manus: good morning from our middle east quarters in dubai. moderating inflation, consumer prices in the u.s. rise. but at a slower pace. china widens its crackdown on online insurance firms and issues a warning.

get ready for more regulation. the csi 300 drops. goldman sachs sees only a transient impact on demand from the pandemic. president biden calls on opec to pump more oil. good morning across the world. wherever you are, and if you are not in new zealand, you have to worry about inflation. the question is the transient nature. we put it in the chart. is it enough? is it enough to say that because these reopening components are less virulent that the u.s. is going to change the narrative? dani: over at rbc, no it does not make a difference. he says we have started to get some hints from fed officials

who have been out loud wondering if inflation targets have already been met. one data point does not tell us much. matt: -- manus: it is almost like touching a straw's. core inflation drops. herein lies the point, which is where you have this narrative from kaplan, a narrative from bostick. you have to differentiate between hiking and taper. if we have it sooner we can do something more later with hiking. it will not be as pressing an issue. dani: we have jackson hole later this month. a lot to digest. i want to bring up lines on deutsche telekom. raising their 2021 adjusted ebi ta. around 37.2 billion euros. previously it was just 37 billion euros.

revenue stronger as well for the second quarter. more than 26.5 billion euros and 26 billion euros as well. earnings still coming fast and furious. does anyone care at this point? manus: you say that, you know what is interesting? you look at the earnings upgrades, the most bullish outlook in about 10 years. let's move the agenda along. let's have a look. dani: let's go -- exactly. it comes after that monster auction where we had the lowest amount of primary dealer takes ever. someone really wanted to buy 10 years. we are seeing a touch higher in yields. that was not necessarily the

movement yesterday. it was all about bond buying. we continue to see tech underperforming with more regulation coming out of china. we are starting to see weakness in the chinese equity market. let's get back to the closely watched inflation reading out of the u.s.. inflation did remain elevated. here is how investors reacted on bloomberg tv. >> it is a positive that inflation pressures are moderating. >> my biggest fear is on the labor side. >> we are in the midst of an inflation heatwave. >> i don't think inflation is at all transitory. >> too early to be too relieved. >> what they should be doing is getting ready to raise interest

rates. >> if these inflation numbers stay high, they will have the flexibility to raise rates against that firm economy. manus: the kansas city fed president says the central bank needs to move ahead with reducing stimulus. >> the transition from the extraordinary monetary policy accommodation to more neutral settings will follow. today's tight economy does not call for tight monetary policy, to be clear. but i think it does signal the time has come to dial back the settings. manus: the cio at julius baer has been listening. i put it to you, to the market, the last guest. using one reading on core cpi,

is it enough to change a chorus of fed speak preparing us for an auto mask -- autumn-esque taper? our u.s. waged? -- are you assuaged? quick did it was reassuring in the sense there was no additional inflation in numbers. we are going to have clarity on this in 2022. even if inflation could move more than the market believes, the matter rests with the treasury, not the fed. today monetary policy -- i would agree with george that the time to pull back stimulus is probably closed.

the main reason is the asset prices. dani: i wonder, if i can do the bad thing and grasp at straws. i wonder if there is anything in this data. i want to point out the energy and food prices, things that made it more of the inflation in this report than previously. does that fact serve as a warning signal that inflation might be broadening out? >> you need to have a clear understanding of what the fed does have an influence on and what it does not. we know the fed influence on energy prices is to say the least rather limited. what should we do if cpi has

lower energy prices? we see a lot of issues, harvest disruptions, etc.. this is not related to excessively loose monetary policy. manus: give me a sense of how you put this to work in money and what you say to the clients. taper is coming. it is just a question of when we move off emergency setting. we are in emergency settings with this round of qe. when the taper comes, do you think it will be injurious to equities? 46 records in a row on the s&p

500 last night. when we begin to taper, does it knock equities off their perch or do we take it in stride? >> the market should be, in the context of an economy that continues to expand. the market should be able to absorb the tapering impact on liquidity. you have on the one hand very strong earnings, very strong profitability. on the other hand, you have rising liquidity. you know your valuation point and the way forward is rather valuation by liquidity. on the other hand you have a continuation of record earnings, record profit margins, and the u.s. equity markets with a cash

yield. these are factors of support for prices. >> if i can extrapolate that further, if you have valuation pressure, but at the same time margins improving, does that mean what we will see is a rotation in leadership where tech underperforms in the more cyclical parts of the market? >> these are directly linked to what is happening is an treasury market. the 10 year having bottom in july. i think this is a function of what is happening with the treasury and yields. real yields are minus one point

