tom: is 10:00 in london, 5:00 a.m. in new york, 6:00 p.m. in hong kong. happy christmas, happy holidays. i am tom mackenzie. santa rally. u.s. stocks hit an all-time high on optimism omicron will not hamper the recovery. market study amid fears of trading. united and delta airlines cancel around 200 christmas eve flights due to personnel shortages. gas prices plunged as more ships carrying u.s. lng race to the continent to offset russian supplies. good morning on this december 24, 2021. let's check in on the markets after another record stateside on the back of easing concerns about omicron and the severity of that variant and also more

solid data coming through from the u.s. in terms of jobs numbers, durable goods, even though there is caution about consumer spending and how inflation continues to eat away at households drive power -- dry powder. europe is moving with the caveat volumes and liquidity's are thin. markets like germany, italy and spain closed. gains are range bound across the stoxx 600. euro-dollar at 1.13. sterling is at 1.34 and brent crude is lower by a little over 1%. wti not trading in the session. we can get some clarity on the gas prices when we switch focus to that board. it is gas prices, third day of gains.

falling prices in terms of net gas. that is partly the result of the lng shipment shifting from the u.s.. asia prices have been higher than they have been in europe. now that lng shipment facing towards europe and could be easing some of the supply chain constraint we have been seeing. gas prices falling 20%. whether that continues will be a focus of the colder weather on the continent. the s&p 500 adding an all-time high amid the optimism that economic growth will whether the omicron coronavirus outbreak. our bloomberg tv guests weigh in on how the virus will affect markets in new york. -- in the new year. >> omicron increasingly in the rearview mirror. >> it will be mild. >> still much more transmissible. people cannot go to work if they have the virus. >> it has already been discounted.

>> more red flags than most of my ex boyfriends. >> some of these vaccines are proving to be pretty good against this version. >> going to have an economic impact whether or not it is deadly. >> there is going to be a bit of a roller coaster ride. tom: eddie van der walt of bloomberg markets joins us live. thank you for joining us on this christmas eve. what you make of the fact that we did finally get the santa rally after a lot of choppiness in the markets of last few days? eddie: was there ever any doubt traders were going to buy the dip? they were conditioned so strongly to do it i do not think there's a lot of people that will be overly surprised. we are in a time of very thin liquidity. whether this carries through into the new year or they are enough to be uprooted by the

next omicron or virus related headline closure in britain or somewhere else, these gains are delicate. traders have shown they are looking for reasons to be optimistic and they will continue to be so unless markets change substantially over the coming weeks. tom:'s next year all about the fed and inflation? eddie: we survey live readers about what they think are the biggest fears. the number one factor was inflation, the second factor was central banks. you have to think that if everybody is thinking about it, perhaps it is already in the price. if you're looking at tail risks, you should be looking at other factors that everybody is not talking about right now. that is the risk. also the fed has pivoted so hawkish they have given

themselves a lot of room to look dovish, even as they raise rates next year. we could get two rate hikes from the fed. they look dovish and therefore stocks will continue to rally. tom: some of the tail risks you are looking at and the indications for the fed. when it comes to gold, you are breaking down some of the seasonality. it has had a bit of a bid in the last days. eddie: you mentioned the santa rally in stocks. gold is the asset that likes christmas more than anything else. over the last decade gold has rallied between december 23 and january 3 every single year apart from one. the average gain is 1.6%, which is more than double the average santa rally in stocks. gold is something that does well. there are two reasons i can think of. number one, people buy gifts of gold.

you see the prices rise. also there's a lot of doom mongering around the christmas and new year's period. people get nervous. even though stocks are going up there all these tail risks we should be talking about. that is my top reason for why people buy gold over the christmas period. tom: bitcoin is still characterized by some as a digital gold, unfairly, arguably. what have we learned of the last 12 months about bitcoin, specifically the institutional buyer we have seen alongside the regulatory crackdown in jurisdictions like china? eddie: i think 2021 has been a breakthrough year for bitcoin, not just on the price front. bitcoin has ingrained itself in the financial markets this year. a year ago you could plausibly still argue that bitcoin is going to go away. it is an asset class, it is a

fringe asset class that does not affect markets that much. right now we have futures, we have institutional investors getting in the space, it has become part of the furniture. you can argue the price will go down or you can argue the price will go up. you cannot argue cryptocurrency will disappear overnight. i do not think that is plausible anymore. bitcoin has established itself as a true alternative asset in financial markets. tom: we have a guest coming up from bny mellon this is one of the key risks they are looking at is supply chains in 2022. not a major surprise, but an area that is very much the focus of all of our attention. you've been looking very closely. are you seeing that easing continue? there was a case you are making that you're starting to see easing in the supply chain. eddie: such a good question.

we are seeing easing. there other factors that are coming down. before christmas there was a lot of worry supply chains will not be able to supply, there was talk about empty shelves at christmas. in the u.k. and elsewhere, and we have not seen any of that come about. it feels like the real panic in the supply chain is easing. at the same time we are seeing things like natural gas prices, which is not exactly a supply chain problem. what it does when using natural gas prices as high as they are, what you are seeing is industrial manufacturers shutting down so we see less aluminum being produced, less fertilizer being produced, and the knock on implications of that has not completely fed through. this first phase of the supply chain crisis is somewhat behind us.

i think we are now in the knock on implications and the secondary effects that will be with us for a while, keeping inflation hot for some time. tom: that is the perfect queue to our next segment. always great insight. eddie van der walt of bloomberg markets. have a great christmas. coming up, a bold call for 2022. we bring you that next. this is bloomberg. ♪

tom: welcome back. this is "bloomberg markets" on tv and radio.

your christmas turkey might be more expensive this year. whatever delicacies grace the table, they are probably more expensive than ever before. we find out why. >> this year has been a pretty difficult year. the price has risen dramatically. we've seen price increases across the board from 10% to 30% to 35%. today we are at the turkey farm in kent. we are here to find up if turkey will be more expensive. everything from labor to cost has gone up. this is likely to push up the price of turkey even higher compared to last year. >> we have put our prices up about 8%. that has not covered everything

and we have had to do as much of it as we could. the butchers will also have to take the hit as well. we use -- the price is up 35%. the cardboard we use for the boxes the birds go out in has gone up 35%. gas prices have gone up 20%. it -- fuel has gone up a lot. getting the birds from the farm to the shop will be expensive this year. the food prices have also jumped up 18%, which has had a very big impact because it is not something we can economize, no matter the cost. we have to feed the birds the right rations. there's not a product we use on this farm that has not gone up. >> rigidly in the u.k. -- the

meat industry hit the hardest. this is because the government to intervene. this is not been enough. farms like this have introduced innovative ways to deal with the shortages. tom: a look at what is making your christmas dinner more expensive this year. it might get even more so next year with u.s. economic growth -- inflation faster than most analysts anticipate in the first half of 2022 according to a trader that correctly picked this year's job in bond market expectations for consumer price gains. the bank of violence global head of market trading spoke just and ollie bostick and guy johnson about that call. >> we still believe market expectations for next year in terms of asset pricing is very positive because they are

feeling comfortable -- there are enough savings to support consumers. at the same time there are some downside risks. looking at joe manchin not supporting build back better and with previous fiscal measures that also expire next year, your expecting contribution from fiscal assigned to u.s. growth to be negative next year. also now central banks are changing the reaction functions and prioritizing off-site inflation risks over downside growth risks. what we got was a super hawkish period. not only are they stopping new purchases in march, they also told us they're looking to deliver three rate hikes and

they already discussed tightening. what we heard from governor waller as they are looking to deliver that after one or two rate hikes. that can also happen in 2022. there'll be a lot for the markets to digest. guy: it looks like we will have a bumpy year. in terms of where you would expect inflation to go next, market pricing looks relaxed. market pricing is signaling we will go back to around 2% in terms of u.s. inflation. do you believe market pricing at the moment? >> even the fed has dropped the word transitory, so the markets and central banks are aware inflation pressures are much more growth based rather than just being focused -- much more broad-based rather than just being focused on energy prices.

