the ecb ho es to real now which is nice. the ecb hopes to build _ real now which is nice. hopes to build on recent - real now which is nice. the ecb hopes to build on recent world | real now which is nice. the ecb - hopes to build on recent world cup wins by england's women and men's team. but many question whether yet another format is the right way to do that. is another format is the right way to do that. . another format is the right way to do that. , ., , another format is the right way to do that. , ._ ., ., do that. is it the way to do it? will it be _ do that. is it the way to do it? will it be a — do that. is it the way to do it? will it be a success? - do that. is it the way to do it? will it be a success? only - do that. is it the way to do it? | will it be a success? only time do that. is it the way to do it? - will it be a success? only time will tell. 0ne will it be a success? only time will tell. one thing is for sure, even some of the most ardent attractors of the format within the county game at the moment, they readily admit themselves it has to work beca

guy: let's talk about the ecb story you were just mentioning. the ecb in some ways relatively upbeat on the economic outlook, despite the financial stability risk. that's according to the central bank vice president. he spoke a little earlier to paul gordon. >> the risks looking forward are much more balanced than in the past. on the other hand, you have the speed up in terms of vaccination. vaccination is gaining momentum everywhere in europe. we are catching up. on the other hand, you have risks and uncertainties. the variants of the virus. what is happening in emerging markets. perhaps the focus is not going to be as much concentrated on balanced economies, and i think we have to start paying attention to what is happening in emerging markets. i think of india and brazil, summing that could have implications for the global financial markets. these are the elements that we have to look at carefully, and in the monetary policy meeting in june, they will tick into consideration all of these factors. we will have plenty of predictions, and we wil

we will see what comes out of the ecb in june.rom there, we will see what happens as we go through the summer. we will see what happens with the economies a little bit more open in italy, spain, areas that rely on tourism, for example. i think the summer will be key to see what happens in terms of the ecb. alix: if you want to play a better recovery and get ahead of that, where is the best value? marilyn: as i mentioned, we are still long italian bonds. we think there is still room to compress their versus germany. we also see that italy is going to be one of the largest recipients in terms of the recovery plan. but elsewhere, we are long chinese government bonds. we still think there's a very attractive carry on a risk-adjusted basis. in addition, we like some other areas of local currency emerging markets, and we do continue to have this barbell approach in terms of some investment rate and high-yield bonds, very much on a bottom up selective basis. we hold those positions which we think offer some value still and offer potentia

is this going to be a problem for the ecb?he pound, we are going to watch carefully how the pound trades over the next few days because we've got scottish election results coming up. we've got to keep an eye on that. the chairman 10 year down sharply -- the german tenure down sharply. we got some comments from the latvian central bank governor talking about an ecb taper. that had a really big impact into the btp market a little bit earlier. the whole effect has been superseded by that big payroll miss, though. alix: it is a very specific reaction here in the u.s. you got that big miss on jobs. it was buy tech, buy bonds, sell dollar. if you have lower yields, you're going to have less interest margins, therefore the financials get hit. it does seem to me the market is taking this relatively in stride. arc innovation etf up almost 4%. we were looking at its worst stretch of losses since 2018. that has now gotten a little but of relief after that bad jobs number. take a look at five-year five-year forward breakevens. if you want

will he repeat the same mornings we heard from the ecb?xpect him to have positive things about the economy to say? expect him to reiterate the transitory word? go ahead, tom --the transitory word. go ahead, tom. we have antony blinken meeting with sergei lavrov. at 2:00 p.m., the fed minutes from their previous meeting. how much will they start talking about the other t-word, tapering? how much will they talk about how deflationary risks remain the biggest threat in markets rather than the inflationary push that many seem to be worrying about? this seems to be the dichotomy driving the difference between many investment houses. do they see inflation as the bigger risk or disinflation, or even stagflation? jonathan: or decelerating growth later in this year into next year. when you get a dovish message from news conference, maybe from the statement, usually the minutes is the platform to let the hawks dance a little bit. we can only identify one hawk out there right now, kaplan, and basically nobody else. tom: to the german moving yields, t

jonathan: the guide we've had from the ecb has been to preserve his financial conditions.lian 10 year yield is back inside 1% this morning at 97 basis points. it was north of 1.1% in the last week. do you think this move off the lows of february, when we were south of 50 basis points, do you think this move is making them uncomfortable? shahab: in isolation, no, simply because this could also be attributed to improved reflation prospects across the euro area. in those southern european countries which were severely damaged by the loss of tourism income, their framework is looking much better. economists put out a piece looking specifically at the likelihood of tourism recovering across europe. that is something to bear in mind here, that that can be looked at in a positive light. if you look at market-based inflation expectations, for example, five-year five-year spec patients, they are still going up for the euro area as well. that to some extent reflexive global factors like rising oil prices, but from an ecb perspective, as long as that is still trending up and we are b

