>> good morning from bloomberg's middle east headquarters in dubai. it is daybreak europe.

these are the stories that set the agenda. a hiatus. stocks trade higher after last week's selloff. traders looking ahead to jackson hole. afghanistan in turmoil. president biden expands the evacuation. criticism of his response. g7 meets. and rethinking zero covid. the country may never return to zero cases but hong kong says its border will not open until the pandemic is kept at bay. welcome to daybreak europe. last week there was a wonderful phrase that came again and again, a moment of existential angst. there was a great deal of angst in the market and that was reflected in the markets which crumbled at certain points. have we passed through that as

chinese equities bounce back? i want to show you moments of great divergence. last week it was bank of america. the equity community is even more diversi. gent. the third widest in a decade. morgan stanley says we have to raise points. barclays, a 17% plunge. but despite that, money flew into equities. i put it to you this morning that the reason you have passed through this existential angst moment because robert kaplan has opened the trapdoor to the possibility of a delay in the sequencing of tapering. that, ladies and gentlemen, has repriced the dollar and emboldened some the equity risk takers. let me show you the rally.

a bounce back in china. the tech stocks up 1.5%. what is more important? the scale of the heights or the pace of the taper? do you want more big tech? are you worried about delta? the china implosion in terms of regulation and growth is what is worrying global fx markets. this is the oil market bouncing back. kaplan waivers and the dollar goes over and oil bounces back. it is not genius stuff. bitcoin above 50,000. i put it to you that any valley in euro swiss would be an opportunity to buy a little swiss for the weekend. jackson hole is the event the world will focus on this week.

virtual gathering. the scrutiny and the taper clues are what we are looking for as well as the economic outlook. lucy macdonald is a global equity strategist at j.p. morgan global emerging markets income trust. here we are. a moment of exit -- existential angst. it was per evasive. how worried are you that a taper begins that will materially impact the equity market outlook? lucy: the expectation at the moment is that when we talk about taper and then the tapering will happen next year and the rates will start to rise in 2023. it seems any big deviation from that timetable is likely to cause more volatility.

any communication from the fed needs to be very clear. a message coming out without any deviation and that is going to be difficult because we are at a stage where growth is going to be slowed down. the messages coming will be more confusing. we are going to be having more confusing messages on inflation as well. the fed itself will be digesting a lot of confusing information so it will be extremely tricky for them to deliver a solid message coming through. >> this is where i want to get to your view on growth. sometimes, i think -- when i look at the vaccination rates in the united states, 50 -- 56% have had two shots in the united states. if you think the line in the

sand was july 4 for president biden. how do you talk about covid and delta? when you talk about equity exposure as a team --at what level does that come into the conversation? lucy: the growth is going to be more volatile. we know we have a push and pull between the vaccine and the variants. there may be different ones that come out and more vaccines will need to be developed as we go so it will cause more percent -- volatility in growth and more difficulty in forecasting. that means where you have the cyclical recovery that has happened so far, you cannot forecast that it will continue. that is the main issue, the inability to forecast forward and that is why you had the big gap in expectations that you

were talking about earlier on interest rates and growth. >> the very top line of your note was -- when it comes to differentiating where you want to take exposure in a peak growth world, how does that play out? lucy: you need is bond yields to come down. you don't want to have everything riding on bonds as an equity investor. how do you do that? you get away from it a little bit by some exposure to emerging markets, some idiosyncratic small growth companies -- anything that can mean that you are not just being swamped in

this conversation about rates at the bond market. as an equity investor, you do have that opportunity of getting some interesting business in your portfolio. manus: can i add j.p. morgan to the headline story this morning -- goldman sachs, bank of america see the lost decade for emerging markets as having passed? do you want to join that, lucy, joined the roll call of the next swing in em? lucy: it is tempting as these -- at these valuations. you look at the discount of the emerging markets to the rest of the world. when you look at growth, commodity is helping at the moment. the thing which is the barrier is the fact that the vaccination

program is less mature in the developing world and therefore, you have more uncertainty about growth there. the other thing is if you have dollar strength dropping and yields rising, it is difficult for emerging markets to differentiate themselves. i think yes, i would be tempted. i don't know if i would go all in until you got further through the covid. manus: and we are grappling with what that is as we have vaccinations and now we are talking about booster number three. lucy, stay with us. great to have you back on the show. j.p. morgan's global em trust head leader. first word news with angel. good day.