we still believe it is very likely u.s. inflation will move in the first quarter. there are also risks for inflation that has been happening in the metro gas market. the market was already very tight with low inventories, and then we saw a number of french nuclear reactors taken off the grid in the russian supply lower-than-expected. we have seen near-term upside risks for inflation in europe. looking into the medium-term, we are expecting some supply chain pressures easing. delivery times are already shortening, and energy base effects mean the contribution on headlines is going to be lower. keep in mind currently when we are looking at the base effects compared to 2021 -- the u.n. had

a short period where prices were negative. looking at where they are now, the base effect this year was superstrong. looking into 2022 we are comparing 2022 prices with 2021 prices. the pricing points will be much higher in the base effects -- at the same time, we do not expect to move back to pre-pandemic low inflation levels, either. still very strong components. this will continue. there is mostly pent-up demand for services. that is going to continue. wages are picking up. tom: the bank of ireland's global markets head of inflation trading speaking to bloomberg. let's get to the bloomberg first word news with angel feliciano. angel: the uss moscow needs to

de-escalate tensions on the ukraine border. it comes as russian troops are continuing to build up ahead of a potential attack. the comment follows vladimir putin's annual press conference. he warns western nations about military cooperation with russia's neighbors in eastern europe. president biden has signed a law banning goods from china's xinj iang region unless companies can prove they are not made with forced labor. china urged the u.s. to correct the mistake immediately, say the bill was in disregard of the facts and truth. we have seen one of the biggest u.k. retail deals in years. central group, owned by one of asia's richest families, is joining forces with cigna holdings of austria. the deal is close to 4 billion pounds. global news 24 hours a day, on air and on quicktake by

bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i am angel feliciano. this is bloomberg. i have to say, i love oxford this time of year. looking at the christmas display. tom: famous for its christmas display. normally a huge draw. i do not know if they are there in as many numbers as they have been traditionally. they put a lot of effort -- this is such a big retail story. in normal times we spent more time discussing. a major deal. bought for a couple of hundred million in 2020. now they are selling it for 5 billion u.s. dollars? a lot of real estate. angel, hopefully you get down -- you get time to go down to selfridges at some point. we look at how the u.k. exit from the eu changed the job market. that is coming up stop this is

bloomberg. ♪

tom: this is "bloomberg markets." i am tom mackenzie. it has been almost a year since the u.k. technically sever ties with the eu today we are looking at the impact of brexit on the labor market. let's bring in lizzie burden. this is the question today. how has brexit impacted the jobs market here in the u.k. 12 months on? lizzie: it exacerbated the labor

crunch. about 200,000 eu nationals left in 2020, and for the industries that relied on eu labor, that meant empty shelves. if you remember we had the fuel crisis over the summer. that was because of the trucker shortfall, which was partly because of exit. in those industries that had recruitment issues, employers have had to hike wages to try to lower new recruits, which meant they have had to increase prices to cover the wage bill. it has squeezed household finances. if we are going into 2022, you have this trip of headlines about the government not following its own rules, but you also have the cost of living crisis. ironically, brexit contributing to it. it is ironic because the government has been such a champion of brexit. tom: you are trying to do your bit.

what about the impact of covid? lizzy: you have to separate the two but the pandemic did contribute to all of the eu nationals leaving. they did not want to be stuck here for the pandemic or the recession that followed. they found if they were trying to come back that the drawbridge had been lifted, the restrictions were tightened. that 200,000 figure i mentioned is interesting because there more economically inactive workers 375,000. tom: important update on the labor market from lizzy burden. traders are optimistic the economic recovery can withstand the omicron wave. stay with us. this is bloomberg. ♪

tom: welcome back to "bloomberg markets" on tv and radio this

christmas eve. i am tom mackenzie. stocks futures are steady after your chairs reached an all-time high amid economic optimism the economic recovery will shrug off omicron. tom jones joints me now to get the deep dive on this market -- adam, thank you for joining me. happy holiday. what is your take on impacts the way the market should be reading the severity of omicron. are they right to look through this and bet the economies of the world will power this variant? adam: we certainly think they are all stop when we look at the pace of the pandemic, we believe this is not going away. this is something the world will have to live with. there's been a significant accumulation of immunity. the role of vaccines has been phenomenally successfully across

the developed world. we've see that bear out in terms of hospitalization and death rates. when we look the underlying strength from a macro perspective, i think it is the right thing to be pricing higher growth. tom: what is the trajectory of growth? your forecast over the next 12 months? how does that growth unfold? adam: we are incredibly positive. everything we look at in terms of the consumer balance sheet, in terms of corporate balance sheet. we know the u.s. is a consumer driven economy and consumers are doing well. wage growth is incredibly robust. you have things like fed expectation surveys putting to significant increase in expected expenditure from the lower cohorts of earners, which is obviously where the higher-margin lies. we are very excited. i think the market is generally underestimating the ability of

the private sector to pick up this demand from the public sector. you have built back better. we think the private sector is positive on the moment. we have a positive view on growth, certainly in the first quarter and over the second half an aggregate. generally i think it is an exciting environment. tom: the bond market reaction to what we have seen in terms of inflation in the fed response has left many scratching their heads. we more dashed we have more of a textbook response from the bond market and u.s. yields? adam: one of the biggest concerns is bearing in mind all of the strength in data we have seen. yield curves have continued to flatten. they continued to flatten in the face of all of this apparent strength, which is a bit of a worry to some extent. what is happening is we have seen the death of some of these fiscal policies, there were

expectations around those. those have faded away. there are still questions on labor force participation rates. there are things that are concerning. everything we see on the ground in terms of expenditure, house prices, all of these things are positive at the consumer level. tom: what you want to be getting exposure to as we headed to the new year and what are you avoiding? adam: generally we continue to favor, we have had a fantastic year being more exposed to things like financials and energy. those are areas we continue to like, specifically banks will stop some of the names in the u.k. we like. a lot of these businesses have derated despite having outperformed the wider market. they are cheaper now than they were then. the level of capital assets within these banks and their

ability distribute returns to shareholders has increased significantly. you cannot hold out with a tailwind from higher rates. it makes a compelling case. the nice thing about some of these as they very lowly valued, but also they protect us from things like higher inflation because they respond well to those things historically. it is a nice exposure to maintain the diversification. we continue to like china for next year. i think chinese equities are pretty attractive at these levels. we are seeing indications more recently from chinese policymakers they are hitting their pain threshold. we are seeing a bottoming in the chinese credit impulse. they have increased reserve requirements. they are doing everything they can to slow down the rise of the

yuan, which has been surprisingly strong, but also limit the downside on future growth. we do not think china runs away in terms of gdp, but at the margins the environment is becoming much more supportive. tom: given your bullish outlook on growth and the higher yield strategy, you want to be ditching technology or do discriminate within that space? adam: i think it is a discrimination story. if you look at some of the tech names -- it is coming down to the level of cash flow these businesses are able to generate. the big guys are still able to do that in spades. valuations even now do not look extreme to us. a lot of these large growing structural growth businesses. i think it is one that at the margin is focused more specifically -- tom: opportunities in u.k.

banks, oil, and chinese assets. adam jones, thank you, have a great christmas, a great holiday. thank you for your contribution. coming up, we look at omicron's effect on aviation this christmas as united and delta airlines cancel over 200 flights. this is bloomberg. ♪

>> according to bloomberg vaccine tracker, roughly 3.2 million doses of the covid -- 3.2 billion doses have been administered -- far short of the trumpet ministrations goal of getting out 20 million doses by new year's day and vaccine hit a snag on vaccines developed by astrazeneca and johnson & johnson were suspended over blood clot concerns. within a few weeks their shots were declared safety use by regulators in the eu and the u.s.. before the end of april joe biden hit his goal of administering 200 million shots in his first 100 days and vaccines have been made available to all adults. vaccines rolled out globally over the summer. that is as the ultra contagious delta variant surged across the globe. by july the cdc had advised vaccinated people to put their masks back on in indoor spaces

as breakthrough cases rose the agency learned vaccinated people still transmitted the virus. in the fall the fda issued emergency approvals for booster doses. late in november, global financial markets sold off after south african researchers identified a new severely mutated covid strain that has the potential to evade vaccine protection, the omicron variant. many countries reinstated travel restrictions from african countries. japan closed its borders to foreign tourists, and u.k. prime minister boris johnson advised everyone able to work from home to do so. with 2022 on the horizon, the new year will bring with it a lot of uncertainty and big questions about the pandemic future, including will vaccines need to be reformulated and can any ground be achieved without vaccine equity. many countries have less -- vaccination rates of less than 50% of their population that is where the virus is most likely to mutate.

