tom: good morning from bloomberg's european headquarters in london. i'm tom mackenzie. this is "bloomberg daybreak: europe." decision day, investors await any changes to the ecb bond buying program as rising bureaus energizes the hawks. mobile stocks fall amid fears of a recovery slowdown. the fed says the delta variant

hit u.s. growth in july and august. china's regulatory crackdown continues. tech shares take a beating as gaming companies face oversight. inflation searches to a 13 year high. it is the ecb we want to focus on. i want to bring your attention in terms of real yields on high-yield bonds in europe. as a result of that enormous balance sheet held by the ecb, those real yields of high-yield bonds are in negative territory. that 3% inflation picture, you get negative yield in the high-yield space. that talks about the reach, the lack of yield as a result of the oversight ecb balance sheet. will that change to any degree? will the middle move at today's

meeting? is this a bet by investors that the inflationary picture is more transitory than hawks are suggesting? we have great interviews coming up. we will get perspective from the chief economist at commerzbank, joerg kraemer. then later on, china tech and the regulatory scrutiny, and opportunities for investors, talking to duane kuang, founding managing partner, qiming weichuang venture cap. also some great interviews out of egypt. manus cranny has been in cairo at the international forum. you have been speaking with the finance minister. lots more to come. manus: it is interesting, a

cacophony of voices from citi, to tidjane thiam. you are going to debate the hawkish tilt from the ecb. the finance minister we will hear from later on has seen it all before. this is a country that is a carry trade. the real interest rate differential is phenomenal. a quick taper could cause money to flat out. -- flood out. and on foreign policy have the tilt from the foreign minister from a global perspective, america is not stepping back from its global role, but there is a hurriedness to foreign policy in the region. coming up, we will talk to the finance mr. of nigeria. they all carry the risk of a

taper even though the market seems assuaged from that. tom: thank you very much. fantastic interviews coming out of cairo from manus cranny, and the implications of the fed and ecb possibly tightening on the em space. let's check in on the markets, red across-the-board. cautionary tales from the u.s. citigroup more conscious on u.s. equities -- more cautious on u.s. equities. the s&p falling for a third day. the china story is back in focus with tencent taking a hit as they are called in by regulators, a focus on gaining profits. hang seng is down more than 3%. futures in the u.s. are down 0.4%. ecb policy makers will have to decide if they dial down

emergency stimulus later today. the hawks on the governing council may still not get their way. we are getting perspective from key voices ahead of the meeting. >> we are in a different universe it seems in the u.s. and europe. in the u.s. you had a commitment to purchase the same amount every month, and this is a clear-cut commitment. tapering means something. in europe there is flexibility. >> the situation in europe is different from the united states. the economy was not performing well, there was a lot of slack, inflation was too low. it is a different situation in the u.s. >> what we are seeing in inflation now, and the hawkish ecb members are once again too short-term focused.

>> there will be hawks being vocal on this, which is to be expected given the new guidance. >> we need to watch to see if they are switching, but there could very well be a reduction in purchases this week. i do not think lagarde will do anything else but stress the dovish point. tom: let's go to maria tadeo on the ground in frankfurt. the ecb is expected to provide growth and inflation projections. what is the focus? maria: when you look at the gdp and inflation projections, we expect to see changes to that forecast. in terms of growth expectations, the european union with the

vaccination rollout that has gone quicker and better than expected, the ideal we will not see new law downs kicking in the european economy, all of this will prompt a revision to gdp and take that number higher. the point of focus is not so much the growth but inflation, as we head into 2023, that will be the cpi print where there is a lot of attention focused on today. we have a huge debate in the governing council, we know there is not a lot of consensus around where price pressures are going. hawks have been calling for a warning around inflation that is more sticky than expected, and there is a question whether this is transitory. tom: maria tadeo on the ground in frankfurt, bringing us the latest from the ecb in the run-up to that important meeting. our guest this morning is joerg kraemer, chief economist, commerzbank.

