manus: good morning from bloomberg's middle east headquarters in dubai. i am manus cranny. annmarie hordern alongside me in london hq. it is "daybreak europe." global stocks falter after a surge in treasury yields. jay powell's comments will be watched with a focus. chancellor merkel outlines steps for a gradual reopening in germany. london sees a rise in virus

cases. we are joined by the former white house energy envoy, the head of the crucial opec-plus meeting. 7:00 a.m. in frankfurt. 10:00 a.m. in downtown dubai. it has not been this hot since a decade ago. the breakevens are ratcheting. it is a question of whether it is a sustained move in the breakevens. charlie evans, you sent the tweet out. i think it sets the tenor and the tone, the highest in a decade. what is going on here? what tolerance is there at the fed for average inflation targeting as the breakevens rise, as nominal's rise -- nominals rise? >> yesterday, that surge in the 10 year yield, 10 basis points at one point, deja vu from what you and i saw. the new music is very positive.

fiscal stimulus support on the way, the vaccine front is doing well in terms of how many can potentially get their first dose by may and of course, we had the beige book which pointed to modest gains on business is talking about jobs but my question is, manus, is the fiscal support priced in? at one point, -- at what point will that hit the market? manus: that can rollover and fade to gust. that's what they are essentially saying. he says you are going to see this squeeze on the stimulus. let's have a look at what he had to say. that is going to ratchet higher and then you are going to fall over yourself. before we get to the part where we are going back down to 1%, we have to go through the part where we get an absolute peak and optimism about the strength of the recovery. are we there yet? are we there yet? that is the question i asked myself that i put this to you before you do the board.

i love a bit of volatility, fix. the bond market volatility is nowhere near as high as it was march of last year when yields imploded and it's nowhere near 2013 and it's absolutely nowhere near, at all, 1994. good morning. >> financial conditions are still stable. let's take a look at where we traded this morning because across asia, it is right on the screen a lot of blood out there. the csi 300 down 3% and that is leading the drawdown we see on the benchmark and this was the rotation upon us. what you are seeing in asia, what happened overnight, the tech heavy weights are getting tracked down and not doing enough when you look at the money going into the energy and financials. i want to see what is going on with cross assets. we have been talking about the 10 year yield closing out the highest.

manus, look at dollar-yen. on the $, the highest it has been since july on a 107 handle. it is opec-plus. brent is trading at $64. interesting quote overnight. a little bit of a warning. the saudi energy minister may cement his reputation as the prince of lot twists. from the oil market to the king of the central banks. today, it's all about the appearance by jay powell and any comments on the move in yields. they are out with a note overnight and they are saying that the market is likely to conclude that 1.5 to 1.6% for the 10 year yield is the top of the fed's comfort zone. joining us this morning is the head of global macro strategy at natixis investment managers. very good morning to you. what is the top level you see on the 10 year for the fed's comfort zone? >> that is the really big

question today. i think a comfort level -- we are starting to reach to it and it's more about the speed of the move, the volatility of the move, as manus is was saying, rather than an absolute level. they very much want the financial conditions to remain very easy and so far, that is the case. they want inflation expectation to remain sustained. they don't want to stop that too much. they want the equity markets to continue to do well. we are seeing a rotation within equities rather than out of equities if you look at the flows and underlying performance rather than the headline indices. so that number can be 1.5, 1.6, 1.7. it is more about how we get there and how unruly it is. manus talked about volatility in the bond market. that is something that i'm sure the fed is going to look at. one of the reasons we are hearing a bit more of a move in

bond markets is that maybe we are going to be closer to verbal intervention for now rather than actual intervention, but we know that the fed, the ecb, and others have plenty of tools to try that. it's a question of keeping the bond market quarterly rather than an absolute level, in my opinion. manus: good morning. a lot of people talk about bond vigilantes. this is just a dislocation as far as i can see. we have not seen any major drawdown in stocks. we have seen a bit of a shuffle but what caught my eye was credit suisse, as far as growth stocks were concerned, and they cut these to benchmark. the reason why i bring it up is they have been overweight growth stocks since 2010. are you reviewing anything? i need to stand back and consider i could face a higher inflation environment and i might have to adjust.