the ecb's conditioning assumptions at $1.21.hey can revise that up ahead, but i think that heading to $1.23, this is where the euro becomes slightly deflationary for the ecb, and that is where they may tone down their language. guy: why is that the case? because financial conditions are still very loose in the euro zone. the difference between now and when they got concerned about $1.22 is that europe feels like it is on the front foot now. it feels like it is generating growth. as a result of which, you wonder if they will be more tolerant to a slightly stronger euro. geoff: tolerant, yes. but what about their mandate? as you look at a forecast horizon, you still don't have inflation, you still don't have the magic 2% number. i think we can get one dollar 20 have since sometime this year, but it is about the pace rather than the level. at this time last year, heading into the june 2020 projections, we were below $1.10. so could we really have a 15 big figure higher revision in their assumption with no disinflation or impact? th

that suggests to me it is not the market telling the ecb that policy is too tight.t is the market basically repricing growth and inflation signals more positively. as the ecb encounters the actual data flow that concerns that more positive outlook, as economies reopen, as the data gets better, and as their forecasts start to rise, that we think will translate into a bit of tolerance for yields to also move higher. that will keep yields anchored. alix: the question is, how do you play it? george: our favorite expression is just to be short european duration. the 30 year rate in europe is still far too low for the macro outlooks we will be encountering at the end of the year. in the next three months, you might even see that really being a parallel move across the curve, with 10 year rates moving. but i think when you are thinking about what sort of macro picture are we had in the next six months, just slightly reduced policy support. it is not going to be an abrupt shift, but it will be a shift away from support in the bond market. both of those things push towards h

there is a lot of uncertainty and the ecb is taking that on board. >> clearly the case.t, thank you. >>> we are watching the travel situation globely. i want to bring you the latest news from singapore. the transport ministry said the travel bubble with hong kong will be deferred there was hope or expectation they would introduce a travel bubble between hong kong and singapore, but it looks like that decision has been pos postponed. the hong kong government says the news will be made again on june 13th. just a reflection of how another wave of coronavirus is beginning to grip the asian region this is something that julianna was talking about with the reopening in the uk. a lot of concern about the emerging of the indian variant and how it is quickly spreading in the uk. what is happening in asia could be a signal of what could happen in europe and the uk we are watching that closely >>> in terms of the european markets price action today we are now trading negative. we started off the day with a positive footing, but things have turned south in the last half hour. on the

and that's not a function of ecb.be a perception that the ecb is getting to hawkish, and could push the euro further out and create some euro level concerns. but overall, there's not much going on in currencies. other than fundamental forces pushing the renminbi slowly but surely higher. that's all favored currency, but were not so keen on cash and low risk assets of the treasury, but if someone wants to keep some money in such instruments, the preferred choice is renminbi related government bonds. annmarie: yesterday francoise gilroy said the ecb is not there yet when it comes to the likes of tapering. you have canada, new zealand getting out front. at some point the fed, can it push the ecb ahead? yves: i think every central bank has to have its own methods of normalizing. i think the ecb has been through it before. we are not in a situation in europe where asset valuation -- the situation is more tense in the u.s., with bows -- both the housing market suffering a structural shortage of housing supply, and a lot of

that is the ecb's position. i am fascinated by this ecb meeting.that is the most important quote this morning. jonathan: there's going to be pushed back. tom: many on wall street agree with dr. lane that you're going to see a spike up and then we will damp down, come again to something more normal. jonathan: we have touched on this a couple of times. that is philip lane and he is in line with the call of the federal reserve as well, the much surprise pressure we're seeing is transitory and worldwide. the issue the ecb has that the federal reserve this ad have right now, there isn't a framework the governing council has agreed to in the same way the federal reserve has. i remember hearing from governor carney years ago but even over many people it did not go so well, one thing it achieved, it kept the hands of policymakers tied and kept the committee on the same page with an appropriate amount of time. the ecb does not have that. those hands are not tied and that is why you get the hawkish sound even though it is not maybe warranted. tom: john, i ne

the ecb was behind the fed and the bank of england to stimulate. not to the scale that the u.s. is but both the central bank in the euro zone and governments are working in synchronicity in order to stimulate this recovery. it provides some insurance against downside risk. annmarie: a guest yesterday was talking about there is no inflation risk. how much is inflation risk in europe being exported from the united states? kallum: we need to keep an eye on bond markets a little that the likes of the french and german bond market does not follow u.s. treasuries, and to a certain extent, gilts, too much. the eurozone suffered a lot less inflation in the last decade. i am not consistently above the central bank's 2% target. the ecb still has some work to do before it can start to consider where its exit strategy may begin and how that may enfold. from the ecb's point of view, let's get inflation expectations above 2%, let's close some of those output gaps, which are still high in countries like france and italy. at that point, i think you can start think

a dutch bank says it aims to distribute dividends after september, subject to ecb recommendations.oining me is the ing cfo. great to have you with us on the show. this is a great barometer of what is going on. europe is reopening, your company is reopening. are you seeing and in tandem -- in tandem spike and loan demand? is it reopening and taking off? good morning. >> we see a resurgence in terms of revenue numbers which have recovered from a low point in the first quarter of 2020. the revenue growth has been in retail banking as well as host cell bank so it is quite broad-based during the course of this quarter as well. manus: i see your loan losses are 50% below the estimate. with that endure, or have we seen the best improvement in your estimate of loan losses? >> for this quarter, we decided not to -- we stayed prudent in terms of adding somewhat more to our loan loss provisions. in fact we do see the ratio of nonperforming loans have remained benign, given the economic situation and strong credit management. our guidance has been that we expect loan losses this year will be l