you were saying they will push out a program beyond march, that is your view. what underpinned that view? joerg: you are right, i am not too impressed with what the hawks are saying. the main reason is growth. currently growth is quite strong , it is benefiting from the relaxation of the corona related restrictions, but we have to look forward. we have seen two months in a row a decline in the business climate. we have seen the chinese pmi for the service sector, and this new corona wave will dampen growth. i expect no meaningful growth in the fourth quarter, and this is the main reason why in the end

at the ecb council, the doves will prevail. they will extend the bond buying program beyond march next year. tom: should we assume there are reductions in the amount? joerg: this is a different decision. at the end of each quarter regarding the monthly bond buying volume in the coming quarter, the fourth quarter, this is determined by short-term technical considerations. you have to see the finance conditions since june have improved when you think of the significant decline in government bond yields. this is a justification to slightly decline the monthly bond buying volume by 80 billion

to 70 billion, not much. tom: if they go from 80 billion to 70 billion, do you expect that to have an impact on financial conditions? joerg: no, i don't think so, because you have to see the share of government bonds held by the ecb and most of the countries already exceed one third. the ecb is such a dominant player when it comes to the bonds, and the net purchases are significantly positive, therefore this will not be negative for the market, especially as most of the economy expect this slide reduction of 10 billion euros. tom: the market should be able to whether this one. you mentioned the fragility and the eurozone economy.

what is your view on inflation? one guest was saying it is not overly concerning. are you in line with that view? joerg: headline inflation is likely to move upward above 3%, but increasing inflation is driven by sectors, which is why i agree next year inflation should fall quickly again below the 2% mark of the ecb. tom: the euro has been trading in a tight range, is there any view there will be a significant move on the back of this change you expect from the ecb today? joerg: beyond the decision to

slightly reduce the bond buying volume in the fourth quarter, i do not yet expect a position today regarding the future of the bond buying program. i expect what the market looks for, a general dovish signal, but this is nothing new for the market. i do not think that euro-dollar today will get significant. tom: i want to unpack that concern you have around the economy. what are the key risks facing the euro zone economy now? is it the delta variant, supply chains, or a combination? joerg: i think it is a combination. you see this policy in china that means every outbreak of corona may lead to a closure of

a production site. this could significantly increase the supply bottlenecks that you have for the semiconductor issue, the output of the german car industry is only 50% below the precrisis level. and the corona wave in germany will lead to new restrictions, even if they only affect those not vaccinated. currently, 25% of adults in germany are not fully vaccinated and are potentially subject to new restrictions. this is likely to lower gdp growth in q4 by nearly one percentage point, and this is likely overall to bring growth in the fourth quarter to a halt in germany and probably also the

euro zone. tom: those are the risks facing the euro zone economy. joerg kraemer, chief economist, commerzbank stays with us. coming up, investors -- dallas fed president, robert kaplan, would love to see tapering start sooner rather than later. more on that, next. this is bloomberg. ♪

tom: good morning, this is "bloomberg daybreak: europe." the fed says u.s. growth slowed slightly to a moderate pace in early july through august, with the delta variant being the main culprit. dallas fed president, robert kaplan, says he would love to

see the taper process start sooner rather than later. >> it is not our expectation you will see a prolonged slump. you will see a slowing in the third quarter. you will see improvement in the fourth quarter. i would love to see it sooner rather than later take our foot off the accelerator, because i think the longer we make these purchases for longer than necessary, i think it may actually make it so we have less flexibility down the road. tom: joerg kraemer, chief economist, commerzbank is still with us. we were hearing from kaplan, and his views the taper should start sooner rather than later. there is the should they question and the will they question. what is your view on the timing of the tapering? when do you think this process

is announced, and when does it start? joerg: i think it is more important to listen to what the fed chairman set about this, and he said the fed is ready to taper and make the decision by the end of the year, but he said this depends that the economy develops as expected. i'm not sure whether the economy develops as expected because we have seen negative surprises on the job market, and negative surprises in the economy elsewhere. for example, in china and the euro zone. it may be possible that the fed makes a tapering decision in the december meeting, but it is no longer sure. they may postpone it to the first quarter. the fundamentals are clear. we have an inflation issue, we will have a tight labor market, and the problem of strong

increases in real estate prices. timing wise, if not this year, early next year. tom: some of those things are the ingredients of stagflation. are we looking at stagflation in the u.s.? joerg: stagflation is a term invented in the 1970's when we had an inflation problem and many years of low growth. i do not expect this, but stagflation may be a good description regarding the fourth quarter because we are likely to see continued high inflation, and growth which will be lucky to slow down significantly. tom: where does this leave the dot plot for the fomc? 2023 are when the hikes are expected. will that change?