esty: we are adjusting within our portfolios in terms of the cyclical rotation and we definitely think there is still room for the cyclical rotation to continue. we like financials. we like energy. the more value-oriented regions like europe, like japan, should benefit and should do well. we are not necessarily downgrading the more growth or tech sectors so much. that's really a question of investment horizon. can they underperform? in the very short-term as possible. generally speaking, i would not dismiss tech entirely. very short-term, the cyclical rotation continues. medium to long-term, we are seeing a very quick cycle and it's possible that within the next few months, as a lot of things are priced in, you go back to this 2019 environment and you still have growth doing very well in the u.s. and

emerging markets. you have strong earnings growth, sustainable earnings growth, and i think you are going to have a little bit of that. you want to that quality in your portfolio. you have this rotation now but again, i would not dismiss growth stocks today. annmarie: if you are not going to dismiss growth stocks, do you think investors should be buying the dips on days like we saw yesterday? esty: absolutely. again, we can have an overshoot of treasury yields, which means we can have a more forceful rotation in the equity markets and we can have possibly a bigger correction at some point. we had a couple of bad days. often, they have been followed by a rebound. but we could have just a slightly more extended correction. we have very strong performance and that would be natural and healthy but absolutely, we are definitely in buy the dip mode for the coming few months because our medium-term outlook is constructive.

you talk about the fundamental supports. these are not going away and in a way, the move in yields is reflecting optimism about growth, about reopening, about starting to see the end of the tunnel of this pandemic and these lockdown so a lot of this is positive and equity markets are going to benefit over the medium term. manus: you know what i'm like when i find a fact of the day? there's been no 5% drawdown in the s&p 500 since november. 81 days. 5% is a walk in the park. opportunity. we will talk about the next opportunity in the markets. head of global macro strategy at natixis investment management. let's get the first word news to laura wright at london hq. laura. laura: the senate scrapped plans to start debating president biden's one point $9 trillion pandemic relief plan yesterday. it increases the likelihood that the passage of the bill gets pushed into the weekend. the timeline was delayed as

lawmakers are waiting on an official cost estimate of the latest version of the package. the european union is bowing to take legal action against the u.k. for breaching the brexit deal. it follows the decision to take unilateral action on trade rules relating to northern ireland, marking the second time boris johnson has declared his intention to break international law. it puts london on a collision course with brussels. space s has successfully landed a starship prototype rocket in its third test flight but it exploded into a fireball just moments later. the mishap is still likely a sign of progress for spacex and its mission to take humans to mars. no one was hurt in the explosion and there were no reports of any injuries. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. manus, annmarie. annmarie: laura wright, thank you so much for that.

stores, gardening centers, they are next on the list. europe's largest economy begins to ease lockdown restrictions. we will talk germany and bring you the interview with the bundesbank president, next. this is bloomberg. ♪ so you're a small business, or a big one. you were thriving, but then... oh. ah. okay. plan, pivot. how do you bounce back? you don't, you bounce forward, with serious and reliable internet. powered by the largest gig speed network in america. but is it secure? sure it's secure. and even if the power goes down, your connection doesn't. so how do i do this? you don't do this. we do this, together. bounce forward, with comcast business.

>> our economy has shrunk by 10% , the largest fall in over 300 years. repairing the long-term damage will take time. much has changed, but one thing has stayed the same. i said i would do whatever it takes. the furlough scheme will be extended until the end of september. business rates, cut. vat, cut. stamp duty, cut. total fiscal support from this

government over this year and next amounts to 407 billion pounds. without corrective action, borrowing would continue at very high levels. in 2023, the rate of corporation tax paid on company profit will increase to 25%. i said i would do whatever it takes. i have done and i will do so. annmarie: whatever it takes. we have heard that before. she soon act promising to continue spending big on virus relief programs but signaling there are tax rises to come. europe's biggest economy is laying out plans to gradually unwind its covid lockdown after more than nine hours of talks with regional leaders. angela merkel agreed a timetable abusing measures over the coming weeks and speaking to matt miller the buddhist bank president said he does not expect permanent scarring in the economy.

