manus: good morning from our middle east headquarters in dubai, i am manus cranny. this is "daybreak: europe." all eyes on the taper, investors fret central banks may ruin the party for stocks. tech leads selloff, asia follows suit. drugmakers defy the drop. omicron continues to spread. more banks saying to work from

home. and boris johnson doesn't promise no more further curbs. plus, european gas prices hit a new record and there are tensions with russia. saudi arabia warns of oil output dropped 30%. -- 30% this decade. it has just gone 6:00 a.m. in london, and we have fervent said fever fomenting everywhere. this could be the biggest move in the dot plot you have ever seen. lots of people tell me the dot plot doesn't matter but we are definitely gearing up for a demonstrative shift in guidance from the federal reserve. the fever is palpable in the equity market into the close last night. we have spoke to 106 asset managers and this is what we are perhaps most concerned about, is there still value in tech? let me take you to the bloomberg survey. taper, take away my punch bowl,

my free money, the fear of negative interest rates and runaway inflation and this is what we are most concerned about for next year. this is what concerns us most, but if you roll it over and look at what we are most optimistic about, it is about growth and inflation rolling over. if we are most worried about runaway inflation, you want the fed to taper faster, and maybe get ready for some rate hikes -- the deal with inflation, this is where the conundrum begins to come in. the two of them don't add up. that is the state of play with the bloomberg survey we have done in terms of concerns getting into 2022. a lot can happen between now and then, not least from the fed or christine lagarde and the bank of england, the governor there says omicron is not going to be a major issue for the market. markets in asia concerned about the discovery of omicron in china. rising cases in australia. ms eia should down for the day.

-- ms eia asia -- mscii asia down for the day. nasdaq bounces back. even though several companies took a smashing in the market. the one stock we are tracking on record is now down 31%, this is a builder in china, down 31%. and his royal highness tells the market, don't short this market. let's talk about the rest of the risks on the board. boris johnson is not ruling out more covid restrictions. goldman sachs saying to employees, work from home if you can, in an effort to curb the spread of the omicron variant. let's bring in rachel chang.

how much of a shift back to remote working are we seeing? it is a narrative in the u.k. but it is not dominant theme globally. rachel: it is not and i think different places, the level of control of the spread is different. in hong kong there has not been a local case for months. what we are seeing in the u.s. and europe is a disappointing reversion to what things were like a year ago. there were so much excitement after the vaccine rollout, people were going to go back to work and normalize. you had eggs calling for trading floors to be full again. and omicron represents a bit of that sliding backwards and where we are in the pandemic, which is disappointing for people who are now enduring their second covid christmas. manus: thank you very much, just

over 40% returning to -- just under 40% returning to offices in the u.s.. asian stocks under pressure for a third session and i can tell you that one stock is down 31%, the most on record. keep an eye on that move. chinese properties and the tech sector under pressure. juliette saly is standing by. in the last hour, it was 14%, what did you do? juliette: it's more what j.p. morgan did with the cut, and this issue raises red flags. we have a lot of concerns about the property sector. what rachel was pointing to, omicron and the crackdown on tech leading to a negative session in asia, and particularly watching the seldom -- a sell down in tech players, and particularly macau casinos as we heard about the omicron

case in china. property developers, as you mentioned, hitting a record. also of course flowing through into a number of other property developers because we have contagion concerns as well. evergrande toward a record low today as well. it's not just stocks only seeing shimao bonds. a lot of concerns about the sector. the effects and what will mean about the downturn in the property sector weighing on chinese economic growth. jp morgan saying the shimao deal is a red flag, cutting shimao to underway. manus: thank you very much, juliette saly with the latest on china and the asian market session. two ubs in switzerland. some of its former bankers have

had punishments cut in paris, the bank was accused of helping to launder money. french residents had not declared to the tax man. let's bring in our finance editor. the big story is more the penalty on the bank, isn't it? walk me through the scale of what has been delivered relative to what we expected, first of all. >> let's start with the numbers, if you cast your mind back to a few years ago, we were expecting significantly more than what we ended up with at the end of this mess. to the tune of $2 billion. as we saw in the stock price, you had investors thinking this was significantly less than what they had been expecting. also the idea that going forward, clearly you still have the reputational issue around