marvin: it is the conundrum of the ecb.f different economies with a lot of different speeds, and you have one organization trying to keep it all together with one number, whereas, certainly for us with the dollar, it is much easier. jon: good luck in the ecb meeting. marvin: absolutely. the focus is going to be on what they do -- everyone is looking at the size of the balance sheets, and that being the first stage of the normalization. the lahm -- the envelope structure itself leads itself to a natural crosses. it's an important meeting in the middle of summer. marvin, good to catch up. your tenure in germany this morning. negative about 15 to 16 basis points. just coming in basis point this morning. tom: they're coming in, and i go again to everybody talking higher yields. i'm looking at for digits, 1.5910 on the nominal 10 year. i think this show we sort of expected this range and attempts to come under 1.60. most of the street is looking for 1.65. jon: matt hornbeck of morgan stanley i think described where he was recent

we will see what the ecb has to say.ing up, we delve into china's bad bank as officials battle to prevent it from impacting the country's vast debt ridden financial system. we will ask what we have learned about what is happening inside china's bad bank. this is bloomberg. ♪ anna: welcome back to the european market open. a half an hour until the start of trading. futures point to the upside. u.s. futures up 0.2%. nasdaq futures, 0.3%. quieter on some risk assets. a good opportunity to take a step back and see where we are in the fight against coronavirus. this is one of the big themes that has hung over markets for many months and keeping a track of the rate of infections and tragically the death toll has been crucial for everybody. mark: i'd like to draw attention to the virus globally looking better than a couple of months ago. i know europe and u.k. in particular are optimistic but a lot of the world is nervous. in asia, we are seeing a resurgence. globally, people are worried about the possibility of new variants sp

do you think the ecb is in a position to start tapering? dr.r: not at all, and the ecb recently signaled they may have to extend qe beyond march 2022. this is a possibility. it will depend upon the pace of the recovery, the base of rep -- the pace of reflation, which is much slower than in the u.s., and it will depend on movements of european bonds with u.s. bonds. but definitely, given the fact that european reflation is much slower than in the u.s., plus the ecb commitment, these will not go very high -- guy: can i come back to alix's question on growth? what is your assessment of the next generation fund and how they are going to be spent? do you think those funds are going to be enough to put european countries, italy, spain and others on a sustainable path in terms of their current debt loads? dr. broyer: we estimate that next-generation eu will add 1.5% to 4.1% in five years. and the financing of the package is definitely supportive to the credit world in the southern and eastern part of the european union. the interesting thing in this n

guy: how has the ecb, and other central banks have done this as well, the ecb continues to do it in sizehas tried to force money into the system to provide companies in europe with the ability to borrow, not only in size, but at super low cost. can you walk me through the dynamic of what you are doing and how the ecb is impacting that? blair: the ecb funnels a lot of that capital through the banking sector. the one thing they have not addressed is the significant regulations that banks face. the regime has made it must -- much less profitable to make the same kind of loans we would make to companies. when we approach a business we can provide a complete solution, write alone from 50 million to 500 million, even a billion in some instances. banks cannot compete with that effectively. alix: when it comes to the u.s., it feels like the push is to take a look at this kind of lending and shadow banks. do you feel like there will be the same kind of movement in europe as well? blair: we believe our industry is many years behind that of the u.s. in the u.s. it is more mature. from our perspecti

wait and focus on employment, but the ecb really can't.hat do they do about this growth they are going to see and the higher inflation? there's a lot of talk that the pepp is going to be rolled back in june. william: in june, that is way too early. i think we will be surprised if the guidance already changed. there will be lots of questions at the press conference about that. so my expectation will be more that the guidance will change in the meetings after the summer break, and that the pepp will stop in march 2022, but there will be a substitution effect to increase traditional asset purchase programs that will be disruptive to the liquidity environment and with was back to bull markets. guy: a short move higher over the last few days in btp yields. when does that number start to become a problem? is it 1%, 1.5%? italy's debt load is going higher and higher. if we are going to start to see an inflationary impulse around the world with treasuries in charge of that narrative, driving european rates up, is that going to be an issue for the

guy: the ecb is in a much better position now.accine pickup is happening, growth is starting to come back. it is a much better picture. where do using the ecb will have a problem with the currency? because it is a deflationary factor, which they are going to think about. while inflation is picking up in europe, it is potentially lagging where it is elsewhere. we are definitely not back to target. where do you think the line in the sand now is? kristen: the reality is we are heading into a june ecb where we are lightly to see conflicts within the governing council. that is going to continue to provide a tailwind for the euro. i don't think we are anywhere near that level yet where it is going to be a problem for the ecb, and we don't expect the euro to see significant outperformance from here, but it is really about the pace of the move. if you continue to see appreciation at the rapid clip we have seen in the past couple of days, maybe that changes the narrative for them. alix: as we see heavy tech selling pressure, is the dollar

