>> good morning from bloomberg middle east headquarters. price surges at the fastest pace

in 26 years. shortages of energy. $50 billion, elon musk's network plumage is. the stock erases $200 billion. plus, the earnings season is in full swing. let's get to breaking news. allianz tells us they are going into a new profit. it is in that guidance. we are operating guidance will be at the high-end of 11 billion dollars-13 billion dollars despite the ongoing litigation risks that we have ongoing this massive investment and insurance company. i am referring to their problems with the funds. the numbers speak to themselves.

a strong third-quarter is how they refer to it. they say that the overall outlook will be strong and firm for them in the upper end of the guidance. that is lighter than the market estimated. health, $1.25 billion, they have just suffered the worst floods, storms. $1.1 billion -- 1.1 billion euros worth. 2.1 one billion, 2.0 3 billion. i can catch you up with the cfo in a little while. giulio terzariol will join me in a while. let's move to abn. the profit there is comfortable.

the market -- the operation side of the business is just ahead. the cost of risk is expected. this is very much along the entire theme of the banks. it is flattering the numbers. this is in a post-covid world. bloomberg intelligence was focused on the net interest income from abn. this will be on the lower turning point for them. that is the top line on abn. onto pivot over, this time from credit. two different narratives coming through from abn and credit

agricole. stable amid a bond training slump. the third quarter profit jumps. that beat the analyst estimates. it beat the most optimistic number that we had. the provisions, this is the critical point. they dropped, for 60 million euros on the survey, strong results is what they are saying. those are the themes. allianz, this is important. they talk about third-party net inflows at 19 billion versus 9 billion on a quarter, quarter basis. this is where the conversation will get interesting, when we catch up with the cfo in a

while. to see the flow of money into pimco is phenomenal at 19 billion versus the 9 billion. let me just set the stage for risk. i think they have done a wonderful job at setting that guideline. they had a temporary hold because of the tesla story. the is idiosyncratic. they had this to say, the risk of a policy mistake. this is all about pumping up that liquidity and adding to it. let's take a quick look. "the economy is doing just fine. but the collateral damage it's creating, the unintended consequences that are resulting, are spreading." we will talk more about that.

warning about the bubble nature of markets. markets, the stocks are lower. s&p 500 index is breaking the winning streak. you are looking at a risk on the cpi coming in at the highest level in 20 years. there is a risk of overheating on prices. iron ore is dying. the market in china is expected to slow down and inventories are rising. bloomberg data shows a spike at 10%. china had inflation numbers. it is building. across the globe.

as you thought about this data, what stands out? the highest in 26 years, will endure? >> it is all about factory prices. it is mostly due to tradable inflation. if commodities have gone to the roof. the price of oil is a big player in that. there has been an impact from the energy crunch. there are two questions going forward. the evidence is not there just yet. i was mostly due to vegetables. the big question is, how long of this -- how long does this continue. her brother chinese economy is

slowing down. the real estate sector is slowing down. more broadly, the demand for merchandise goods is expected. for manufacturers in china, prices continue to go through the roof on that gain, it will certainly put pressure on them. manus: i courage -- encourage everybody to go back and read the story from this morning, talking about goldman sachs, the authorities have a higher bar for pain. they will endure more pain to achieve that rebalancing that they want, not what risktakers want. thank you so much. context for inflation this morning. let's talk about tesla. $200 billion in market value. the biggest selloff in 14

months. let's get to asia transport editor. peter, adding to billion dollars, it was said to me, this will be like a magic moment for them. can you explain, a substantial reason for the selloff? >> i think the first reason is, we are none the rise -- wiser. he had that controversial interest poll were his twitter followers voted in support that he should sell down 10% of his stake. since then, radio silence from him. we do not know the win or the how or the who he will sell to. we know that investors do not like uncertainty. a couple of other theories are floating around. it was news that his brother, before the poll was held, sold

some of his shares. when insider sell, that is not taken as a great sign by investors. if the insiders think that the stock has peaked, maybe it is time to get out. the other thing, tesla shares have been on a tear. they are trading around 1000 u.s. dollars. there up a thousand percent since early last year. if you are going to take some money off the table, perhaps it is not a bad time to do it when there is uncertainty going around. manus: thank you very much, peter. very latest on tesla. the largest venture capital event is in berlin. it is super return. on the road, traveling. it is my coanchor, dani burger. i woke up and i said, where is dani and they told me she is

traveling. dani: i know you miss me. i am still next to you in the coanchor seat, and spirit. on my plane flight over here, this is the first time this conference is on since february 2020, the flight was packed. people are eager to get back. there was not a person on that flight on their way to this conference. it is more important than ever, private equity, capital, real estate. it has continued two throughout the pandemic and after the pandemic as well. these are the masters of the universe. there sitting on $150 billion of dry capital, a record amount to deploy. fund sizes are bigger than ever. blackstone is planning to raise over $30 billion.

