"commodities edge." focusing in on the companies, the physical assets, and the trading behind the hottest commodities with the smartest voices in the business. i want to get to the data dig, the top market stories of the week. omicron risk really dominated the news cycle, but under the hood, there are some interesting stories. your electricity prices hitting another record this week, rising over 15% in germany. these yellow bars tell the story. power prices for the future trading close to 200 euros per megawatt hour. that begs the question for next year, is this not a short-term event? higher prices for you and me, but may be to profit for trafficker. they are having their best ever profit, up 94% from last year. price differentials, virus confusion while helping them to

cash in on all of that volatility. one of the biggest debates right now in the energy market is are we headed for a big supply crunch due to underinvestment? the international energy forum said that companies need to raise investment 520 $3 billion a year by the end of the decade to prevent a surgeon educate prices and economic unrest. that is a total of 4.7 trillion over the next 10 years to meet demand. let's get into the ring because it is oil producers versus the white house, which could be a big impediment to increasing that investment. public u.s. producers are very cautious about spending more money on production. there are demands for higher payouts from shareholders and policy confusion from d.c. earlier this week, we spoke to the conocophillips ceo about this push and pull. >> the industry is already doing these things, voluntarily trying

to raise the bar. when you get these kinds of shots across the bow, it is not that constructive, creates more uncertainty in the atmosphere. alix: joining me now is kevin crowley, our big oil reporter. you just attended the world petroleum congress in houston. you had a government official talking about producing more and he was heckled. what was the mood music? >> he came to houston asking producers to produce more oil, to keep the gasoline prices down, and someone yelled out, so why don't you help us then? it was an old-fashioned texas welcome to the officials. certainly, the industry is not over enamored by this administration. they have been anti-oil and gas from day one. just a few months into the biden presidency, he is asking opec to

increase production to keep gasoline prices down, even after lots of anit-oil news, such as canceling keystone xl. alix: was there any indication that these producers would increase money to boost current production? >> they talked about the need to increase production, investment in the industry. really, they are being very tight on the capital budgets at the moment. they understand they need to return more cash to investors who have been very disappointed by a decade of poor returns. they are quite enjoying the high commodity prices at the moment. we are not going to see the same huge increases in investment that we have seen in the past. alix: what was your biggest take away? they also announced a very bald dividend at the world petroleum congress. what was your biggest take away

leaving their? re? >> there is a real slacker in the industry, hammering on the point that if we move too quickly to a cleaner energy future, we may have damaging price spikes. there is still a very strong need to keep oil and gas in the mix as we go forward. that is an extremely strong line , they think, that will have big political ramifications. we are already seeing huge price spikes in europe. i think the industry will use this as an example as to why oil and gas will still be needed for many years to come. alix: greatng this week. appreciate it, kevin crowley. time for commodity in chief, where we talk to one executive in the commodity world. today, it is john dowd. hays firm is one of the latest companies to use a spac to go

public. here is a refresher on how that works. company a raises a pool of money from investors to buy another company. once it finds its target, it gives company b the money, and company b is public. company a investors own shares in company b. think of it as a blank check company. earlier this year there was a spac boom, raising about $6 billion in capital come to market each week. in the second quarter, that number slowed to four. as the amount of spacs diminished, so have returns. the etf tracks the performance of those newly listed spacs, and is down 19% this year while the s&p is up nearly 20%. as of mid-september, 93% of spac s have traded below their par value, which is something you don't want to see if you are

trying to drum up enthusiasm for a deal. some investors are withdrawing their money once a deal is announced, so in essence, it leaves less money for the spac to make the deal. there are about 398 spacs out there, about $128 billion worth of money looking for m&a opportunity. enter go green investments, which raised 250 million dollars to target the alternative energy space. over the past 20 years, there have been six deals of this type that have been completed in the u.s., worth about $1.3 billion. amid all of that spac money and private equity cash out there, there could be more coming. i recently sat down with john dowd to find out what he wants to buy. >> i think the market for spacs is very competitive.