i what point does a kick in for the ecb? on top of that, the bond market too. yields two inch back, not just on bonds. tom: i'm looking back to thursday, to the american economic data. euro pretty much stable but we are watching german yield. there were nine basis points from thursday, may--- may 6. we have had a yield moving toward flat and positive in the german tenure. at one point, it was 10 for basis points. that is a big move. off american data, it is a better europe. jon: the message from the ecb is likely to be different than that from the federal reserve when you have the big patient cheddar yields -- big change on treasury yields. the federal reserve said this is consistent with the outlook and ok. i do not think you get that from the ecb. tom: jonathan ferro has real knowledge on this. what does lagarde do at the next meeting? is about asset and flows or interest-rate discussion? jon: i think it will be asset purchase discussion. tom: i agree. jon: around the dollar where it is are now, 1.21. tom: i agree. i have no idea what i'm talking about. jon:

we are not at the level where we may get pushback from the ecb.uropean economy pushes to the upside, may be did not get that. while we have been on air we've seen a big trade of the commodities market -- a big fade in the commodities market. making some people starting to fade that move. let's talk about what is happening at an individual level. the ftse, the dax, the cac 40. the ftse 100 mildly negative on the session. earlier on -- it relates back to the commodity story. the dax plant and the cac 40 flat as well. on the index level, nothing happened. let's talk about the sector level. earlier on as i said, when i looked at the numbers first thing, we did see a strong move by the basic resources. that has stuck a little bit. i've been surprised by that. losses up 2.23%. thanks having a relatively good day. then you get into some of the bond proxies. real estate is up strongly, up 1%. the bottom end of the market, technology in europe is relatively low. technology down 2.4%. travel and leisure down as well. quite restrictive. that was not the news

it the ecb seemed to have changed tack.is about five basis points. bunds are really trading at about 25 basis points. to me that suggests that the ecb may after all be willing to let trades further. that is a pronounced shift in policy. >> that is interesting because i was not long ago that we saw a lot of pushback from the ecb when they saw a rates on the rise. speaking of the u.s. curve, i know you have been asking a question of the day on the blog -- how far can deepen the u.s. with inflation -- how far can things steepen in the u.s. with inflation? >> steepening in certain parts of the curve can widen points hundreds of basis points. >> thanks for bringing us your thoughts. we will keep our eyes on the steepness of the curve. we are coming off earlier highs and the u.s. futures did deteriorate a little. you can see it is down 4/10 of 1%. in terms of the sectors, it is interesting to see basic resources doing well. at the push higher and commodities prices is what we are talking about here this week at bloomberg tv. it r

the ecb can miss its favorable conditions when it is a recovery.ith the 10 year yield, down through 1% over the last couple of weeks. i think that is the focused going into june 10 for the easy be meeting and that conference with president lagarde. tom: in the ecb's defense, they have been clearer about extending their timeline out. i think they have done a much better job than the fed of saying 2022 and even 2023. jonathan: it is time contingent forward guidance instead of state contingent forward guidance, where we say when we get there, we will do something. are we done? ? tom: we are done. i'm looking at the bond market. do you say curve flatter? we haven't talked about it in ages. but there's some really interesting fixed income. jonathan: it has stopped steepening. i think you can say that. real yields were higher. tom: to tell you about "the real yield" this afternoon at 1:00 p.m., this will be something to get you ready for the weekend with a fixed income market coming out, the publications tonight. i can't wait just to see mike for rowley

for the ecb, things get little more complicated. the premarket repricing -- the bund market repricing is a different story from the italian market repricing. quite a move. lisa: these are huge moves, and it raises a question about what point will fiscal move -- kick in? jonathan: we want to bring you the headline and of europe, the e.u. and u.s. temporarily stopping the tariff dispute. no surprise that they are may be removing some tension ahead of the president's first overseas trip. tom keene will be back tomorrow. coming up at 7:00 a.m. eastern time, little bit later, sebastien page at t. rowe price. equity futures, 41.58. shout out to ed hammond of bloomberg news with an interesting story he broke over the weekend, that at&t is in talks with discovery. this is bloomberg. ♪ berg. ♪ ritika: israel's prime minister signaled he is not ready to let up on attacks against hamas positioned in ghaisar. more than 200 people have been killed, the vast majority in gaza. non-yahoo! says he will whatever it takes to restore order. constant ro

alix: what yield can the ecb not seem to handle?a that if we are nearing 0%, at what point do we had that resistance and have the feedback on the currency? jane: it is part of the same to make. because the guild has moved -- it is the same debate. because the currency has moved -- you can argue yields are rising because the markets are anticipating a better outlook. if it is done in a calm and contained manner, if the fundamental data doesn't dollars this uptick, that will be ok -- if the data does it knowledge this uptick, that will be ok. they'll be the sort of conditions -- guy: jane foley of rabobank, thank you. this is bloomberg. ♪ alix: live from new york, i am alix steel. this is the european close on bloomberg markets. here's what we are watching the next 24 hours. if monday was mushy, may something exciting will happen in the next few hours. the house financial services subcommittee will hold a hearing on spac's. tomorrow in the u.s. we get new home sales and earnings from nordstrom's. i think the new harm sales numbers wil