the fact that they were a serious banking service. you had a lot smaller penalties than what investors were thinking. that means that potentially going into next year, you have a bit more room, this is what analysts are saying, a bit more wiggle room to give that back to investors in other ways. maybe there is a chance for buybacks and other ways to give back to shareholders. that's the next step, but the lawyers for ubs have not said this is the end, they are looking at this and they continue to find ways they may ultimately -- this would not be the final number. it is one to watch in the coming months, it might not be the end of the saga for ubs. manus: adam, thank you. ubs, the last two days it down

just about 1%. juliette saly has the latest headlines. juliette: european diplomats morning again that time is running out to revise the nuclear deal between iran and world powers. envoys from france, germany and the u.k. say they are frustrated by iran's refusal to budge on a new demands in the seventh round of negotiations in vienna. the allies suggest their rapidly developing program will make it obsolete. the u.k. is trying to ramp up user shots amid a surge in omicron cases. prime minister boris johnson says the new variant is likely to account for the majority of cases in london. this as a growing number of lawmakers from johnson's party have pledged to vote against covid restrictions in the house of commons later today. hong kong easing travel to china quarantine free rules for limited business trips to the mainland. california meanwhile imposing an

indoor mask mandate as omicron spreads. u.s. cases have top 50 million, meaning about 15% of the population has tested positive for the virus. time magazine has named elon musk its person of the year. the publisher said few people have had more influence than elon musk on life on earth and maybe off earth too. it cap say run in which elon musk has solidified his standing as the world's richest person and turned tesla into a $1 trillion business. 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: thank you. $1 trillion, just think what we could do without. coming up, a massive week for monetary policy decisions, from 20 central banks. we will discuss the biggest

downside risks for stocks next year. this is bloomberg. ♪

>> -- in a situation where there is stress around the corner. -- quite a lot the last few months and we've had a lot of news about that. at the moment, i wouldn't say there is a big stress event. manus: andrew bailey assessing the omicron risk. for more, let's get to our u.k. economy reporter. here we go again, the governor redefining some of the narrative, now saying there won't be too much stress from omicron for the markets. what do we learn? >> it is curious timing with the

bank of england decision on thursday, bailey saying he doesn't think omicron will be a stress event for markets even though they did have marked movement after news of the omicron variant emerged. some of that has been reversed. the bank of england saying the u.k.'s eight biggest banks will have a capital to whether the double-dip recession. interestingly, the financial stability report looking at the u.k. housing market saying more of the recent price boom is to do with the race for space, people leaving a flats for battle -- that are value and less to do with interest rate cuts from the bank of england. as well it said the growth in crypto could pose some risks to stability, but the deputy governor saying the bank will need to have the necessary regulation in place before that becomes a problem. manus: race for space, there you

go. lizzie, thank you. don't race out of central london, we need you. let's bring the conversation to my guest. she joins us now. thank you for being with us. i am always a bit cautious when i listen to central bank governors and their guidance, but we are going into the bank of england meeting and the presumption is they would not dare to raise rates. that is gone. do you expect a slightly hawkish tilt to come from the bank of england, because that is the growing concern across the central banks, the fed, the bank of england? >> bailey, the way i see it, indicating there would not be similar stresses we saw in march 2020, and i agree that nobody

expects that. i think when you look at it under that light, it makes a lot of sense, what he has said. does it give away what they are likely to do on thursday? probably not. think they are evenly split. i would go probably with the rate hike being delayed and not just the rate hike we were to pointed disappointed -- disappointed six week ago, so let's see. manus: the unreliable boyfriend comes back. i want to bring you what paul krugman said, he talked about inflation and he said it's going to be more like a minor league version of the 48 inflation