it surged during 2020 in response to the mispricing of ipo's. every private company out there is aware that the average ipo popped 30% last year. that is money left on the table for a private company looking to go public. they have increase the demand to go public through spacs. big picture, this is about investment in energy and the environment. i don't think there is nearly enough money being allocated to those two sectors. clean energy is very competitive today, but we are not close to oversupply the world with clean energy. if we do, that would be a massively positive thing. alix: where do you want to be on the stage of growth? >> a lot of companies are not mature that are on, that have a proven technology or proven service, that are growing substantially but not yet in a free cash flow generating mode. i think that is the ideal for a spac market.

go green is not looking to be a venture-capital provider to a technology that is not yet defined. we want a company with a business model that works. alix: where are you targeting? >> anything in the supply chain, wind, solar, grid storage, transmission is in our strike zone. anything that is a bottleneck in one of these industries for these companies to achieve results and get something done is what we are trying to solve. alix: you can make the argument that $250 million is a drop in the bucket when it comes to the billions that have to be spent on clean energy. how do you scale that? >> i think you are right, but a journey of a thousand miles begins with a single step. $250 million will not be game changing, but for a private company, the prize is a positive relationship with wall street. the benefit of wall street, it can direct a nearly unlimited

amount of money to profitable enterprises. what this is is an opening of the door. alix: the energy crisis we are seeing globally, how has that affected your investment strategy? >> significant. the lack of investment by oil and gas companies, which i think is a structural shift in response to the poor returns the industry has earned over the past decade, that lack of investment is causing a need for accelerated investment in clean energy. i think that is a very profound cycle. what we are talking about is clean energy as a disruptive technology replacing older energy businesses. this is not a 1, 2, 3-your phenomenon, this is a 10, 15-your phenomenon. it is a massive undertaking. alix: time for our commodity kicker. the supply chain squeeze is

giving new yorkers nothing to s chmear about as bagel shops across the city are reportedly running low on cream cheese. some famous spots are down to just a few days supply. what is contributing to the shortage? labor and a scarcity of packing supplies. some small owners are scavenging across state lines while others have decided it is time to retire less popular flavors. that does it for "commodities edge." this is bloomberg. ♪

matt: this is bloomberg markets. i matt miller leaving we will hear from the johnson and johnson ceo alex gorsky on the flight covid-19 in the face of the omicron variant. then we will break down the supply chain impact with the ceo of resilinc, a supply chain risk management company. and we will speak to the ceo of new bank as the company just started going public with a market value of $41 billion. let's take a look at what is going on in the markets. the s&p still down but doing better and better throughout the session. about .2%. 46.91. under the wednesday level we saw before thanksgiving. yields are coming down as well as investors buy into bonds. the u.s. 10 year at 1.4932.

the bloomberg dollar index up a third of 1%, getting back to its highs at 1183. fairly risk off mood right now. the 30-year is fresh off of auction results. some new results minutes ago. u.s. 30 year yield, 8.729. the bid to cover ratio was in line with the average bid to cover ratio. 2.22. i am pretty sure indirect bidders were 61%. direct bidders, 21%. sometimes you can obsess about these bond auctions. let's bring in ben jeffery of bmo capital markets to talk about this. we have been watching every auction big and small very closely every day since the

haywire seven-year option we had in february. how key is this? >> today's long bond auction, yesterday's speak to the pivotal point where we are at in the treasury market. tomorrow's cpi data is a meaningful event risk. two tales, yesterday being smaller than today, represents a treasury market investor base that is ready to position for whatever comes next. tomorrow's inflation data will be extremely critical in the set up for next week's fed meeting, where we will see if powell ultimately decides to speed up the pace of the tapering of qe, but that may alternately mean for the outright level of yields, shape of the curve going forward over the next few months, frankly, few quarters. matt: if we see a big inflation print, does that mean the market prices in more hikes, sooner?

does that mean the market will so bonds? if you expect the fed to raise rates, why would you buy these? ben: it's an interesting dynamic between the different points of the yield curve, the different sectors. it is those points that will be very beholden to fed expectations. should we get a stronger than number tomorrow, that will pull forward tapering assumptions, lift off assumptions, and maybe even terminal assumptions on where the fed will try to bring rates. moving out to the longer end of the curve, are going to respond more to that negative growth, negative inflation impulse from tighter monetary policies. higher interest rates will naturally slow the economy, bring down inflation. in that vein, a flattened or would be the biggest response to a blowout number tomorrow. matt: that is not unlikely. a strategist on bloomberg said