tom: that was bloomberg's ariel berger taking us through this year in covid. in the u.s. as a result of the spread of omicron, united and delta airlines are expected to cancel 200 christmas eve flights because of staff shortages linked to covid. it is a blow to carriers still trying to recover from the pandemic with the holidays one of the busiest times for travel. let's bring in bloomberg's laura wright and the news of flight cancellations overnight in the u.s. unwelcome for all of those travelers making their plans and waking up this morning. what are the implications for the travel sector in europe and the major destinations that are normally a draw for tourists? laura: this is a real blow for travelers who are hoping to visit their families and friends. the primary reason for united was because of covid cases amongst their staff, which means

we did not have enough staff to pull crude together. for delta it was a mixture of cases and the weather. this is against a broad-based recovery in u.s. domestic travel. weekly data from tsa shows it is almost back up to pre-pandemic levels. i have been doing a bit of digging in data on seed capacity comparing this week to the same weight in 2019. there is a clear divergence between u.s. airlines and their european counterparts because the u.s. airlines have been able to benefit from interest in travel. american airlines down just 8% over that period while british airways 31%. yesterday the united states reporting 269 thousand new covid cases. more uncertainty ahead. tom: how the markets reacting to the news of this cancellation and this uncertainty? laura: the markets have been

sensitive. when we heard first about the of a chronic variant that led to a selloff. yesterday after berlin neri data indicated omicron cases -- after berlin neri data -- after preliminary data indicated omicron cases are less severe -- i was speaking with one analyst yesterday, director at jail last , he told be the sector has experienced cancellations already, and crucially this is the time of year when families come together and individuals plant where they want to go on their summer holidays. airlines rely on that forward-looking planning. the industry is terrified of a third summer of disruption. while news flow around the virus remains, that will put passengers off looking down the line. tom: what i want to know is what

happened your skiing holiday? laura: it is still up in the air. i am holding off. i will hold out. tom: the uncertainty is also impacting laura wright, who we know is a devil on the slopes. thank you for that report and i hope your holiday comes to pass. european natural gas prices are plunging. this is after this year's stellar rally which attracted shipments of lng that will now offset flows we are seeing from russia. tracking data shows at least 15 u.s. vessels are now heading to europe. anna, what are gas prices doing today? do expect the movement in gas prices to continue? three days we have seen gas prices drop. anna: prices are declining from

record levels we have seen earlier this week. that is a combination of factors. lng coming to european shores at the end of this year, and just like after the new year. also the weather forecast has changed and now we are going to see milder weather in western europe at the beginning of january. that would decrease demand. it is worth noting the wave of lng we are seeing from the u.s., but not necessarily what we are seeing in nigeria, russia, or even on the way to the u.k.. these may not necessarily last for long. it will depend on prices with asia. what we are seeing now reflects very high record prices in europe we have seen earlier this

week. it remains to be seen whether prices in europe and asia are going forward. remains to be seen, depending on the weather. tom: may be milder weather on the horizon. you point to major fluctuations in these prices over the last few days. very high prices at the beginning of the week. what was underpinning that? was it all about russia? anna: the traders were really concerned on this. a major pipeline from russia to germany dropping to zero -- it actually reversed. it was from germany to poland than they got some explanation from vladimir putin -- european buyers are not requesting any gas for the pipeline. also we heard from some of the european buyers saying they are already taking their contractual volumes down, so they hit their limits as to how much they have

to buy, because gas prices were lower earlier this year than the market rate we are seeing right now. tom: was the outlook for january and the rest of winter? anna: at the moment -- most of the winter weather is ahead of us. storage levels are depleting rapidly. it is now less than 50% full. that remains a concern. we will see what the weather is like in asia, if there is a cold snap in china all of these will divert all the way back to asia. it remains to be seen. at the moment -- the russian gas flow into europe. only 21% of the major pipelines out of europe into germany has been booked for january. we will have some more clarity

as to whether we will see higher flows from russia as january begins. tom: thank you for that update in the inside from bloomberg's anna. as a result of these high gas prices, they have fallen, it looks like they will fall for a third straight day. the longer term horizon is you see very high prices. british steel saying it will stop taking new orders as a result of the high energy costs. high energy costs taking their toll on british steel. more on that if and when it comes through but is another reminder of the corporate implication. households affected by this. sustainable debt financing has hit a record high this year. we look back on a pivotal year in the fight against climate change. that is next. this is bloomberg. ♪

tom: welcome back to bloomberg markets on tv and radio. i am tom mackenzie.

this is likely to be remembered as something of a turning point in the fight against climate change. one of the highlights was the cop 26 summit in november. sustainable debt financing took off as well with banks and governments issuing over $1 trillion in green securities for the first time. the planet continues to warm up. think back to recent natural disasters in the u.s. and the philippines. the reality is the world is likely to remain dependent on fossil fuels for quite some time. joining us to unpack some of the green financing trends we are seeing in 2021 is our bloomberg green reporter. sustainable debt issuance in 2021 topping $1 trillion in the first three quarters. what is driving that it will it continue? >> it is both physics and politics. we have seen climate disasters here and the planet warming.

we already have forecast 2022 will be one of the warmest years on record. the politics are starting to change. at cop 26 after a year of not having one of these annual conferences we heard from most global leaders, the world's largest economies now have a net zero goal and they are committed to trying to do something on climate change. that is reflected in the debt issuance because it is the money they can use to move their businesses towards green activities. as you can see the chart of exponential growth, and any exponential growth has height and there are risks. we have to be very careful the activities being funded by these debt instruments are going towards green activities. tom: part of that activity is the electric vehicles based, which has been growing very fast

despite the fact that the auto market has been under pressure. what are we seeing in terms of the region's leading. i see the chinese flag behind you. is china still leading the path when it comes to the transition around ev? akshat: no longer. europe has taken the lead. china used to have the largest share of sales in ev, but now europe is almost reaching 20%. that trend is going to continue. analysts tell us that battery prices, despite the inflation and supply chain problems continue to fall, maybe slightly slower than they did in the past. that means electric vehicles become more competitive. that is good because we need to get emissions from transport rapidly. the only way you can do it if you are going to buy a vehicle is you do it through electric vehicles. otherwise you are looking at public transport, which requires

a huge amount of money from governments and that has not materialized in a year where we have seen recession. tom: just briefly in terms of the global energy mix we have seen change, what are the major changes you have seen and how does it look as we look into 2022? akshat: renewable electricity coming from solar and wind has really taken off this year. those are purely economic trends. the majority of global markets have solar and wind as their cheapest option, even compared to running a coal or gas fired power plant at the prices that existed a year ago. the market now shows us that if gas supplies are not met, there can be crunches and there can be spikes. the long-term outlook is clear that renewables will keep growing rapidly. tom: that increased share for the renewable sector within the global energy mix. a great round up on some of the major themes within the green

economy over the last 12 months but we can expect next year. thank you. let's check back in on the markets with a reminder that even on christmas eve -- that given it is christmas eve you have indexes closed-door close early. the ftse 100 is open. it is posting gains as things stand. on the back, we saw the santa rally stateside. optimism about the spread of the virus being curtailed in the severity been less severe. where we are seeing spade as we head towards the end of the year , natural gas prices falling prey third straight day. coming up, bloomberg markets continues on tv and radio. this is bloomberg. ♪