joumanna >>> all those questions of the ecb program. we'll have that conversation for another day.g up on "street signs." credit suisse with losses related to the fund amounting to billions we speak to vincent kaufmann after the break. so you want to make the best burger ever? then make it! that means cooking day and night until... [ ding ] success! that means... best burger ever. intuit quickbooks helps small businesses be more successful with payments, payroll, and banking. shipstation saves us so much time it makes it really easy and seamless pick an order print everything you need slap the label on ito the box and it's ready to go our cost for shipping, were cut in half just like that go to shipstation/tv and get 2 months free ♪ ♪ just like that ♪ ♪ >>> welcome back to "street signs. i'm joumanna bercetche along with tottenhamjulianna tatelbaum these are your headlines lufthansa aims to offer over 100 summer destinations as they call for fewer restrictions for vaccinated passengers. >>> u.s. futures point to a higher open as investors eye the next batch of earnings and data. wa

become a problem area for the ecb, at what level?ek: certainly the annual inflation. when you look at the euro on a trade-weighted basis, it is close to record highs, but the pace is still not at a level that i think would be problematic. we are talking potentially .1 to .2 percentage points impact on inflation. if my forecast on the euro-dollar were to materialize over the next six months. yes, they play lipservice to that being of concern, but i do not ultimately think it has a huge impact on overall inflation dynamics at the levels i am talking about. guy: can we come back to the issue of credibility? you firmly believe the fed will do what it says it is going to do. what about the bank of england? we had comments yesterday talking about the possibility that we could get rate hikes next year, and that puts it in line with a bunch of other central banks, the u.k. economy accelerating, does that have any credibility, already -- or are we back to the carney era, where we had promises the rate would go higher and there were not really

it had similar commentary from the ecb, talking about the transitory nature of the inflation pressure and we would agree that eventually -- yes we have a very strong demand that will trigger a supply response in the medium term so you should have this even out and we expect the u.s. to settle out about 2.5% by the second half of 2022. that is not far away from inflation expectations over the medium-term. what we are watching, to see if we are wrong on this, is to measures. -- two measures. how broad-based are these inflation pressures? we estimate our economics team has done -- economic team has done the numbers, and the vaccine accounts for some overshoot in the u.s. we also will be looking for signs of more persistent inflation in the wage market. if there is to be persistent inflation, it will come from the labor market, that's where we would be more concerned. manus: let's see what the jobs report brings at the end of next week because we have a little bit more tone and intonation. you expect inflation numbers to settle back. if that is the basis, some people have come on the show

i'm the number the ecb and that you're for them getting together and in the end there's like a group awareness which is great. i hurried up on 2nd to buy some mocha protest about somebody could that have been lagging the judge said and judge said and as the stuff i'm a moonie did up on bill and with that. best up i went up at gunpoint to go bike like a homo boy all right. this is the ultimate demonstration of sun power. flame and we're strong favorites to win the match but they could only scramble a draw. some are not back up the up at the security but what i'm getting you know that it's not up but just the can mean that while i'm going on comodo now last block that the puppy you have to keep the last. piece out when just the guy. i was never to end up in being always a little spell man before but if you miss it i'm not too up on me and i'm only about willing to accept new this now unless you're going to pick up. on purpose when i tell them that i'm responding then and then then because i set it up with an idea you know my back up the time to have. an i pad and i mean yes and yes and

anna: let me ask you about the ecb specifically. say that they are going to announce the slowdown in the pace of the pandemic program, the pet program. you think that's coming in june, what message will that give the market? what message do you think it should give the market? >> it is very much a communication challenge. we expected to be at the base of activities. what's the story? the story is that it suggests to control. you have to allow the outlook, and they could think -- and they think they can do so very moderately with the asset budget. at the same time there would be an objective with the intermediate target with the accommodation for a longer and keeping the conditions. and i think this is a more medium-term set which would be a strategy that i think the ecb will move decisively in a dovish direction. so it's time to catch up with the fed. anna: so it's a communications challenge they face in june. luigi, thank you. chief global economist, thank you for joining us this morning. coming up, we will be back to the belarus s

we are seeing at this week with options targeting some ecb hikes in late 2024.do you make of that market action? kokou: i think it is pretty irrational, particularly if you look at the nonfarm's payroll data last week. i find it interesting we are scared about inflation when the data was pretty poor, and therefore the narrative last week was the fed is unlikely to tighten as soon as the market was expect and. here the expectation is being pushed backwards. our view is that 2023, 2024 is the area for europe to start dealing with the inflation pressure. but i think it also is important not to underestimate the structural deflation forces that have been at play for the past 20 years. these sort of things don't disappear overnight, and therefore they will reassert themselves most like gravity against the sort of connecticut she driven by all of this fiscal and monetary stimulus. guy: is there a danger that the economic cycle could almost be over by then? the rate of change, the pace at which this cycle is happening, his eye watering. it is completely different to pa

