>> good morning from bloomberg european headquarters. 6:00 a.m. in the city of london yet i am that a burger. this is "bloomberg daybreak: europe." growth concerns. a choppy session in the u.s.. the delta variant continues to weigh on the recovery. the dollar sits at a nine month high. u.s. covert deaths hit levels not seen since february. the cdc delays a decision on booster shots as debate

continues over the need for a third dose. more pain from the chip crunch. a new report says global shortages will cut auto production by as much as 1.1 million cars this year. good morning. you made it to friday and it is a gloomy friday to end this week. u.s. equities did manage to eke out again. there might be something more malignant building. here's a look at what the vix has done. we are looking at a 6.2 percentage point increase on the volatility index that the markets have been unusually calm. this is the biggest perk up and hedging on this market over volatility options january. on an index level, maybe every in the green, but is this indicated more concerns about growth? is this indicating something about the fed? certainly, some of that concern in other asset classes like commodities that got absolutely

decimated yesterday and a stronger dollar as well. that is the state of the volatility market. that's see where you are set up for this morning's trading session. you are looking at the ms die asia-pacific index that is weaker along u.s. futures. asia looking much worse, down by more than 1%. this is the first week since june that we are seeing american indexes, european indexes, and asian indexes all end the week lower. weaker equities and a bid to bonds at a -- on your nominal 10 year yield. crude up ever so higher but that is brent crude. $66 a barrel just a week ago. let's get the latest on the market action. to dig through this with us is garfield reynolds. thank you so much for joining us today. what do you make of this gloomier action in the markets over the past couple days? garfield: a big part of that is

the world has finally learned the dangers of the delta variant to the reopening thesis. the idea was we have the vaccines now, getting rolled out, so we can go back to something more like normal, something more like what life looks like before covid. unfortunately, it had become clearer and clearer that that is not going to be the case even with the expectation that deaths are going to be less and it will not be as severe as the situation was originally. you will not get that will reopening. booster shots maybe, endemic rather than pandemic. all of that is crystallized along with the concern that next year was going to see a growth slowed down anyway just from the astonishing goods as we balance back from the pen -- bounce back from the pandemic this year.

especially when the fed and other central banks are looking to remove stimulus even if gradually. dani: so many crosscurrents you are pointing out and if we begin the regions themselves within that sort of waking up to the virus fears, you can see it in the price action today it is in stocks are down more than 1%. u.s. equities were able to post a game yesterday, down anomalies so far this season. -- nominally so far this season. why is there so much pain in the equity market concentrated in asia sure marc garfield: a big part of it is -- in asia? garfield: the new zealand dollar cost by 1.5%. there was one covid case and that was enough because it meant that the rbnz delayed a rate hike because the entire country went into law down. more broadly across asia, asia has been very exposed to the delta variant.

the other thing that asia is exposed to is china and china equities and we had the daily crackdown headline about fresh limit on what internet companies in china can do, fresh regulations, and that is a class drumbeat. the victory china tech giants have lost about $1 trillion in market cap since the soft ongoing so that is a constant burden for the market. there is also plenty of disquiet about china evergrande, the big property developer, which is struggling to remain solvent. everywhere you look in asia, you always be china in such a big part of the picture and it is a very gloomy part of the picture right now. dani: certainly. i'm just looking at alibaba share prices which fell to record lows, falling to another record low, down an additional 3%. thank you for staying on top of

that for us. that is goff of reynolds from our mliv team let's get into more of the market action we are joined by the fx strategist at commerce bank. thank you for joining us this morning. one of the more remarkable market moves we have seen again with some of the gloominess that garfield was telling us about is the strength in the dollar taking out its year-to-date highs, continuing to move up. what do you make of that? what do you make of the unrelenting rally we have seen over the past few days? >> it is kind of amazing because if you look at the performance of the classical currency safe havens, the swiss franc, the u.s. dollar is outperforming, which is obvious the surprising given all this year about the delta variant. we have seen throughout the world and in particular, asia. i think we are seeing some slide into the liquidity of