>> from the financial centers of the world, this is bloomberg

markets with outlook steel and guy johnson -- with alex steele and guy johnson. guy: it is 11:00 a.m. in london and 6:00 a.m. in new york. and 7:00 a.m. and hong kong. i am tom mackenzie. happy christmas. on this december the 24th. u.s. stocks hitting an all-time high on optimism. markets steady in thin treaty. despite new covid cases upends travel plans. united and delta air lines canceled 200 christmassy flights due to shortages. gas prices plunge as more ships carrying u.s. energy raced to the continent to offset russian supply. let's check it on the markets. as we said in the headlines, santa rally. the s&p 500 back to new records

stateside. the u.s. of course, we have to acknowledge there is very thin volumes given where we are in the christmas holiday period and the number of major indexes are close. the likes of germany, italy and spain. in early closures in the likes of france as well. nonetheless, you are seeing an element of stability in these markets. the u.s. will not be trading in terms of treasuries and equities. asia was a little mixed. here is the u.k. gilt, essentially flat. the u.k. continues to struggle with case numbers but his studies suggest that the severity of omicron, will potentially not lead to his many hospitalizations. that could change the equation. gains of a 10th of a percent for the single currency. brent is lower. gas prices will have a read across to that given we are

looking at three straight days of significant losses and drops within the natural gas price. as a result of some of these shipments coming through. let's switch it on to the gmm you can see the nat gas prices. down about 16%. you are getting l&g shipments from the u.s. heading towards europe. suggesting you will get additional supply even if there are concerns -- the concerns about russian resupply's remain. whether you get a milder winter will be a factor as we weigh up these prices. produce steel talking about the impacts of their business. traders ringing in their last-minute holiday cheer. the s&p 500 hitting an all-time high yesterday amid optimism that economic growth will weather the omicron coronavirus outbreak but there are a number

of risks ahead from the virus to inflation. we have been asking markets where they are looking out for in the year had. >> we certainly value favor into 2022 overgrowth. and are much more on the short duration side, when we look at equities and fixed income. >> u.s. equities will still do ok next year. but i think you get double that in some of the international markets including the emerging markets. >> we do think it will would create some slowdowns in the economy. perhaps some slowdowns in production which could add to inflation pressures. >> the markets and central banks are aware that inflation pressures are much more growth based now. >> the yield curve will -- we've already seen that. tom: joining us now is an investment strategist. thank you for joining us this christmas eve. happy christmas to you, happy holidays. what have you learned about the resilience of the markets, given

we are back to new record highs, thin volumes, thin liquidity, it could change in the next few hours but what have we learned about the resilience and what the reader crosses going to be into next year. will that resilience continue? >> thank you very much for having me on happy holidays, everyone. i think that we have learned for 2021 is there's still ample amount of liquidity in the markets thanks to the easing central bank monetary policy coming from the u.s., u.k., germany and japan had for next year the story will change a little bit, and we have the initial signs of it already happening with the bank rates dropping basis points. i think for next year the main story is going to be about two factors and how they play out in terms of driving markets.

the first one is inflation. whether or not the central banks will be able to tame inflation that is traveling across the world and the second one is interest rates. whether that is softening -- the softening yield curve for continued and what that means for sector performance across major markets. tom: do you see that yield curve flattening continuing? an estimated forecast of 2.5%. where do we go in terms of yield trajectory and what is the pain point for sectors, particularly technology? >> sure. first of all i think we are still seeing long-term rates to be moving higher. although, i think in terms of the magnetism -- markets going height, markets might once again be overestimating -- because you remember that, yes, g4 bond prices are going to be reduced, but also remember that bond

issuance will be reduced as well. that gives a mixed picture on the yield side. however, our best case scenario is that they are just higher. and that tells us that what i mean by that is we are actually going to see a steepening and yield curves. what that tells us is that we are going to position ourselves so that we are going to be overweight in the short duration assets rather than large duration assets. we are still seeing the value to sectors will outperform growth. however, to your point, i think one needs to take into account that the growth sector, tech stocks, are really diverse and you have to have exposures to high quality, low price volatility, high cash generation stocks in 2022 because, remember, there are risks out there as we are seeing from omicron and figuring out the -- whether omicron is a serious

risk to the markets will be a bumpy ride. so you have to have some exposures in the high quality tech stocks as well. we're saying that stay away from the risky part of the growth sector, because again, understand there's -- the ample of amount of liquidity will not be there in 2022 due to social central banks tapering. be selective and growth stocks. tom: where does that leave you on the reopening trade? have you seen enough on omicron to add some of these reopening stocks? >> i think it is still early to say that omicron is not a risk and that reopening trade will come back and the small-cap stocks are going to be higher. but i do believe that initial signs are suggesting that, again, anecdotal evidence is suggesting that, yes, severity is not as high as the eight

other variants, but it could be the case that there might be circuit breakers in the u.k. and even in the u.s. so, we are positioning ourselves in the sense that the economic sensitivity of new variants might not be as low as we had initially, you know, projected them to be. basically, the vaccine might not be that useful. initial signs are very very positive but market participants should follow the headlines very very closely in my opinion. tom: what is the importance of following credit spreads as a guide to investing if you look to 2022? >> sure. i think for credit spreads we have seen them move higher, although rates -- are a multiyear lows. it is important to monitor them because it tells you the state of the financial condition and

terms of whether they are still easy or whether they are getting tighter and tighter. we have seen that spread widening starting in europe. now in the u.s. as well for other dollar -- based countries as well. monitor them closely because some of the riskier parts of the growth sector, especially in the tech sector, they are very much, they are high correlations of the credit spreads. when credit spreads widen, we see they are coming under pressure. it is a key indicator that we are monitoring for the next year. tom: when we switch focus to china there has been a pivot to easing stocks in the pboc there. have you seen an increase in the credit impulse in china, do you want more exposure to that market? >> absolutely. right now we have a neutral stance but we were really glad to see that first they cut their

required reserve, and shows that -- by five basis points. reserve -- were cut by six basis points. all of this tells us that they are using that policy flexibility to make sure that the market stresses are not becoming a contagion. to your point, credit impulse is still weak but to the extent that they become, they improve, i think, those stocks that are leveraged to china, growth, industrial and luxury names in europe, for instance, will get a boost from that. it is a little bit early to make that call but again for the next year, for early next year i think we will start to see that happening in the markets. tom: watch a potential bounce back in terms of chinese assets and watching the credit spreads, a guide to investing for next year. bny mellon investment strategy. thank you very much have a

wonderful holiday. >> u.s. prime minister boris johnson is urging britons to take care of christmas. he's considering whether to tighten pandemic roles amid a record surge in cases yesterday 120,000 new infections were reported the u.s. has moscow needs to de-escalate tension on the you came border as kiev says russian troops are continuing to build up ahead of a an attack. it followed vladimir putin's enterprise conference warning? nations about military cooperation with russia's neighbor a eastern europe. president biden has signed a law banning good from -- a region in china. a move that will add to tensions over beijing's treatment of the weaker minority. -- the uyghur minority.

we have just seen one of the biggest u.k. retail deals in years. central group owned by one of asia's richest families was -- the deal was worth global close to 4 billion pounds. global news 24 hours a day on air and on bloomberg quicktake powered by 2700 journalists and analysts in 120 countries. this is bloomberg. tom: angel, thank you very much. it is a big deal in the retail space. $5.4 billion. it was bought in 2003 by a canadian company for just 600 million pounds. and that is $800 million. part of that is real estate. it has a big footprint in central london and that is part of the value proposition for

that thai austrian company and you assume the window on christmas. check in on the markets. of course, within the context, thin liquidity and thin volumes, given where we are, september -- december 24, getting my months muddled up. the range. across the stoxx 600 in europe 113 up by a tenth of a percent. sterling is at 134. u.s. equities markets and treasuries closed on december 24. french lower by 1%. coming up. president biden is president goods from changing.-- from a region in china. we will get more on that. bloomberg. ♪

tom: this is bloomberg markets. european natural gas prices are plunging after this year's stellar rally attracted u.s. shipments that will offset flows from russia. ship tracking data show 15 u.s. vessels now heading to europe. we cover power and renewables. she joins me now. what do we know about gas prices and the movement today? how much of this is about energy coming from the u.s.? anna: european natural gas prices are declining and are h eaded for a 20% drop after a seven consecutive weekly gain driven by mild outlook in january and a wave of lng coming to europe. and many more coming from russia, nigeria and angola.