let me ask you about the ecb.spoke to one guest who said they have a real communication challenge coming when they have to dial back what they are doing and yet not make that look like any kind of tapering. what are your expectations? we saw some lions from the board member talking in an interview in japan, saying it would be premature, tapering talk would be premature. caroline: it is interesting to see the ecb took a slightly different approach versus the other central banks earlier in the year. as it starts to rise, they were quite keen to communicate they did not want yields to rise too much too quickly. it will be interesting to see how they have the narrative going forward. what will be really interesting on europe is on the recovery funds and how they get destroyed. clearly, it's a large package, slow to be implemented, now that those implementations are sort of gathering robust terms about how they are going to take place, that is actually going to be a very interesting angle from the european area. anna:

anna: lots to watch for when it comes to the ecb meeting. thanks for joining as.and those into the markets live team this morning. that is it for the european market open. "surveillance: early edition" is up next. we go to the first hour or so of the trading day. u.s. readers point to the downside. here in europe, travel and leisure stocks losing the most, along with energy. telecoms and autos and other parts a little more resilient. that's it for this monday. this is bloomberg. ♪ >> we will have higher inflation this year above 2%. >> i would certainly be wearing a mask on an airplane. >> i think vaccinations are rapidly overtaking. >> this is "bloomberg surveillance: early edition." francine: well good morning and welcome to "bloomberg surveillance: early edition." here's what's coming up. megan media merger. at&t is looking to combine them with discovery.

libido pushback from the ecb -- a little bit of pushback from the ecb.uld go to the lower yield as being profound over the last few days. america is opening up. capacity, 63,000. wrigley field in chicago where the chicago cubs are going to move to 60% capacity of almost 42,000 seats. lauren sauer joins from johns hopkins emergency medicine. it is become the theme of the show, which is how to the unvaccinated bounce up an opening america? wrigley field, you put them in section 503 to section five up the middle and nowhere? what do we do with the unvaccinated at sports events? >> i think the biggest thing we have to do is make vaccine available. maybe we have off events, vaccine assets -- available so we can encourage them to get vaccinated. i think the outdoor events will be where you see a lot of co-mingling vaccinated and unvaccinated people. the place we are in america right now is vaccinated and unvaccinated are going to be together. in many cases, they will be mask less. it is an honor system. tom:, on. i don't mean to interrupt, but you've hit the t

where it ecb have an issue?ara: it is really -- laura: it is really all about the pace of the move. i don't think they are looking at one specific threshold level, but like you mentioned, the contrast this time around are those inflation expectations. so looking at five-year five-year metrics come others have climbed quite a bit over the past couple of weeks, but around 1.65, they want to get those to 1.82%. there is clearly room for that to rise, so they are not going to push back on that euro strength. it is not going to be necessarily a deflationary hedge at this juncture. alix: such great analysis. thank you so much. joining us now for more, karen ward, j.p. morgan asset management chief market strategist for emea. it is a similar question. does a strong euro, at what point does a strong euro wind up hurting the investment case for europe? karen: i am not too worried about dampening the prospects of european stocks. i think people tend to talk about the euro as leading the charge. i think euro is the consequ

do you think the ecb is going to be capable of looking through 4% german inflation? the optics of high inflation, especially in germany come over there is cultural aversion towards high inflation, particularly with the ecb quantitative easing of purchases, that generates quite a lot of discomfort on the governing council. i wouldn't be surprised if next month, we are going to get quite a bit of noise, which would be quite unfortunate for a number of factors. it is clear that at this point, supply side and demand side factors are the driving factor. we don't really have an environment where the eurozone is moving towards full capacity and full employment and continued period of excess demands. quite the opposite. you're very early in the recovery, and it is the recovery running into severe bottlenecks because of dental over shots by your tenure -- because of potential over shots by your 10 year interest rates, weighing down the ecosystem of the global industrial cycle. europe is very much a price taker in that, not a price driver. the imbalance are very much an inheri

using the ecb is going to tolerate a positive bund yield?u think the ecb is going to tolerate the current trajectory? bhanu: yes, if you also see inflation expectations rise. because in the last month, we've got a little bit of a correction in european inflation expectations. they have moved higher because previously, u.s. inflation, the gap between u.s. and europe was at a high. finally, europe is catching up. as long as that rummage the driver, i think they will be higher with -- they will be happy with higher yields. because of credit risk in italy, that is something the ecb won't tolerate. whether it is pepp or something else, they will throw money at that and keep bdp spreads quite tight -- dtp spreads quite tight -- btp spreads quite tight. alix: if you are looking for the value trade, the europe trade to top out, that is going to pressure yields even higher. i am wondering where in yields that turning point will be. bhanu: if u.s. breakeven yields go to about 2.7%, so another 20 basis points, that would be high enough in my mind for t

- cafe in frankfurt doing a remote on ecb.onathan: i think they care about the direction of travel. they don't want to see a bond market with yields going through 1%, and then we keep moving. they want to introduce some stability into the bond market. they clearly want higher interest rates. tom: they want a positive yield, right? jonathan: let's go back seven years, when president draghi first took rates to negative territory that -- that summer of 2014. for subsequent years and months, president draghi would talk about rates needing to be lower now, higher in the future. i've repeated that line many times because they have gone lower. they've gone even lower. they never came higher again. that has been an issue. tom: just now, we begin to see that. maybe that is the song for june as well. let's do the data right now. green on the screen. three days of carnage. jon and i disagree on this. would everybody calm down? jon seeing a little but of damage. the fix from a 27 level comes in -- the vix from a 27 level comes into 23.8.

