♪ >> good morning from bloomberg's european headquarters in london. this is bloomberg daybreak europe. these are today's top stories. u.s. futures little changed amid economic growth concerns even as the nasdaq 100 reached a new record. morgan stanley cut u.s. equities to underweight. debate rages over the impact of

prosperity goals. bitcoin us inners losses. they take a beating. el salvador fumbles it rollout as legal tender. from a shift in views on the u.s. you have bank of america coming out and saying that it is now the end of the goldilocks era for the u.s. for an era of low rates and high growth. the bank of america team are suggesting the door is closing on that period. the next two months carry outsize rescues to growth on the policy front, the fiscal front and the question of the delta variant. bear that in mind as we look ahead to the european equities and continue to focus on what's happening in asia. currently the bench mark is down

about .3%. but the nikkei continues to be in positive territory holding about 30,000 level. we had a stronger than forecast g.d.p. continuing to put fundamental support on an optimistic few days for japanese equities. bitcoin remains in focus on the back of that story around el salvador's fumbled rollout. currently trading at $64, 400. slightly lower in the session. the futures in the u.s. remain the focus. that divergent picture. the nasdaq reaching a new record. the focus continues to be as well on the policy front coming out of china and how investors should be reading that. they are seeking to ease the concerns of jinping's regulatory

crackdown. some investors have been rattled china should not be neglected. >> one way or another, we have to move more to environment of equal opportunity. hopefully to produce greater productivity to equal opportunity. but also to reduce that wealth gap. that is opportunity gap and that redistribution is in the swing and that'll happen. tom: joining us this morning is the chief investment strategist ateama. thank you for joining us early this morning out of amsterdam. what is your view on the changes that we're seeing in china? do the risks now undermine the

case for greater exposure for that market? >> we look at china right now, there is really an tracking tradeoff. the common prosperity team. it brings regulatory risk with it which we don't think is quite over. the chinese gofd disboft easing concern. we don't think they are done yet. it is bumping up against another strategic goal they have which is going to be for the next five years, the fact that china is struggling for tech independence that certainly is an interesting tradeoff that we're seeing now. now we're comfortable being neutral waiting to see how it plays out in the short-term but long-term there could be opportunities there. tom: long-term there could be opportunities.

i want to show and bring up the terminal. socgen's basket of stocks that alignolicy shift. it has long been a theme in china. those stocks performed significantly. i wonder in terms of the complex complexity, the difficulty of following the policy in the environment like china. and the solutions to that. what is your view? i think the underlying slue is that we're on this path where we are seeing that wealth and income inequality coming up on the policy agenda in multiways. china has put itself firmly on that path in a very short-term time frame. that is going to continue. that is going to be an investment theme that we take seriously. at the same time you look at the evaluation levels that the market has reached to flies the

risk associated with that path, we think those are quite attractive. especially to other parts in the market. that is a tradeoff have to make as investors. we think the tradeoff now is not quite there in terms of being overweight china. as well as the tech independence agenda we think there will be an opportunity to overweight that reach. tom: the search for yield brings many investors to china's credit space and it is dominated largely by what happens in the real estate sector, the property sector where you're seeing yieldses of 12% and up. is there an opportunity for some of these risk being mispriced? >> if you look at the property side of china, i think the risks are certainly quite elevated. is it elevated to the extent that we should be congratulating for 11%, 12% yous?

we don't think they are there yet. it is too early to go in that direction because of the underlying risk in the short-term with respect to the prosperity agenda. this is an extenges to that broader theme of wealth inequality and the housing market being such a big part of the wealth equation in china is a big part of that agenda so to go overweight that sector, against the same tradeoff, we don't think we are quite there yet. they have not reached their pain threshold yet to go in the other direction. we're not seeing policy actions to underlie that concern. it is more incremental opposed to actual policy. tom: the optimism in japan has taken up a lot of the air time in the last few days. of course on the policy front