07 -- 1.07 this morning. if we see real yields go up a bit, we might see a return. but compared to a year ago, the valuation advantage of those companies has tremendously gone. all of the pressure and long-term interest rate, we don't expect the shift back into cyclical. dani: we have much more to cover. you are going to stick around with us. let's get to the first word news. >> afghanistan is reported to have replaced its army chief.

that is as taliban militants make rapid advances. seizing more of the country's provincial capitals. the acting finance minister has resigned and left the country after the taliban captured key custom sports, bleeding the administration of revenue. fighting intensified ahead of the full withdrawal of u.s. and nato troops at the end of august. . poland's ruling party has pushed through a controversial deal after 24 hours of political drama. parliaments lower chamber voted to approve the legislation, which seeks to prevent takeovers but targets discovery. that is the american owner of poland's largest private tv network. the eu and u.s. say it is an attempt to bundle independent media. global news, 24 hours a day, on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg.

manus: china's tech crackdown continues. this time it is the online insurance company in the sites of beijing. failure to comply will result in severe punishment. this is bloomberg. ♪

>> i was brave or stupid depending on your point of view. in 2006, 2007, we set up small investing teams in asia. a year into it -- it was the way the laws work. the laws may exist on a piece of paper in these emerging markets.

they are not followed in practice. we want to fix these businesses. we are trying to do more than just being investors. your ability to make those changes operationally is really stymied. when we look at asia, we say we look at a large part of emerging markets. for the most part. not really for us. >> do you think china will become a viable market for credit investors? >> they are. some credit investors already went in china. some of their peers have operations out of hong kong. they have significant investments in china. we will just agree to disagree. we think over the next 10 years it is not changing. you look at the headlines coming out of china every day. in the u.s. papers. it does not feel so welcoming.

if you are a u.s. investor trying to restructure companies. dani: the cio of strategic value partners with his thoughts on investing in asia. china stepping up scrutiny of the nation insurance technology platforms. part of regulatory crackdown that has roiled global investors. your nose before the show, you called the regulatory crackdown an exogenous shock, and that you will revisit julius baer's secular outlook on china. have you revisited it and how has your view changed? >> look, what happened is a substantial change. nothing has changed, but now everyone realizes what is going on.

this is a central -- but they play by the rules of capital markets. we have seen the emergence over the last 15 years in china, and it seems the initiative has moved to the point where they have realized regulation is an a way that is detrimental to shareholder value. we think the potential for companies to be allowed to expand, to reinvest earnings profitably, will be constrained by regulations. we will revise our position on chinese equities in the

not-too-distant future. matt: -- manus: blackrock institute said they treat china as a single pillar separate from the u.s.. the u.s. is one basket, china sits in its own a splendid basket on its own. viewing the equities, is there a less risky option in terms of credit? would you take -- given the yield? >> we have raised china to core asset class status. on the back of the fear you would see to a certain extent the same type of things you have seen in the u.s..

we don't think that cases over and dead. china markets are too big to ignore. you want to move more towards bonds. as the interview highlighted, you need a small -- for this investing purpose. credit in china is an interesting asset class. we like chinese government bonds and renminbi. germany, the policy for many decades in the 1960's onwards, was one that protected and favored creditors as opposed to shareholders. we are going to see the same in china. i expect high single digit numbers going forward.

we think it is going to be much closer to between zero and 3%. renminbi rated bonds will be an important asset class. dani: you mentioned the equity portion. manus did as well in his conversation with blackrock. if i can dive into this point a little bitave a chart with correlation between the s&p 500 and the m sap. it is more than china, we need a break out from the equity portion of the u.s.. is it now the entirety of asia and the recovery story we need to treat differently? >> the asian stock markets as well as china will remain to a large extent correlated. china will have more of a life of its own with its own credit cycle.