will the ecb look to taper like the fed is looking to do?we are having some problems. we are having some problems with jordan's align. i'm going to jump in because it seems to be in and out. we are catching some of what jordan is saying but not all. i don't think it is his base case that the bond buying or the decision to slow bond buying comes in june. the market is thinking about whether to take this seriously or not because we see a pop to the upside. on the euro-dollar. thank you to jordan rochester if he can still hear me. coming up here on the program, siemens gaining this morning after beating estimates and raising its outlook for the year. we hear from the ceo from siemens next. this is bloomberg. ♪ mark: welcome back to the european market open. just coming up to 20 minutes into the session. making gains. modest in some cases and strong in others. some upgrades to expectations coming through from some german corporate says morning. let's get some -- let's get a bloomberg business flash. laura: peloton is looking to ease concerns of

, the ecb first and then the federal reserve?am: the ecb of course should show its cards first. the meeting on june 9 will be very important because given the pace of acceleration in eurozone growth in the numbers, in the survey data, and the improvement in the vaccinations, which has been impressive, i don't think that they will come away with saying we have not discuss tapering. all the questions will be around that. more interesting is what the fed is going to do and when will they start talking about talking ? and if that has been repeating, it is of the view that inflation pressures -- it's a story of trust. if you look at history and do research on that, you observed that -- are not better than private-sector forecasts. matt: i got to cut you off, running up against the clock, but i appreciate your time this morning. william de vijder, chief economist at bnp paribas. this is bloomberg. ♪ 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 wher

the ecb highlighted it very concretely. do you invest in overheating economy that the fed is going to ignore? julian: this afternoon is going to be very important. what the fed minutes say and how the market reacts to them. our suspicion is that they are going to continue to emphasize the word transitory, and we think that is probably not the right thing to do. we think the thing to do is for the fed to acknowledge that in an economy that is growing 6%, perhaps even 8%, where financial conditions are the easiest they have ever been, and inflation expectations are beginning to get embedded and actually causing asset price pressure and economic slowdown at the very margin, yesterday's housing starts point in case, is that they need to acknowledge that this is an issue, and frankly, what we would see if they did knowledge was a knee-jerk reaction, probably lower in the stock market, but then ultimately, you would see a stabilization because the message would be we are in control of inflation. guy: i just want to think about wh

you see the ecb, the light blue line, is now above $9 trillion. these are all dollar valuations.ndemic, no central bank in the world had a balance sheet bigger than $6 trillion. this is an extraordinary gain. it is not quite doubled, but getting there in the space of just over a year. phenomenal. ecb's balance sheet is exploding, the fed's balance sheet is still increasing after a big jump last year. meanwhile, the boj topped out in december, pboc topped out in january. european markets have been the real outperforms this year. u.s. markets are doing pretty well. we have seen the chinese stock market do quite poorly this year. we have seen the boj suffer the last couple of months as well. i think there is some connection. anna: that's interesting, to think about the output of this. is there a connection with stocks? what's interesting is to think about what is driving the decision-making at these central banks and why their balance sheets are growing. i don't understand why the bank of japan's balance sheet would be shrinking if that is still the intention. we have seen inflation

will they chat in regards to euro strength, or will it be on ecb day?opefully we will have you back on a more regular basis here on "daybreak: europe." my host on his calls on the dollar and the euro. vasileios gkionakis, head of fx strategy. it is your monday morning show and he is the oracle of omaha. he pulls no punches. he warns on the spac craze. of course, it is the event that people wait for. what are we going to do? berkshire hathaway's agm. some like it hot. what does run it hot really mean? manus: from bloomberg's middle east headquarters in dubai, i am manus cranny. it is "daybreak: europe." these are the stories setting your agenda. the market refocuses on inflation risks. warren buffett adds to the debate on prices. u.s. futures are higher, but japan, china, and the u.k. are closed. the article of omaha pulled -- the oracle of omaha pulled no punches at the annual meeting. he warns on robinhood and ways in on the spac craze. and the daily deaths in india hit a record as prime minister narendra modi's party loses an election in a key state.

the ecb meets a week before the fed. this is going to be the new market narrative. the fed behind the ecb and indeed the -- as well. >> i wonder what it will take to calm the markets. some metrics show investors still believe the fed will act on its transitory nature and that if they see inflation higher, we will start to act to defend that. there is still this debate. across many sectors what caught my eye was the fannie mae report showing higher demand for this summer than the expected earlier for housing. that is an area that has been running hot. different pockets of the economy may be talking points for the fed to have to defend this overall transitory inflation narrative. really convince people they are on track with their strategy. >> kaplan has been saying we have real access when it comes to the housing market. let's get a recap now. >> a 30% plunge in the morning, 30% surges in the afternoon. that was the roller coaster ride bitcoin took investors on yesterday. outages on major crypto exchanges. ether down over two days. the u.k. rethinking commuter travel

