons for the rest of the world to be drawn from that. should we be really worried about european or u.s.

inflation? i think that is point one. there's no doubt that european exports to china in particular were going gangbusters earlier this year, late last year. that is definitely going to weigh. in europe, if you are getting less of an impulse from that trade, you want domestic man's to pick up. that should happen as the service sector unlocks. we are expecting it to happen, but we shouldn't underestimate the fact that europe is going to have to maybe look elsewhere for some of its export market, particularly for germany and the big exporters. it could be an additional weight. guy: boris johnson, 5:00 p.m., a press conference in london. expected to signal the final reopening here in the u.k. how much of what we have already seen in terms of the reopening is already in the data? how much more should we expect? simon: we've got u.k. gdp on

friday. i think it will grow at not like the pace we got with the first set of unlocking in april, but it should give a pretty good number for may, and sequentially come of the unlocking in july, it is more marginal to the economy. so i think most of the big boost sequentially is behind us. we should get a very strong q1 number for the u.k. the question is going to be related to what we were just talking about. how much is this wall of demand keeping the supply side for the you could economy still slightly constrained, and what is that going to mean for prices? guy: and how does the furlough scheme unwind, and what happens to the labor market around all of that? we are going to leave it there. thank you so much, simon wells, hsbc chief european economist. up next, we are back to what i think is a fascinating story. beijing ordering didi and other

companies to halt new user registration and remove didi services from their platforms, just days after a didi ipo in new york. we will discuss this next. this is bloomberg. ♪

guy: let's get back to china's tech crackdown. beijing banning ride-hailing app didi from app stores days after its u.s. ipo. valuation multiples on large chinese tech companies will continue to compress. joining us from dubai is a safe house capital portfolio manager. talk me through your assessment of the situation.

we have a massive, high-profile ipo. days later, the chinese regulator steps in and basically cuts didi off at the knees. how as an investor should you be reading this situation? >> the way we look at it is today, the regulator is making it clear that no matter how big you are and no matter who you are and who is at your table, if you do not abide and give into their control, they will make an example out of you. that is what we are seeing today. a couple of days ago, we find out they are getting investigated. next thing, they are removed from the app store. this is a warning sign to all investors, but really to all of the companies out there, that if you have too much data, they want to have control and they want to have oversight to get that is what we are seeing. guy: what does this mean for future ipo's? if you are a chinese company at

the moment, you have significant amounts of capital, significant amount of data. can you list in the united states? will u.s. regulators allow you to list in the united states? sharif: it's a great question. i think first of all, if you are a large cap company in china and you want to list in the u.s., the first thing you need to do is go to the regulator and say can you please check everything and make sure we are abiding by all laws and requirements because we don't want to get taken down before or during our ipo. i think we will continue to see chinese listings in the united states, but i think a couple of things will happen. the discounts we see on chinese equities will continue to increase, and we are already seeing that. i think the rate of chinese ipo's may slow, but in reality, i don't think that is a concern. i think it is the valuation they will get.

take didi, for example. there was a $100 million floated for them. we are seeing that the discount should accelerate and widen. guy: do you think u.s. regulators will require greater health warnings in terms of the risk? sharif: it is hard to tell as the u.s. regulator stands today. obviously there's this kind of u.s. being tough on chinese equities and chinese stocks with their accounting requirements and things like that. that pressure will definitely continue. whether u.s. regulators create some sort of safeguard for foreign investors in ipo's, i think that is very complicated. i don't see that happening. but at the same time, i think global investors are learning from their mistakes. they are learning the hard way that if there is a risk with the

regulator in china today, nothing is off the table. you have to tread with caution. guy: on that note we will leave it. thank you very much for your insight today. very useful. sharif farha joining us from dubai. coming up, we will take a look at what is happening with global food price inflation. the farmers business network out with its new report. we saw the usda report last week , really causing a huge spike higher. u.s. farmers not wanting as much as everyone they thought they were going to be, particularly in corn and soy. u.s. farmers are being disciplined. what do they see in terms of their market? that is the focus next. this is bloomberg. ♪

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♪ guy: live from london, i'm guy johnson. this is "bloomberg markets."