but also, to a certain extent, the debate about adrs, etc.. investors will be differentiated within china and the u.s. going forward. that should foster lower correlation. manus: thank you. the equity market could be afraid to dip in. our guest host this morning on markets. coming up, biden wants production increases to reduce prices for americans. the latest on the oil markets. ♪

manus: this is "bloomberg daybreak: europe." president biden has urged opec countries to reverse the production cuts to help lower u.s. gasoline prices. his comments cap a series of actions by administration officials to address the cost of oil. the white house eyes inflation as a potential threat to recovery. elizabeth, the market reaction, president biden's plea to opec, i had goldman sachs earlier on. his pleas may fall on deaf ears. >> good morning. u.s. presidents talk comes off the back of strong recovery and oil supply levels, at the moment

, there is not much market reaction to the plea. oil prices are still stable this morning. there is some consensus the plea will fall on deaf ears with saudi arabia and russia comfortable with the current amount. the u.s. is not the only one struggling with current oil prices. in asia, the latest round of crude purchasing, we are seeing buyers asking for less oil from saudi arabia as well. they are struggling to match current crude costs. this is probably what opec is looking at more closely. dani: let's take a step back away from these regions, but as a whole, the consensus -- do we have a consensus what the

balance looks like to the market at this moment? >> it looks like holding at the moment. china particularly is being washed with concern. handling outbreaks with aggressive lockdowns. the country's overall significance in the oil demand picture. there is some consensus the impact on oil may be short-lived. for example, a cut in the demand forecast because of the outbreak. there are also markets such as the eu and america that should have more moderate impact. dani: goldman using the word transient when it comes to oil is cutting a lot. coming up the u.k. is set to

clear a third dose of covid vaccine as the delta variant spreads. that story next. ♪ comcast nbcuniversal is investing in entrepreneurs to bring what's next for sports technology to athletes, teams, and fans. that's why we created the sportstech accelerator, to invest in and develop the next generation of technology that will change the way we experience sports. we've already invested in entrepreneurs like ane swim, who develops products that provide hair protection so that everyone can enjoy the freedom of swimming. like the athletes competing in tokyo, these entrepreneurs have a fierce work ethic and drive to achieve - to change the game and inspire the team of tomorrow. (announcer) the core is key to losing weight, getting back in shape, and feeling good. introducing the aero trainer, designed to strengthen your core, flatten your stomach, and relieve stress and back pain. it conforms to your body and increases muscle activity. abs, back, obliques, hips, and glutes.

get incredible results in just five to ten minutes a day. the aero trainer supports over 500 pounds, and inflates and deflates in seconds. check it out at aerotrainer.com. that's a-e-r-o trainer.com.

>> good morning from bloomberg's european headquarters. it is 6:30 a.m. in the city of london. i am dani burger alongside manus cranny. here is what you need to know. moderating inflation. consumer prices rise but at a slower pace. the economies reopening are beginning to ebb. china widens its crackdown and

issues a warning. get ready for more regulation. the csi 300 drops. goldman sachs makes a transient impact on demand from the pandemic. president biden calls on opec to pump more crude. transient will be used for everything. i think it needs to be wiped from the dictionary. cpi out yesterday and some of that easing allowing bond yields to drop. manus: suddenly, you have this frenzy about the fed won't taper, it will hit the pause button. if you spent the last seven days literally getting a big hammer and banging it over our heads, tapirs, substantial further progress, differentiate between taper, stop at 68 and about hikes, i am restless justifying

the fed speak. it is a drop in some of those transient components. esther george saying, look, she is not calling for tighter monetary policy but it does signal it is time to dial back the quantitative easing and there in lies the ointment. that is what kaplan said, isn't it? >> all of this is an impetus for the market to keep buying bonds. after the cpi data for the 10 year was incredible, it was the lowest take ever from primary dealers. there are people out there who really, really want to buy bonds. manus: primary dealers are always a good indication. let's circle back. the other main theme is delta. are we going through it? how will we come out the other side of it? this is where u.s. drug regulators have set their sights on authorizing the third booster shot.