and change in leadership there. we have stronger g.d.p. numbers. a shakeup in the nikkei 225. is there further change? >> we think japanese eck industries a bit of catchup potential here. they have not been held back by the political side of the equation not really pushing through the new fiscal stimulus expected as well as the delta variant that ch had been surging in japan and was holding back the economic recovery. on both fronts now according to the resignation as well as the case numbers rolling over, we're seeing positive signs that japan is going to be transitioning into a more positive place. equities have quickly started to reflect that. if you look at the performance year to date there is still quite a big gab gap between japanese markets and the rest of the world. we think that gap will close further and provide a bit more

upside to that market. guest: you have a total forecast of 5.4%. what is supporting that view? >> on the merging markets, this is a strategic five-year outlook. we have a slightly higher return for costs. it is driven by the evaluation size of the equation. we're just seeing evaluations because of the underperformance they have had being more attractive than the developed market equivalence. we're also seeing merging markets and greater potential still. not the way it used to be with china doing double digit revenue growth, less than that but still significantly higher than what we expect from developed market equivalents. tom: our guest stays with us. thank you.

let's go to fist word news now with simone. >> good morning, tom. boris johnson's government will hold a house of commons vote on the new tax package today. the u.k.'s prime minister appears to be off -- rebellion over the tax hike after announcing that pensioners and shareholders would pay more. it is expected to generate 36 billion pounds over the next three years. >> to conservative government wants to raise taxes. but nor could we in good conscious meet the cost of this plan simply by borrowing the money and imposing the burden on future generations. so i have to be frank with you. this new levy will break our manifesto commitment but a global pandemic wasn't in our manifesto either.

>> the white house sates 3/4 of u.s. citizens have received at least one doughs of the covid-19 vaccine. biden will detail plan with vaccine hesitancy slowing and the inoculation efforts hitting a new record last month. ford has snatched the head of apple's project. doug fields joins the car maker as chief of advance technology and embedded system officer. he worked for tesla. global news 24 hours a day on air and on bloomberg quick take powered by more than 2700 journalists and analysts. this is bloomberg. tom? tom: thank you. coming up, just markets get defensive as growth concerns return. we discuss more coming up. this is bloomberg.

tom: welcome back. this is bloomberg daybreak europe. let's check in on the european futures. you may get some more aggressive tapering than some had expected from the e.c.b. we will see if there is an announcement around reducing some of the purchases currently. futures in europe looking lower. a solid day in europe. maybe a bit of profit taking here. in the u.s., essentially flat. we have a new record for the

nasdaq yesterday. morgan stanley cut u.s. tech equities to underweight. investment strategisteama and northern trust management is still with us. what is your view on where things stand with u.s. equities with morgan stanley and bank of america, are they right to be sounding the warning signal at this point? >> we don't agree with that stance at the moment. we are a little more optimistic. we still think the recovery will continue. in the short-term, we're transitioning interest the recovery growth to more organic growth. lots of volatile data and there will be periods of disappointment in that data and maybe we're in such a period right now.

we do understand that that is -- that is challenging for markets at times looking six to 12 months ahead looking through that volatility, we are underlying positive growth and it is going to be supportive for equity markets. tom: volatility but not time to reduce dramatically or expose u.s. equities. where do you want to be positioned there? do you buy into the view that tech is a safe hain amid this volatility? how much exposure do you want to be having? >> we like the value part of equation more than the growth side of things. we look at the evaluation gap as well as the earnings gap and on both scores that the value look more attractive to us. we're also in recognition of the fact that our lower interest rate environment forecast does point in the direction of growth

a bit. offsetting factors there. overall we do like the value side a bit more. it is a laggard relief rally that we have been playing all year long. it has a bit more to it over the next couple of months. that is where we are. tom: what is the next catalyst for u.s. stocks? >> in terms of positive catalysts, we are looking at the fiscal side of the equation. how is the biden administration going to shepherd these infrastructures as well as reconciliation bills through congress. are they going to be successful? you don't want to see too much of a glitch in 2022. we're looking at what the fed is doing and is the tapering transition going to happen smoothly? that could be a positive catalyst as well. there is a little bit of risk being priced in that could be released if powell manages to

transition that party equation swell well. those two things are catalysts. tom: the strong start to week. we were mentioning just a couple of minutes ago the futures pointing lower in europe. what do you think about it is behind it? is it concerning? is it bracing for something untoward or unusual from the e.c.b. come thursday? are markets starting to price in a faster taper? >> i think with europe, as you said, it is probably a combination of factors. there is a little bit of profit taking that is likely happening at the moment because europe has had a good run. we think europe is exposed to global growth. you are seeing a little bit of concern here and there. we have seen the china equation. we have talked about that and the on the u.s. side of things, the delta variant has been impacting voluntary consumer behavior, holding back the recovery just a smidge.