that he thinks the 2's/10's going down another 20 basis points does that make sense? ben: the two-year point relative performance to the 10 year will be an important place to watch. i would also look for the 2/5's curve. the current level of deflation begs the question of how high the fed's will need to bring rates in order to bring inflation back down to something they would be more comfortable with over the longer term. a higher terminal rate assumption will wait proportionately on the five years there while two's remain comparatively less hit. from that perspective, it would be a 5s/30s flattening or, 2s/5s steepener. matt: how high can we get? we are taking off from ground level now. ben: great question, when that

is being hotly debated. that is a reasonable departure point. just given the fact that what we saw in terms of the response and financial conditions in 2018 when the hiking cycle was called off and we got those three rate cuts, that tightening of financial conditions is something the fed will try their best to avoid this time around. look toward 2%, maybe a little bit north of that, but it will be the performance of the sci that determines where the fed ends up, in my opinion. matt: valuable intelligence. appreciate you joining us. ben jeffery of bmo capital markets talking about rates. still ahead, we will hear from the ceo of johnson & johnson, alex gorsky leaving soon. david westin asked him about his business and fighting covid. this is bloomberg. ♪ s bloomberg. ♪

matt: this is bloomberg markets. johnson & johnson ceo alex gorsky says the company will have more information about the efficacy of its vaccine against the omicron variant in the coming weeks and discussed how the pandemic has change the business of j&j. alex: first of all, it's important to acknowledge the great progress we have seen. clearly, we have some challenges in front of us, but when you think back to the uncertainty that we all faced 20 months ago, would we have a vaccine, therapeutics, what would be the path forward we have certainly made a lot of progress. but omicron has demonstrated, we

need to get everybody vaccinated. the sooner we can get everybody vaccinated, and the more we are learning, including a booster, the more we can prevent these additional mutations and hopefully get through it. we remain absolutely committed to this. we are working real time as we speak not only on the current version of the vaccine, to get it out to as many people as possible, but also on a next-generation, depending on what we find out about omicron. we think it will take a collective effort of many companies, countries, the world taking this on. david: what do you know at this point of the effectiveness of the johnson & johnson vaccine against the omicron variant? alex: we need to perform some additional testing. we know this virus likely transmits at a faster rate, and that is not good. number two, we are still trying to understand what it means in

terms of the severity of the disease. we are encouraged by some of the data we have seen thus far regarding how the current vaccines, particularly when boosted, are reacting against this virus. we have to gather more data from testing, in the clinic, from real-world evidence. we will know more in the coming weeks but we have been encouraged by what we have seen. david: any timeline on when you could have a better read on specifically the johnson & johnson vaccine will work on omicron? alex: we should know in a couple of weeks, have an exact indication of how ours works against this particular variant. david: talk about a next generation of vaccines be tailored for omicron. it's a different technology johnson & johnson has, not the mrna. can you change your vaccine to address omicron if necessary? alex: the short answer is yes. we are working on that as we speak, but we want to see how

the omicron virus is impacted by the current vaccine. we are encouraged by some of the data, we need to gather more to determine exactly what the efficacy profile will look like, but right now, in fact, we are working on the next generation, should that be necessary. david: one thing i learned is there a different profile of the johnson & johnson vaccine as opposed to others. it doesn't raise the antibodies as high early, but it may last longer. what do you know about the duration? alex: from the beginning, we tried to design the vaccine to have strong durability over a long period of time. you are right. your body has the antibody response -- think of it like the first line of defense that your body musters to take on this kind of ibmers. then you have t cell and b cell, which are the longer-term.

that gives your body the memory so that you can respond years later that you see with vaccines. some of the data that we have seen does reflect that we have very strong t cell and b cell response. studying that right now to say exactly how does that manifest itself in terms of durability and patency over time. one thing we know is that this virus will not go away tomorrow. it is not only important that you have a strong response immediately but that 6, 12 months later, particularly in some of these other areas around the world where the logistics of getting multiple choses will be challenging. matt: that was alex gorsky, ceo of johnson & johnson speaking with david westin. now to something that caught my eyes, the recent jobs numbers. we saw initial jobless claims declining last week to the lowest level since 1969, coming in at 184,000.