carlisle, $27 billion. we have a great lineup for you. in just about 20 minutes time, we will speak to the ares managing director, cohead. we will talk to carlisle. also, we will speak with ursula burns of integral holdings. a stellar lineup of interviews to bring you. manus: quality names with a quality anchor, go easy on them. dani, be well. we will speak to her through the morning. a couple more breaking headlines coming through. we have noble and maersk drilling.

this is one of the ones that will come through. let me just try and grab a few more details for you. consolidation within this sector, given the supply chain issues, given the energy crisis that we are in at the moment. it will be interesting to see why we see these combinations go through. all stock transaction. 50% of outstanding shares. it will be a merger of equals. noble drilling and maersk are to combine. they have a list on new york stock exchange along with nasdaq. big moves there in terms of what will go on in the drilling sector. this is underlying accusation for the energy crisis. a lap of -- lack of capex, a

lack of flow, structural challenge the past 10 years. we will speak to management of those businesses. let's get the first word news. >> france has thought to rally the nation, presenting a bright outlook for the economy. president warrant older people they must get a booster shot or see their health pasty activated. it will stop them from going to restaurants and cafes. vice president kamala harris is on five days of diplomacy. she looks to heal a rift between the u.s. and their oldest out lie. she will beat the french today. president biden and his chinese counterpart are scheduled to hold a virtual summit next week. a comes as the two nations spar over taiwan. the u.s. climate john kerry says

cop 26 negotiations produced a deal on carbon rules. it combines a set of technical rules that need to be hash out. carrie -- kerry told bloomberg he is optimistic. >> i am confident. we can get there. human beings created this problem, human beings can solve it. >> global news, 24 hours a day, on-air and at bloomberg quicktake, powered by more than 2,700 journalists and analysts in more than 120 countries. this is bloomberg. manus: thank you very much. coming up. china recorded faster than expected, factory inflation. we dive into the numbers. ♪

manus: this is "bloomberg daybreak: europe" and we have the latest out of china. factory prices gain at the fastest pace or 26 years. does samy chaar agreed with my last guess -- guest? in china, we are looking for cpi. out of the u.s. this will all top out and we will beat back to 3% in the u.s. by the end of next week we -- next year. this is peak china inflation. would you be that optimistic?

samy: hello. yes, we would. if we look at the prices and inflation data, it has a lot to do with base effects on energy in china, a lot to do also with the core story in the short supply there. we are in a high plateau. it is very clear that we will remain high up there for a number of months. the soon as the late first quarter, early second quarter, we will start reverting back to more inflation numbers. we digest these pandemic and news effects. we expect much more normal inflation numbers in the second half of 2022. manus: if that is the case, do you think -- we have had quite a bit of flattening, a quite

aggressive flattening of yield curves. i have had people come in and say they are a buyer of that curve he could it is too aggressive and overly negative. what would you say to that? how do i position to the rates market for the scenario you just built? samy: the shift has been brutal. i think the market was a little too aggressive and pricing in too many rate hikes by too many central banks. we had a very strong pushback by all of the central banks, bank of australia, ecb, the fed and the surprised by the bank of england which led to a huge turnaround. now they are going too far the other way. we try to stay to a medium turn on inflation, it will lead

central banks to tighten money down the road, maybe not as much and not as soon as the market was expecting, nonetheless, this is an economy that does require some form of monetary policy normalization. there is no huge risk on the economy, no recession risk or major slowdown risk. it is the market realizing that central banks will take it slow and wait for numbers on employment. that is for the second half of 2022. manus: might guest this morning called it a fascinating outlook, someone married to the main man in the white house who has a seat on china and someone who never worked on wall street, it was a fascinating insight into who the potential change in the chair could be. what is your discussion at

lombard odier? they have tracked powell. your thoughts. [no audio] manus: we lost the line. hopefully we will pick him up in just a moment. as we have been saying, some like it hot and inflation is running up. u.s. cpi data is due today. we will talk about hot markets. this is bloomberg. ♪