spike. do you see a painless carry through next year coming off the top of this inflation or do you sense something more enduring, and how do you prepare for that? >> i am on the enduring side because covid has caused some of it and some of it is supply-side issues, especially out of china, they've been cracking down on covid very strongly. but there are so many other factors at play. for instance, the tornadoes in kentucky, but many climate change related issues causing a rise in food prices, in higher gas and coal prices, this transition away from fossil fuel, energy related, carbon emissions come away from that,

and clearly that transition will cause more stubborn inflation. so also the demand, i think we see prices going up and it can cause some of the demand to heighten. people know it is going to be tough to get a product, let me get it now, because in six months time, it will be even worse. i think there is a self-fulfilling aspect on demand itself. how high will it be, will it stay around 3% or 4%? i don't believe it will go up into double digits like we saw 40-plus years ago. manus: do you expect a meaningful correction in equities? how soon and which equity markets will correct perhaps the

fastest? >> well, i believe -- relatively positive on the equity markets. there is the expectation this will continue to go higher. real rates remain low. globally -- expect the economy next year. i want to put the argument that the rate of growth is likely to slow and so given that we have artificially high growth rate in 2021, it is expected to slow down. often it's not the absolute level, it is the rate of growth changing and the expectation to slow down. that is one thing where i believe the market is not really prepared for that sort of outcome potentially.

i'm not saying it is necessarily happening but i don't think the market will be positioned for that and clearly that could cause further volatility. manus: i know that you have reduced your exposure to china. i look at the new slow this morning, last week it was evergrande, a perennial of late. today it is about shimao down, a record shift in the equity and bond market. is this property i suppose implosion you are seeing or spectacular almost explosions going off, these depth charges, is this what you don't want exposure to china, or have you got zero exposure? what would it take to get you back? >> we had quite significant exposure to china up to 18 months ago. china -- international bond

market. there were fewer opportunities. end of 2019 -- 20, sorry, there was the sanctions imposed that only came into effect this year, we had to prepare for that. there were things we had to do because of the u.s. sanctions on china. and when it came to the chinese property market, for the funds i was responsible for, we were not taking the risk must we were not really involved in the chinese property market, but clearly the market was concerned. i think i read a few weeks ago that if you were to take all of the german and french population and assumed they were all in 3%

households, all of the german population could move into chinese apartments without replacing anybody. there is an enormous overcame -- overhang of the apartment already. we can see why the chinese government is keen on slowing down property speculation. we do see this will rumble in the background for quite a long time. it is a huge issue. they are starting to regret. it seems early to go back into the last few weeks, there was a big turnaround. yesterday we were proven right in waiting it out for the time being. manus: ok, don't get tempted. you usually have a very good reason. we will catch up more, we will

talk ecb. this is bloomberg. ♪

manus: it is "daybreak: europe." i am manus cranny in dubai. some of the major central banks will meet this week. tatjana has a lot at play. you are writing the risk play -- risk wave, i am confused why 10 year bonds are not higher. is it because of the assumption of slower growth or just underpricing the scale of the move from the fed? tatjana: some of it means, i

believe, it is technical. the ecb does whatever it can to be dovish. but then when you look at the amount of spending, the chinese central bank owns a chunk. germany owns a lot. they have to own even more at year end, so there's very little free-throw -- free flow. there are a lot of technical and seasonal pressures on the bund for the end of the year. i would not be surprised if next year, it does alleviate a little bit. by no means all, but some of it,

that allows the bund to move more freely and more reflective of fundamentals. manus: briefly, the risk the ecb is late to the tightening party, how real a risk is that? tatjana: it is a big risk and that is because clearly inflation is much higher than they. with the ecb's own forecast. even if they only listen to their own forecast, it is indicating higher inflation concerns. what will they do -- what will that do to their outlook on quantitative easing and rate hikes? manus: thank you so much. let's see what the news brings the next couple of days. good luck with the volatility on

all the portfolios. coming up, there is an energy crunch.