that was back when richard nixon was president. down 43,000 from the prior period, one day after we learned job openings jumped in october 2 the second highest of all time. the number of available positions rose to more than 11 million. so a ton of openings and almost nobody applying for unemployment insurance. meanwhile, the quits rate fell to 2.8% from a record 3% in the prior month. basically, the great resignation goes on, and lie flat is what the kids are doing these days. shares of nubank jumped after its public debut in one of the largest u.s. listings of the year. it's ceo joins us after this. this is bloomberg. ♪

mark: i'm mark crumpton with bloomberg first word news. u.s. secretary of congress gina

raimondo tells bloomberg that companies who implemented vaccine mandates are having an easier time bringing their employees back to work. >> the companies like united airlines and others that were first out of the gate to implement these mandates, they have seen tremendous success. more people are applying for jobs, more workers feel culpable going back to work. they are actually facing an easier time recruiting folks. people don't want to work if they feel unsafe. mark: secretary ron mondo also pushed president biden's build back better plan. president biden plans to skip the world economic forum, a gathering of world, political, and economic elites. many of his predecessors also chose to not attend. he is sending administration officials to the january meetings in switzerland. past delegations have included senior officials who will work on economic and trade issues.

the omicron variant is four times more transmissible in its early stages than delta. a japanese scientist analyzed data from south africa. the researchers says omicron transmits more and it escapes immunity that has been built naturally and through vaccines. about 5 million kids aged five to 11 in the united states have gotten at least one covid-19 vaccine dose since those were ok'd five weeks ago. but the speed of the rollout depends on where you live. the wall street journal analyzed cdc data and found about 30% of young kids have gotten vaccines in some new england states, while parts of the south are well off the national pace of 18%. global news 24 hours a day, on-air, and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. i'm mark crumpton. this is bloomberg.

♪ amanda: i'm amanda lang. welcome to bloomberg markets. matt: i'm matt miller. we welcome our bloomberg and bnn bloomberg audiences. here are the top stories we are following for you from around the world. nubank goes public and is now latin america's most valuable financial company. backers for the brazilian digital bank include warren buffett. in a moment, we will speak with the ceo from the nyse. supply chain issues continue to drive inflation up, resulting in an expensive holiday season with some questioning if this is the new normal. more companies telling their employees to go back to work

remotely as covid cases rise. all that and more, coming up. amanda: a bit of a lackluster session, mixed actor across stockmarkets. in the s&p 500, you are seeing financials, utilities doing ok. health care as well. weakness for the groups that make up the tech groups. cvs is up on its outlook, so you are seeing some buying where investors feel it is warranted. as you mentioned, we are looking at a sizable ipo today. i look at the u.s. ipo's 42021. nubank ranks sixth on the list. we will be talking to the ceo in a moment. what jumps out to me is rivian, which slumps that all, even though it has little by the way of revenue or profit. nubank stands out in contrast to that, you might say. matt: rivian is just starting to

roll out the product, have been developing the company for a decade, and now have sold at least a few hundred trucks. an inopportune time. the timing isn't great because of the chip shortage, supply chain issues, right as they introduced the truck. but it is true. amanda: we are seeing shares of nubank trading higher today. the brazilian digital bank raised $2.6 billion, which means the overall valuation is about $41 billion. let's bring in ceo and founder david velez. thank you for being with us. let's start with what you are offering. you are now i think the largest financial institution in the region. pretty sizable footprint. what does nubank do that makes you so valuable? david: thank you for having me. today, we are already one of the

largest financial institutions in latin america from customers, but we are fully digital. you remove the branches, you save, and you give all of that back to the consumers. great customer service, no fees. ultimately, it is building a better banking proposition for both bank consumers who for a long time didn't have alternatives. you had four or five banks that dominated the markets that we operate in. but then you have 200 million unbanked customers that never had access to a bank, still have cash under their mattress, and with our model, we can serve them better. it is an opportunity for latin america. matt: this is a booming business here in europe. how far into the crypto world are you willing to go?

that, i think, is an important part of digital banking, but not one that warren buffett and berkshire hathaway necessarily want to back. david: we give access to certain crypto mutual funds but not crypto trading. our focus is around better financial products, investing, lending, credit. customers are coming in fast, attracted by the traditional products package without fees and a better user experience. amanda: give us a sense of how your growth will be shaped by somewhat difficult environments in both brazil and mexico in the year ahead? david: environments are always volatile for us. when we started in 2013, things were as volatile in macro as you could imagine. the brazilian gdp contracted 8%.