manus: it is "bloomberg

daybreak: europe." i am manus cranny. my guess this morning is samy chaar at lombard odier. interrupted at the meat of our conversation. if -- becomes the head of the fed, what would it mean? samy: frankly, he did the job the democrats wanted him to do. i am not sure that having reynard -- brainard would change it. what is important is there are many other seats to be filled. boil or brainard can reshape the fed for the long run. they are going to bring in people that are on the dovish side. i think this is the market

acknowledging, if you reshape the fed, they will give credit to the new framework, inflation targeting, the fed will be patient in the face of inflation until we have a clear sign we are at full employment. the reshaping of the fed is a very significant story for 2022, and it will be dovish. manus: one of the boards i have been looking at, that i look at every morning is gmm. brainard oneof the things for me is about steel and iron ore, which is in the commodity section there. if that camera can zoom in, they have been -- bounced off the lows. i'm not try to over embellish the move, but i have seen a lot of volatility. this is a china story, but tell me what you think about supply bottlenecks.

this is the driver of angst for markets. samy: we are seeing, every day, additional signs that these bottlenecks are about to peak. it started with shipping, it flows now and it is improving. prices are coming down. we have also looked at energy bottlenecks. we are thinking about european gas, you can type them into your bloomberg terminal. chinese coal, obviously, we are seeing prices on the front end of the curve normalized, the same way we saw lumber normalized in the u.s. some of the bottlenecks are fading. we seeing container ships, the number of vessels in u.s. or

chinese ports that are starting to peak. the bottlenecks are there, it will take time for them to fully ease. at least the problem is not getting worse. we can say that it is getting so many people are overweight now, and asking themselves, "why can't i lose weight?" for most, the reason is insulin resistance, and they don't even know they have it. conventional starvation diets don't address insulin resistance. that's why they don't work. now there's release from golo.

it naturally helps reverse insulin resistance, stops sugar cravings, and releases stubborn fat all while controlling stress and emotional eating. at last, a diet pill that actually works. go to golo.com to get yours.

manus: good morning. i am manus cranny. factory prices surge in china at the fastest pace in 26 years.

$50 billion for, elon musk's network -- net worth plunges. the stock a almost $200 billion in value. earnings season is in full swing. we speak to the executives from allianz, ares and credit aaron cole. this is the heart of the chip crisis. that is not the shocking piece of news. you are looking at a margin of 25 5% -- 20.5%. the margins were looking for 19%, this is a strong delivery

in the fourth quarter. margins are up. revenues are higher. in terms of the overall dividend, coming in at 27 euro cents, a year ago it was $.22, these are a strong set of numbers for the chip maker coming through in germany. let me pivot cross to id does -- adidas. they are coming in with a profit. you have to think about supply chain issues, where do they produce their products, where are the bottlenecks for them, how difficult is it to get the last mile or 20 miles from the port to the shop? third-quarter sales rose 3%. this is the guidance. full year net from continued operations, low-end of the

billion. there margins slip as well. full year gross 50.5, margins are under pressure, sales are in line. it is guiding to the lower end of the range. those are the three walkways from adidas. they took a hit from coronavirus let's see what they have to say about that. margins or 50.5-51. this is the critical issue for these companies. the prices are rising labor, costs all the way on these businesses. i want to turn to the conference

in berlin. she got on a plane, she has been traveling quite a bit, but this time it is for good conversations. dani, good morning. dani: good morning. my next guest has been traveling a lot as well. so thrilled to have them, blair jacobson, managing director and cohead of ares. good to have you. here we are in person. private capital is a fascinating time. $378 worth, a lot of money is chasing fewer assets. where defined value in all that competition? blair: i think the good news is, now that vaccines have rolled out, economies have reopened, the markets are open. we have looked at about 1300 deals in the last 12 months. we are seeing record ella may

levels. a lot of what would have to do is sitting on record levels of drive powder. for every year they invest, they require one year. there is a lot for us to do. we tend to be local. we have 75 investment professionals all over europe, six local offices. we are turning over rocks and stones in all the countries. dani: what are the sectors you are most interested in right now? blair: our fundamental goal, it has served us well, is to back the best businesses and the best sectors we can find. that tends to take us to telecommunications and software, health. things like insurance brokerage, wealth management, have all been very stable. . good credits. dani: does seem that the

majority has been stable. the default rate never surpassed 2% in 2020, did we skip that part of the cycle or is it still coming? blair: we think a lot of challenges are left. hopefully covid is in the rearview mirror. there are a lot of factors in our mind. four that we are focused on. the first is rise in fuel and energy costs. the second is supply chain issues. the third is the rising raw material costs. the last is tight labor. the bank of england is forecasting 4% inflation. in terms of supply chain, gasoline lines and shortages like the 1970's, we are wondering if there are going to be holiday presents on the shelves. the bigger question is, how does it impact rates? the bank of england singled a rate rise. think it will happen in the near