food prices extending their recent rally to the highest level in almost a decade. concerns build as economies struggle to overcome the pandemic. joining us is kevin mcnew, farmers business network chief economist, putting out a new report on prices. kevin, great to see you. thank you very much for joining us. the usda report last week cut a lot of people, particularly when it came to corn and beans. they were expecting farmers to be out there planting more. they didn't. what is your perspective on this? kevin: we had our farmers to lessen mid june from a poll we did of 2000 farmers, and they said there's a lot of opportunities out there and other crops.

so while markets are hyper focused on corn and beans, we saw winter wheat planted really skyrocket, and that took a lot of corn and bean acres off the table. i think the market got it wrong, and our partners are helping us understand what was going on, which was not that much corn and beans as the market thought, hence the big run-up in prices june 30. guy: why are they taking this approach? why are they planting winter wheat? why are they doing things differently? kevin: you have to go back to what circumstances were in the fall of last year. we were just coming out of a deep -- the deep, dark days of covid. winter wheat was the only thing that was sort of getting some positive price movement. farmers were able to switch it up and plant a lot of winter wheat, especially in key corn producing states. we saw about 2 million acres of winter wheat come on in heavily

corn producing states, so that told us early on that farmers made the choice already in the fall. guy: we are hyper focused on what is happening with the weather. we have seen hugely hot weather recently, but earlier in the year it was completely different, due to volatility in the weather that farmers are having to deal with right now. what impacts is it recently having in terms of yields, and terms of what farmers are doing? what is this super hot weather doing to their outlook? kevin: you are exactly right, it is such a bimodal year this year. the northwest of the country is super hot, really dry. southern and eastern parts of the country are super wet. really in the middle, where it matters for production, is where we are hyper tuned on what the weather is going to be. it has been dryish in states

like iowa, south dakota, north dakota, minnesota. those are areas of the upper planes where we have seen a lot of this additional acreage come online this year. while we have more acres than we did last year, they are really in drought throughout these impacted areas. so if we look at where we are, this is the key element of growing season for u.s. producers, and we see weather forecasts that look a little more promising in the next 10 days. we will see if those weather forecasts come true because they haven't been doing very well with this personality of weather across the u.s.. guy: what is happening globally? we are looking at a map of what is happening with the weather globally. a little to the east of where i am now, ukraine obviously a huge producer as well. you've got south america. what does the competition look like right now? kevin: let's start in south

america. that growing season is wrapping up. it is real bad weather for brazilians in particular. they had a drought in the early part of their season. now they are trying to get to the end of the finish line growing season, so we are really seeing that egg corn crop that competes in the world market against the u.s. really ratchet back. you mentioned ukraine. they are having a good growing season, getting the benefits of good moisture this year, unlike last year. so it is kind of a who has the yield, who doesn't have the yield this year. ukraine is probably one of those where we are going to see more export competition in the coming year. guy: quick question on another key input for a lot of farmers, and that is fuel and how they get their crops to market. oil prices have started to shoot higher. how does that could factored into the thinking of farmers?

is there anything they can do about that? how many farmers hedge forward in terms of selling some of their crops? what else can they manage in terms of some of their costs. kevin: fuel and energy prices in particular have a two-pronged approach or two-pronged impact on farmers. one is, as you mentioned, is fuel costs. the second, energy impacts fertilizer costs, and that is a really big component of farming. we've had a lot of discussions with our farmers about trying to lock in fertilizer costs early not just for this growing season, but even next year, as we think prices will continue to be reasonably strong. on cash forward contracts, some of the more advanced farmers will lay off some of that risk exposure. guy: more broadly, it does seem that a lot of things are getting more volatile at the moment, and

trying to get an idea of where prices are going to be six months, 12 months, two years down the road seems to be getting harder and harder. is that what we are going to see in the market? are we going to see more volatility? kevin: volatility has always kind of been embedded in the agricultural markets, and obviously last year's covid demand destruction played into it, but then we've got weather problems the last year. as we look ahead, china is a major player. they stepped into the corn market in a big way. so you are right, we are going to see volatility certainly for the next six to 18 months, but we will probably see prices moderate beyond that because we will start to ramp up production and some of these other countries, as well as the u.s., at least in the next growing season potentially. guy: enjoy the rest of the

holiday. thank you for your time today. greatly appreciate it. evan mcnew, farmers business network chief economist. president biden essentially declaring victory over covid-19 over the weekend, but concerns remain over the delta variant, which is spreading in states like new york and california. we will talk about the numbers next. this is bloomberg. ♪