that reflects very high prices at record levels. we have seen early this week and last week. so, prices were above the rates we saw in asia. and that is why traders, makes more sense for traders to direct the cargoes into european markets. but it remains to be seen in january, it depends on the weather outlook in asia and also if we are going to see more russian gas arriving in january. tom: you touch on some of them but what are the main factors to underpin those very high prices at this week? anna: we had a cold snap in europe. demand went up and slowed -- from russia were lower actually. we have seen the deliveries cut over the last two weeks, lower

from last week. what we see from european buyers is they are already taking their contextual limits for this year earlier when prices were cheaper. and now just because they do not need extra gas and the rates are much more higher, without the request from european buyers russia is not selling more gas. tom: do we have clarity on what the outlook is for january and the rest of winter? anna: at the moment january looks very mild the beginning of the month. so, it does look like a lot of this bullishness has subsided, but at the same time, we do expect at the moment 21% of the major pipeline from russia is used for january. supplies may remain cut from russia into january. and also, we're going to see

reduced nuclear production in france. which will increase demand for natural gas, for power generation. so, these facets remain to be seen and also whether -- what weather we are going to be seeing in asia later this winter. for some time now in the beginning of january the forecast point to lower prices. tom: bloomberg's analyst on the latest on terms of gas prices and what the indications are as we look ahead to january. possible mild weather. a positive impact for consumers here. it is a crucial area that we will continue to focus on. we are now going to shift and pivot at the same time to geopolitics. president biden signed

legislation that would ban products coming from china's zhejiang region if company's can prove it was not made with forced labor. what has been the official response from beijing to what was a bipartisan piece of legislation in the u.s.? >> hi, tom. beijing has repeatedly denied allegations of forced labor and genocide and even calling it the lie of the century. they are saying that that the intention is to contain china and the political rhetoric aside, we are certainly watching for countermeasures from beijing now that this bill has been passed and also looking at the increasing number of companies that are really getting caught right in the middle of this. tom: there is a significant applications for supply chains given that a lot of cotton is produced in zhejiang, and tomatoes and agricultural goods.

there is a lot to unpack -- for u.s. companies based in zhejiang. what if we heard from chinese consumers and is there a backlash brewing? >> great question for the companies that have the requirements bill, and on the other, rising nationalism in china. chinese mapping e-commerce platforms taking the store off of their apps. recently intel faced huged consumer backlash and -- it cut ties after it asked consumers not to use any labor or products from xinjiang. they found himself apologizing for this move. we saw huge consumer backlash from walmarts after it posted --

after one of its -- in china went viral. we see more companies needed to walk the tightrope and looking to see what kind of additional costs beijing may impose in response. tom: what are some of the key things you are watching for in terms of the u.s.-china relationship in 2022? >> yeah, i mean, at the start i think we are looking at where the trade deal is going to go once the phase i expires. we have not had much indication from either side on what the next steps are. that's certainly next on the watchlist. ad, of course, the most sensitive issue, taiwan. we are looking at that. and so, yeah, to start off the year already quite a lot of th ings to look for. and maybe there will be bright spots in climate cooperation. so, we're watching for that as

well, but yes, those are some of the things. tom: thank you very much. joining us on a beijing and what to look for in 2022, the chinese reaction to that bill that has been signed by u.s. president joe biden restricting the flow of goods from xinjiang to the united states. the santa rally describing stateside, back to a new record lever, not to mention about the winning severity potentially of omicron and strong u.s. data around housing and jobs bodes we ll. consumer goods and consumer durables are positive. the u.s. market close today. treasury and equities got some major markets closed as well. the the likes of italy, spain and germany. seeing upsides in the u.k., the benchmark stock is flat. 113. and brent is lowered by 1%. coming up, we'll look at omicron 's impact and aviation

as united and delta cancel over 200 flights. travel misery for a lot of people. stay with us. this is bloomberg. ♪

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tom: welcome back to bloomberg markets live on tv and radio. in the u.s., united and delta are expected to cancel 200 christmas eve flights because of staff shortages linked to covid. it is a blow to carriers trying to recover from the pandemic with the holidays one of the busiest times for travel. let's bring in laura wright, doing a deep dive on all of this and implications. what is the latest than in terms of the disruptions from covid-19 during this all important holiday season? >> covid is having an impact for the united states -- united have been unable to pull together crews due to infections and delta airlines it is a mixture of the weather as well as covid cases. in the united states, the seven

day moving average of covid cases stands at 186,000, new covid cases. that is being challenged by this narrative that yesterday there were reports of 269,000 cases. we may start to see a retracement in that recovery, because tsa -- before this week highlighted that the u.s. had almost caught up with pre-pandemic levels of domestic travel. tom: what is the state of play when it comes to some of these key european travel destinations that were girding for a big season hopeful to see a large number of tourists? >> europe is far from recovery. looking into some oag data on seat capacity comparing to this week to the same week in 2019. interestingly, greece is an outperformer with seat capacity down 3% for that period. whereas, the united kingdom is

the group laggard with seat capacity down 30%. it was the best week year to date in terms of seat capacity for that basket of european countries, but there is so much uncertainty ahead due to the virus which is causing potential travelers to delay their plans. tom: how are -- have the markets reacted so far to the turbulence? >> markets have been sensitive in the airline sector. when we learned about the omicron variance, we thought there would be a selloff yesterday a study indicated that omicron could be less likely to result in hospitalization, there was a rally. today the price action is reduced and volumes are low. i spoke with john strickland from jls, he told me that yes, airlines are spheres and cancellation at it this time of year when people come together and plan their summer holidays. airlines rely on those forward bookings for planning for staff.

it is quite unbelievable that the airline sector is facing potentially a third summer of disruption because of this pandemic. tom. tom: thank you. bloomberg's laura wright and the impact on the airline sector of these restrictions and the spread of omicron for their sta ff. ok, let's get the latest on the virus. u.k. prime minister boris johnson has urged britain to take care amid a recordsurge in cases. merck's covid-19 pill was cleared by u.s. regulators giving high risk patients a second at-home treatment. we saw the pfizer pill cleared earlier this week. joining us now is a professor at the johns hopkins bloomberg school of public health, doing an excellent job throughout this pandemic of keeping us informed as of course the situation evolves. thank you for this time on christmas eve, of course. what is your understanding of the severity of omicron?

what is leaving you cautious after studies of the u.k. that suggest the severity of omicron is more muted than previous variants. >> the important thing to continue to monitor are these populations that have been at high risk of severe disease. talking about the elderly, we are talking about those with secondary medical conditions that predispose them to severe covid. we haven't seen a large number of individuals with those, in those categories be infected with omicron. that's the one thing that's still cautious. case numbers are spreading, severity seems to be mild in the healthier population. that is a good sign but i'm still concerned about those vulnerable populations and we need to monitor that and see how the virus is going to behave in those populations. tom: do you have a timeframe, is there a timeframe, sense of what

we will have clarity on this and be able to answer this question more conclusively? >> omicron seems to be moving at light speed compared to other variants, so i imagine that with the surge of cases we have been seeing in the u.s. over the past week or two, we'll be seeing the severity come in a week or two, because disease severity likes the case numbers by 14 days. so, sometime in this holiday season will start to see if there is a real uptick in the cases in these vulnerable populations. tom: is it at that point when we can see and verify whether or not some assumptions from some, some market participants who have made the call to maybe omicron because it is so -- less severe is going to be a positive in terms of the shape and the evolution of this disease. is that when we can make a call and turn it -- and determine whether this will be an endemic disease like flu that is treatable? >> that will be the real sort of

bellwether for things going forward. i think another thing to realize, though, is just an increase in case numbers alone could put a real stress on our health care system. so, even if omicron is causing milder disease, if someone gets sick and does not go to work for a week, that puts a strain on that workplace and particular when it comes to hospitals, having staff not be able to get to work will cost a drop in the amount of care they can provide to their patients. and that is going to stress the system even more. so a milder disease is great but if a virus is causing twice as many cases but only half as many mild diseases, at the end of the day you end up with the same amount of severe cases. it's still an evolving situation that we have to monitor. some good news, but public health officials are still a bit wary and trying to monitor things and again we will be quite busy to this holiday season keeping track of that.