take a listen. >> if you still fear contagion in an airplane, you will be reluctant to board a flight but if the pandemic is overcome medically, then i think your attitude might change over time so this is the main point. we have to overcome the pandemic. based on this scenario, we assume that restrictions are gradually lifted and the pandemic is more and more contained. we don't see permanent scarring in the economy. rather, we see that once the restrictions are lifted and infection rates are under control, that consumption is picking up quite quickly just as we saw last year so even those restrictions, if they would last somehow longer, we would still think that we would reach -- precrisis gdp levels. of course, a different growth

rate than for this year. matt: are you worried about a two speed recovery here in europe, i mean, with the success that germany has had and the firepower in the german budget. it seems that they are going to do a lot better throughout 2021 and in the coming years then italy or spain. jens: that's why i think that europeans are so important. the fact that governments agreed is a means to overcome that disparity and you are absolutely right. the economies in the euro area have been hit very differently by the pandemic. infection rates and mortality is different but also course, there are huge sectoral differences that play in the current circumstances. some economies with a higher share of services, with a lot of

terrorism, are harder hit than others, and that is why i think that it is important and in our own interest to join forces to overcome the crisis together. manus: the president of the buddhist bank -- bundesbank speaking with us. the head of macro strategy at natixis investment managers. we all coalesced around steepeners in the united states of america. we put these altogether. is it just steepeners delayed in europe? the steepening in europe is delayed. is this a delayed trade but it will arrive? esty: it might be delayed. it will not arrive on the same scale as in some of the other regions. we know that the reopening is going to be slower in europe.

vaccination is slower. hopefully, it is accelerating, but it will still take time so we are talking second half before the reopening so you are seeing more of a sympathy move in yellow but probably not on the same scale as what we are going to see or what we have seen but that's going to continue compared to the u.s. you also have the ecb that very quickly came out, saying they do not want yields to rise too much. we will see what christine lagarde says today. you know, in terms of the supply of debt, the ecb is buying a lot of it so it can act more forcefully or more easily to try and calibrate a little bit more so i would not expect the same size of the move in terms of steepening in europe as in the u.s. and elsewhere. annmarie: i'm glad you brought up the ecb because last week, we had a lot of verbal intervention but now, we are learning that they are downplaying concerns over the rising bond yields. do you think they will step up

bond buying or is this all going to be verbal intervention? esty: it will probably be verbal intervention at this point but i think they will mention again that they want to keep an eye on yields. they want to keep them relatively capped. we know they have flexibility in the bond program to extend maturities or to change which segments they are buying. they were buying a lot of italy earlier in the year and now, that has quieted down with mario draghi coming so they can easily play around with that. i'm not sure they will make an announcement to change anything in the row graham, keeping in mind it was only two or three months ago that they extended and increased this program already so they have the flexibility but it will probably be verbal at this point. again, you know, a gradual move up words and keeping in mind the german bund yields are firmly negative for most of the curve, gradual move up words is a sign

of recovery and reopening so it's not entirely negative and it should not be seen that way either. manus: or certainly in the u.k.'s place, let's pivot there. going to see all annmarie's line. he goes cut, cut, cut. is it buy for you in the u.k.? esty: i think there are plenty of positive factors for the u.k. as well. one of them is, you know, we have at least moved on from the uncertainty of brexit. we are seeing a lot of spending that is happening in the u.k. economy. domestic stocks should continue to benefit. if the pound does not rise too much, then you have opportunities for the larger caps. the ftse 100, it should do well with the reflation trade as well so not my highest conviction trade but definitely a buy from

our perspective. annmarie: are you worried about the tax rises on corporations that are due to come? this is the highest we have seen since the 1970's. esty: it is something we will have to keep in mind. it's a couple of years out still and it has been delayed. plenty of things can change but we know that the u.k. is going to have to pay for

they are not the only ones. at the moment, we are not really talking about tax hikes on corporate's in the u.s. so much but that could come some point sooner so i think the focus right now is that there is a lot of pain in the u.k.. combine covid and brexit. we have relatively short memories but covid was very painful for the u.k. up until a positive vaccination rollout so a lot of pain to take care of. the focus has to be on spending come on supporting economies on reopening and then at some point, we will look to how we pay for it, but most markets will have time to prepare themselves for that even though it could be a little sooner in the u.s. and maybe markets are not pricing that in quite as much. annmarie: i stand corrected. highest u.k. taxes since the 1960's, not the 1970's. thank you for joining us. head of global macro strategy at natixis investment managers. coming up, we will head to china. policymakers preparing together at the national people's congress but what is on the agenda this year? details coming next. this is bloomberg. ♪ (announcer) back pain hurts, and it's frustrating. you can spend thousands on drugs, doctors, devices, and mattresses, and still not get relief. now there's aerotrainer by golo, the ergonomically correct exercise breakthrough