>> good morning. president biden says he may extend the august 31 deadline for a full u.s. withdraw from afghanistan. he is also promising expanding efforts to help evacuate americans that have struggled to reach the airport. some 25,000 have been airlifted so hard. u.k. prime minister is seeking to convene g7 leaders on thursday for urgent talks on afghanistan. china has brought local cases of covid down to zero again. since -- the country has carried out 100 million tests, imposed travel bans and enforced lockdowns. scott morrison in australia says it is highly unlikely that his country will return to know covid cases. he is sticking to his plan when vaccination targets are met. sweden's prime minister is set

to step down in september. his unexpected announcement in a speech on sunday could open the way for the finance minister to become the country's first female leader. 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 angel felicity ando. this is bloomberg. manus: angel, thank you very much. coming up on the show, president xi plays out a warning for china's rich. frederick from beijing points to a campaign to close the nation's massive wealth gap. we discussed. this is bloomberg. ♪ed. this is bloomberg. ♪

manus: it is daybreak europe. we are live from dubai. a snapshot with global equities. a bounce back from the biggest one-day rally in asian equities driven higher by tech. you have to say, look at that. the hang seng tech index up 0.7 5%. robert kaplan, i put it to you very simply, robert kaplan opens the door. the gap is wide from the analyst community. let's get back to lucy macdonald from jp morgan who has global em income trust to manage on a daily basis. lucy, i put up the equity board because i think it is important to acknowledge that there is something happening in china. the rhetoric continues from

president xi. i want to get a sense from you in terms of what happened in the chinese equity market? when i look at the hang seng down 6% last week. $900 billion was wiped out of china tech last week. you came to the end of the week, did you say, what just happened? lucy: the regulation is the driving force in that sector at the moment but i also think what is going on in china with the debt restructuring is extremely important. the switch from all sorts of growth and volume of growth to volatility of growth now seems to be on the agenda. and that means probably an

overall slower growth, better quality, but the potential for fewer black swans as we go through the debt restructuring happening. so you have got the regulation and then you have the and make structure and i think both of those things will be ongoing. manus: we can never predict black swans. we can only see the hint of gray on the horizon. do you think it will be a debt death charge that explodes as a black swan? lucy: there is the higher probability for that now and there has been in the last decade. because some of the lurking debts that we have been talking about for years are now being addressed. now, there is a risk association with that because of the size of

them and so far, they are mostly domestic bonds but we are coming to some that are also foreign investors and there is a scope for contagion. manus: maybe that is why we saw the liquidity injection last week. i want to understand where you would go for growth. one needs to be more discerning. this is msci china. relative to the world, and i think it is a good charge. it is back at levels we have not seen since 2006. you said earlier that it is tempting when you see valuations collapse. it is not always the right time. when you see these revaluations, where do you think the best opportunity is for growth? china has not stopped growing, it may just pause. lucy: it may grow more slowly

but potentially better quality. these are interesting times. we are looking at the tencents of the world. these are interesting businesses. however, regulation is difficult to predict and needs a look at valuations. how much of that is priced in? who knows. i would trend with caution in this area but it is a good starting valuation. manus: have you taken any profits? have you taken any sort of defensive, or more defensive maneuvers given the outperformance, let's say, of equities? lucy: the point i have been trying to get through is about

diversifying away from pure bond liquidity driven play which has been the biggest driver. part of that is now spac but it is also all of that quality growth area. and, i think you just need some more differentiated sources in your portfolio to mean that you are not just driving off that one bet which no one can really forecast. manus: you are right. one big bet. stay with us. we have gone for the full special with lucy, she is with us for three sessions. coming up, in five weeks, election day. polls show chancellor angela

