>> good morning. i am manus cranny. tom mackenzie alongside me. the breakup. beijing wants to split apart ant's group. the hang seng slumps. olaf scholz fends off and

attacked two weeks before germany heads to the polls. and a bite out of the apple. the judge orders major changes to the way the tech giant runs its app store but stops short of calling it a monopoly. good morning, tom. back in the office. i am also nauseous with this debate. past week was apocalyptic. cpi would drive the taper debate. tom: it seems the debate is back. i know you have been reading from some remarks. but it is not just the ppi. it is the cpi. there is also the u.k., eurozone, canada and india. they are all coming out with data about whether this is transitory or if it is becoming more embedded. manus: it was enough to make me

jump over a firewall and pay two dollars a month. i have signed up for it because i wanted to read the rest of the story. it is not 1979. even i cannot remember that. 9.3%. it hit the top and rolled over. i encourage everyone to read the op-ed. wages are rising but they are not paying more, they are incentivizing more. tom: and that is one of the question marks. use all that play out in the s&p 500 last week. watch road of losses. -- four days of losses. there are questions about data and the covid delta variant as well. in terms of where additional

support and optimism may come from, i want to show this chart. it shows the dry powder investors have in terms of cash. four $.5 trillion held in money market funds which is above the peak we got through the great financial crisis. that dry powder is there and ready to be deployed. manus: it is indeed. it is interesting how there is a disparity between asia and u.s. equity futures. what do you have? tom: the markets across asia are looking tepid this morning. the pull is coming from the tech stocks. word about alipay possibly being broken out. in terms of the futures come in the u.s., you have some optimism after the four days of closing in the red stateside.

oil is in full focus again. and a note from goldman sachs saying oil prices are poised to rise significantly. that is where things stand in terms of markets. back to china. we expect some retail numbers. let's focus on the alipay stories where regulators are looking to break up that organization. joining us is stephen engle. why does the significance of separating the lending units from ant's other units. -- other units? stephen: ant began with alipay. it was a payment service platform for online shopping and the like. as they grew and became the super app, they started adding wealth management, insurance and lending. they have two lending platforms which actually became the

biggest revenue generator for ant pre-ipo, before it was put into a separate entity. the chinese government wants to contain risk to the financial system. these platforms which will now be separated out into its own apps with its own oversight and under regulation that will be bank regulated because ant does not have to have those 30% capital bumpers. they were not regulated like a bank. they basically passed a lot of the loads to the consumers across china to the state banks which underwrote and securitized those loans. ant did not necessarily take on that risk. the chinese government wants to contain those risks. according to this ft story -- we have also been reporting on the

sensitivity of data. they are going to ask ant/alipay to separate the data and create a separate entity which will also be owned by the government. manus: we were just looking at alibaba dropped by over 6.3%. the ramifications across the market are real, there is a real contagion. stephen engle with the latest on alnd tech. let's stay with china. the switch of the focus to growth. some data points coming out this week. let's get to our chief asia economics correspondent. speaking of the data, how much is it going to inform us? >> i think it will reinforce what is going on in china.

we know the retail sector was walloped in july and early august. we have seen that in the pmi which is because of the aggressive crackdown. internal travel was hit hard. we know car sales are down. the retail story is expected to be around 6% or 7%. on the others, the production and manufacturing side are reflecting strength. there was an expectation that the export boom would have faded. tom: joining us now is lucy macdonald, global equity specialist at jp morgan. thank you for joining us. we are seeing pressure reflected on the stocks of alibaba and tencent. the regulatory squeeze from

china up front and center. we saw the impact on gaming stocks from pressure. do you at jp morgan have clarity as to where we are in this crackdown? lucy: it is going to be rolling through many sectors. i don't think it is over yet. it is a continuation of what we have seen since president xi came in with the anticorruption and the move to consolidate power and now this new phase of moving through the different industries. finance, tech and the education sector. and there will be few areas that are safe from this. i think investors are trying to find and hide in areas they think there is less exposure to

inequality, to the issues that are the target of this approach. but i think, they are going to be few and far between. manus: good morning. good to have you back. a new lampooning of risk in a different direction. some people debate the very interest ability of china ash invest -- investability of china. is it still investable? and where is it the least risky given the onslaught of new regulation? lucy: there are some areas where you have got companies which have goods and services that will not be in the firing line. they don't have huge profits.