manus: this is "bloomberg daybreak: europe." i am manus cranny and these are the headlines that will set your agenda. all eyes on the taper. investors fret central banks may ruin the party for 2022. in stocks, tech leads a selloff and asia follow suit. drugmakers defy the drop as omicron continues to spread. more banks tell staff to work from home as boris johnson

doesn't rule out tighter curbs. plus, european gas prices hit a new record amid tensions with russia. saudi arabia warns oil output could drop 30% this decade. welcome to the show. we are dealing with what could spoil the party next year and the guardians of the galaxy in the risk, that is central bankers by the way, there is a fervent fed fever fermenting in the belly of risktakers. that is what we are worried about, that a taper of policy could be a mistake, too much, too soon, too aggressive, but then underway inflation. if you don't taper and potentially hike more aggressively, you probably will have runaway inflation. it doesn't matter if one correlates to the other. on the upside, a roll of the dice. this is what we've got. positive demand. opec-plus seeing that on the oil demand side. you will see the scale of demand

for oil in the first quarter, the equivalent of an annual demand. could you see that global demand the supply chains becoming so unplugged and will inflation fall back dramatically? paul krugman think so. he think that will be more 1940's versus 1970's. i wasn't around during either of those. asia is down, there is a case of omicron in china. that plays heavy on the asian equity session. asian stocks down. he saw apple, nvidia -- we saw apple, nvidia and tesla down yesterday in the late part of the trading day. tech took a bath and it bounces back this morning. crude destroying paul wallace's story, it has bounced back. bitcoin, maybe i can still get a hedge. maybe i can get the pension fund into a bitcoin etf.

let me hear your thoughts. all advice welcome. and more advice from the saudi arabian energy minister. he warned yesterday, don't short oil. opec-plus will react to a fallen prices. i have a scratch in my back, it has been there from bin salman he wants to keep everybody itching. >> he was, he was very particular about oil traders should not short oil. one of his main messages from the opec-plus meeting in early december, still very much in session. opec decided at that meeting to increase production month by 400,000 barrels per day, but in a twist, it cap meeting in session, allowing it to

reconvene very quickly to change course and not increase production next month if market conditions warrant that. his message to traders is watch out, we could change tact. manus: he calls his friends every day and we chatted we share notes. understand this is his style, this prince in charge of the oil ministry. but then i look at opec, they have their demand schedule for the first quarter, and when you take the demand boom they think they will see and the add from opec, do you still end up with a big surplus? paul: according to opec's new numbers, you still have a surplus next year. almost whoever you read, whichever analyst you look at my they are saying the oil market is going to switch from a supply deficit at the moment to a

supply surplus early next year. it is just a question of how big surplus will be and how long it lasts. it is interesting the market did not seem to become much more bullish at all after opec put out its report yesterday. for now, the markets are still very much focused on omicron and what impact that will have on oil demand. manus: absolutely, and they don't want an out for christmas. thank you, paul, with the latest on the oil markets. that warning came from his royal highness, don't think you can have a post-thanksgiving swipe at the market. the u.s. has pitched a truce to japan to resolve the trump era steel and aluminum tariffs. iron ore meanwhile held up. a nice jump yesterday on the optimism about china's economy and stimulus. joining us is my guest.

good to have you with me. can we start first of all with -- i saw this japan note this morning that the u.s. would proffer some kind of truce with japan over aluminum and steel. that is a good news shot for some of those hard commodities. your first take on that prospect of a step back from the trump era tariffs of 2018? fiona: any news that suggests we are going back to free trade is positive on the demand side for things like steel and the other industrial metals. i think it will be seen as a positive, but it is combined with demand in china,, so we are seeing good and bad prospects in the market at the moment. manus: we just showed a big

chart of iron ore. it roared to life yesterday, 7%. a triple are cut from china last week. we are grappling with what the housing slowdown is in china. talk me through how i can unemotionally assess what to do with iron ore. fiona: iron ore has had a crazy run this year. i'm not sure anyone knows what to do with iron ore. on the one side, i think there were signs last week out of china they would be looking next year to focus on stabilizing the economy, which likely means additional stimulus, that is probably a positive for iron ore. but how the property crisis plays out i think in the short-term will be a bigger driver. manus: so the kind of almost head fake rally you had