merkel, her preferred successor is failing to impress at the polls. we have more on the election risk right here on bloomberg. ♪risk right here on bloomberg. ♪

manus: it is daybreak europe. with just over a month to go until election day, the latest polls show support for angela merkel's party and its affiliate . while the social democrats have risen to almost a for your high. maria tadeo is in berlin and the polls have a screaming message. how worried do you think they are at the cdu? berea: -- maria: they are very

worried. we have entered the critical stage of the campaign and the polling numbers for armin laschet look like a big disaster. the cdu has lost more than 10 points as a party and he himself as a political party, a potential candidate, is also slipping on that basis. one problem is a candidate that has not been successor -- successful on the campaign trail and the cdu slipping week after week. if you look at the latest polls coming out, they show that they are polling 22 percent. the spd that was third and discounted from the election is polling at 22%. i would argue that is the dynamic. it is gone from a cdu-green competition to a duel between the finance minister and armin laschet representing the cdu. it is very open and you could tell at the cdu over the weekend that there was a lot of nervousness. manus: do you think we are

moving further away from a two-party coalition to something broader? maria: yes, certainly. i was almost the best case scenario. the market at the beginning was positioned to the idea that the cdu woodwind the election but we were heading into a cdu-green two-party coalition. the greens cannot reach past 18% according to the polls. they have not been able to sustain momentum beyond that. to form a government, it looks like you will need a three party coalition. the question is, if we do get the 22% for both the right and the left, which way is germany going to go? this is an election that is more volatile than anticipated and a race that is more open then and he thought it would be. manus: the fx markets could go into schizophrenic mode.

thank you. let me get back to my guest. lucy macdonald. you were a buyer of europe about 10 months ago. are you still a buyer of europe in the broadest sense? lucy: yes. still a buyer. valuations still give a bit more upside. there is some fiscal stimulus so fiscal rectitude is no longer the bible. and i think that is a big change in europe. if we get a little more instability which would cause the euro to weaken, that helps earnings because of the nature of the stock market. manus: most fund managers do not look at the change of government

but merkel exits and that is a generational change. that is a multi-decade change. but -- does it come into your thinking at all that you have a green party? lucy: overall, it is a generational change. there has been a great deal of stability which has managed to hold things together. a lot better then has been expected over the last 10 years. -- a lot better than has been expected over the last 10 years. i don't -- i think a shift will happen regardless. manus: from a valuation

perspective, would you also say that your relative to the u.s. has ownership? do you think the gap has been enclosed? lucy: it has been closed to some extent. it is not as interesting as it was but still, the potential is there. manus: lucy, thank you very much. lucy macdonald from jp morgan global e.m. trust. coming up, she has landed in singapore. the vice president kamala harris is taking off her asian visit to singapore. the backdrop of her arrival is setting -- is kabul. that could overshadow the trip. part of her discussion in asia is about supply chains.

let's see what she has to say. we are expecting a press conference from the vice president shortly. asian equities. you have a relief rally in asia tech as lucy in business, it's never just another day. it's the big sale, or the big presentation. the day where everything goes right. or the one where nothing does. with comcast business you get the network that can deliver gig speeds to the most businesses and advanced cybersecurity to protect every device on it— all backed by a dedicated team, 24/7. every day in business is a big day. we'll keep you ready for what's next. comcast business powering possibilities.

manus: good morning from our middle east headquarters. it is "daybreak europe." stocks trade higher after last week's selloff. traders look ahead to jackson hole. afghanistan in turmoil. president biden explains the evacuation beyond kabul airport amid criticism of his response to the crisis. the g7 meets tomorrow.