in 2017, the country contracted 4%. the macro has not really helped, but the reality is, the trends that are behind our back accelerating our growth are almost uncorrelated with that. regardless of where gdp is, people want to leave the banks and get better products. people want to be fully digital. there is a young population that continues to adopt the product. ultimately, this technology adoption is a powerful trend. even where you see emerging markets, we will continue to accelerate. matt: what do you do with the proceeds? you have raised $2.6 billion, worth at least $41 billion as the stock rises. how do you intend to use that to fund your growth? david: we are profitable in brazil, core markets, and now a lot of that capital we are raising is going to new markets,

mexico, colomia. -- colombia. the growth has been better than expected. we are already the largest credit card issuer in mexico. we want to be the leading financial institution in these countries. we are also you're marking some of that capital for m&a. we think there could be a possibility for consolidation in the market, bring some great talent into the company. amanda: you do have impressive topline business end growth. profitable in brazil. you warned that you may not deliver the profits that some want to see as you expand. is there were new pressure on you to do so now that you are a public company? david: we have been clear with our investors, the opportunity

ahead of us of digital lysing financial service is so large, more than a trillion dollar market cap that we think will grow, as you bring all of those 200 million people into the banking system. our priority will continue to be a growth, accelerating and bringing new and better products for consumers. we want to do that growth responsibly, looking carefully at our economics. the good thing about financial in latin america, very healthy markets to operate under. that is why we have been cash flow positive since 2018, profitable in our core market of brazil. we will continue to invest in growth but will also look to do profitable investments as we scale. amanda: this week, your knowledge of those latin american markets is a part of your company's story. you are a co-founder, but is there anything about this model that you could see expanding

beyond latin america, into other markets? david: we started in 2014, and we think now the future of financial services around the world will be new, digitally native technology companies. we think these companies have more of a focus on culture, consumer obsession, and they are much more efficient given they don't have branches. they can pass on those efficiencies to the consumer. we think this is happening faster in latin american markets , given the lack of access and alternatives. when you look at south, china, india, the story is similar. a lot of mental meals -- millennials who are using financial services but don't want to go into a banking branch. we think ultimately this is a global trend. as you mentioned, there are a lot of players who can do this

from a number of different? fees. matt: i am sitting here in germany where people are incredibly traditional normally, but the covid pandemic pushed a cash-up cyst nation into making digital transactions. previously, almost no stores wanted to accept plastic. cold hard cash is the german way of paying, but that has changed now. what about in your markets? how much are people doing transaction digitally? how much longer do you think we will have cash? david: we have seen the same thing. before the adoption, a lot of adoption, but in the core demographic of millennials, people under 30 with a smartphone, that wanted to do everything digitally. the concept of a bank with a branch before the pandemic was still a little bit scary for a lot of demographics.

the pandemic change that. people were forced to use digital banking. once they start using, they never go back because it is a better product, more centered on the user experience. even from the beginning of the pandemic, over a million people above 60 years old are opening their accounts. across the entire demographic people are embracing this. ultimately we think this is the model going forward. this is the beginning toward the full digitalization of cash. brazil has a new infrastructure that has been incredibly successful. the government enabled it about 18 months ago. the adoption has been incredible, so we think this is the early days of bringing those payments that were traditionally cash into the digital economy, utilizing the rest of the population. matt: david, great to get some

time with you, appreciate your insight. fascinating business, markets. awesome to see people on the floor of the new york stock exchange. david velez, ceo of nubank. coming up, as supply chain issues continue driving prices even higher, we will speak to the ceo of resilinc on whether it will ever recover to a pre-covid status. this is bloomberg. ♪

matt: we have breaking news right now on starbucks, looking at the company's shares after a union has won a majority of votes in a labor board election.