tom: indeed. in fact, i was at a hospital in north london yesterday with my daughter. fortune may not severe but we ended up in a wing. the nurses told us a 50% of their nurses are done with omicron. they are all vaxxed so they are essentially fined by 50% of their nurses are because of the spread. in terms of the treatments then we had the pfizer and the merck pill, we know it will take time to get those to the places and the hospitals that need them. do we know what the timeframe is for that and how and when that will make a material difference to the treatment of this disease? >> both pfizer and merck have been giving a production of their drugs in anticipation of getting this approval that they got this week. so, those shipments should be going out. there will be a shortage initially. there will not be as much available, but again, to look at the positive things that have been coming out of some aspects of omicron, the appearance of

these antiviral drugs is going to be critical because they take the place of monoclonal antibody therapy which appears to be taking a really big hit because of the mutations in omicron. so, antivirals are going to be great for those high-risk populations we talked about. but people are going to have to be really careful about understanding whether their local pharmacies have these drugs and there will be some rationing in terms of prioritizing very high risk groups initially simply because there is not enough drug to go around to fit everybody in those high-risk groups. tom: some countries will have to do this and have done this, which is mixing and matching of vaccines. is there data to inform us about the efficacy of that? what we know about the mixing and matching of vaccines? >> mixing and matching seems to be a great path going forward does not matter which vaccine you got initially, an mrna booster, a third dose if if you

did the mrna or a second dose if you had the j&j or the astrazeneca vaccine, those all give you an immunity that is extremely high and is now shown to actually recognize the omicron variant and be able to presumably limit disease there, too. the number of cases and people who have gotten boosters is much much less than the number of cases and people who have not gotten boosters. so, booster strategy seems to be able to work against omicron. and essentially whatever is available out there, if you are eligible, get whatever's available at your local pharmacy or your local dr.'s office because it will -- doctor's of fice because it will help you with a stronger immune response that will protect you from omicron. tom: data backing up the need for additional boosters. we are looking at israel, a country that started to roll out fourth shots. i do not want to feed into the

conspiracy theorist, but is there a concern about the number of doses we end up having, the number of vaccines? >> i think there is. we don't have data on a fourth dose and what it does to your immune response but that simplistic idea that every boost is going to make your immune response stronger and better does not really hold ture in many-- true in many vaccines. that is why we have a set number of vaccines and while we try to leave sometime in between vaccinations to make sure your immune system recovers and gets back to baseline. i've seen no data on efficacy of a fourth dose of vaccine. again, i'd be cautious that it may be useful but we do not have any data supporting that. so, right now third boose, a thi rd dose as a booster is the way to go. the data supports that. until we see something different, i'm not sure if a

fourth dose is something we should be thinking about broadly. tom: dr. pekosz, always such a valuable and important insights thank you have a great holiday or just to notice, the johns hopkins school of public health is supported by michael bloomberg, the founder of bloomberg lp. ok, let's get the first word news. angel: the u.s. says moscow needs to de-escalate tensions on the u.k. board. it comes as kiev says russian troops are continuing to build up. the comments follow president vladimir putin's annual press conference that warned that western nations about military cooperation with russia's neighbors in use in eastern europe. morgan stanley said the staff they had to be in the house -- in the office during the first two weeks of january have to wear masks when not at their desk. it applies to all locations, even those where everyone is fully vaccinated. it comes as other banks are revising the return to office plans. tom, i know you are into the

story but it is one of the biggest u.k. retail deals in years. it sold a department store to a high austrian venture group. it is -- a chinese family is joining forces with an austrian group. it is close to 4 billion pounds. global news 24 hours a day on air and on bloomberg quicktake powered by 2700 journalists and analysts in 120 countries. this is bloomberg. tom, i got to say, i told you earlier that i love oxford street at this time of year and especially looking at the christmas displays right outside -- tom: like a moth to a flame. they are fantastic. selfridges does an amazing job. it was bought by a canadian family for $800 million in 2003. now they are selling it for 5.4 billion u.s. dollars.

a lot of this is down to the fact that selfridges has a huge footprint in oxford street and behind the store there is undeveloped land. it's the broader picture as well this company has associates -- in other parts of europe as well but it is a big deal of the u.k. coming up next, brexit's impact on labor. you change the jobs markets. that is next. this is bloomberg. ♪

tom: this is bloomberg markets.

happy christmas eve, happy holidays. i am tom mackenzie. a lot of the main indices closed. the likes of italy, spain and germany and france closing early. the euro stoxx 600 is range b ound after it hit new records in the u.s. on optimism that may be the omicron variant. the omicron variant is less severe. the ftse 100 up. euro dollar gaining on a softer u.s. dollar. treasuries and equity stateside will not be trading today. natural gas prices very much and focus today. it looks like a third day of falling prices, down by 20%. this is as we chart the energy that has been shipped from the u.s. to europe making up for the supply shortages out of russia. if we get a cold weather. that will have an impact. some predicted a slightly milder winter. brent is down 0.8%.

some of that will be pared into natural gas. we have lower thin volumes and thin liquidity leading up to christmas. your christmas turkey might be more expensive this year. from brazil to china to the u.s., whatever delicacies grace your table they are probably more pricey than ever before forwe find out why. >> this year, has been a pretty difficult year. the price of production has risen dramatically. we've seen price increases across the board from anything from 10% to 35 percent. today we are at the -- turkey farm in kent. we're here to find out in the run-up to christmas if turkey one of the most important meals on the table will be more expensive. everything from labor to seed

costs have got up. that will push of the price of turkeys even higher compared to last year. >> we have put our prices up by 8% but that definitely has not covered everything and we had to absorb as much of it as we possibly could. the butchers will have to take a hit on what they are putting the birds price as well. >> we use -- the system now. the price has gone up 35%. the cardboards we use for the boxes the birds go out on has gone up 35%. gas prices have gone up 20%. fuel, as everyone knows has gone up a lot. you're getting a birds from the farm to the butcher shops will be very expensive this year. i had a very big impact. it's not something we can economize on. we have got to feed the birds the right rations.

there isn't a product that we use on this farm that has not gone up. >> critically in the u.k. -- shortages have hit every industry. this is force the government to intervene -- this has not been enough -- but in farms like this, to introduce innovative ways to deal with the shortage. tom: a look at how inflation is impacting christmas dinners. this year on peer to peer david rubenstein asked global leaders about this is quite the switch from turkeys and christmas dinner to the pandemic. >> the pandemic itself and the ability for this technology to be used overnight to fight against this very nasty virus, that we did not imagine. >> since 2013, we have been building our capability in digital cloud and security. so, at the time of covid, we

became relevant and critical for really all of the world's leading companies. >> crises bring out the worst and the best in people. while we entered covid, the covid crisis as a very coherent, powerful team, we emerged even stronger. >> take advantage something as negative as covid, but we were forced to look at the business model and we said -- reset the business model. >> it has certainly been a challenge for us on staffing at the restaurant and has put pressure on wages which is what you see in a capitalist system. so, employers like mcdonald's are having to pay more on wages. >> the single biggest issue we have is getting labor back into hotels broadly but in certain roles like housekeeping and the culinary areas. while we have seen some easing of that over the last few months

we still have a ways to go. tom: ok, those were just some of the leading industry voices who spoke to carlo co-founder and cochairman david rubenstein on peer to peer about their experiences during the pandemic. switching focus to brexit. it has been almost a year since the u.k. severed its ties with a e.u. today we are looking at the impacts of brexit on the labor market. let's bring in our u.k. reporter who has been digging into this for us. what has the effect been on jobs? >> brexit's exacerbated the labor crunch issues you just heard and that clip in the u.k. last year, 200,000 e.u. nationals left in 2020. that led to staff shortages in industries that rely on e.u. labor like retail which has led -- the fuel crisis over the summer, because of the trucker shortage which again comes back to brexit. there were over -- were other factors as well. in those industries that faced

recruitment issues, as you heard in those videos, they had to up wages, and the company said to hike prices. it's added to the inflation headache for the bank of england and squeeze household finances. as we look ahead to 2022, the cost of living crisis is proving to be a real achilles' heel for boris johnson, which is ironic given that brexit is such a defining feature of this government. tom: we were at the tory party conference in boris johnson said high wages. this was always part of the plan. being offset by inflation. when it comes to covid is difficult to unpack that. >> part of the big reason why those e.u. nationals have gone home was because they did not want to be here in the pandemic or in the recession. then the drawbridge was lifted and visa restrictions were tightened. you look at that 200,000 figure it is interesting because

actually there were more u.k. nationals who became economically inactive, which means they were not looking for a job or they didn't have one because they were staying students, becoming retired, or they were long term sick. the covid impact outweighs the brexit impact on the markets. tom: you have to de-pick or unpick the two to get a clearer picture on the markets. let's check in on the markets as we close out the hou. -- the hour. the optimism, the santa rally being carried over. a number of the major indices closed. slim volumes and the quantity. holding on to gaze across the benchmark. the europe stoxx 600 in the ftse, the u.k. market regaining 0.3%. natural gas prices have come down for a third straight day,

down 33% as u.s. ships had towards europe. brent at $76 a barrel. that is the shape of marcus this christmas eve. we wish you a very good christmas and a very good holiday season. thank you for watching with us. plenty more coming up. this is bloomberg. ♪