australia warns the country may never return to zero covid cases. hong kong says its border won't open until the pandemic is kept at bay. what does at bay mean? what is normalization? one our talk at the federal reserve robert kaplan eisai has opened the trapdoor to an altered timeline to taper. he wants to be open-minded and avoid rigidity. a moment of existential angst from last week seems to have passed. it is the central bank gathering to beat all central-bank gatherings. janet whole -- jackson hole. janet yellen wants to back powell but what would a second term mean? a hawkish scenario, bullish for the dollar. compared to the alternative, powell is clearly less woke

than his employment mandate understanding then lael brainard. could be a second term for powell? powell has to corral the three schools of thought when it comes to taper. here is the dollar. it belies something which i think is much wider, which was the rally last week. bank of america said that rally in the dollar was driven by growth woes. peak growth. bank of america says the dollar rally was driven by the week asian sentiment, deteriorating in china. let me show you stocks. he reprieved in china, a bounceback in china. it is just the beginning of a floor. you have to be judicious in terms of where you put your money. asian stocks up 1.1%. my favorite line is when it comes to stocks, the analysts

have never been as wide in their view of whether we are 1000 points up or down on equities in 10 years. that is the breadth of the range at morgan stanley. 70% downside, 8% upside. the dollar rose. let's roll it over, have a look at oil. stopped in its tracks. it had a turgid run down the past couple weeks. you are seeing a pause for breath on brent. if opec-plus met today, they very well would probably call time on the extra barrels putting back at the market. glorious bitcoin. back above $50,000. you hear all the calls written about it in terms of the fibonacci level, to get to $51,000, the record high. the euro cascaded lower.

it rallied furiously last week as a defensive hedge, but is worried. maybe that is the opportunity to pick up a hedge for yourself. let's talk about the vice president of the united states of america because she has begun her tour of southeast asia in singapore. she is do to hold meetings with the prime minister and business leaders. the trip risks becoming overshadowed by the question of afghanistan. for more we are joined by bruce einhorn. thank you for being with me. what is top of this agenda? the pacific trading relationship is incredibly important. is it trade or security? what do you think the overarching agenda was supposed to be? bruce: i think the key point is that the biden administration is trying to reemphasize that southeast asia really does matter to the u.s..

the vice president on this trip is supposed to be speaking about things like the semiconductor shortage and the role southeast asia can play, singapore of course is a major semiconductor manufacturer. there is also on the agenda issues related to the pandemic. the vice president, when she goes to vietnam, is going to be opening the southeast asia office for the centers for disease control. the overall message is -- almost a symbolic one that we are sending the vice president to southeast asia, we the united states, we are focused on your part of the world after a while when the u.s. was looking elsewhere. manus: one or two people have been writing an awful lot about the execution of that withdrawal from afghanistan, and what signal might that send to taiwan

in terms of that protectorate that has always been there? let's talk -- let's just dip into kamala harris. she is on the podium now. let's listen for a second as she begins to deliver her address. vice president of the united states. >> 3, 2, 1. thank you very much. >> madam vice president, prime minister, good afternoon. i will be the floor manager for today's press conference. for the live stream there will be two cameras. the one with the yellow box is the two shot for the two of you. the one with the orange box is the one you should be looking at giving your individual replies. on your rights, the screen, you will see the program feed set up for the livestream. on the left, it is where your

q&a -- manus: we will bring you the news conference in just a moment. my apologies. we returned to bruce einhorn, a reporter tracking the administration and the latest nuances. bruce, you say this was about reassuring the asia pivot. in terms of the news flow we have had with regards to afghanistan over the weekend, what has been the material change from the president? bruce: as far as the vice president's trip, i think it is reassuring the region that notwithstanding the u.s. withdraw from afghanistan, that the u.s. is emitted to southeast asia. i think that is the message the

southeast asians -- southeast asian leaders are concerned about. they are all quite aware that under the previous administration, the united states withdrew from the transpacific partnership. president trump visited the region several times to meet with kim jong-un. he went to singapore, to vietnam. but beyond that, was not terribly engaged with southeast asia itself. that is something the biden administration is really trying to address now. manus: thank you very much. bruce einhorn, the latest on kamala harris and her trip to singapore and asia. let's get the first word news. >> thanks. sweden's prime minister is to step down in november after seven years in power. his unexpected announcement in a speech on sunday could open the