♪ >> it is time for the bloomberg business flash. i'm laura wright.

a unit of canadian investment firm brookfield has agreed to fly recreational vehicles. recreational vehicles manufacturing has gotten a boost for vacationers looking for safer means of travel during the pandemic. apollo global management is considering whether to make an offer for morrison's. earlier, the company rejected an offer from a private equity firm. china has expanded apes cybersecurity probe -- expanded a cybersecurity probe beyond ride-hailing company didi. it has told them to halt a new user registrations and told app stores to remove didi's service.

authorities want to tighten their control over data in the interest of national security. that is the bloomberg business flash. guy: thank, indeed. in the u.k. -- thank you very much, indeed. in the u.k., boris johnson is slated to speak at 5:00 p.m. london time this evening. meanwhile, president biden celebrate in the u.s. faxing campaign during the holiday weekend. let's take a listen to the president. pres. biden: we never again want to be where we were a year ago today. so today, while the virus hasn't been vanquished, we know this. it no longer controls our lives. it no longer paralyzes our nation, and it is within our power to make sure it never does again. guy: but there's a new risk emerging around the world, the delta variant, and the efficacy

rate of vaccines starting to be called into question. we've got data from israel starting to suggest efficacy is sharply down. what does that mean in terms of the severing of the link between cases and hospitalizations and mortality? bloomberg health reporter james patton joining us to discuss all of this. the president almost declaring victory there. we passed the point at which the virus controls us. we now control our own destiny and the virus. given what is happening with the delta, given our lack of knowledge about efficacy and duration of efficacy with some of these vaccines, do you think he's being a little bit optimistic? james: it's a good question. obviously, the u.s. is celebrating the july 4 weekend, and president biden is declaring independence from the coronavirus, and here in the u.k., boris johnson has pushed back the lifting of restrictions

here, and the british press have called this coming milestone freedom day, that now has been postponed following a spike of the delta variant. so i think governments have underestimated the virus before, and there have been lots of twists and turns along the way over the past 12 months, so talking about independence or freedom might be premature. clearly, there are some positive developments, hugely positive developments on the vaccine front. the vaccines appear to be holding up against the variants thus far, but there are a number of risks that you have mentioned. guy: one of the things i am reading and hearing a lot about his concern around clusters forming, and there seems to be this increasing lack of focus on case counts. i am wondering whether that is the correct assessment. i would have thought that the

larger the number of case counts, the more chance that we get more variance. my looking at that the right way? james: we have seen in the u.s. and the u.k. and israel huge numbers of people get vaccinated thus far, but there are pockets of the population in all of these countries that have raced ahead in their vaccination campaign. there are still people who are unprotected, and there is lingering reluctance to get a shot, and a variety of other complex reasons why people aren't rolling up their sleeves right now. so basically, that allows the virus to keep spreading. it increases the risk of more problematic variants emerging, not to mention the vast numbers of people across the world in lower and middle income nations in particular that have only

received tiny amounts of vaccine. so that is what is sparking worries among some scientists, researchers, and companies that we are not out of the woods yet, that we could be dealing with this for quite some time. guy: should the focus therefore be on cases, or should the focus be on hospitalizations? i come back to the israeli data, which showed a marked drop in efficacy, but i smaller drop in efficacy in terms of preventing hospitalizations. should we be focusing on the letter number? -- the latter number? james: there should be a stress and emphasis on the hospitalizations and the deaths, no doubt. this data we are seeing in israel today is pretty consistent with the findings we have seen elsewhere. here in england, health authorities a few weeks ago i believe released some results showing the vaccines from pfizer and astrazeneca were highly

effective at preventing hospitalizations against the delta variant. these numbers from israel that we are seeing today show the vaccine is i think 93 percent effective at preventing hospitalizations, and the has dropped only slightly from the 98% increase we have seen. so obviously, those are very encouraging figures. the companies and scientists will point to that and say the vaccines are continuing to provide protection against new mutations. they will potentially slightly reduce the fact. it's another's uncertainty about the next varianthaemerge, but te positive signs. guy: the debate is certainly raging in the u.k. about kids in schools, bubbles, and whether or not actually you need to send all the kids home once you get one case, and whether or not you need to vaccinate children. at the moment, it does seem u.k.