the u.s. dollar and the hope that the fed will soon announce tapering and both benefiting the u.s. dollar currently. dani: i wonder what you make of this argument that is starting to bubble up, and specifically, i looked to our guest to form this argument that the dollar is the new 10 year yield. if we see some concerns about the economy, any sort of wobbles when it comes to the delta variant, it used to be shown through u.s. treasuries that they did show this cloud review and they ended up being right and now, it is the dollar that is doing that. it is the dollar that global markets will be taking their cues from in terms of these concerns. do you think that that is a valid argument? is that possibly what the direction of the greenback is showing us? >> yes, that is a valid argument in the short-term. in the medium to long-term, i would be a little bit more cautious because this only works as long as the overall picture for the u.s. still stands. and currently, you know, like we

are seeing a normalization in growth, in sentiment in the united states as well as the first items for the inflation falling which is also good for the u.s. dollar, but everything only works as long as these indicators don't fall too low because then there will be the fear that the fed will delay its monetary policy normalization and at that point, this whole sentiment could turn around and be negative for the u.s. dollar. dani: i guess new zealand set the pace for a slight pause in terms of tightening. given all of that and the risk from that, how do you want to position around the dollar? esther: as i said, in the short term, we do see further downside in particular now that we have broken through the lows in the euro-dollar, but medium-term, like towards the end of the year when the fed is announcing tapering or starting tapering, i would expect a move up again. towards next year, we are

definitely seeing levels at 120 in euro-dollar. i would look at the inflation dynamics because those start surprising to the downside. there is a high chance that the fed will be very relaxed with respect to its interest rate normalization if you are looking at what is going on around the world. dani: i kinda want to get a sense of the short-term, how much further this has to go. euro-dollar around 116. his there a level -- is there a level you see as the floor for that? esther: we would need some further u.s. dollar positive news to break sustainably below this level. which could of course happen over the next few days with respect to an actual tapering announcement. everybody is looking at jackson hole next week. this might not be the best event to announce tapering.

they are moving closer and this could bring further u.s. dollar appreciation impetus. otherwise, just like from the risk concern, investors might be too concerned to get optimistic on the u.s. dollar because it is not yet clear how fast the fed will actually move. dani: you are going to stick with us. we have much more to come are -- to cover. that is esther reichelt. annabelle droulers. at about -- annabelle: antony blinken and g7 foreign ministers agreed during a virtual meeting that the taliban's actions will determine their relationship with the international community. participants underscore the imperative of safe passage for people wishing to leave afghanistan. speaking to bloomberg, the german chancellor candidate says the west has an obligation to rescue afghan personnel.

even if that means talking to the taliban. >> we as a common international community have to stand together because responsibility to save those people who have supported the nato troops in afghanistan translator, being a cook, or being a journalist, so the nato troops have to ensure that people can come to the airport, meaning also talking to the taliban to save people who trusted us. annabelle: 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. dani: annabelle droulers, thank you so much. coming up, commodity currencies look to be the biggest casualty of this flight to safety we are undergoing, plus we will hear from the rbnz governor, adrian orr. that is on the next. -- that is all next.

this is bloomberg. ♪

dani: welcome back to "bloomberg daybreak: europe." i am dani burger in london. new zealand extended its locked down by four days, trying to stop the latest outbreak of coronavirus. this week, the central bank delayed and expected rate hike which adrian orr says may now happen in october. >> we have to focus very much on our purpose, which is of course the inflation and employment mandate which we have and, you know, absolutely this week was not the best of timing to be looking to reduce interest rates given reducing monetary stimulus, i should say, given

the situation, but you know, times on hand, we can observe what is going on and the underlying economics remains the same. we have significant capacity constraints. we have one-off spikes. we have rolling supply disruption. we are above maximum sustainable employment. so the underlying situation remains the same, but we thought let's just observe over the next few days and we need to be true to our mandate, which is to say are inflation pressures rising? should we be back more at a mutual interest rate? what would change that view? you would have to see a significant shock to demand. what we have learned through time is that incomes remain strong. demand bounces back very quickly. these rolling lockdowns will