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annmarie: good morning. this is "daybreak europe." i am annmarie hordern in london

with manus county in dubai. -- manus cranny in dubai. joining us for that is tom mackenzie. great to have you on the program. what are the key announcements we should be looking out for? tom: there is a lot to unpack as there always is with the national people's congress, this annual gathering of 3000 or so top officials in beijing. there is a bit of a will they, won't they around the annual growth target. the pandemic was ravaging the economy so that made sense. this year, there is a debate over whether they will set a gdp target so we are looking out for that. the reason why they may not is because they don't want to tie themselves to add additional spending. they are increasingly concerned once again about leverage and that. we had that articulated by the head of the banking regulator a few days ago and that ties into the deficit target that is expected to be reduced. likely to be reduced 3% this year. we will get spending targets for

the military. we are looking out for that potentially soon later today. long-term issues, the birth rate that continues to fall. the aging population. will they unveil policies to address those crucial issues? and then the energy goals. are they going to flesh out that commitment to be carbon neutral by 2060? huge implications. in terms of this five-year plan, this is a bit esoteric but it's the plan from 2021 to 2025, laying out a blueprint for china as to how to wean itself off u.s. technology. firmly looking at that. hong kong. will they do anything to further erode the freedoms in that city? matt: this -- manus: this brings us to blinken. what was your take away from the language that he used? diplomacy, not military. action comes first in the united

states, as it was recalibrating the relationship with china. tom. tom: to some extent. they stressed the biden administration. officials have been coming into office saying they will take on china in areas where they see china and beijing challenging the norms and they made it very clear that he thinks china is the only player. russia does not even have a look in. china is the only player with the technological skills and abilities to undermine what he says is the open international order and as you point to, he said the u.s. is going to be competitive where it has to be. collaborative where it can be. and it will push back and challenge china when it has to. now, we are going to hear from the foreign minister on sunday. we will see if there is a direct response to that. we know xi jinping himself has said to officials that he sees the u.s. as the biggest threat to china and china's ambitions. so far, neither side, neither beijing nor the u.s., have

offered an olive branch, and the two sides might fall apart. manus:

annmarie: good morning. from bloomberg's european headquarters in the city of london, i am annmarie hordern with manus cranny in dubai. global stocks fall after a spike in treasury yields. jay powell's comments will be watched with laser focus. chancellor merkel outlines steps for a gradual reopening in germany as london sees a rise in virus cases. plus, we are joined by the former white house energy envoy

ahead of a crucial opec-plus meeting. manus, very good morning to you. there is so much on the agenda this thursday morning but it has to be what is going on in the markets. we have crossed global equities falling due to a spike in yields and it is the breakevens, the highest since 2008. that is what we are hitting. what does jay powell say today? if we get angst and worries about where these yields are going. manus: i think the market expects a little bit of verbal intervention, verbal pushback. the breakevens, as you say, our highest since 2008 on five-year paper. charlie evans spoke last night and said he could tolerate something up to 3%. for me, it's about the ratcheting and volatility in this market. the velocity of the move is nowhere near what we saw last year as yields imploded.

it's nowhere near what we saw in 2013 during the taper tantrum so for me, it is about the velocity of the move. here is a quick sweep of the markets. we will do that first. asian markets coming back as the bond market re-prices. there is any rotation in the equity trade. s&p 500 down .3%. you have not seen the s&p draw down by more than 5% for 81 days. credit suisse, they pivoted from their growth position. the growth stocks. they want that back at a benchmark for them. and of course, let's roll it over. you take it away and that talk about these bonds because this is the fundamental point. what level would the fed tolerate before they may be intervened with operations? annmarie: standard chartered has a great note to out overnight and they likely conclude that the comfort level for the fed is