scientists are taking a cautious start. in the u.s., the debate is further advanced. can we get to the point where we can learn to live with the virus without vaccinating secondary school children? james: it is a really good question, and i think it remains to be seen. some people would say that the u.k. is behind the u.s. in this regard, and we will need to advance and do that at some point soon. we are still getting more and more data and learning more and more about this virus. i think it remains to be seen, and a lot of it will depend on future variants and the extent to which the u.k. and other countries that are in this more favorable spot right now can catch up with the virus.

right now it is a big race, and the variants are outpacing the effort. it certainly looks like things are heading that direction, but we will just have to wait and see. guy: really interesting. thank you very much, indeed. bloomberg's james paton on what is happening. u.s. markets closed today. but as we go to break, a look at some of our coverage of the july 4 celebrations at the boston pops. >> from maine, welcome to the party. >> i am so happy to be here to celebrate the return of live performances. >> ♪ country roads take me home ♪ ♪ [singing] >> ♪ come on and go with me

come go with me ♪ ♪ [fireworks]

♪ laura: let's check in on the bloomberg first word news. china's president xi jinping held a video summit today with the leaders of germany and france. the three were said to have discussed trade, climate, and biodiversity. beijing and europe are trying to keep humans rights abuses from

scuttling talks and other areas. the opec standoff between saudi arabia and the united arab emirates hasn't been resolved yet. the saudis want opec and its allies to increase production over the next few months and extend a broader agreement to the end of next year. the uae wants better terms for itself, and argues that the proposed agreement to extend quota limits to the end of 2022 is unfair. the vatican says francis is in good condition a day after he underwent surgery to remove half of his colon. the pope was alert and breathing on his own, set to be hospitalized in rome for about seven days. in turkey, inflation accelerated faster than estimates last month. that is a blow to president erdogan's hopes of an interest rate cut this summer.

inflation rose 17.5% from the previous month. global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm laura wright. this is bloomberg. guy: thank you very much, indeed. laura mentioning the number of things i want to focus on as well. let's take a look at when it's been going on with the stoxx 600 today. the u.s. is out for the fifth of july today, fourth of july holiday, as a result of which, all markets closed over there. over here we've got very like volumes. equity -- very light volumes. equity value sticking a little higher for the stoxx 600 right now. i wouldn't take much away in terms of the price action we are getting. we are pushing up a little bit over the last couple of sessions. the pound getting a little bit of traction against the u.s. dollar. we are going to be hearing from boris johnson at 5:00 a.m. london time today, noon and the

united states. he's expected to confirm the final reopening here in the united kingdom and an end to mask wearing, etc. maybe another boost for the u.k. economy. we've got that out friday, gdp numbers. we will look forward to seeing exactly what is happening there. the big story in some ways is what is happening in the oil market, and the big story is that nothing is happening in the oil market. we are awaiting the start of another critical meeting of the opec-plus gathering. we still don't know whether there's going to be some sort of resolution between the uae, abu dhabi and saudi, riyadh. have a disagreement that could have major implications for the oil price. you could see a breakup of the agreement, a breakup of discipline within opec. that could produce an awful lot of oil coming out of the market. the other option is that we get a deal, and that reduces the

amount of oil coming on, or it kind of manages the amount we are going to get. densely on one side, you could see prices dropping sharply. you can see a complete lack of oil coming on, as a result of what you could see prices moving sharply to the upside. the market doesn't know what to do right now, as a result of which it is doing nothing. in europe, the stoxx 600 up 0.3%, but the banks catching a bid. markets up sharply, and the travel and leisure sector is being boosted by the potential u.k. reopening. we are going to talk about all of that next. we got a great guest coming up that is going to give us a take on what is happening with the commodity stocks. alan custis, lazard head of u.k. equities, is up next. this is bloomberg. ♪

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>> the countdown is on in europe. this is "bloomberg markets: european close," with guy

johnson and alix steel. ♪ guy: monday the fifth of july. 30 minutes to the european close. live from london, i'm guy johnson. we've got a lot to talk about over the next 30 minutes, over the next hour. alix steel has a well-deserved day off today after the fourth of july yesterday. the boston pops celebration. let's talk about where we are with the markets now. the ftse, the dax, and the cac not going anywhere in a hurry today. a little bit of outperformance coming through from the london market. our clays doing relatively well. some of the mine -- barclays doing relatively well. some of the mining stocks on the front foot. the cac up by about 0.3%. the smi in zurich going nowhere. the dax down