continue for a while. that flexibility, remain focused on the target. dani: i hope all the investors and traders who kind of control the market expectations for rate changes are listening closely because market expectations for an october hike have been much higher, down to 59%. first of all, because you skipped this rate hike the mid of the sudden lockdown in new zealand because of the case outbreak. but also may be because it is not going to be a monetary policy statement meeting where you typically would make a rate change at the monetary policy review meeting. it is true you announced the end of your long-term security asset purchases. are you saying that october is a live meeting regardless of any of this? esther: -- adrian: we retain the

right but not the obligation to move policy when we think it is necessary. we can communicate many different ways. a monetary policy statement outlines our views on what the mutual interest rate is, how we see inflation performing, and we have the official cash rate back in neutral over next year. next year was 2%. what would push us off that course? we would have to be very convinced that the supply side has been able to respond. the demand side for the economy has had a significant turnaround. that would mean fiscal policy is not doing its job. dani: adrian orr there. that decision to delay a tightening or tapering in new zealand would mean that we saw the aussie dollar, kiwi dollar,

and canadian dollar all under pressure. that canadian dollar looking green because it is in the front of that pair. the kiwi dollar trading at a nine month low. let's get more on this from esther reichelt, from commerce bank, who is still with us. october is very much on the table. it would take a lot, in terms of demand, to delay it even further, yet we continue to see a lot of weakness in the kiwi dollar. what do you make of that dynamic? esther: i'm not surprised because everybody remembers the experience. we have the spike or the increase in cases going up in july and they still do not have this outbreak under control. the fear is that new zealand will be in a very similar situation right now so that this outbreak might turn out much bigger than the central bank

initially expected and therefore that the central bank could be much bigger than they might indicate initially. dani: do we extrapolate that to other central banks as well? do we see this as more of an isolated incident given that new zealand is much more restrictive in trying to just have a zero covid policy? esther: the market is very nervous that that could be the case. australia -- monetary policy at least initially despite the outbreaks that they were going to taper. they also indicate of course we are looking at this outbreak and we can decide differently. now, new zealand took the step to delay a rate hike they had clearly indicated and the concern is that given how -- we cannot estimate how it will develop. also other central banks delay

their tightening decisions and that monetary policy normalization will actually take much longer than was priced into the exchange rates. dani: with all these currencies as well, they also are commodity currencies as well as commodities have been under pressure over the past few days. how does that factor into the central bank thinking? we did see the australian central bank flagged the movement in the aussie dollar. some of the weakness despite the higher commodity prices. how is that going to play out? esther: there are two things to remember. a weaker currency is good for the exports and also pushing inflation a little bit. on the other hand, commodity income is an important center for these economies. if global growth concerns deteriorate, they have to adjust

their outlook. it will perform less or worse than they initially respected. global demand to normalize an increase. if this is delayed, we have to rethink our whole outlook scenario. dani: always a pleasure to catch up with you. thank you so much for coming on. that is esther reichelt at commerce bank. coming up, the delta variant saps optimism from the markets and deaths in u.s. hospitals hit levels not seen in february of this year and we will have the latest on the virus, next. this is bloomberg. ♪

esther: -- >> the u.s. has to be taking the lead. i'm pleased to see the u.s. has distributed 100 million doses overseas that the american taxpayer has done gracefully, graciously. they are in people's arms, more than every other country combined, but still, we got to do more, much more. dani: president joe biden's former covid advisor on america's role in stopping the spread of covid-19. cases worsen across the asia-pacific. sydney and new zealand are under law down and japanese cases are spiraling out of control. america is also suffering its own outbreak. covid-19 deaths in the u.s. have hit numbers not in februaryicu's over -- in -- 90% of