joerg: this is difficult to say because since the last dot plot, the economic outlook has deteriorated. inflation came above expectations, for me it is unclear what the impact on the dot plot will be. tom: joerg: tom: joerg kraemer, chief economist, commerzbank, thank you. let's get the first word news. simone: china's factory inflation accelerated in august to a 13 year high with commodity prices remaining elevated despite beijing's battle to curb gains. cpi rose 0.8%, less than the 1% forecast by economists.

prime minister johnson has won a mandate to raise taxes to fund health and social care. the vote in parliament passed comfortably. 40 lawmakers from johnson's party abstained or voted against the plan which will bring the tax burden to its highest level on record. easyjet is planning to raise a billion pounds to help compete during the travel rebound. the carrier has secured 5.5 billion pounds in the liquidity since the start of the pandemic. european airlines have been offering rock bottom prices. european farmers can feed bugs to chicken and pigs. the change comes into force this week. insect feed has the potential to reach 500,000 tons by 2030.

global news, 24 hours a day, on air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. that last headline about insect feed gives me the heebie-jeebies. tom: it is good for the environment, apparently. thank you, simone. coming up, we have an update on the virus. we will bring you the latest on japan and the emergency measures. and denmark's virus control model. this is bloomberg. ♪

tom: this is "bloomberg daybreak: europe." i'm tom mackenzie. japan is planning to extend emergency measures in tokyo and

other areas until the end of the month, the delta variant is causing increased pressure on the medical system in that country and many parts of the world. japan has extended its emergency measures, why are the japanese vaccination rates so low still despite the prominence of the virus? michelle: japan has made remarkable gains getting to the vaccination levels that they are. 50% of the population is vaccinated, and they did not start with great impetus until the olympics. they are gaining ground quickly. the challenge in japan is that they do not have a medical system set up to deal with a lot

of coronavirus cases, because not every hospital accepts them. and people are tired of being locked down. the state of emergency will continue, but whether or not people will follow the recommendations is another question. tom: in the u.s. president biden is calling for a vaccine conference at the u.n., and a number of u.s. states are in real difficulty with hospitalization rates. michelle: president biden is acknowledging the fact that the u.s. has a huge number of the vaccines, and his hearing calls from people to spread around the amount of vaccine more broadly across the world. that comes as the u.s. is being hit again with record cases, and the need to get boosters into arms to protect people who have started the vaccination process

is really important. president biden once a u.n. meeting to figure out how we get through this. some people say the western nations need to donate as many as 10 billion vaccine doses in the next six months to protect the world. how we get there with what is happening with the supply chain is an issue the whole world will have to come together on. tom: michelle cortez with the latest on the changes on restrictions in japan, and president biden calling for a u.n. meeting on this. futures in the u.s. are in the red. this is ahead of the position by the ecb. futures across the benchmark down 0.5%. coming up, beijing urges

gaming platforms to rethink their profit. plenty more ahead. this is bloomberg. ♪ introducing xfinity rewards. our very own way of thanking you just for being with us. enjoy rewards like movie night specials. xfinity mobile benefits. ...and exclusive experiences, like the chance to win tickets to see watch what happens live. hey! it's me. the longer you've been with us... the more rewards you can get. like sharpening your cooking skills with a top chef. join for free on the xfinity app and watch all the rewards float in. our thanks. your rewards. 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

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bloomberg's european headquarters. i'm tom mackenzie. this is "bloomberg daybreak: europe." decision day, investors await any changes to the ecb bond buying program as rising euro zone inflation energizes the hawks. mobile stocks fall amid fears of a recovery slowdown. the fed says the delta variant hit u.s. growth in july and

august. china's regulatory crackdown continues. tech shares take a beating as gaming companies face oversight and factory inflation searches to a 13 year high. red on the board again, dragged lower by what is happening in china, particularly the tech stocks. tencent falling sharply on this regulatory scrutiny. the msci asia pacific is down more than 1%. more of a sour tone from morgan stanley and citigroup, concerns over the delta variant and the growth trajectory amid higher inflation. in terms of tech stocks, down 3.8% in hong kong, the big names. futures in the u.s. pointing lower, 0.4%. the dollar is up. regulators in china tell gaming

companies to deemphasize profits and comply with new beijing regulations. government agencies called a meeting to convey plans to step up supervision and checks on illegal behavior. our next guest is the cofounder of the shanghai capital venture firm, one of the most significant players in that space. duane kuang, founding managing partner, qiming weichuang venture cap, was an early investor in chinese companies. thank you for joining us this morning. where do you see de-regulatory tightening? where are we in this shift in emphasis? is this the start, middle, or we closing in on the end of the process? duane: i think the big announcements are more or less out, and we are into more