future. luckily, we invest in floating-rate assets. we think they will have real implications once rates start to rise? dani: perhaps they have to act more aggressively once they finally do move at the ble, this is a global phenomenon as well. what does it do to the world of private debt if we all of a sudden have that tightening? blair: i think it depends on how much and how quickly. the market hate surprises. when we run the math on our businesses, we provide credit at a level where if rates work to go up 100 basis points to 200, we would be ok. anything more than that, we would be at the table talking to the company. dani: have you had that conversation at all or is there a concern? blair: not yet. this is one of the nice things about our class. covid was one of the first tests of our asset class.

it is probably less than 10 years old. it has performed well, because we backed a lot of the stable businesses that remained open and profitable during covid. dani: let's talk about fun size a little bit. ares had the wonderful soup related -- super lit if of having that. how big are they getting at ares ? one of the interesting trends we had, the deployment has gone well. blair: one thing that is interesting, the markets are moving to scale. there are focusing on larger businesses. we have done a couple transactions of over a billion in size. the capital markets themselves, 40% of the market in the u.s. 15 years ago focused on companies at 300 million or less, that number today is 2%.

we are becoming more relevant as our capital base rose. we are quick, confidential, public to private, we can also provide growth capital that the bond and -- markets cannot. dani: i know that you have been a very vocal proponent of tsg, when we think about esg, it is around public companies, data, and the world of direct lending and private credit, it is more opaque, does that make it a more difficult prospect to invest with an esg lens? blair: we think it is the other way around. ares is a group, it is important to us and to our investors who trust us with their capital. we are at a point where it has moved on to being passive, check the box, to think about how we can actively drive positive esg outcomes. a lot of the times we are the sole lender to these companies and have influence.

we are doing three things. first, we can promote sustainable business. we can invest in recycling businesses. we just did a one billion pound loan to a consulting business to help them reach more clients and their goals. we had some financial incentives for them to do more on the esg side. the other thing, our average company is not that big. we have a lot of internal esg resources at ares that we can bring to bear. we helped bring one from scratch. these are all things we can do to bring the power of ares and the resource we have to the middle market. dani: that is all we have time for. thank you so much for joining us. that was the ares head, blair jacobson. back to you. manus: thank you very much.

dani burger at the berlin conference. coming up, biden backed away from the emergency release of crude reserves. words and actions matter. this imberg. ♪

manus: it is "daybreak europe." i am manus cranny. biden backed away from the immediate release of the crude reserves. the white house is weighing the merits of tapping the supply after allies refused to increase the pace. we know that, paul wallace will

tell me why the white house has decided. -- has decided this. we know that the verbal saber, flopped. they flopped yesterday, not in its entirety, but they rolled over on the eia report. talk me through the report. star in q1, did they ring opec? >> that is what they were thinking is one justification for any downplaying. that report suggested that, like many others have recently, the market will switch from the surplus -- sorry from a deficit to a surplus next year. that was not news. almost every trader out there, let -- out there, opec itself said that as well. one thing is they have not tried

very hard to coordinate with other consumers. that coordination -- outside of that coronation, the market never believed it would be that effective. that is something that got to the white house. manus: here we are, using the white house set bar, that risk is still in the market. russell hardin, good morning, demand is back to 2019 levels. surely, the prince should be having the conversation with russell. we are seeing real demand, raising prices. does that change the narrative, russell already calming the demand back earlier than we anticipated? >> that is something you have to take recognition. world trader says we are back to pre-covid levels of world demand, you have to sit up and take notice.

they are not the first people to say that. some people are slightly less bullish. aramco said they will get to a hundred billion -- hundred million barrels a day, that is pretty much pre-covid levels. if we are not there, we are almost there. manus: if you go on to read the rest of aaron co.'s review, they -- aramco's review, it is interesting how the eia talks about the price rolled down and yet aramco talks about tightening and markets. the threat is life, paul wallace joining me on the set. our energy and commodities coverage team leader. let's get the first word news with juliette saly. >> france has the two rally the

nation, presenting a bright outlook for the economy. president warned older people they must get a booster shot or see their health pasty activated, stopping them from going to cafes or restaurants. u.s. vice president kamala harris is embarking on five days of diplomacy in the country as she looks to heal a rift from the u.s. and their oldest ally. bloomberg sources say president biden and his chinese counterpart are to hold a virtual summit next week. it comes as the two nations spar over taiwan and in washington over beijing's expanding nuclear arsenal. general electric wants the -- once the world's most valuable country will split into three groups in a stunning breakup of the conglomerate. they will combine the three energy businesses into another separate entity. aviation will make the third