of the pfizer and moderna vaccine's for people with weakened immune systems come that comes as the u.s. struggles to contain a surge of more contagious delta variant. the booster shot, what is the definition of a weakened immune system? who are the qualifying groups. one will booster shots come out? >> what we are hearing is that the fda is close to approving that third booster shot. we are talking about people who are on medication to suppress the immune response. their immune systems need a very strong dose of that vaccine to elicit that antibody response. we know that from the trials we have seen, half of those patients have a significant vaccine response once they get a third shot. it is a small and special group but definitely the fda is paving the way to start rolling out

these third rounds of shots, these booster shots, partly because of that fear of delta just sweeping through the country. dani: we have seen various entities, the pentagon or individual companies, from employees coming back to the office, mandate vaccination. where do we stand on this trend? are these just one offs we are seeing, mandated vaccinations? rachel: we are seeing this become more and more common across the u.s. people forget the u.s. had a strong start with vaccinations but plateaued at a low level, just below 50%. in contrast, europe, germany, the u.k., getting into the 60's and the 70's. the governments are much stronger in mandating people to get vaccines before they can enter restaurants and places like that. in the u.s., the government does not do stuff like that at all. they do not compel private businesses to do anything. those private businesses have a lot of freedom to mandate who can come in, what their

employees can do, and we will see that this is one of the only ways for the u.s. start getting that vaccination rate high up enough to be a protective shield against delta. manus: the front of bloomberg.com has the headline "fully activated u.k. at -- adults -- u.k. adults to avoid self-isolating." i just wonder, is this going to be really closely watched? one of the reasons why covid cases have actually been dropping, which is stay-at-home, isolate, contaminate. rachel: the fact that the u.k. has confidence to be that and say that self-isolation is not required anymore for fully vaccinated or really shows the u.k. has come through worst of that delta ways. cases did shoot up quickly but they also came down quickly. most importantly, hospitalizations and fatalities

made at a low rate. of course, other countries now, especially the u.s., is really hoping to get through the delta wave in the same way. but it remains to be seen if the u.s. can chart that same path in the same way. dani: rachel, thanks so much. rachel chang from bloomberg news. i was one of the ones to be taken by the pingdemic. starting monday, it is a completely different picture from a few weeks ago. manus: the whole concept of the third dose is going to be a very specific and small group at the moment. the question is whether that is rolled out. i have been speaking to a number of people who are from israel. they are struggling to decide whether to go back because of the risk of another law down. that is one of the most vaccinated countries in the world. travel is never far from our mind. it is a whole agenda, isn't it?

dani: that is becoming a big theme of the covid recovery. we will be speaking with the ceo of jetblue airways because they will be making their first foray into transatlantic service so they will have flights from new york to london despite the travel corridor not having fully opened. let's get to the first word news with annabelle droulers. hello, annabelle. annabelle: china has released a five-year blueprint calling for greater regulation of the economy, providing a sweeping framework for a broader crackdown on key industries. the document jointly issued by the state council and commonest party central committee says authorities have to actively work on new rules in areas including national security, technology, and monopolies. president biden is urging opec and its allies to unleash more oil onto global markets,

stressing the importance of affordable energy is the world pushes towards using less fossil fuels. it comes today's after top climate scientists say carbon emissions should be cut as quickly as possible. hackers have returned a portion of the approximately $610 million of crypto they stole from a decentralized finance protocol network. in a message, they said they pulled off the attacks for fun. the hackers are asking for donations as a reward. 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. this is bloomberg. manus. manus: thank you very much. let's get back to the major story at the moment. to the ceo downplaying the regulatory crackdown made by china. that has dented the pace of listings and pressures talks to

say the least. he told bloomberg he has a record number of deals. >> we are seeing a similar type of modifications to how big tech works all around the world. all platform businesses are being scrutinized in how they use their data, manage information about their clients, do they have too much power, how are we going to manage how they deal with the public? it is not too different from what we are seeing in other places. it might be perhaps in its own way in some sectors like education and may be in a specific way we don't see too much in other places but if we look at big companies, it is very similar. >> how is it in -- how is it impacting the ipo pipeline after a blistering first quarter? >> that is correct. if we look at the first six months, 46 ipo's is double what it was last year.