way for the finance minister to become the country's first female leader. bloomberg has learned janet yellen has told senior white house advisers she supports reappointing jerome powell as federal reserve chairman. the white house has been casting a wide net for possible candidates. powell's four-year term is set to end in february. the u.s. treasury secretary's backing would increase powell's chance of reappointment. lg camp shares have tumbled the most after general motors recalled its electric vehicle for the first time in nine months over the risk of battery fires. the u.s. carmaker wants lg to cover the cost of the recall, which could reach $1 billion. gm is to replace batteries in millions of cars. shares of ever grant -- evergrande have fallen on

reports they may sell their headquarters at a loss. global news 24 hours a day -- 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: thank you very much. a peak into the kamala harris press conference, she is alongside the prime minister of singapore. speaking in regards to the very latest from the united states and singapore. we will have more on that as the morning goes on. coming up, the delta variant forces australia and new zealand to review covid strategies. more on the nuances and political shifts. this is bloomberg. ♪

manus: it is your monday edition of "daybreak europe." there is a repricing in the dollar. robert kaplan uses language like wanting flexibility, wanting the ability not to be tied to taper. that has begun to reprice in the dollar. the aussie is flying higher. there is a shift in rhetoric from scott morrison we might never return to zero covid cases in australia. the aussie collapsed by 3% last week. a little bit of a short squeeze. a short covering. you see the dollar now against the norwegian krone and dollar cad also rolling over.

you see the commodity complex stabilize. a lot of this triangulate spec to the 4.5% ramp-up you have seen in chinese technology. it is kaplan's fed as well as opening the door to a different taper timeline than he originally espoused. he is the arch hawk. that has reprice the narrative across the fx spectrum. the dollar may pause. let me return to our top story. the covid-19 and the delta variant. you just heard from the prime minister of australia reviewing the strategies in regards to the highly unlikely outcome that his country will ever return to zero cases. what does that mean? how important is this statement? michelle, what exactly prompted this? the borders have been firmly closed. lockdowns have been the most severe, even cross-county border

lockdown. why the pivot from morrison now? >> the number of cases of coronavirus are continuing to climb in australia and new zealand despite these really strict lockdowns they have. been doing australia has been particularly hard-hit. they have had more than half a dozen lockdowns where people cannot go out and yet still they are not having the impact they thought they were going to have. certainly not the impact they had earlier in the outbreak. that is because the delta variant that is so much more infectious. it can get people sick even if they have no idea they are infected and they are showing no symptoms. it happens within 24 hours. with the realization this is not something that is, once the virus is widespread is and your community it is going to be possible to stop. in some respects it is a good thing because it is going to force countries to go forward and figure out a way out of the pandemic that does not require them to be isolated forever.

on the other hand, usually the way through something like this is through a lot of illness and infection, perhaps hospitalizations and death, something these countries have been able to avoid until now. manus: when i look at the map, it is one of the maps i look at every morning when i come in, i look at australia. 70 million doses have been given. 33% of the population. america is at 56.7%. the u.k., eight 9 million or six to 7% -- 89 million or 67% of the population. why did they get so badly behind the rest of the developed world? >> i believe the reason these countries are lagging is because there has been no reason to get vaccinated in terms of your practical day-to-day life. in the u.s., the u.k., everybody

knows people who have been infected. everybody knows people who have been hospitalized and sadly most people know someone who has died. almost one in 500 people in the u.s. has died from coronavirus. if you are in australia or new zealand, the only person you know who has coronavirus is the person you read about in the newspaper. people don't feel urgency to get it. if the virus is not out there threatening you, why get a vaccine that might have some minimal side effects? i think now that we are seeing this virus really start to take hold in these places, citizens are going to realize they have to get vaccinated, not only because they have to get vaccinated to open up, but they are going to need to be vaccinated because the epidemiologists are saying everyone is either going to be vaccinated or infected. you are a lot safer if you get vaccinated first. manus: this is where scott morrison has shifted the nuance, isn't it? from case numbers to volume numbers.