yesterday, mind you, it hasn't been dramatically unseated today. for 2022, if we get a settling in the housing market in china, do you get a sense they will restock -- do they need to restock? what is the most important aspect of the market i need to look at? fiona: certainly i would be looking at stock levels, imports in china. i would be looking at shipping issues, whether they have been resolved and if it is possible to get iron ore to the chinese steel makers. and i would continue to look at things like energy supply and china's commitment to reducing pollution. it is quite a complicated picture when you try and unravel the chinese steel market. manus: the one market that really is oiling over is in europe. i was looking at a couple of

charts. we have natural gas stockpiles in europe really rolling over and coming down. we have a cold weather snap coming. and i have record high prices in germany, 200 euros per megawatt hour. gas wrapping by 2%. how fragile is the european energy complex? fiona: the european energy complex has been incredibly fragile for a number of months now. it seems like it keeps getting hit with new crises. there was news yesterday the european commission will consider allowing joint purchases by countries of gas from strategic reserves, it indicates how precarious the situation is. one of the things we have to realize is energy crises are not new, but we are recovering from

a once in a generation economic shock. on top of that, particularly in europe, increasing commitment to renewables and zero carbon, which can complicate things in the near term. manus: how much higher do you think european energy prices -- i am showing the german chart on the screen. i think it was 205 euros per megawatt hour. do you expect a much tighter market and higher prices in europe? fiona: the market is doing its job. prices are rising to the point where demand gets destructive. that was initially in the industrial sector, with places closing down. the big unknown for the next few weeks will certainly be the weather, but we would expect prices are getting to the level where we are making necessary cuts to demand, although those cuts are sometimes unfortunate

and not very popular. manus: we understand that in the united states, they have begun the petroleum reserve release, just under 5 million barrels is what we reported went to exxon. there are another 45 million to go. do you think they will do the full 50, and what impact will that have? japan have yet to decide how to begin to distribute there's. -- theirs. talk me through if this will go the full monty, and if japan jumps in, what are the prices for gas and oil? fiona: we are not talking about massive amounts of oil being released from strategic reserves. what we are talking about is the biden administration showing intent to be involved in the oil market and egg attempts to

reduce prices at the pump for u.s. consumers. and similarly, what we are seeing in japan. i'm not sure we should get fixated on the volume to be released. it is the intent, saying we will do something about higher energy prices. manus: yep, all about the intention and whether you will really go head-to-head with opec-plus. thank you so much, fiona boal, my guest this morning on the commodity complex. juliette saly is in sydney. let's get the first word news. juliette: the u.k. has promised -- as it tries to ramp up booster shots amid a surge of omicron cases. prime minister johnson says the new variant is likely to account for the majority of cases in london. this as lawmakers from johnson's party have pledged to vote against covid restrictions and a

commons debate later today. u.k. ministers have been told they should -- scam adverts. they have said they should sanction companies that lead to fraud or disinformation. this crackdown is expected in the u.k. parliament by march. goldman sachs has told london staff to work from home if they can. hsbc, deutsche bank and citigroup are among big firms to also tell employees to return from home -- return to home working if possible. 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? manus: thank you very much. juliette saly in sydney with the latest. coming up, our interview with the binance ceo.

this is bloomberg. 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. ♪ analysts in more than 120 countries. ♪

manus: it is "daybreak: europe," i am manus cranny in dubai. what a week for crypto. you are looking at bitcoin, ether, all under pressure. we've gone from hero to zero. this is the fifth week of a slide in bitcoin. we have gone through -- ring a bell, somebody -- moving average. the 200 day moving average. we begin to understand the scale of the destruction. again, down -- yep, down the 30%

level again on bitcoin, that is the red chart at the bottom. again, under serious pressure. i like what someone had to say, volatility is deadly in that coin and it was supposed to be a hedge against inflation. that seems spurious at the most -- at the moment. to binance, they have withdrawn the request for a crypto security exchange in singapore. the ceo caught up with bloomberg about their plans there and in the u.k. >> we are not that disappointed. we invested in a local regulatory exchange. we will have two duplicate