it slowed down on the second quarter and the pipeline is actually at record levels. if we look at how many companies have filed and are being analyzed, we have around 200 companies that is a very significant and healthy pipeline. >> have there been lots of reports that bytedance is going to go ahead despite its regulatory scrutiny? >> on the first six months of the companies that listed, 90 2% were tech companies. now the ones coming. the companies will assess market , where is it too volatile to go? there is a listing ceremony we have tomorrow. we had one last week. the activity has slowed down because some companies are evaluating the market. is this the best market for me to go or not? the pipeline remains very strong and we actually have more and more companies that are inquiring about doing an ipo in

hong kong and possibly companies that were perhaps analyzing other markets and now they are asking a lot of questions about hong kong. dani: the ceo of hong kong exchange speaking with stephen engle. i want to give us a quick check on what the nasdaq 100 is doing. manus: having one of those little moments. nobody tells me that. [laughter] dani: we like to see you hard at work. i think it is a good thing for everyone to see. it is interesting what is happening in tech. he is saying to us that the direction of these equity markets in the rotation between tech and the rest of the market is being dictated by yields more and more. it is the story that started at the beginning of this year and it kind of went to the background a little bit and is rearing its head once again. manus: he said we have six days we priced the bond market,

ratcheted by 25 basis points. even as the bond market began to be priced, we were talking about yields making it to 1%. 25 basis points did nothing to unseat the equity market story. it is when does the spiking yield -- of the conversations we had this week, we have had a couple of people talk about 2.5%. where is the inflection point? that is going to be the interesting thing in terms of the move in real yield there and where does that kick in in terms of unseating the equity market? dani: i did talk to our favorite bond market bull who is still holding on. he is still at 1%. he is not budging. his call for lower yields have been prescient when most of the market was caught out short.

it is a call to keep in mind. manus: he is absolutely stoic and resolute. very simple. it is just qe. you buy the rumor, you sell the fact. his stoicism and root hold is admirable and predicated on we have seen it all before. dani: we will stick with the central bank theme. it is a bumper day. we will look at decisions out of turkey and mexico and how it could impact the currencies of those countries. this is bloomberg. ♪

manus: it is "bloomberg daybreak: europe." dani burger alongside me in london. it is a big day for emerging markets.

central banks of mexico and turkey will decide whether to tighten policy as the global economy and inflation gathers steam. let's get to our asia economy were ordered. michelle, we are expecting to see across the em spectrum a number of rate decisions. just looking at turkey. all 20 surveyed by bloomberg are saying they will leave rates held at 19%. is that going to be the norm? >> manus, good morning. it is hard as i usually say to name tms with a broad brush and harder today with the three we are focused on in terms of the em world and central banking. they are all dealing with the delta variant and perhaps on the upside, the broad positive risk moderating at least from the overnight members. that can be a trend that takes

hold worldwide but still very tentative as yet. but for turkey at least for today, inflation is still a big issue, keeping them on hold for an interest rate cut that president erdogan has called for for some time so we are slated to to see them keep on hold and then revitalize that debate on the political side. the philippines and mexico today, quite a bit different. the philippines have their own conundrum along the growth picture. inflation has behaved a little bit more. that gives them room to look at how growth might perform and whether they might need to do more on that. it has never been about interest rates in this region this year at least. it holds on policy rates. they are looking at more tools in their toolkit. looking at reserve requirement ratio cuts which they have ruled out for today but could be an

option going forward. lastly, for mexico, kind of another unique scenario. they are slated to hike for the second time in two months. inflation debate raging as investors are seeing inflation pick up to their comfort but on the dovish side, they are calling for a little bit more tolerance on inflation to see those growth numbers pick up as they are dealing with covid related concerns and growth concerns. dani: digging into the details, michelle jamrisko. we come to this region, counting down to the u.k. second-quarter gdp figures. we will have a look at what exactly to expect from the data, next. this is bloomberg. ♪

dani: welcome back to "bloomberg daybreak: europe." i am dani burger in london with manus cranny in dubai. one of the teams over the past week has been the strength in the greenback and that of was has been consequential the euro and for the pound. leading up to the cpi data, i was taken aback by how weak cable was looking more so than the euro. maybe thoughts that the fed would move sooner that the pound, for some reason, yesterday, seems to be more of a place that would feel the pressure than the euro. manus: i think cable often does reflect a much stronger dollar trade in isolation. perhaps a much better story about what the resilience of sterling has been. what is it that brings sterling to the next level up? i am grateful. i will take that. the data we are looking for, gdp data today.