the 1.5 to 1.6% and that is the top they think in the near term. there are we this morning, manus? we are near the 1.5% so potentially, powell is going to use some verbal intervention to get a little bit more stability but it's not really the levels of these rates. we are far from 3% like historical highs. this is very slow but it is the speed, manus, at which we see these rates rising. manus: it's all about the moms had let's get to the asian markets. they are reacting to the breakevens, to a whole variety of issues. they let china losses and that's a key move we are seeing. let's get to juliette saly. juliette: hey, manus. certainly been a week of whiplash or asian equity investors. you have these recovery hopes and then you have, as you have been pointing out, these inflation fears, and that is certainly what we are seeing today. the msci asia pacific index has

been oscillating between positive and negative territory since february 23, the longest streak since 2013. it is china leaving the losses today. some big faults coming through in institutional favorites that mainland traders are selling out of. you are seeing the csi 300 down by 3.3%, testing this year's load. its biggest one-day drop since july and you have the likes of samsung, softbank. i also want to have a look at the hang seng tech index. it's close to falling 20% from its recent peak, underperforming the hang seng index for an eighth day in the last 11 and we are seeing it now if we flip the chart, having a look at testing potentially heading into bear market territory. the next stop for a potential entry point in this index is below 8006 hundred. should you buy the dip? credit suisse is positive.

they are overweight equities, particularly in china and australia as they look at the vaccine rollout and they are anticipating herd immunity more broadly in the u.s. to be achieved around september. they are seeing the global economic growth recovery and normalizing to 4.2%. manus. manus: juliette saly in singapore. the very latest on the markets. we can reset. wti near $62 a barrel. investors await the results of a crucial opec meeting later today. the group supply curves are expected to be eased after the rally but so far, we don't know how the supply that the cartel will return to the market. when and how, with saudi arabia -- when and how will saudi arabia phase that out? that's of key interest bid let's bring in our guest,

former special envoy under president obama. always great to get your perspective. here we are, a deafening silence from last night. the prince of twitter -- what do you think that they will do? do you think his royal highness will add back his one million barrels he took off to stabilize the market at the start of the year? >> first of all, it's good to be back,, manus. it's always a pleasure. i think he is the one who referred to the twist. we do not know what saudi arabia wants to do but i think it has to be looked at in a broader perspective of what are the interests, the russian interests and saudi interests in the energy markets these days, and clearly, i think the saudi's would like to see some higher prices, but would like to

stabilize the market and not overheat it either. i would expect them to agree to returning some of those barrels to the market if not maybe stopping short of allowing all of it to expire about doing it basically on the saudi terms. the question becomes what does saudi arabia do, regaining some of their control of the market, and then allowing for some additional barrels on the market for the rest of the opec last, but i think the big question here is not if they put some additional barrels on the market but do they do the full million or not? that's a question we will have to see. the j mmc being totally silent, probably we should have guessed that would be the case. the uae minister was not even in attendance at it so i think that that did not surprise me but we will have to see where -- what saudi arabia wants to do, and i

think it reflects more than just oil markets but just generally, the great changes we are seeing in the middle east in general. annmarie: about those changes, you were part of the obama administration when they had the iran nuclear deal, the jcpoa. we are seeing the high oil prices. many say we are at the start of a super cycle. does this give iran more leverage when it comes to whether or not they want to get back to the negotiating table with the united states? >> i don't know that i would call it leverage. i do not believe that is leverage but i think that if iran tends not to make difficult decisions, what it prefers to do or considers difficult decisions domestically, unless it feels the pressure to do so. let's remember something about the jcpoa in negotiations back in the obama administration. it was only when the oil prices crashed and i think the late -- mid to late 2014 into 2015, that led to the greater pressure that

they felt because not only were the sanctions in effect at that point, i was in charge of the sanctions and they were seeing great pain in the ability to export but the prices had come down and we are now in a different position where just compared to a couple months ago, oil prices have rebounded quite considerably. they have, over the last eight to nine months since last summer began to increase their cheating on the sanctions and allowing themselves to have a little bit more exports and now with the rise in prices, it clearly takes away some of the economic pressure that iran was feeling just a few months ago in comparison so the maximum pressure that the trump administration plays clearly failed and the fact that the iranians figured out how to live with the sanctions even at the extreme levels. but now, we are at a different place where the oil markets are actually favorable to them as they are not going to increase