they are not high-profile. they don't have leaders that are likely to say the wrong thing. you can find more protection. but as i say, i don't think this is over and i think it will run through more industries. for those that were hit, there was no expectation that it was going to happen beforehand, like education. tom: what are the contagion risks in terms of significant slowdown? lucy: through the veritable interest entity, that could be a source of contagion if that structure shifts to

international markets. elsewhere, we have seen these are the three sources of risks growth. you have seen it in the debt restructuring which is huge and ongoing. you have seen it in the search for parity and also in covid and the potential slowdown from covid. there is a potential risk to other global markets. you cannot just rely on the u.s. because otherwise markets will be purely dependent on what the fed does. if you don't get positive moves from china, that puts more on

the fed. manus: lucy, the amount of stimulus china does is going to be fundamental to optimism about the global economy. but the other big shift i am seeing is in japan. i want to pause on the china story. foreign traders are buying the most japanese stocks since 2013. i want to get a sense from you because you are chief equities -- your achieve equity strategist on japan is becoming more bullish. what do you get -- what sense do you get from the market? is there recovery or is there more to come with the shift in political leadership? lucy: it is an obvious place to

hedge the china risk. is certainly provides potential value. it is a cyclical market like europe. and we know there are a handful of companies in japan and they will be focusing on better governance. there is potential. it is an interesting place to look. the issues that have held it back relative to other markets are still there which are the fact that there are still lower standards of governance than elsewhere in the world. it is a proving trend but the issues are still there.

manus: lucy, stay with us. lucy macdonald, jp morgan will stay with tom and myself. >> england is to abandon plans for a vaccine passport. it was expected to come into place by the end of the month following a similar system in scotland. israel is preparing to ensure it has sufficient supply in case a fourth round of covid shots is needed. it started a booster shot campaign in august. north korea said it successfully testfired a new type of long-range cruise missile over the weekend. the missile hits targets 1500 kilometers from the launch site. just wait, north korea --

a court sided with apple and its antitrust lawsuit. the judge regret -- the judge rejected claims --. she did say apple has engaged in some anticompetitive conduct ordering it to allow developers. 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. tom: coming up, president biden's inheritance tax heads headwinds. we discuss all this and what it means for the u.s. economy, next . this is bloomberg. ♪

manus: it is daybreak europe. i am manus cranny in dubai. house democrats are said to put forward a top tax proposal. [indiscernible] it all comes as we await the u.s. cpi tomorrow sure to feed into the debate about whether we have inflation which is transitory or structurally becoming embedded. lucy macdonald is with us. i want to get a sense of where you are with risk at the moment. everyone back from the hamptons and fireeye play. the barbecues are finishing. physical stimulus, 20% of gdp

coming down the pike. and a taper delay. how does it look for you for risk? lucy: when in doubt, you look at the seasons ended in september, it is more likely to be down on average. it always is. you start from there. we are in a time where you are likely to have more choppiness. we have got goods, liquidity, we know that. that is the biggest support to market. this is not going to go away. we are going to be in a -- territory. however, we have risk around growth. we also have risks to inflation which is the biggest change this year. and that is not going to go away

. within the growth and the uncertainty, valuations are not attractive. that gives you the potential for more volatility and then you come back to where we are. looks like we could get more choppiness in the short term. tom: i want to get your views on earnings. and how do you solve the text debate in washington? we are still middle of the way through this. we are looking at 26.5%, that is the democratic position. what should investors be thinking about in terms of earnings going forward? lucy: it is generally not the most important. any tax rise is not great but

the more important driver on the p&l is going to be -- which is still quite strong. and then margins. and margins are going to be the focus because they want to see whether companies can pass through the cost of labor. and so far, the margins have held up which shows us there has been a lot of consolidation in industries but we could see more. but the companies that are currently able to pass those costs through and the prophets should hold out. and i think that will be a big driver on earnings rather than tax breaks. manus: we are going to debate every time you come on about the transitory nature of inflation or not. i look at the market. -- the tech market.