those concerns are probably weighing in on european investors' minds a little bit. on the e.c.b. side of things however we're muchless concerned. the e.c.b. has a difficult task ahead of it. it had a dovish surprise last meeting. the pandemic program to its regular asset purchase program and needs to do so in a smooth fashion not to scare the markets with a hawkish surprise now. we think it has -- lagarde has been well positioned to do that. we're optimistic she will manage again tomorrow. tom: an investor expectations in terms of inflation. it has piblgd picked up significantly. are there concerns the b.c. is behind the curve? >> we don't think so. if we look at the long-term outlook for inflation, we think

it is stuck because of technology and automation is the dominant theme for the next five years and the e.c.b. should be in recognition of that. still far below the the 2% target that the e.c.b. has. we think there is lots of room to maneuver there in terms of inflation expectations and we think it is going to be hard for europe to get to that target in a sustainable fashion given its current policy mix. we're not worried about that at all. it is a short-term blip in inflation that we're seeing now. and the hawkish e.c.b. members from my own country are once again too short-term focused not looking through volatility and we think there needs to be. tom: on the u.k., you have outlined this. boris johnson wrestling with the question of tax hike here's and social care. long-term you have a view that the u.k. is going to return

higher returns than european market. >> clearly the u.k. has been under performing very significantly over the last five years. that heens that the starting point in -- means that the starting point in evaluations, for the dwopt developed market as a whole, underpins that outlook, higher return expectations of course doesn't really mean that we have a strong catalyst here and now to release in the short-term that evaluation is going to be a long grind to get there. that is because we are waiting to see how the brexit and the u.k. economy is going to dissipate over time and how the labor shortages are going to dissipate over time. we do think there is a valuation opportunity in u.k. equities. right now we don't see the catalyst in the short-term for it to get released. >> evaluations for the course of brexit do continue.

chief investment strategist ateama. coming up, bitcoin has a turbulent ride after el salvador became the first country to roll out the crypto currency as legal tender. this is bloomberg. bloomberg. ♪ tom: happy wednesday.

this is bloomberg daybreak. el salvador's bitcoin rollout got off to a rocky start. it plunged as much as 17% with the lowest levels in a month. the country's president said he to being advantage over the crash to buy the bit.

joining us from singapore is bloomberg's cross asset markets editor. how has bitcoin reacted to the el salvador rollout? a bit of a selloff and then pairing some of those loss. >> it did sell off pretty quickly and got down to $45,000. it is now in the mid 46,000's now. this is quite a drop after everyone was looking to the level above 50,000. saying lots of people are going to be buying in. we see it going up from here. there was a lot of anticipation and that has not quite worked out. tom: how does it fit into the trading pattern for bitcoin? this is the fist country to fully adopt the crypto currency. >> right. so actually bitcoin has sort of proven to be a buy the rumor type of thing.

in 2017 you had the rollout of the futures from the c.m.e. it dropped a ton after that. earlier in the year, the record was around the coin base. it fell from that level. it seems once you get to the actual events there can be a big dropoff when it is something highly anticipated. tom: how much read across is there for the rest of the crypto currency space? >> most of the top cryptos are off more than 10%. it has done a number on a lot of them. one holding better is solano. it is the seventh largest crypto currency. that sold off a little bit less. bitcoin, ether, a lot of top ones have taken it on the chin. tom: ok. thank you for joining us. the market reaction within the

crypto space to that rollouted in el salvador did not go as smoothly maybe as the president would have hoped. let's check in on the markets and concern in europe on a hawkish e.c.b. the futures lower across the bench mark. you can see the ftse is very lightly down .3%. futures of course, the dax is essentially flat. futures in the u.s. as well flat. you have a negative close in europe. a mixed picture. s&p was lower. the nasdaq pushed into view. the heats debate among wall street investors among the long-term viabilities. we're going to get details on that next. this is bloomberg.