their export by that much but they have increased it some, 300,000 barrels over the last several months, and now, this oil price environment allows them to significantly increase their revenues. manus: let's extrapolate a bit further forward because the iranians want to sanctions lifted in totality, we understand, before they will talk. d.c. insists tehran gets fully compliant before they get engaged. we need to close that gap. how easy is that going to be to close that gap and is there an appetite, let's say, to get the two? how do we get the two to the table with that level of divergence? >> the biden administration said we believe it is the right policy to get back into the jcpoa but they are not rushing to get back at all costs. they are stating the strong u.s. position that says that iran

must stop their activity, enrichment activity, and return to compliance, and clearly, that has to be done before any sanctions can be lifted because i don't think it is reasonable to expect that the united states or, for that matter, the rest of -- the other members of the jcpoa, to remove the pressure point from iran and expect that they will indeed follow through so i think that is the american position. i think it's too early to start giving a diagnostic of how successful this has been. president biden has been in office just a matter of weeks and we are still seeing him in this phase of the american side saying here is what we want to do. we would like to be there, back in the jcpoa. there are other issues we need to address as part of that. i think the iranians are testing and seeing how the resolve of this administration is. i think they will find that president biden is different

from what they have seen before. this is a fairly strong and competent president who understands foreign policy, wants to be back, but is not going to be pressured into it, and iranians -- i think they are playing a dangerous game and the attacks just yesterday in iraq, the previous attacks incur kurdistan, these are dangerous moves that a brazen iran is taking and i think that we talked about oil prices. if these continue, that will have an effect on oil prices themselves so i think we are in the early stages and we have to remember that president biden has only been in office six weeks or so and we are just now -- we only have an iran envoy for a week so i think we have to wait and see how this turns but i believe that the approach president biden is taking to have allies along with him and to bring the international community will unite the united states for the first time in four years together with other

countries. that in itself will start bearing fruit as pressure on iran will build. annmarie: you pick up on a point secretary blinken said yesterday. a lot of people are from the obama administration but he said that fit the moment and we are not simply picking up. when i see in terms of iran is it is a bit different from what we saw under the obama administration but i also want to move to saudi arabia and what is going on with the crown prince. the administration says biden's direct counterpart is king salman. mohammad bin salman's is the defense secretary. they are not going to sanction mohammad bin salman. is this a fine line of recalibration? amos: let's broaden the aperture on this question. the change that has already happened, instead of looking at it -- was there a sanction on the crown prince or not -- i think some significant steps have been taken except that they have not been taken all at once. there has been a sea change in

u.s. policy towards yemen and the war in yemen as president biden had talked about before, removing the support of the united states for the war in yemen. i think that is something that is not where saudi arabia had hoped. there has been a change in the policy on arms sales and a freeze on what were the existing arms sales. there was a more transparency and releasing portions of the report on the murder of jamal khashoggi. so and then if you take this all together, there's already been quite a significant change in u.s. policy towards saudi arabia. but let's also remember that this is an important country in the region. you have to recalibrate but recalibration does not mean an abandonment of the relationship in totality in a way that would actually do harm to u.s. interests as well so the administration is looking at how

do you respond to the events that took place, to the murder of mr. khashoggi, and how do you continue to have an effective middle east policy at the same time? again, early days. release of the report was extremely important. the signals of change in policy, while acknowledging, has manus just mentioned, we are in a different middle east than president obama left it. the abraham accords have occurred. there has been a change in the relationship with qatar, may be a full circle since the obama administration sanctions have been. now, the rapprochement. we have a different iran. we are in a different middle east -- manus: we are absolutely in a different middle east and i want to pick up one final point just briefly. he mentioned that abraham -- they have been almost subsumed in the saudi-u.s. rhetoric.