how do you add in incremental inflation protection? how do you do that vicariously to cover the risk? lucy: i think it is commodity of -- commodative. having some exposure in your portfolio make sense. china is not necessarily going to help you out so it really is focused on the bond yields. and you want to hedge against that because --

there is also a little more support for commodities and that the industries have consolidated and you have extra demand and we have the shortages around the world. you also how far more green related commodity exposure. there are more fundamental reasons to own commodities however, i still find them difficult to forecast pure a huge supply and demand imbalance is a difficult one. tom: lucy macdonald, thank you for joining us this monday morning from jp morgan. coming up, it is two weeks until germany's election. in the second debate on sunday, olaf scholz was the more convincing candidate.

we will discuss that next. this is bloomberg. ♪

tom: it is monday morning. welcome back to daybreak europe. two weeks before germany's general election, the front runner, olaf scholz of the social democrats managed to defend his position as the most likely successor to angela merkel. maria tadeo joins us from germany covering the twists and turns of the politics and germany. manus: i know we are going to try to get mario back but maria joined us earlier. very punchy in this debate

between olaf scholz and the other runners in terms of the polls. what have we got? we have olaf scholz offending off the attacks of his track record as finance minister. it is getting punchy. tom: laschet was coming out in this debate and turning his fire on olaf scholz. the lead of the social democrats keeps expanding in terms of whole numbers -- poll numbers. olaf scholz is the clear frontrunner. let's check in on the markets in terms of the asian session. down close to 1% as things stand. the u.s. futures holding on to some very modest gains. futures in europe down 0.2%. we will have plenty more coming up. that is your market check. this is bloomberg.

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tom: good morning from bloomberg's european headquarters. i am tom mackenzie with manus cranny live from dubai. here is what you need to know. beijing wants to split apart ant group's alipay. the latest move in its crackdown.

olaf scholz fends off attacks in a key election debate just two weeks before germany heads to the polls. and a bite out of the apple. the judge orders changes in the way the tech giant runs its app store but stops short of calling it a monopoly. manus, we were debating this at the top of the show. the questions about inflation moving back from center for investors. the focus shifting to cpi. the importance though is the granularity of this inflation and that is what you have been looking at. the question of wages. manus: it is whether apocalyptic ppi will be delivered. paul krugman says it is transitory. he says it will stay low.

just like 1979. tom: 1979 and 1951. i was going to ask you where you were in 1979. what was the fashion? manus: i was in school and in very short trousers. tom: more inflation data on the docket. a question as to whether the cpi, ppi transition in china will hold up. the ppi is not past into china. manus: we just had the conversation with lucy macdonald who said basically if you want a hedge, it has to be in the commodity space. we will touch on the oil market in just a moment. asian equities under pressure because the long arm of china

has reached out wanting to separate the alipay business. let's look at the equity markets. asian equities lighter with the hang seng tech index also under pressure. s&p futures, bank of america has done its weekly flow update. a 20% bump in terms of stimulus, fiscal stimulus. equity inflows, the cumulative inflows, .8 trillion. you don't want to be left out seems to be the consensus building. let's talk about the commodity story. david ingles joins us from hong kong. a big picture view on supply and demand and the stickiness or the difficulty in the supply chain. where are we on some of the

metals? let's focus on aluminum. david: that was the note out of jeff curry published this morning. it is not just in china but increasingly in europe. not to mention is this is barreling towards shanghai. we have now doubled in terms of the prices of the lme contract. look at this bloomberg charge. our own measure of industrial metals is now within 5% of 2007 levels. that will be a new record high. a 95% rally from last year. you can imagine how this is playing through to the equity market. you have the hong kong listing and a mainland listing for some

companies. while the overall session in the asia-pacific is on the lighter side, that is a bright side that we have seen, the equity markets. i will leave you what this next graphic. a list of names to watch in europe that are related to this specific metal. tom: great stuff. david and glaze out of hong kong. wti crude climbing towards $70 a barrel after a run of a three week in. goldman sachs says oil is the target of $18 a barrel. saying it will be hard for investors to avoid inflation in this market. joining us now is stephen guestroom ski. as you look at things, where are we in terms of the price pressures, the supply and demand debate good have details out from iran over the weekend. how are things shaping up for you?