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tom: good morning. from bloomberg's european headquarters, it is 6:30 a.m. in the city of london. this is bloomberg daybreak europe. here is what you need to know. u.s. futures little changed amid economic growth concerns even as the nasdaq 100 reached a new record. morgan stanley cut u.s. equities to underweight. debate rages over china's common

prosperity goals. seeks to ease concerns. and bitcoin us inners losses. the largest crypto currency takes a beating as el salvador fumbles its rollout as legal tender. let's check in then on the markets. broadly negative across the asian session. the nikkei in japan stands out on the back of stronger g.d.p. data. we were talking about the growth concerns. morgan stanley, bank of america both warning on the prospect of higher rates and lower growth. you have bank of america pointing to what they described as possibly the end of the goldilocks era. morgan stanley in the headlines downgrading u.s. equities on outside risk, outside risk to growth. the futures in europe are lower. the focus here on the e.c.b. and any moves to reduce stimulus. let's get more on what we have

been seeing in the markets and break it into more details. what is the picture in asia at the moment? >> it is taking a little bit of a pause off that eight-day rally probably not surprising. looking for concerns about growth. you pointed to the fact that japan is an outlier. we had that revision upwards in the second quarter g.d.p. we have the buy back from softbank helping softbank shares weakness is coming through. you have a breather coming through from the hang seng tech index. we saw that rally in the nasdaq and the nasdaq index as well. you have seen some rebounds coming through here in terms of easing restrictions for mainland travelers and that is happening and watching the age of crypto stories, that rocky start to el salvador taking bitcoin as

payment. you have seen downward pressure coming from a number of these players today tom. tom: you have been tracking the theme in asia. focused on ever grande. >> it is raising concerns about a default here. we know ever grande is one of the biggest defensive worries. we had moody's yesterday cutting the rating, the credit rating and today that was followed up. they cut their credit rating to triple c.p.r. plus calling it a triple default. cutting from neutral to sell. we saw shares slip below their 2009 i.p.o. price. they have rebounded somewhat in the afternoon session. stock has dropped around 74% year to date driven by all of the negative headlines and the company hasn't sold a dollar

bond since january last year. the next question is how much does it hurt suppliers? will they be a casualty of the evergrande liquidity. tom: providerser of a huge amount of house inning china. investor ins china and of course the world rattled by jinping's regulatory crackdown is taking aim at property raising trillions in stock values. part of jinping's push for common prosperity which has sparked intense debate among investors. >> have been pretty positive on the measures china has been taking. >> it is something that we are still observing. the -- it is not entirely clear. >> moving more towards fairer regulations. a level playing field.

>> it is a wild card what their game is with the policy. we have sold them. >> big selloffs that we have seen means that we're looking at whether or not there are some opportunities. >> in some ways, it is making it safer for investors, including foreign investors. >> it is an economy we cannot live without. they are some investment opportunities there. the question is size them accordingly. >> china is making sure that you perhaps don't get too carried away and stharynl you don't start overpaying. tom: we're joined by sofia out of hong kong. will the campaign benefit china's long-term growth or does it raise the risk of excessive government intervention. how is this all playing out? >> exactly, it is all about

execution. as you -- as we saw the guests on tv talking about how does china, how does jinping's government plan on deploying this common prosperity campaign. a campaign that kicked off in november last year when -- it was the same they president jinping wrote an article that mentioned common prosperity at least 11 times. that has been rattling the markets. they don't really understand what this means. how does china plan to redistribute wealth and what does it mean for the most profitable companies, the ones that are targeted. how how do they invest in that new climate. this wasn't very well communicated to the market. this is not something that investors in the u.s. or london are really used to. coming out of beijing and new rules that really completely