beds in intensive care are being used. the vast geordie of covid inpatients -- the vast majority of covid inpatients are unvaccinated. let's start with the u.s. could a third shot be the answer or is it more just about not enough people being vaccinated to begin with? >> right now, there's a lot of debates on the third shot. it is not only just the medical community seeking more data to find out whether there is need for the third shot to be administered to fully vaccinated class of now. there is also this discussion about vaccine equity when some parts of the world like africa is only 3% covered by vaccine. advanced economies, 55 percent covered according to our data. just seeing that, when we are administering more vaccines to advance economies, is it going to cause more outbreaks in the

developing world and more variants potentially coming up? that is another side of the discussion. the who came out to criticize what the u.s. is planning to do with these two debates going on, really, right now, the question is how can the country really vaccinate the rest of the population that now the vaccine rate is hitting a wall. with the rising cases and hospitalizations and deaths in the u.s., that is something the policymakers really are trying to do with this review coming up. already delayed for a week to discuss the use of booster shots among cdc advisors. dani: it does seem like one of the at least hopeful spots in the u.s., comparing it to the u.k., where you had a peak in the delta virus cases. there is some hope that that peak is occurring in the u.s. but i'm wondering how that relates to the asia-pacific region because you have japan and australia seeming to be hotspots.

does that seem like that could be at a peak as well or does it seem like there is risk for it to spread further? >> at least right now in the u.s., the cases all the rising but not reaching the record level. for japan, the cases are the highs in history. more than 10 times what it was a month ago so that is really spiraling out of control and australia as well, always adopted the covid zero strategy, trying to keep the virus out of the borders. now with the lockdown extending in sydney, it really challenged that strategy as well as neighboring new zealand. this asia issue is more like they have all performed very well in the first year of covid. right now, how can they continue their success? with less immunity obtained from infections a year ago, how can they actually raise up there back nation? dani: thank you so much. that is our reporter and hong kong. coming up, angela merkel heads to moscow.

what will be her first meeting with vladimir putin? discussions will include afghanistan and nord stream 2. we will get the latest for berlin. this is bloomberg. ♪ (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.

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annmarie: good morning from bloomberg -- dani: good morning from bloomberg's european headquarters. asian stocks dipped after a choppy session in the u.s. the delta variant continues to weigh on the recovery while the dollar missed around a nine month high. u.s. covid deaths hit levels not

seen since february. the cdc delays decision on booster shots as debate continues over the need for a third dose. and more pain from the chip crunch. global shortages will crush auto production by as much as 7.1 million cars this year. a gloomy backdrop in markets today. asian stocks dripping more than 1%. u.s. stocks, we saw again yesterday, but we saw things like commodities get hit. that suggests anxiety under the surface. sentiment also starting to turn. you are looking at the individual survey of investors, bears versus bulls. when this turns into the red, it means in this survey, there are more u.s. bears that there are bulls. it happened for the first time since january. u.s. equities may be hovering around all-time highs, but sentiment is far from it. if you look at this as a

contrarian indicator, this might mean it is time to go back in, but in today's market, we are not yet seeing people go back in. set the stage. msci asia-pacific indices heading lower than more than 1%, at 1.2%. u.s. futures down nearly a third of 1% with a bid for bonds and oil slightly higher. angela merkel is headed to moscow today, just a month before german voters decide her replacement as chancellor. she is set to meet with vladimir putin for the last time as chancellor before heading to ukraine over the weekend. merkel and putin have a long relationship, and she has provided an open mind of communication -- open line of communication between the u.s. and moscow during her year as chancellor. that relationship may never be more timely with russia one of a few nations to keep its embassy

open in afghanistan after the taliban took control. maria, what is the significance of this trip, which is merkel's last? maria: you brought up two good points. angela merkel is someone who grew up in east germany. she is a fluent russian speaker. she has known vladimir putin for years. she has had to deal with russia for more than a decade. this is someone who has first-hand experience when it comes to kremlin politics. she is not running for reelection. it is a very strong component for europe and european politics, the fact that urkel will not be there to bridge the gap between russia and the european union. the other thing is the critical timing of this meeting. you have situations in afghanistan. the germans are rushing together people out of the country. meanwhile, the russians have