>> when you look at it, there is a lot of upward pressure on the market. there is enough supply to meet up with demand. there were worries that the delta variant could curb this demand response and you could see that supply growth would potentially grow faster than demand. now, we are moving into a tighter market. the general view is that we could go up to an $80 range and at that range, you will need more supply in the market and it is challenging outside of opec-plus. manus: the balancing act is opec is putting 400,000 barrels a day back onto the market between now and christmas and the whole debate last week -- i'm wondering why they pivoted so

quickly. ida caused a drop but that will alleviate, so are we over embellishing the potential for constriction? >> that is a possibility going forward that it could get out of whack. when we talk to traders and analysts, that is something that comes up. but there are a lot of different unknowns and you sort of have to see where things shape out. essentially, when you look at the u.s. where shale drivers or the offshore production in the united states, it is expected more will come online after the hurricane last week. tom: i want to get your view in terms of the politics of norway.

some did by the oil reserves that norway is blessed with. the dilemma -- what is the them that weaves across from norway and the dependence on carbon? >> it is an interesting debate. take a step back and look at the bigger picture. not just norway but look at other countries that are looking at creating diversifying away from oil. you could see other countries follow suit. what is happening now -- there

is an imbalance between supply and demand. you still need oil. you could see spikes in volatility as the imbalance goes through the supply chain over the next few decades. it will not just be for oil but gas as well. manus: a lot of these things will accelerate. robert malley says we cannot wait forever for iran because at some point, their nuclear advances will make their return to the jpoa much less valuable. iran and iaea have had some

discussions and there has been progress. this puts iran barrels back as a risk factor to the market. that looks like a 2022 story. how is that affecting oil markets? >> when you look at how this situation has been handled with iran, that will put pressure on prices. there is still the unknown with the biden administration and how discussions are going and where opec-plus is. you cannot take those barrels for granted. i think there is some hesitancy about where to go in the future. but it is a potential unknown. manus: ok, stephen, thank you so

much. discussing the supply on the oil market. >> higher taxes risk strangling the uk's economic recovery. the head of the country's biggest business group will warned that hiking taxes on companies will be self-defeating as it will inhibit investment. boris johnson's government raised payroll taxes to help out spending. north korea said it successfully testfired a new long-range cruise missile over the weekend. the missile hit targets 1500 kilometers from the launch site according to the official news sites. england is to abandon plans for a vaccine passport. this was to come into place by

the end of the month following a similar scheme in scotland. israel is preparing to ensure it has sufficient vaccine supply in case a fourth round of shots is needed. it has inoculated 2.8 million people with a third dose after starting a booster campaign in august. 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. tom? tom: let's switch focus to germany and the politics there. two weeks before the general election and olaf scholz managed to defend his position as the most likely successor to angela merkel. bloomberg's maria tadeo is in germany. what was the takeaway to you? maria: when you look at the debate, olaf scholz won the debate according to a poll done soon after but to me what was

striking was that he really came under attack. armin laschet was much more aggressive. at one point, he questioned his record as finance minister and he also brought in the idea of an extreme left coalition and olaf scholz will not rule that out. this shows the change in the dynamic. olaf scholz had to go to bavaria where he did get a standing ovation. he does seem to have made some gains even after that debate where a poll suggested some including pollsters after the debate saw that he increased in terms of how he did. perhaps better than expected. one thing i would note is there

was a brief moment where the third candidate did very well. but it is now being presented as olaf scholz versus armin laschet as the competition. manus: where did laschet inflict the biggest wound on olaf scholz? wildcard was a darling company sold to the world. and then there was the cum-ex dividend scandal. maria: wirecard was a technology company that was doing very well and then incredibly collapsed with a big scandal behind it. we note the career of olaf scholz was tied to the scandal. these scandals are very complex.