overturn business as we saw in the private education sector. this is something that policy makers are also coming to terms with and we saw today a front page article in local media really addressing concerns by investors that this is not something that is really going to change where china is going into opening up financial markets and welcoming foreign money into its capital markets. tom? tom: investors confused asyou say. it seems chinese officials are confused as well. what does all of this mean for hong kong? >> hong congress is in a very interesting position here. it is a city that is very important to china. it is where most of its companies raise money and a lot of foreign capital. it keeps flooding into hong kong. this is a success story any way you cut it for beijing in terms

of capital flow. we're watching for any science of capital outflow. no signs yet. the hong kong dollar is very strong. the money coming into equity funds. this is a city where if you're talking about inequality, this is evident here. it was one of the things that we blamed for the protests that started in 2019. the extreme inequality here and you're talking about property, property is so expensive here. hong kong regularly tops the lists of the world's most unaffordable cities. if you're rolling out a common prosperity campaign in china, how will this play out in hong kong and what does it mean for property tycoons in the city? tom: it is a key issue isn't it? in hong kong and mainland china. investors are trying to find some transparency on in with clarity. is there a theme this invest coster hold onto?

you have the credit suisse common prosperity market. how do you invest in this environment? >> yes. you were talking with my -- my colleagues earlier that the way to invest in china now and really understand what's happening is there are two very strong campaigns that play here. when you look at investing in chinese stocks, you're looking at a balance sheet and that stock is extremely profitable, and if it is the in the private sector, read between the lines. look at the latest slogans coming out of the communist party. there are a lots them. there was a newsful note from nomura revealing what all of these slogans mean. this is the kind of investment environment we are in now.

if you looking at the credit market, anything with a huge amount of leverage, you're looking at evergrande rmt we were talking about earlier, this is a very dangerous space for investors. that implied government support is no longer there. beijing will not bail out these companies at any cost. that is a very big shift in the credit market. tom: indeed. study the slogans. thank you very much indeed. let's get the first word news now with simone. >> thanks, tom. boris johnson's government will hold a house of commons vote on its new tax package today. the u.k.'s prime minister appeared to be -- the conservative party rebellion over the tax hike after announcing pensioners and shareholders would pay more. it is expected to generate 36 billion pounds to fund the covid

hit national health service and soarnl care for older people. mexico's top court has decriminalized abortion. in a region where few countries limit access. criminal liesing early term abortion is unconstitutional. the ruling cease mexico follow argentina where elective abortion was declared legal last year. a human watchdog said iran's new government is scaling up production of highly enriched urine uranium. in its first report since hard line -- to being the presidency, the stockpile is close to the levels needed for weapons. officials will meet to discuss their program later this month. neptune energy is said to be considering a merger with harbor energy. the deal valued a group at $10 billion or more creating one of

europe's biggest independent oil and gas companies. africa and southeast asia. we told neptune is considering an i.p.o. or an outright sale. global news 24 hours a day on air and on bloomberg quick take powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. tom: thank you. we have a -- crossing the terminal. naming raphael lopez as the chief compliance officer changes the top of that bank following the collapse and scandal. sam changes at the top of credit suisse. naming raphael lopez as chief compliance officer. we'll keep you on top of that story when get get more information.

he says the key to success has been independence. more from our interview next. this is bloomberg. ♪

>> our growth rate has been one of the positive ones globally. expectations are quite impressive going forward and that comes on the back of very important reforms as well as projects across different sectors. that has not stopped by the pandemic. tom: that was the egyptian minister for international cooperation speaking to my colleague manus cranny. manus joins us from cairo where they are hosting a forum. what are the key takeaways so

far then? manus: tom, we're going to get underway in the next two days where the doctor has set an ambitious program. when we talk about multilateralism, what is it? world banks. oecd, u.n., african dwoft bank. we have city. you have the african development bank. governance. she talked about the governance of credit suisse. reassurance from the multilateral agencies to private capital to pull it together. there is lots of challenges. if you think here in egypt lots of opportunities, major megaproject. we we want a level playing field.

we want an equitable piece of the pie as other people. there is that discussion from the media and the -- but i think what the doctor is really trying to do is sort of push in a coast covid world the need to speed up the agenda toward theesg. the sustainability goals in 2015. tom: all of those important topics. you're going to be digging into the opportunities with some great guests. who have you got lined up? manus: we're going to do a panel and then off to the foreign minister. i think it is an amazing period of time. let me give you a quick snapshot of geoapplication at the moment. biden withdrew from afghanistan. the middle east is in a very tenuous moment. they came and met weeks ago.