the number of people who have contracted covid. hospitalization rates. that, we know, is tied to the vaccination. thank you very much. michelle cortez, thanks for joining me. i encourage you to go to the map. phenomenal data. 72% of vermont is vaccinated. the u.s. overall, 56.6%. this is the data that caused a tremendous existential angst last week. hong kong's abrupt u-turn to reimpose some of the world's strictest quarantine policies triggered an outcry from the business community. the commerce secretary spoke exclusively to bloomberg's stephen engle. >> we are not totally shut off, but we are playing a safe strategy. we must keep covid at bay before we can talk about full opening

of borders or economies. >> let me read you, hong kong hotels must open sooner rather than later or this could leave the international community to question if they want to remain indefinitely trapped in hong kong when the rest of the world is moving on. this concern amongst the international business community could pose a growing threat to hong kong's status as an international business center. how much of a threat is that? >> i think basically it is the channel that we maintain with foreign chambers. i fully appreciate particularly those companies using hong kong as a base for the region. senior officials need to travel, and therefore -- it is no secret that while the chinese impose quite a stringent requirement,

there will need to be constant adjustment whenever circumstances allow. based on risk of death, it is changing. >> it is seen as ad hoc. again, i need to bring up. it has been a lightning rod of criticism. yesterday, everyone was talking about this. i was the only foreigner at the table. there were locals. they are extremely upset by what they see as a double standard. i know you have justified it. the government put out a statement saying people who are granted exemptions explicitly for the purpose of performing designated professional work, which is conducive to maintaining the necessary operation and development of hong kong's economy. how is a tv show produced by a foreign platform about ex-pat

privilege conducive to economic development in hong kong? i don't get it either. >> as the commerce secretary, we have a wide portfolio. part of my team would look after the local and foreign businesses using hong kong as a location for shooting and postproduction. this is one of the teams coming in. the power under the law allows exceptions to be made for people who might have an impact or an interest in the wider economic development, including for instance, if we try to maintain supply, we need such exemptions. allowing people, aircrew

members, into the town. earlier days, we did grant exemptions to those personnel. in my small area, we are making a small exception to a handful of people who need to come in who need to do the production -- >> wasn't there somebody at the executive council table pounding there for saying this doesn't look good for hong kong? -- pounding their fist saying this doesn't look good for hong kong? >> our job is to make sure we have a good connection with the wider world. such exceptions are being made in good faith and with sufficient data. ♪

manus: it is "daybreak europe."

risk is back in crypto. we are roaring back on bitcoin, above $50,000 for the first time since may. that has a consequence. who is leading who? the bloomberg crypto galaxy up 2.7%. you are going to read lots of notes from various people. for those that ever thought i did not look at a chart, 61.8%. i have plummeted new levels of internet. joanna, here we go. thewe were stuck with bitcoin in

that $30,000 to $40,000 range for weeks on end. with encouragement from elon musk, kathy would come and a lot of people consolidating, institutions buying at lower levels, it has taken off. now we are at $50,000. manus: i cannot wait to see what

elon musk has got to say about the most recent rally. keep writing the articles. they are on bloomberg tv.com. joanna aust injure -- joanna ossinger, our crypto czar. kamala harris meeting with the prime minister of singapore. we wait for more lines to come through on the news. now being asked about afghanistan and the commitments from the allies. this is after some pretty sturdy rebuke from the g7, who meet tomorrow. this is bloomberg. ♪

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anna: good morning. welcome to "bloomberg markets european open peer code -- "bloomberg markets: the european open." stocks trade higher after last week's selloff. traders look ahead to jackson hole. afghanistan in turmoil.