detailed implementation phase. on the gaming side, a tightening of regulations on online games, and today's news is a continuation of that. i do not see it as a new move or new set of regulations. tom: sitting where you sit with the knowledge and experience that you have, how do you see this shaping china's technology sector longer-term? duane: i think there have been a lot of regulatory moves, and quite a number of events in the last couple of months. it is very important to separate what comes around and what are

the immediate and actual impacts. and what are the impacts people are concerned about, what may happen in the future. antitrust affects the large forms immediately. it does not really affect the smaller guys. the smaller guys probably can breathe a little easier now that the big platforms have to behave. in terms of data security, which is another big regulatory move that came around, we believe companies operating in china will probably not be affected a lot, but the immediate impact is

more on u.s. listings. that is the immediate impact we feel. tom: you point to the complexities of having to work through these issues and to what extent they will have an impact or not. the listing environment, given that the door for those listings appear to have been closed partially, what does that mean in terms of the vc industry in china and where they are looking for exits? duane: the biggest impact is predictability. a u.s. listing should continue to be a significant venue for chinese technology companies to go public. it is not the only thing.

if there is enough regulatory clearance, our industry could navigate the changes, because hong kong is also a very interesting venue, and increasingly people are looking to list semiconductor companies and technology oriented companies. as long as there is enough clarity, which there is a lack of today, we could navigate through it. we are living through this period of a lot of new regulations being launched, and when the old rules are no longer viable, we are still waiting for regulators to come around and give more guidance and clarity on these changes. tom: the need for more clarity.

are you concerned at all given your past, are you concerned ultimately what we will see is a chipping away of china's innovative edge and some of these areas? duane: the short answer is yes. again, if we expand on that, some of the subsectors of technology may actually benefit. for instance, some of the more hard-core technology companies like semiconductors and so on. the government is emphasizing a lot more on what they call specialties, innovations, focused technology companies.

the bigger platform, whether it is social networking, e-commerce and so on, the impact would be felt for quite some time to come. for players on the ground, i think many of us have been talking in the last month on how we adapt to these changes. we have been investing in tech and health care for a long time. we will dial up our activities in these areas. in the meantime unless there is more clarity on the social network platform type of opportunities, we are most likely going to shy away from these opportunities.

one immediate big theme we need to sort through is the whole meta-verse concept that is quite exciting globally, and getting traction in china. whether or not this is an area we will look at remains to be a question. that is a future wave we may or may not want to tap into. tom: there has been a big focus on common prosperity, trying to close the wealth gap. what do you think this means for china's venture capital industry? duane: there has been quite a bit of chatter on this subject.

they are all trying different interpretations, but we will take of the official version of it, and the official version continues to be that china encourages entrepreneurship, china continues to respect private properties and so on. in the meantime, china is trying to solve a global problem, the income disparities, and how to bring the bottom rung of society along as the rest of society moves ahead. for venture capital, at least for qiming, as long as the overall economic environment in china is still congruent and

conducive to innovation, entrepreneurship, and for companies to go from zero to one, we will not worry about what happens when they go from 5 to 100. i have been talking to quite a number of players on the ground. the level of investment continues to be quite high during the last few months. we will remain hopeful, but it is a subject we will monitor. tom: duane kuang, we appreciate your time and analysis. founding managing partner, qiming weichuang venture cap. let's get the first word news. simone: prime minister

johnson has a mandate from the house of commons to raise taxes on health and social care. the vote in parliament passed comfortably. 42 lawmakers from johnson's party abstained or voted against the plan which would increase the tax burden to its highest level on record. depends government will extend its coronavirus state of emergency until september 30. sydney's stay-at-home orders will continue until 70% of adults are vaccinated. that pushes the lockdown into october. in texas hospitalizations are at an all-time high with the biggest surge since january. gamestop shares fell in extended trading after reporting a second quarter loss. it came on the back of revenues -- the company is planning to become more of an online

merchant. it gave few further details on the earnings call. global news, 24 hours a day, on air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. it's this is bloomberg. tom: simone foxman indo hop. coming up, we hear from egypt's finance minister, his thoughts on inflation, the impact on the fed taper timeline, and capital flight. that is next. this is bloomberg. ♪