starbucks workers voting to unionize. they voted for unionization at the first of three new york -- restaurants, cafes, where ballots are being counted. really interesting as we watch may be a little bit of a power shift, at least in the u.s., toward labor. starbucks joining the ranks of at least one store that will be unionized. looks like volume is up but not a heck of a lot of movement in terms of price action. let's talk about the supply chain. starbucks here in berlin doesn't have any lids and hasn't for a month, because supply chain issues are dogging them. they are also driving up prices, making it more difficult to keep up with consumer demand. joining us now is bindiya vakil,

ceo of resilinc, a supply chain risk management company. you must be in high demand right now. how long until these ripples fade away, how long until the water is calm and clear on the surface? bindaya: unfortunately, the world of the supply chain is always in a state of disruption, perennial disruption that we live through and manage through. right now, we are in turbulent waters. there is so much built-up backlog in so many places, unfortunately, there is no short-term line of sight to getting this cleared out. not only that, there are many things that have gone wrong. in addition to the logistics, the demand itself is incredibly high because of stimulus, people's buying behavior, the

labor shortage across the board, a shifting demographic, shifting consumer behavior, raw material price inflation. it is the perfect storm. amanda: meanwhile, as i understand it, there is another issue, hoarding on the part of some in this just-in-time supply chain system. that must be incredibly disruptive. bindaya: we did see a lot of companies reach a balance lean, as core strategies, definitely hoarding is a problem. there is another issue. because a lot of people were trying to buy more, they have been holding a lot of work in process inventory, where inventory is waiting for a few parts to come in. this is not productive inventory. you can do nothing with it. it is tied up cash, sits on the

balance sheet. it is not productive. matt: in terms of price action, what kind of inflation are you seeing? we have cpi tomorrow. a survey shows us we could get a 6.8 reading, the highest since 1982. are you seeing the kind of inflation that i'm guessing you have never seen in your lifetime? bindaya: absolutely not. and in thedepth and scale. consumers are buying more because of all the stimulus driven demand, income that we have, that we are able to spend. even at the corporate level, we see commodities like gold, silver, palladium, copper, source materials like rare earth, lithium, tin, you name

it. every commodity that we look at that companies are buying are more expensive, and highly constrained at the moment. amanda: right to have you with us, bindiya. that is the resilinc ceo bindiya vakil. coming up, we are learning more companies are telling their staff that they may have to work remotely. we will tell you which ones, after this. stay with us. ♪

amanda: this is bloomberg markets. i'm amanda lang. with matt miller. more and more companies saying they will delay a return to the office. deutsche bank is said to significantly reduce the number of staff working in london starting monday. natwest has moved to more flexible working hours.

this is partly in response to what is happening in the u.k. the question would be, do we see this elsewhere? omicron is a concern and numbers are creeping up across north america. matt: the deutsche bank and natwest news is not that concerning, since the prime minister of great britain asked people to work from home. they will be doing that in the u.k. the jeffries thing is interesting. rich handler said a number of employees started getting covid, and suddenly they had 50 people -- this is not a bank of america sized staff. all of a sudden they had 50 people quarantining. he is sending people home until the end of the month. lyft is going to send workers home, say that you can stay home until 2023. who knows what will happen then. that is so far away, economists

cannot even or cast will happen. pretty incredible that they say workers can stay home until then. amanda: agreed. matt: cool. time for our stock of the hour, and another beat, raised quarter for upscale furniture seller restoration hardware. they see full-year sales rising 33%. kriti gupta has a look. kriti: it is just called rh now, they had that name change. i am told they make products that are to die for. it is not only that they have grown quite a bit but they are being rewarded or beating their earnings in a big way. let's compare them to their peers. they are doing better than the peers, the exception being williams-sonoma, which also has

the advantage of being a big gift business. they also own pottery barn and west elm, of course. this is pretty normal for rh on a post earnings day. they tend to have a good stock reaction, at least in this pandemic era. let's see if that continues on with future earnings. matt: i don't know if i would put up rh against williams-sonoma. you can get spatulas, mixing bowls at williams-sonoma. restoration hardware is for like giant bedroom furniture, much more of a manly thing? williams-sonoma is more like gourmet. exactly. for amanda lang, i'm matt miller. this is bloomberg. ♪

mark: -- limits on freedom of movement. mr. biden warning of the need to protect democratic values at the start of the summit on democracy. an event that has stoked tensions with china and russia. the president called on world leaders to stand up for the values that unite them. eitan cope the data we are seeing -- pres. biden: these challenges are exacerbated by challenges that require shared efforts to address these concerns. mark: president biden says the united states has launched an effort called the presidential initiative for democratic renewal. he is calling