it is hard to pin down on a single issue. olaf scholz -- the word that comes up to describe him is competence. the thing for armin laschet is he is clinging to the fact that olaf scholz will have to get into a coalition with the far-left. that is what the cdu is clinging on to, the fear factor. if you vote for olaf scholz, you are voting for radical politicians behind him. manus: it will depend on how long it would take to form that coalition. maria, you really do get that backdrop. maria with the landscape. thank you for joining tom and i. let's look at the key figures of

the german business world. it is a don't miss. it is germany's largest bank. this is bloomberg. ♪

tom: welcome back to bloomberg daybreak europe. this weekend, tennis fans watched the final of u.s. open in flushing meadows in new york. let's get more with bloomberg's laura wright. talk us through these games. >> the fairytale run of emma -- she became the first qualifier

in the open era -- the men's tournament, there was an upset. novak djokovic ended his bid losing in straight sets to medvedev. manus: how does this stack up for the u.s. broadcast market? follow the sport, follow the dollar. >> in the u.k., the only way to watch the u.s. open was via a -- until it was announced that emma would be in the final.

this is an amazing deal. free publicity. they hope to bring more people onto the platform. netflix -- amazon prime is looking at 200 plus million subscribers right now. hoping to bring more people onto the platform. tom: what does that tell us about the future of streaming sports? >> 7% of amazon's total revenue comes from subscriptions. the revenue has been increasing quarter on quarter. $8 billion in the second quarter of this year. amazon wants to bring more people onto the amazon prime platform. amazon is going to have 80% of french -- going forward this year. manus: you know i secretly

signed up for amazon prime somewhere. good to have you with us on the show. coming up, what to expect in the next six months of the pandemic? what is ahead for you in terms of lockdowns, vaccines and life --what will the new normal be? ♪

manus: it is daybreak europe. tom mackenzie alongside me in london. if you want to know about a market that is squeaking higher come of this on a commodity complex. trading above $3000. for the first time in 13 years.

a huge report out this morning about the overall supply situation. we are ranking on this market. tom: there are questions about the supply of boxlike to china. the goldman picture outlined getting more sustained price hikes. $80 a barrel is the number they looked at. manus: what are the emergency stockpiles in china? we have seen them do this cautiously in a number of commodity markets. we need to understand the ballots. -- we need to understand the balance. the race in vaccines and new variants. that will not end until covid-19

has touched everyone. according to the experts, eliminating the virus will not happen in the next 3-6 months. closed schools, canceled classes, working from home will become the norm again. any indication on the numbers. hit me with the data. are they coming down in countries that have been hit hard. and are we looking at a fourth round of vaccinations. 10% of the population in egypt vaccinated there and supply is the key. >> we are going to see a race of infection coming down in some of these countries like the u.k. and the u.s. that have been hit so hard recently. and there will be an additional rising cases like egypt and other places where vaccinations are hard to come by.

we are expected to have additional waves of infections. vaccination is absolutely critical. that is what will get the vaccine -- the virus under control. it seems we have made progress especially in countries where they have access to the vaccinations. but even then, we still have millions of people in every country that are vulnerable to this infection and if you have millions of people that can get infected, they will overwhelm your hospital system. tom: bloomberg's michelle cortes with us on the takeaway for the future of the virus and how it is likely to evolve given the different rates of vaccination across the nation's. let's check in then on the markets. asia is up by 0.8%. china's technology is back front and center. the futures in the u.s. are

pointing to a little more optimism after four days of closures in the red. futures in europe are flat to marginally lower. the commodity complex, inflation is the key question for investors this week as we look for cpi. ♪

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>> good morning. welcome to "bloomberg markets: european open." i am anna edwards in london. mark cudmore joins us from singapore to take us through all the market action this hour. cash trade is less than an hour away. here are top headlines. the big split. beijing wants to break up and groups alipay -- ant group's alipay. shares sink.