decided to keep their personnel in the country. and you have nord stream 2. that project will be completed, but also the germans have just agreed with the americans to go forward with a plan that would minimize the impact on ukraine. she has also been going to ukraine after this meeting. there are two very critical components in this meeting, one of which is always energy, but second, the geopolitics around afghanistan, which is a crisis that is not reflecting well on germany. they had the second-biggest army deployed in the country, and this whole thing has been chaos for the german government. dani: maria, thanks so much. meanwhile, one of the candidates to replace angela merkel, the german green leader, has been vocal about providing support to afghan refugees. she spoke with maria in weimar yesterday. >> we have to stand together because the nature of troops and

responsibility to save those people who supported the nato troops in afghanistan being a translator, being a cook, or being a journalist. troops have to ensure that these people can come to the airport, meaning also talking to the taliban to save those people who trusted us. dani: as well as the immediate human cost of the tele-band to cover, there is also the long-term difficulties -- taliban takeover, there is also long-term difficulties. yesterday, the imf cut off kabul from the millions of dollars of funding it was set to receive. afghanistan is also said to be the source of trillions of dollars of rare earth, including some which may be key to the transition to green energy. there is a danger that without a solid and internationally recognized government, afghanistan's reserves could be exploited by neighbors that want to claim them. we are joined by henk van alphen, ceo of wealth minerals,

who knows this issue well. he writes that afghanistan's vast mineral resources present a lost opportunity. what exactly do you mean? henk: developing mines around the world is a time-consuming effort. afghanistan unfortunately have wonderful resources sitting there, and it is not entirely likely they will be developed anytime soon. it is obviously not a place where people will be investing money anytime soon. it is unfortunate for a country like afghanistan, but it is not entirely a unique situation in the world either. dani: i am curious, the taliban took that control, were there any efforts underway to tap into these resources? henk: there have been efforts before, not entirely for lithium

or rare earth, but there have been efforts in copper, oil, iron ore, and none of them have gone anywhere. we have all these wonderful ideas the chinese have spent billions of dollars to put mines into production and none of them have ever come into fruition. dani: does that change with china present in afghanistan? with the u.s. gone, does china fill that vacuum and end up being successful in mining rare earth? henk: i would be very surprised. china would probably be one of the few countries that would make an attempt in the future to see. first of all, you have to see what the developments are going to be with the tele-band -- the taliban in power now, so that is going to be time-consuming. it has not been an entirely wonderful experience for the chinese so far. it is very difficult to put-- s

mines into production on environments like that. i would be surprised if they have room to run into afghanistan in the near future. but there is going to be an enormous shortage of rare-earth and lithium in the world, so there was always somebody at some point trying to actually develop something there, but that is going to be very difficult. dani: this is a crucial thing you right in your research, the need for lithium, the growth of the ev market. is afghanistan, at least in the medium to near term, able to contribute to this global need for lithium? can anything fill in the gap? henk: i have been in the mining industry for a long time. it is one of the few times we are in an industry that -- whereby everything is developed -- everyone is developing

everything into automobiles and there was no tomorrow, and there really is not. i do not think there is enough lithium in the short term just apply -- in the short term to supply it all. lithium prices have gone up quite a bit already and will probably peak again. you have to try to be in more stable environments. there are obviously places where you can develop lithium. we as a country were operating out of cheat lake, she lay being a very good environment to work out of -- out of chile, chile being a great environment to work out of. dani: of course, the price of a lot of metals is on everyone's mind, considering we have seen a lot of commodity prices spike higher. it to what degree does it result in higher prices versus stifling innovation, things that, without the access to lithium, you no