how important -- just contextualize the uae's relationship with the united states of america? that also involves stepping back from conflict. there is a recalibration here. amos: for sure. the uae has been very adept in figuring out how to calibrate from the trump administration to the biden administration and i think the abraham accords set a good stage for that. clearly, the power, the influence, and the leadership of the uae is at a different place today regionally and vis-a-vis the relationship with the united states than it was in 2016 and i think that is what secretary blinken is talking about when he says we are cognizant of the fact that the administration is not walking back into pretending that we are just returning the clock to 2016. this is a new middle east. the uae's role is critical here both in the markets -- the oil markets as well as the

relationship with israel and the position vis-a-vis a iran and i think we are going to see that continue to evolve. annmarie: we will see it today because they are pushing to have more in the market when it comes to opec-plus. amos hochstein, under president obama, thank you for staying up late and joining us this morning. coming up, a comeback kid. a 22% rebound after a crushing loss fueled by reddit traders. that is next. this is bloomberg. ♪

annmarie: good morning. this is "daybreak europe." i am with manus cranny in dubai. after getting absolutely pummeled by the reddit crowd, the capital company may be posting had cap.

retail investors targeted its short position stocks like gamestop. dani burger is all over this. is the episode finally behind him now? dani: it certainly shows vindication for those who put $2.75 billion into the strategy when it was coming back, but has he returned to where he was with before -- he was before? his strategy is paying off with the return in february but he lost 53% in january so in order to get back where he was, in order to get his investors round trip, he needs to gain another 75% from here. manus: just look at the pain that kathy woods took yesterday in the market. this is all about strategy and who blinks first in terms of strategy. so did they blank? -- blink? i would not think so. dani: that is not going to do so

well but what he has done here is he totally revamped his strategy in terms of the short side. he is no longer putting puts on because you have to report this to the fcc. he does not want people finding them out anymore. he has data scientists looking at social media, avoiding some of these names and really not taking these chunky short additions but the question remains, can he do as well without those bearish bets? in his first year of trading, 70% ofame from short-term positions so that potentially a big source of return that he will no longer have on his side. manus: thank. dani burger tracking the moves in game stock and melvin capital. we will see you soon. coming up, we are going to bring you the events you look forward to figure day ahead. it is bond movements and this man has the power to move markets. this is bloomberg. ♪

>> companies must choose whether to swallow the financial hit or pass on the cost. it's a decision that can bring new headwinds and a global economic recovery. mic recovery.

manus: it's "daybreak europe." i am manus cranny in dubai. annmarie hordern with me. here is the narrative. do you believe that you are seeing an ingrained a shift in inflation expectations, the highest since 2008? is it the speed of repricing that we need to worry more about? that is the fundamental question because this says that inflation is coming. my guest from macquarie this morning said are we at the precipice of an -- we have had positive correlation in bonds and equities for 25 years.

you have to go to the 1990's for negative correlation. annmarie: people like robert tip, they are saying nothing to see here. move it along. robert tip sees the 10 year yield falling to one point -- 1%. once stimulus fades. you brought this quote to my attention. what i love about it is the peak and optimism. i think it's the timing of when that peak is and that goes with what you are saying in terms of the velocity and speed of the spike in yields. it will be hard for some people to time this. manus: this comes down to why we focus on jay powell this evening. he is the pivotal voice in this argument. we saw evans last night talk about toleration. what is average inflation targeting? what is your nerve? that is the question in the market. this is vol. what i would suggest anybody to do is log on, click on btv and expand it. below is out to maximum because

you are nowhere near the spikes in the market, in the bond market, as you were in the taper tantrum of 2013, nowhere near the vol spike we had last year when yields imploded. yes, volatility is moving but it is not vigilante style yet, and i emphasize the word yet. equities are reacting, aren't they? annmarie: certainly. if we can pull of the board, we need to see what's going on with asia trading. csi 300 dragging down the benchmark at the top. msci asia pacific down 1.7 percent. csi 300 down 3% this morning, bleeding into the futures market. if the rotation, isn't it, manus? ditch text, go to cyclicals. -- it is the rotation, isn't it? ditch tech, go to cyclicals. manus: you have a very good following on a friday morning. i would like to check in and makes her you have not broken

anything. annmarie: we have jay powell. you better be tuning in. the u.s. jobs are certainly want to watch. recap, post gameplay on what powell did. interesting, manus. you and i would have been in vienna today, eating snack. this is bloomberg. ♪

>> good morning. welcome to "bloomberg markets: european open." i am anna edwards. the treasury ball is in powell's court. comments from the fed chair later today will be watched with laser focus. the cash trade is less than an hour away. here are your top headlines. angela merkel outlines the steps for a gradual reopening in

germany,