guy: let's wrap it up with a question about the ecb.e ecb will tolerate a positive yielding german 10 year? is that something you think they will be ok with? vineer: i think they will be, with the economy, the inflation running around 2% in germany, at some point they might not have a choice. this is a billion-dollar question. can they keep buying it, and if they can the market will eventually have a say. guy: we believe there. thank you very much, indeed. i think the story will be developing. the near -- vineer bhansali, longtail founder and cio. thank you very much indeed. let's check where european stocks have settled. definitely a turnaround. a positive session fee delivered . the ftse, the dax, and the cac 40 all delivering gains. alix: coming up, something kind i have been waiting for. that is a company saying it is making milk for humans with no cows. we will speak with ceo tony peterson. is this the super bowl ad? very cool. ritika: this is "the european close." tomorrow, kristalina georgieva at 12:00 and new york, 5:00 in londo

i think the ecb is the most likely to be a laggard in that respect. think they are most likely to be positioning traders as a result of that, but at the moment, eurozone reopening is meaning that people are wanting to push that kind of hawkish narrative, that progrowth inflation narrative in europe. i don't think now is the time for that trade just yet. alix: james, always good to catch up with you. coming up, our interview with the boe's andrew bailey. that is coming up next. this is bloomberg. ♪ alix: live from new york, i'm alix, with guy johnson in london. this is the european close on "bloomberg markets." the bank of england governor andrew bailey spoke with francine lacqua about the bank's asset purchase program. gov. bailey: we have not changed the stock of quantitative easing we are doing this year. what we have changed is the pace at which we achieve that. we have always said we would end it around the end of this year. we front weighted somewhat because we were in the midst of an upsurge in covid. we were concerned about financial markets' s

where is the discomfort level in the euro for the ecb? i think the ecb is quite happy with where the euro is at the moment. it is sub 15%, 16% undervalued on a ppp basis. i think there are more focused on the impact a stronger euro will have on unemployment and the potential for inflation longer-term. in terms of the specific level, i do not think they are looking at one. i think they are more concerned about the asset purchasing program, more concerned about tapering, obviously inflation targets. the question is, where will rates be? they are not really sure about that. they know the euro is undervalued. they are happy with it being undervalued. they have other things to focus on that are far more important to the recovery. manus: i want to pivot to the commodity in the u.k. market. you are neutral on u.k. equities. is that the broader market or the global index, i.e., the ftse? the bloomberg commodity index at a 12 year high, and a reopening test pumping and gas on a reopening test pumping -- pumping in gas on a reopening. yogi: it's im

in the same way that the federal reserve has done in the ecb has done, too. wonder what that means for the bank of england for the years to come. tom: i would suggest whether it is easy -- it is ecb or fed, they are literally making out of -- making it up as they go. none of this is in any of the textbooks. jonathan: going on to say inflation comparisons with the 1970's are "misplaced." lisa: what is interesting to me is that a lot of these central banks seem concerned about stability, and they are citing that as a reason for looking at possibly raising rates sooner than later. the federal reserve does not seem worried at all. i mean, a little bit on the margins, by nonvoting members. jonathan: it is just two issues for them, isn't it? they will talk about financial conditions as if it is exclusive from what is happening elsewhere. lisa: it could be related, jay powell to saying. do you buy that? jonathan: it's not for me to buy. sounds pretty ridiculous, though, doesn't it? lisa: that is actually what other central banks are trying to say. tom, are you buyin

about how the ecb is going to handle their asset purchase program are just a little bit of jitters.i think it is going to be an interesting summer. those voices are going to get louder and louder. kelsey, thank you very much, indeed. we can talk airplane dynamics next time if you want. what have we got coming up for you? we will talk more about what is happening in the credit market. taking advantage of cheap money is in the market. we will talk about why, next. this is bloomberg. ♪ ♪ guy: the big news out of the credit market today, amazon is selling bonds. it is going to refinance debt, going to buy back the stock. that may lead to some sustainability in terms of how it will use that money as well. bloomberg's corporate finance reporter is joining us now. the size of this is absolutely enormous. but in some ways, this just fits the pattern that corporate america has had supercheap borrowing rates. if you are amazon, you are going to be able to get this money at zero. is there anything normal about what amazon is doing here, other than it is just massive? reporter: that pretty much

today, the ecb came out with a financial stability report. they were concerned about what the potential threats are to the market, a market they have caused dramatically to inflate. how worried are they about financial stability? the fed's randy quarles will be testifying in front of the house at 10:00 a.m. who knows what he will exactly say. i want to hear what he has to say about financial stability, this idea of, at what point will the fed taper or withdraw some of their stimulus simply to foretell or pretend to try to contract the market a little bit from frothy conditions? also today, antony blinken will be meeting with russia's sergei lavrov, the first meeting between the two i had of a summit between biden and putin next month. at 2:00 a.m., the fed meeting minutes. very interesting to see if they start to indicate tapering, what that could potentially due to markets -- do to markets. jonathan: we have heard from pretty much everyone over the last six weeks. i don't think anyone has indicated, with the exception of mr. robert kaplan, t