♪ >> human london, 7:00 eight 12:00 p.m. in london, 7:00 a.m. in -- 7:00 in london, -- 12:00 and london, 7:00 a.m. in new york. i'm yousef gamal el-din. canceling christmas eve slates -- christmas eve flights due to staff shortages. lng races to the continent to offset russian spy. tings may be a little quieter because it is the day before christmas, but there is still

plenty to get through. european markets are closed. bear in mind that beyond the next level, we are seeing quite a bit of weakness coming through on the consumer staples side. u.s. 10 year yields are currently off-line, but we are getting a bit of an indication in u.k. 10-year gilts, 0.9 two. volumes are significantly lighter. g10 fx, this is as quiet and calm as a yoga class. barely above the flat line. brent above $76 a barrel. the russian energy minister sees $75 a barrel range kind of a benchmark of stability going into 2022. i want to get to the european energy story. it is all about that gas crunch as we look at the global markets. just flesh out the cratering,

the collapse in the european gas futures. the third day of sharp declines. more tankers crossing the atlantic with u.s. fuel being brought to the region. at least 15 vessels with lng have declared western european ports as their destination, up from 10 on wednesday. this is according to shipping data compiled by bloomberg. let's zoom in on how the omicron variant is impacting the holiday season. united and delta are expected to cancel more than 200 christmas eve flights, all because of staff shortages linked to coronavirus infections. it is a blow to airlines trying to recover from depend of it, with -- the pandemic. let's bring in bloomberg's laura wright for more on this. what exactly do we know in terms of scale and disruptions being caused by covid-19 in the last 24 hours? laura: cobit is having an impact for united, staff shortages.

that was the primary reason why they have been unable to get enough crew on their airplanes. for delta, it was a mixture of the virus and weather. the seven day moving average in the u.s. stands at 186,000. that figure is likely to increase because yesterday, new covid cases in the united states were reported at over 200 tics to thousand. now there's a challenge to the prior recovery in u.s. domestic travel. this week, tsa data revealed u.s. domestic travel was almost back at the pandemic levels, but due to the rising number of cases, it looks like there is going to be a serious challenge for the sector going forward. yousef: i was looking at a list of destinations across europe, getting to europe for a bit of a change in january. but for each country, to cut

through the requirements, the restrictions, what is the latest on that front? are there any updates? laura: europe is far from a recovery. i've been looking at data from oag comparing this week to the same week in 2019. it is also an indication of passenger volume. interestingly, greece is the outperformer, with seat capacity down just 3% over that period, whereas the united kingdom is the laggard for that basket of european countries. the u.k. is still facing a travel ban from germany and france, which also explains their underperformance. i was chatting with one analyst yesterday, john strickland, he told me airlines are experiencing cancellations. christmas is a crucial time when families and individuals plan their summer vacation. airlines rely on those forward bookings. the airline industry is

terrified of a third summer of disruption. passengers are willing to wait and see because of the uncertainty, extra testing, and the cost. yousef: thanks for that. that is laura wright from our bloomberg team in london. let's turn to how the virus is playing out in markets. joining us now is charles lieberman, advisors capital founder and chairman. there seems to be a growing narrative in parts of the market that covid-19 is going to start becoming a centerpiece in the rearview mirror as we understand resilience and innovation against covid-19 even better. do you agree with that? charles: yeah, i do. i take a lot of solace from the behavior of cases in south africa. it looks like there was an absolute explosion of cases, but it also looks like to have peaked and they are starting to come down. the other critical variable is

the number of people who have been hospitalized versus the number of deaths. those have behaved a lot more moderately. it is clear that omicron is far more contagious, but also less lethal, less severe, so cases are milder, and there's a good chance that we will see cases peak in the united states sometime in january, so by spring, things should be humming again. yousef: the economy is still adjusting to the supply and demand imbalances in the disconnect to all of that. we had the bank global market inflation trading weigh in on this. here is something that caught my eye. >> i believe it is very likely that u.s. inflation will be 7% in the first quarter. yousef: do you agree with that,

that basically the upside inflation risk is not sufficiently priced into the market? 7% sure seems to be out there. charles: 7% seems a bit high, even to me. but i do agree that inflation risks are underappreciated. there is still not a residual sentiment that inflation is going to moderate. this notion of a surge in inflation being transitory i don't think has left the market. it is still priced in. otherwise, how do you explain a 10 year treasury at 1.5% when the feds own targets expect inflation to come down at the end of 2023? my own sense is that we have severe labor shortages. the economy is quite strong. i don't see the labor shortages being relieved in any material way. we are hopeful that as conditions with covid improve, more people will come back into

the labor market, but likely that will be gradual. in the meantime, the economy is quite strong, so inflation pressures will likely come in well above the inflation expectations -- the fed's expectations and the market expectations. yousef: in your research, you argue that a quick withdrawal of some of the stimulus is in order. a doubling of the reduction in terms of asset purchases. how soon could we get that, and what are the implications for your 2022 asset allocation? charles: the fed has already announced a doubling of the reduction of bond buying, so they are now doing 30 billion a month. the bond buying program will terminate in march, and that means that the fed will be in a position to start raising interest rates immediately thereafter. that is what we expect. in terms of investment, locations, i think the right way to play this is, number one,

with respect to fixed income, cheap duration is very short. take a little bit of credit risk because the economy is doing so well. corporate profits arising, so spreads can get tighter. basically, keep duration short because there's a lot of upside risk to interest rates and a lot of downside risk to bond prices. on the equity side, the appropriate trades are played for both higher inflation and higher interest rates, so that means in the case of inflation, companies that are built on tangible assets, everything from real estate investment trusts, we will and gas pipelines, spreads in various markets like the banks will benefit from rising interest rates since their returns will go up, and costs will be quite low. yousef: i miss understood that because i thought human a doubling of the announced doubling.

clearly you met the doubling already. in terms of the tail risk, it is kind of what is the unknown variable going into the new year. what are we missing, do you think? charles: it is always hard to know what you are missing because if you knew it, you would not be missing it. but the fact of the matter is i think there is a bit of complacency in the market. much more worrisome on the bond side than on the equity side. in the case of equities, the economy is doing very well. corporate profits arising at a very good clip. the equity market will have some headwind coming from higher interest rates. at the same time, corporate profits are doing so well that that should influence support for stock prices. in the case of the bond market, i am pretty negative. the risks are one-sided, and my judgment. there's very little risk inflation will be more moderate than expected. quite the opposite is very likely.