they are talking to the egyptians a little bit more. there is reproachment. we talked about this with the foreign minister. there is a shift in foreign policy in the middle east driven by biden leaving and and that i- tom: absolutely. manus cranny charting all of that for us live on the ground. plenty more coming up from manus us in in the hours and days ahead. manus is going to be speaking to egypt's finance minterster. do not miss that one. comments come as video faces scrutiny from the u.k. and regulators over the $40 billion deal. >> we're very excited in general. it is not just because of the

importance of chips and the current situation. companies are becoming technology companies. autmotive is one of the fastest growing businesses for us. we just announced it, we have over $10 billion of autmotive dead nateed revenues. the backlog is over $1 billion in revenue in the fiscal year. we're partnering with the auto motive companies. very exciting time. >> your chips are being used in motorcycles. i have been able to experience as well as autmated cruise control. that is quite cool. in terms of the broader industry, this slowdown seems to be lasting longer than has been expected. c.e.o.s are telling us 6-12

months. how is it can with qualcomm? >> let's talk about this. there is a new reality across the board that the percentage of digital component of the economy is higher. i think we all saw the pandemic accelerated. the autmotive industry wasn't immune to that. we are excited about the opportunity. this demand is here to stay. of course we're short in all technology across our industry but the good news, we put our scales to work. we have been investing with our suppliers and we expect the material supply improvement we get at the end of this calendar year. we will enter 2022 with a much more balanced supply-demand equation. >> can i ask you about m.m.a., wants to buy arm for $40 billion. regulators are concerned they will not allow everyone equal

access. why would they? if they are paying $40 billion for it. what are your thoughts on the possibility of a less open arm climate here? were we're being very consistent in our position with other companies. they are a leader, implementers of arm technologies. arm already won. arm won on mobile. mobile die withses. autmotive. the data centers moving to arm. arm has been quite successful and because we're an independent company, they would be able to rely on the collection of this product. arm is a great company. we love an independent arm. we think that is the reason for its success. we'll continue to believe arm is a better solution for everyone.

>> what happens if nvidia gets control of the company? >> at the end of the day, we trust that the regulators are going to take it serious and we talked about it earlier in the interview, we need to have a competitive and open and transparent ecosystem, especially if anybody has a dominant position. tom: that was the c.e.o. speaking to matt michelle at the munich motor show. there is plenty more aheed. stay with us. this is bloomberg. ♪

>> it got long for good reason. i think in the last eight weeks there has been a giant

realization that crypto is not just bitcoin being bought as a hedge against bad monetary fiscal policy. maybe more importantly it is 3.0. there is a realization this is a technology and no investor wants to miss the next internet. this is the next internet. tom: that was mike novogratz speaking exclusively to bloomberg. a disappointing day yesterday. currently trade agent dlrkz 46, 100. speaking at the select committee. on the b.o.e. and the plans for higher rates. at 5:00 p.m. we have the latest russian figures and later eyes on the fed and then game stop earnings later in the evening u.k. time. after that, and in an exclusive

interview, billionaire bitcoin investor talks about the sudden plunge in the crypto currency. it is probable going to be short lived as i described. switching focus to the whole works and home debate and how investment banks are adjusting deutsche bank is calling for the end of the honeymoon phase for its remote work. a growing number of workers are feeling isolated from colleagues. nearly 40% of workers in the u.s. say they have been exhausted after a full week of virtual meetings. let's check in on the markets before we let you go for the hour. a couple of points into the green for u.s. futures. the direction of travel for u.s. tech equities. morgan stanley and bank of america signing the warning sirens on the outlook.

slower growth is something that investors are grappling with. that is it. there is plenty more ahead. the european open is up next. this is bloomberg. ♪

>> good morning. welcome to bloomberg markets: the european open. mark cudmore joins me in singapore to take us through all the market action this hour. the cash trade is just less than an hour away. debate over the impact of china's, and prosperity goals. a front-page editorial in "the people's daily" speaks to ease concerns