| Good morning. Europe's energy crunch deepens, a major media M&A deal is brewing, the U.K. Cabinet is reshuffled and new studies make the case for booster shots. Here's what's moving markets. Europe's energy situation is getting dire, with the French government planning to spend about 580 million euros to help poor households cope with soaring bills. Power prices have surged to records this month following extended nuclear outages and a period of calm weather that reduced wind generation. In the U.K., winter blackouts are possible after a fire struck a cable shipping electricity from France. Vivendi is planning to make a bid for a stake in Lagardere that could end up creating one of the largest media companies in Europe. Should regulators approve it, the company would buy out shares held by activist investor Amber Capital, which would lift its stake above 30% and trigger a requirement to make an offer for the rest of Lagardere under French law. With European companies sitting on their largest stash of cash on record, Vivendi has also built up a significant war chest that it can use for deals. U.K. Prime Minister Boris Johnson made big changes to his Cabinet after a drop in support in the wake of the government's handling of the pandemic. International Trade Secretary Liz Truss replaced Dominic Raab as foreign secretary, while the former secretaries of state for education, justice and communities were also ejected. The reshuffle was done ahead of the Conservative Party conference next month and amid warnings of tougher Covid-19 rules if cases persist. A third dose of the Pfizer vaccine can slash rates of Covid-related illness in people 60 and older, according to an Israeli study. The results come amid a mixed response to a potential booster shot rollout, especially in the U.S. where top health officials and vaccine staffers are divided. Meanwhile, an analysis by Moderna found a higher rate of cases in people who got shots early in the study, indicating potentially waning immunity. European futures are shrugging off concerns in Asia over China risks amid a broader climb in energy shares as oil rose. Equipment rental firm Ashtead is among big firms to announce earnings, along with THG and France's ADP. Bank of Finland Governor Olli Rehn speaks on monetary policy and the international economic situation. In the U.S., traders will watch retail sales and weekly unemployment claims. This is what's caught our eye over the past 24 hours. A combination of attractive valuations, accelerating vaccinations and underweight positioning amid a benign political backdrop suggests Japanese shares can sustain their recent outperformance against global peers. Japan's stock market is on a roll, with benchmarks hitting levels last seen around the end of the bubble in 1990. But this time nobody's fearing a crash, not least because the only people interested in the land around the Imperial Palace are the steady stream of joggers circling its moat. Despite an 7% increase so far this month, the Topix index is trading on just 15 times forward earnings estimates, a three-point P/E discount to global peers and well below its historic average modest premium. The latest Bank of America survey showed global fund managers are still a net 1% underweight Japan, despite recent buying. A leadership election for the ruling LDP party will be held at the end of the month and a general election must take place by November, suggesting a benign political backdrop for stocks into the fourth quarter. And after a slow start, vaccinations have accelerated and Japan has just surpassed the U.S. in administering at least one dose. With industrial stocks making up 24% of the Topix -- versus only 8% for the S&P 500 and 16% for the Stoxx 600 -- the Japanese benchmark is well placed to outperform in any shift toward cyclical shares as the world (eventually) returns to normal. Of course, after such a strong run, a period of consolidation is probably due. But the idea that Japanese shares can continue to outperform is a lot less outlandish that it might have seemed at the beginning of 1990.  Cormac Mullen is a cross-asset reporter and editor for Bloomberg News in Tokyo. Like Bloomberg's Five Things? Subscribe for unlimited access to trusted, data-based journalism in 120 countries around the world and gain expert analysis from exclusive daily newsletters, The Bloomberg Open and The Bloomberg Close. | 
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