longer have? henk: the mining industry generally is very efficient at mining things when prices go up. eventually lithium will be found, but as i said, the key components, because a lot of the lithium comes out of lithium brines, and that is done through an evaporation process, and it is very inefficient, not entirely environmentally friendly. all that needs to change, and that has to change fairly rapidly in order to supply the market that we are going to see here. lithium demand is supposed to go up 40 times in the next 15 years. i mean, 40 times is an enormous number, no matter how you look at it. dani: before i let you go, i do have to ask you one question about afghanistan. he wrote that not only is this a

lost opportunity, given afghanistan's large rare-earth, mineral access, but that also presents a national security threat. what is the thinking there? henk: it is the resource curse that you can have. afghanistan is not going to be a very pleasant environment to be in. it is going to be very corrupt. you have vast resources sitting there. it is going to turn into a purchase more than a blessing for countries like afghanistan, where you have massive amounts of corruption in the future. this should be a blessing for a country like afghanistan, and it is probably not going to happen. dani: henk, thank you for joining us. ceo of wealth minerals.

thank you for joining us. that's get to the first word news with annabelle droulers. anabelle: in australia, sydney's two-month-long lockdown is is expected to be extended until the end of september, as the delta outbreak worsens in the most populous city in the country. new zealand has extended its nationwide lockdown by four days after an outbreak spread beyond the largest city, auckland, placing pressure on the so-called zero covid strategy. u.s. vice president kamala harris will look to bolster economic and military cooperation in china's backyard as she visits singapore and vietnam starting this weekend. it is the biden administration's highest profile trip yet to the region. harris's trip to vietnam will be the first by a sitting u.s. vice president since the or ended in 1975. onlyfans is getting out of the pornography business. the company will prohibit

sexually explicit conduct on its website after october, although some nude videos will still be allowed. onlyfans popularity has increased during the pandemic has sex workers, musicians, and online influencers use it to charge fans for exclusive content. global news 24 hours a day, powered by more than 2700 journalists and analysts can more than 120 countries. this is bloomberg. dani: thank you so much. coming up, we talk about the chip crunch pain. global car production could be slashed by as many as 700 million cars this year. ♪

>> we believe that the war is passed. >> it is very fluid. >> the chip shortage, which is driven by capacity, already the action has been taken by our suppliers, and this will also go away. >> microchips are the center of most of this activity, but we are seeing a wide range of supplier disruptions due largely to continued outbreak of covid. >> we believe it will be until at least mid-2022 until we start to see supplies rebound. >> whether this will go away in the short term, i do not think so. >> we have seen shortages, somewhere from 5%, 10 percent, 20% maximum reduction compared to our initial plan. dani: automakers and analysts there on the chip shortage. according to a new report, the worldwide shortage of semi

conductors will cut global auto production by as many as 7.1 million cars in just this year. that forecast does include the latest cuts from toyota announced yesterday, which sent the share plunging. let's get more on it with katrina, who leads our asian transport coverage. you have the world's number one automaker here. weren't they supposed to be the strongest in terms of supply chain management? what does this mean considering they are not able to really keep up and continue to see pain. --and continue to see pain? katrina: this chip crisis again late last year. toyota was applauded for its supply chain debbie. the company does have a very intricate system in place to monitor its vast network. it also has an early warning system for shortages. the fact that this september snarl is impacting 27 production

lines across 14 plants in japan, which, by the way, is every single toyota plant in the country, really shows just how the best placed plans may be no match for a pandemic that is confounding scientists and sparking fresh lockdowns around the world and still wrecking a lot of havoc on a vast array of industries. the chip shortage, we just heard comments from ceos of automakers, but one thing increasingly being spoken about is how the pandemic is impacting upon the supply chain particularly in southeast asia. toyota itself mentioned vietnam and malaysia. one automotive executive we spoke to recently echoed that point. he said, we can find new ways of keeping machine going, but we cannot fix in unvaccinated apply chain -- supply chain. i think that is what goes to the heart of what we are seeing