company. >> these businesses will be more focused, a greater level of accountability. we should have sharper allocation more strategic flexibility, i think it will be good for the team as well. investor basis will more focused, underinvested in ge today, you put that together, this is the best path for us to unlock a great value. >> global news, 24 hours a day, on-air and at bloomberg quicktake, powered by more than 2,700 journalists and analysts in more than 120 countries. this is bloomberg. manus: thank you very much. coming up, we are going to get to the cfo giulio terzariol of.f the year. the show rose on. -- the show rolls on. this is bloomberg.

♪

manus: it is "bloomberg daybreak: europe." i am manus cranny. allianz, assigned that the world's largest insurer -- suffered steep losses during the pandemic. giulio terzariol is the cfo at allianz. thank you for joining me. you're headed into the higher end of the range. you have raised the outlook, despite litigation risk. what are you so optimistic? good morning. giulio: good morning. thank you for having me. we are having good results. we see these good results across all the segments.

for the quarter, we had a break in profit of 3.2 billion. it is more telling when you look at the operating performance which was almost a break in profit of 10 billion. we had guidance to the higher ends of outlook which means we think we can go to 13 billion for a profit. our underlying performance is very slow. it is coming from all segments. in asset management, you see that we had a break in profit of another billion. i would like to highlight the performance of agi, year by year they are up in profit. they had flows about 55 billion for nine months, that is strong for performance. manus: obviously, in pimco, the

strongest inflows ever in the third quarter. where is that money getting allocated, where are the clients allocating to risk in this environment? giulio: when we look at the money, it is coming mostly from the mutual funds. it is mostly fixed income, that is where most of the flows are going. we also see strong flows in europe and the u.s. we also have deployed some inflation protection strategy. they're coming from mutual funds, europe, the u.s. and they are going to fixed income alternative strategy. manus: are you adding to

inflation protection? we are seeing tips hit record lows. are you adding incrementally or substantially to inflation protection? giulio: what i was referring to, they are offering -- from a general account. we had inflation protected tapes that we had in the portfolio, they are not adding to it. the weight we decide how we structure our portfolio is based on -- it is a structured decision on how much to per -- deploy and protect against inflation. we are not taking a position on inflation to go up or go down. we have a hedge in position on

our general account. manus: you are dealing with a probe from the justice department on the structured elf of funds, you have not made any revisions. when can we expect an update from you on the position in regards to the alpha funds? giulio: we are collaborating with the authorities and are clearly weighing our options. it is hard for me to tell you when we will come out with an update. i can assure you that it is in our interest to find a solution. we want also to find solutions. it is in our interest to put an end to these in a short timeframe. i cannot give you a date.

we have this issue, but the underlying performance of the business is really strong. i want to highlight that age -- agi is having a good performance. at the end of the day, the underlying performance will be in effect. manus: have you made any changes as a result of the alpha fund issues? there must be something structurally that needed to be dealt with, was there? giulio: no, we have not done any changes to our committee. as we are going to, get more capable elements, we may end up doing some changes. so far, no changes.

the issue is an isolated issue and has nothing to do with the general governance we have. manus: ok. thank you so much for being candid and answering questions. giulio terzariol, the cfo at allianz. moving is a handful.

no kidding! fortunately, xfinity makes moving easy. easy? -easy? switch your xfinity services to your new address online in about a minute. that was easy. i know, right? and even save with special offers just for movers. really? yep! so while you handle that, you can keep your internet and all those shows you love, and save money while you're at it with special offers just for movers at xfinity.com/moving. and there you have it. woah. wireless on the most reliable network nationwide. wow. big deal. we get unlimited for just 30 bucks. sweet. but mine has 5g included. relaaax people. my wireless is crushing it! that's because you all have xfinity mobile with your internet. it's wireless so good, it keeps one-upping itself. switch to xfinity mobile and get $200 back when you bring your own phone. or get a samsung galaxy a42 on us. call, click or visit a store today.

♪ francine: good morning. welcome to "bloomberg markets: europe." i am anna edwards live in london. mark cudmore joins me in singapore to take us to the market action. the cash trade is less than an hour away. here are your top headlines. inflation jitters. stocks fall as chinese data highlights the inflationary pressures building in the global economy. up next, u.s. cpi headline figures due out today may show the