tom: welcome back. this is "bloomberg daybreak: europe." let's focus on egypt. manus cranny has been in cairo at the international cooperation forum. you have been speaking with

ministers and executives. what have you learned? manus: this is a minister ready for anything. they are working in response to a big report talking about debt servicing and international investor confidence. the minister said inflation is transitory, and he is preparing for the long haul. >> not permanent. why? with low inflation, low interest rates environment, so with covid-19, you spend the money

with this stimulus package. after that, it should be high and also distraction and supply, with demand starting to pick up. the imbalance caused the inflation that we are witnessing now. once the current imbalance is back to balance, i'm expecting inflation to start coming down and things will move to normal. manus: no material costs for you in the budget in the bread subsidies? >> currently, yes, some of the goods which are mostly imported. we are one of the biggest importers of wheat, so we are affected by higher increases in

prices. also, oil prices went up. inessential goods and materials are causing inflation and disruption. manus: your base case is that it is temporary. you are not worried about an early taper from the fed? >> we are monitoring that. we are monitoring how it will affect the cost of borrowing, and we know there will be in effect, but to what extent? we are expecting some affects.

this will be 2023, so let us wait and see. manus: $30 billion of egyptian local debt is held by foreigners. are you prepared and ready for a taper? >> look, it is not the first time. i remember october, december, 2019 with emerging markets we be it. 2020 we saw more than $20 billion, so we have to be prepared always. manus: are you ready for that kind of an exodus of capital? >> we are taking into concentration our experience. it happened with us the last three years twice. manus: just because it has

happened before does not mean it cannot be an anxious time again. they are ready to issue green bonds out a sovereign level. we pushed him on the side, he said we want to test the market more. it is test and see. the innovation on the green side will help. he does not seem overly concerned about a taper tantrum. tom: what a great interview and what a colorful character. and, what is coming up? manus: we are going to switch across, there is a host of delegations here. the african development bank.

we also have the finance minister or nigeria. she will pop up and join me. and then later on -- this crew is ready to throw me in the nile --we will leave here and go to the prime minister. we will talk to the prime mr. about vaccine -- we will talk to the prime minister about vaccine production. the difficulty of getting vaccines all the way across africa and challenges therein. tom: some important issues with manus cranny on the ground.

coming up, we have the latest on the markets. this is bloomberg. ♪

tom: this is "bloomberg daybreak: europe." i'm tom mackenzie. at midday u.k. time we have cpi figures and we will be watching the ecb rate decision expected today at 12:45. at 1:30 we will get u.s. jobless claims, and finally nfl fans rejoice. the u.s. national all-league season begins later today. we were talking about aluminum a

few days ago because of the situation in guinea. today it is nickel, surging to its highest since 2014 on the back of global demand. demand is rising for another commodity pushing higher, nickel surging to its highest level since 2014. let's switch to asian stocks, sliding for a second straight day. let's get more with juliette saly in singapore. it chinese regulators once again ramping up pressure, pouring cold water on stocks when it comes to gaming companies. juliette: absolutely, you know the story well. tencent called by chinese regular leaders to ensure they deemphasize profits, saying they should end the solitary focus on profit, which is what a lot of companies focus on. big selling on the hang seng and

flowing into the overall index in hong kong as well. there were concerns that clampdown on tech is spreading further. we have a warning from korean authorities, we continue to see that selloff today. the state of emergency is extended in pre-fractures in japan that is weighing on japanese stocks that have had a host-- post-suga run. tom: juliette saly with the latest on the crackdown by chinese reg in gaming stocks. futures in europe are looking lower. a negative handoff from wall street. we are focused on the ecb.

commerzbank will push beyond march, 2022. the global markets are red. the european open is next. this is bloomberg. ♪ it's moving day.

and while her friends are doing the heavy lifting, jess is busy moving her xfinity internet and tv services. it only takes about a minute. wait, a minute? but what have you been doing for the last two hours? ...delegating? oh, good one. move your xfinity services without breaking a sweat. xfinity makes moving easy. go online to transfer your services in about a minute. get started today. anna: good morning and welcome

to "bloomberg markets: european open." i'm anna edwards. mark cudmore will join us. the cash trade is less than one hour away. decision day, investors await any changes to the ecb bond buying program. inflation energizes the hawks. the bank of england governor says