here -- i think that goes to the heart of what we are seeing here. dani: toyota has the best supply chain management, so if they're cut is about 40% next month, what does that mean for other companies that are not toyota, that do not have this best and class -- best in class supply chain management? katrina: that is a good question. that is also what investors are wondering. toyota is down again today. if this can snarl the world's biggest carmaker, what hope do other carmakers have? we are seeing signs that other carmakers are coming out and morning. bmw said that the global chip shortage may worsen, after it said earlier this year that it had enough semi conductors, and now it has changed its tune. volkswagen also flagging worsening supply woes. daimler dialing back delivery expectations. there was another market report recently that said the time it

is taking for chip companies to get orders, fill has stretched to more than 20 weeks, so that indicates the shortages holding back automakers are not getting any better. in fact, they are probably getting worse. dani: katrina, thanks so much. coming up, another risk obsession as growth concerns and chinese curves way on stocks and commodities. we are going to go to mark cranfield from our mliv team. ♪

dani: welcome black to -- welcome back to bloomberg daybreak: europe.

european stocks heading for the worst week since february. the delta variant and china's crackdown are rocking sentiment while weakness in commodities are continuing to persist. that is after beijing's attempts to curb steel output. futures pointing flattening europe. however, after the euro stoxx 50 hundred -- the stoxx 600 wiped out values from yesterday. mark cranfield, thank you for joining us. one thing that caught my eye was how yesterday's wobble might be the start of something more. it has been a while since we have seen a 5% dropping u.s. stocks -- drop in u.s. stocks. do you see this as more than a temporary blip, and mike this extended to for the risk aversion? -- for the risk aversion? mark: if you look at the way

people have been selling equities today in asia, there have been some incremental changes to the picture. we have seen additional lockdowns in australia and new zealand, for example. but that is just an extension of what happened earlier in the week. there is another change in china. they are going after personal data of the tech companies as well, a continuation of the same thing. there is nothing really new as such, and yet the mood in the market is really just as bad as it has been earlier in the week. people are just giving up. they are selling what they can to stop the p&l's getting worse. that probably is a momentum which could continue into next week, and there must be -- and that must be disturbing for people trying to assess valuations, because there is a flood of money trying to get out. dani: getting up, is that the same as the market capitulating? mark: in certain cases, we are

probably seeing parts of that. you could argue as far as china tech stocks are concerned, but when you look at the hang seng tech index, which is down about 46%, 47% since the highs just six months ago, that really does look like some kind of capitulation. some markets have not gone down so far, but the chinese market is severe, maybe coming towards an end. looking at some of the commodity spaces like iron ore, it has also had a severe beating. we are possibly near the end of the extreme selling in those, but there are some others which may still have a bit further to go. dani: in terms of the dollar, we were talking about this with esther earlier. to her, it was surprising, at least for the short term, how much it has strengthened. is it a logical move we are seeing in the dollar, or is there more fear and anxiety showing through in the fx

bedroom than perhaps other asset -- affect spectrum that perhaps other asset classes? mark: i do not think so more than asset classes, but it is related to the overall mood you are seeing in risk assets. you have a combination of things coming together. there is a citation that interest rates will go higher -- there is expectation that interest rates will go higher. you've got other reasons why other countries cannot follow that course. just this year, people looking for a haven, the u.s. dollar is certainly one of the best, very liquid. it is a good place to go, also related to the stability in the treasury market. people are parking money in treasuries. in the background, you have the chinese currency getting softer as well. dani: mark, thank you so much. a lot of market moves to keep track of. tonight, bloomberg is going to be premiering a tv special,

"inside venezuela," where erik schatzker sits down with those who will decide the country's future. that is playing out over the weekend on bloomberg tv. european open up next. ♪

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francine: good morning, everyone. come to the european market open. mark cudmore joins me in singapore to take us through the market actions this hour. the cash trade is less than an hour away, and here are your top headlines. futures slip after a coffee session in the u.s. the delta variant continues to weigh on the recovery as u.s. covid debts hit levels unseen