things for a small market. singapore is a small market and very pro-crypto. we invested in sgx and we will hopefully use that in the future in singapore. so yeah it is not a huge surprise. i think many people are misunderstanding the situation. we are not leaving singapore, we are still very much invested in singapore. singapore is still one of the leading countries in the world for pro-crypto and blockchain. >> you told me something similar when you are winding down binance u.k., and you set to the sunday telegraph you are building your u.k. arm up again. what are your plans in great britain? >> we are in the process for reapplying for the license there. we tried a few different things

and we are in the process for applying for applications again. u.k., everything is on track. sometimes we go through what you call volatility or changes in plans, but we are proceeding's full speed ahead in the u.k. we have a u.k. team based in the u.k., we have an office there, we have established a physical presence, all of the usual requirements for getting a license. >> i want to ask you more about plans in london. what about it that is more difficult to comply with when it comes to u.k. regulations? is it around money laundering regulations, is that why it takes some time? >> honestly, that is the easy part of compliance. those things are done in the banking industry, and in the crypto industry, we do more. it is an established process. it is not difficult to follow.

in the crypto world, we also use analysis. we look at blockchain analytics to determine which transactions come from where. they are very much or third-party tools being used for that. that is the easy part. many of the regulations today only focus on centralized exchanges, they don't look at nft's and many other things. we are often talking with regulators saying how do we regulate this other part? we are wanting to help regulators to have a broader view of the crypto industry. the crypto industry is not just kycl. we have to think about listing framework, how do you choose at which point to list, what is the criteria? how do we handle customer disputes? in what situations do we compensate users or not? there is a lot regulators don't

look at and we want to educate regulars to look at a broader scope. manus: the binance ceo speaking to the bloomberg team. coming up, the latest on the omicron variant. risks are rising, markets are reacting. this is bloomberg. ♪

manus: this is "daybreak: europe ." let's get the latest on omicron, new research showing that omicron variant dents protection from a double dose of mrna vaccines. this will be a race for vaccine

or three, or booster number three for many people. what does the study tell us? rachel: exactly, over the last two weeks we have gone the initial data from pfizer and astrazeneca. we are seeing a significant drop in antibodies against omicron. indeed, that is as feared, that vaccines are less effective against the disease. but at the same time it is an unknown, the best case scenario, omicron is more infectious but people are not eating seriously sick and the fatality rate is not knowing up. does that rate hold for the asked of the world, and if it is

scientifically proven, it is a positive outcome. manus: boris johnson is opening more vaccine sites but he has not allowed additional restrictions. what do we understand? rachel: that speaks to the uncertainty with omicron, it is four times more transmissible than deltek, which is a scary, but at the same time, -- than delta, which is scary, but at the same time, woody has appetite for -- nobody has the appetite for turning back the clock. they are asking people to be cautious, or from home, take precautions. people want to get back to life as normal and that is the balance he is trying to strike. manus: meanwhile, goldman sachs is the latest bank asking employees to work from home. that hasn't devolved to a global edict yet. where are we on the balance for

work from home globally? rachel: places like asia with strict travel curbs, very few indications in hong kong, so work from home is a thing of the past. but in europe and the u.s., uncertainty is creeping in again. after a spring and fall that was very much normalized and people gathering again, gruma, -- omicron brings all of that back. if it causes as much disease as deltek, i think we will see in the new year people staying home again. right now there is no certainty around helping threat is. manus: ok, thank you rachel. we will keep an eye on that, 40% back at their normal desks. looking at the bond market, bonds, bonds, bonds.

us trillion yields are dropping so you still see the haven trade to the -- australian yields are dropping so you still see the haven trade. in the u.s., fed fever in the air. this is bloomberg. ♪ ♪

anna: good morning. welcome to "bloomberg markets europe." cash trade is less than an hour away, so here are your top headlines. investors fret -- drugmakers defied the drop. virgil abloh -- omicron