i love what dan hanson has written. he talks about a scorching level of growth but that does not compute with me. if i said only 16% of companies are able to bring their staff back into city centers, i wonder what kind of a scorcher gdpr be going to get? manus: -- dani: it is just not as many people. let's begin to the data we will get. mark cranfield joins us now. just talking about some of the gdp and what it would mean. what exactly are we expecting from the reading today? mark: another strong member. bloomberg economics is looking at 0.5% in june. remember the 4.6 points. no liquidity when you compare to what we are seeing a couple

of years ago. it was a weak year for growth. it will certainly be eye catching but it will not be a complete surprise. people have seen that in other countries. the united states of course posted strong gdp so it might be a total shock. manus: the strongest bounceback in 80 years. how does it play out? we were debating -- cable is more of a dollar story. how has the bounceback been reflected in sterling and the equity markets? >> the pound is a g10 story which is dominated by the u.s. dollar. the pound sits in between the dollar and the euro.

to some people on the outside, they consider both the pound and the euro currently to be relatively weak currencies within the g10 complex on the dollar to be the strong one so you are not going to get too much movement in the pound no matter how good the gdp numbers are. as long as people think that the fed is going to be reasonably quick, they might even be doing it in the next couple of months. that probably puts the u.s. ahead and the pound probably suffers a bit because of that. dani: with that in mind, how much does this figure matter to the boe and it decision on what to do with rates? mark: it comes very much into that calculation. the inflation outlook and what is happening in the jobs market as well.

eye on the side as well. if the fed brings forth their decisions to move, that makes it for the bank of england. they look at the circumstances in the you can decide that the employment picture is not as strong as they would like it to be and for that reason, they might hold back on tapering or even thinking about higher interest rates. the bank of england will certainly factor in the fact that the economy is looking a lot more healthy. it probably means that when they move, they can probably move in a recent rate hikes rather than doing a one-off but they are probably not ready to do that just yet. manus: let's see what kind of a scorcher they deliver in terms of the gdp numbers. mark cranfield from the markets live team just for your own reflection, expecting gdp to rise .5% in june combined with 2% advancing in april so you are looking for a pretty heady

bounceback. keep an eye on sterling. pantheon microeconomics. macy campbell falling back to 135 by the year-end and to remain there throughout 2022 and part of that thinking is that investors who are mistaken in thinking the bank of england will raise rates as far as the fed over the next two years. dani: there certainly has been some commentary out there that the boe leads the fed that i guess, to that point, to what you are talking about, maybe it lays out the blueprint for tapering first but that does not necessarily mean that their reaction is one that is more extreme than the fed. it is all about setting the agenda versus acting more aggressively. manus: let's check in on the futures. 46 record in a row on the cash market in u.s. equity futures. will that divergence continue?

slightly flat. nasdaq down .8%. but the survey is out. 56% of managers have a buyer equivalent on the u.s. ♪ (announcer) back pain hurts,

and it's frustrating. you can spend thousands on drugs, doctors, devices, and mattresses, and still not get relief. now there's aerotrainer by golo, the ergonomically correct exercise breakthrough that cradles your body so you can stretch and strengthen your core, relieve back pain, and tone your entire body. since i've been using the aerotrainer, my back pain is gone. when you're stretching your lower back on there, there is no better feeling. (announcer) do pelvic tilts for perfect abs and to strengthen your back. do planks for maximum core and total body conditioning. (woman) aerotrainer makes me want to work out. look at me, it works 100%. (announcer) think it'll break on you? think again! even a jeep can't burst it. give the aerotrainer a shot. pain and stress is the only thing you have to lose. get it and get it now. your body will thank you. (announcer) find out more at aerotrainer.com. that's aerotrainer.com.

dani: good morning, everyone, and welcome to "bloomberg markets: european open." i am francine lacqua. mark cudmore joins me in singapore to take us through all of the market action this hour. the cascade is less than one hour away so here are your top headlines. moderating inflation. u.s. consumer prices rise at a slower pace.