so the 10 year, in my judgment, is at severe risk, and the market is not priced for that. yousef: charles, great catching up. thanks for taking the time. all the best for the start of 2022. that is charles lieberman, advisors capital management cio and co-founder. let's get you some news from around the world with angel feliciano. angel: prime minister boris johnson urging brits to take care at christmas. he is considering whether to tighten pandemic rules next week amid a record surge in cases. esther day, nearly 100 cruelty thousand -- nearly 120,000 new infections were reported. omicron appears to be less severe, but more contagious than any other covid-19 variant to date. that is the conclusion of a u.k. government study. it adds that the existing body of research showing a lower risk of hospitalization from the spring. the u.k. health security agency says people with omicron are 50% to 70% less likely to go to

hospitals then with delta. the u.s. says moscow needs to de-escalate tensions on the ukraine border. it comes as russian troops are continuing to build up ahead of a potential attack. the comments followed president vladimir putin's annual press conference. he warned western nations about military cooperation with russian neighbors in eastern europe. in the u.s., president biden has signed a law banning goods from china's xinjiang region unless the companies can prove they are not made with forced labor. it adds to tensions over china's treatment of the uighur muslim minorities. beijing says the bill was in disregard of facts and truth. 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. i'm angel phyllis ciano. this is bloom -- angel feliciano. this is bloomberg. yousef: liquidity is quite a bit lighter, and some of the drivers

are much less than they would be on a normal day. i will give you a good example of the brent crude trade. usually we are under one million contracts. now we are just a few thousand. the disparity is massive, so there's little you can read into the downside of 0.3%, but there is still a general sense of fresh positioning and some assets, including in energy on natural gas, where we had that cratering about 24% at the moment. it is very much because of that flotilla of new lng headed for europe. what a game changer in the last 48 hours. let's get you a snapshot of what is coming up. we will get you into that in more detail and see what the road ahead looks like for the next couple of weeks. this is bloomberg. ♪

yousef: this is "bloomberg

markets." european natural gas prices are plunging. it is rare that you see throughout the year moves to about 20 bars percent -- about 25%. it comes after u.s. lng will help offset lower flows from russia. ship tracking data compiled by bloomberg shows at least 15 vessels are heading to europe. let's get to bloomberg's european gas and energy team leader isis almeida. you can see the collapse in the price, but talk to me about what is happening with some of the underlying trade. what stood out to you? isis: we have a pretty shocking collapse today, 26%. we had as much is 28% yesterday. it is the third day of declines. we even went by whole -- went below 100 euros briefly. volatility is at a record, so it looks like we are going to end this year with record

volatility. there is so much happening in the natural gas markets. at the moment, there's a huge amount of u.s. lng, about 15 cargoes declared with destinations in europe. it is just getting warmer. the forecasts are all changing, and it is about to get warmer, so all of this cargo is going to arrive just as it gets warmer, so we will see the market reacting to that pretty sharply. liquidity is quite low. yousef: natural gas contracts have a reputation for volatility, but this is nothing compared to what we are seeing in the last few hours. how does that fit in with historical precedent? isis: if you look at volatility like the 60 day historical volatility, all the way back to 2011 i think is what we have data for, you see this is record.

we have not seen at this high ever. not even when russia invaded ukraine back in 2014. it has never been this high. we had a couple of days this year where we have seen sharp increases. october 6 was one of those days that we had a 40% increase, and now we be -- i know we have had more than 40% decline for two days. it is a very wild ride, and it is very difficult for companies to cope with that. yousef: when you look at the fundamental drivers in the month of january, what is on the agenda? what could help set the tone and maybe bring some stability in what has been a very wild ride? isis: russia has signaled it is going to continue limiting supplies throughout january. the pipeline capacity they have booked is not very much. this wave of lng is definitely going to help us stabilize. there's a lot of factors that

are going to count. we will have 30% of the french nuclear capacity offline in the beginning of january, and that is really going to mean we have to count on gas. i would not say this volatility is over. if anything, i would say we are in for more volatility next year again. yousef: thank you for that analysis. that is bloomberg's european gas and energy team leader isis almeida on the frontline of natural gas contracts. this year is likely to be renumbered as something of a turning point in the fight against climate change. one of the highlights was the cup 26 summit in december, was companies, banks, and government issuing over $1 trillion in green security for the first time. the planet continues to warm up or you just think back to recent natural disasters in the u.s. and the philippines. the world is likely to remain dependent on fossil fuel's some time. to unpack some of the green financing trends we have seen is

bloomberg green reporter. sustainable debt issuance topped $1 trillion. are there particular players that stood out that took up most of that volume? how does that set us up for 2022? reporter: it was actually quite widespread. corporations have the ability to issue bigger green bonds, but really, you are seeing europe and the u.s. taking a large fraction of that, but there are single issuers that really stand out. the reason this is happening is because businesses are recognizing that a warming planet is causing rising impacts, and those who are making the right noises about reducing emissions and putting in the right regulation are sending signals that this is trying to move away from carbon heavy industries. green sustainable debt is one

way to do that. that is why we are seeing these cans of records being set. of course, any exponential curve has a little bit of hype behind it, and we should remember that there is room for greenwashing. we should recognize that the money that goes will not a medically go towards green activities. yousef: electric vehicle sales are growing fast globally. akshat: for the last few years, it has been china, but europe has taken the lead here. electric vehicle sales are now electric, and that is crucial because transport emissions are one of the hardest to cut. unless governments but hundreds of billions of dollars into public transport, all of the other room to cut emissions is through transportation.

because the pace of decline has slowed a little bit, we will continue to see electric cars become more and more affordable. yousef: i hope they also become more comfortable. there's also more work to be done on that front. in terms of the global energy mix, renewables have become a much bigger part of the pie recently. realistically, how much more progress can be made in the next 5, 10 years? akshat: the economics is what is really driving renewables now. it is climate policy to some extent, but in most of the world, solar and wind are cheaper to build as new power plants than to even run power plants that already exist on coal and gas. that is talking about prices of: gas from a year ago, -- of coal

and gas from a year ago. so we will continue to see that grow. we also have to recognize that we are in a gas crunch, and renewables are only going to work if there is something to be able to balance them. it shows that we will continue to have a dependence on fossil fuels to manage this intermittency of renewables for some time, unless we get cheaper batteries or other technologies that can get rid of fossil fuel altogether. yousef: thank you very much. this has been hugely insightful. bloomberg green's okta rafe -- green's akshat rathi there. we had quite a bit on energy in the last 10 minutes, so i'm going to skip that for the moment and get straight to the g10 fx complex. cable has been a standout, building on the moves we have seen throughout the year. what a year it has been.

you can easily pull this up on your terminal. we are seeing quite a few markets closed this morning, including the united states. in europe, trading will wrap up a little bit earlier than expected. that gives everybody a chance to relax and celebrate christmas when it comes. this is bloomberg. ♪ ♪

yousef: this is "bloomberg markets." let's get to the turkish lira. we have seen some correlations break. a look at turkish stocks in the local currency, they have decoupled. we have some charts around this. usually they have moved in tandem, and that link has broken. the last couple of hours, turkish president erdogan has been speaking. he has spoken about 273 times so far this year. that has been one of the defining moments for the emerging market space. let's head out to eddie van der walt to flesh that out much more and dig in first to some of the commentary here. he talks about how this is

basically a victory, kind of redefining monetary policy, right? this is what he is trying to sell, that they don't need to hike rates to bring down inflation. are they going to be able to succeed? what do you see in the data? eddie: we will have to wait and see. he's obviously trying some thing very new, very different. the markets are rightly skeptical. it is through intervention that some of the biggest selloffs in the lira, that they have been able to stop some of the selloff in the lira. as you point out, equities have been an effective hedge for the currency over a long period. we have seen it almost feels as if equities are expressing a different view here through the currency. equities are now suddenly saying, listen, this has moved from being a currency crisis to

almost feeling like a wider economic crisis. keeping inflation at bay if your currency is devaluing as much as it had prior to the recovery we have seen in the last couple of days, it is very hard to keep inflation at bay. it is almost impossible. yousef: as we set up for 2022, there's still a few days to go in 2021. we looked at some of the historical data as we slide into january. what are the seasonality trends that we need to remind ourselves of when it comes to portfolio positioning? eddie: everybody likes to talk about the santa rally in gold. perhaps that is underway again this year. but i tell you what, there is one thing santa loves more than equities, and that is gold. gold over the last 10 years, between december 23, when markets started to close, and january 3, when the new year really starts, in that period, gold only had one down year in the past decade.

the average return in that period is 1.2%, double the return in stocks. so if you're going to pick a christmas winner, i would go gold overstocks here. yousef: even santa needs a year off, in terms of the historical data. if you had to choose one tail risk that is at the time of your list? eddie: we spoke to markets live readers over the last tour weeks or so -- the last two weeks or so. professionals told us the things they see most is inflation, geopolitics, those sorts of things. but if you dig down, those are the things that are front of mind today. that's why people are talking about them. the thing that worries me most is natural gas prices in europe. they are coming down a little bit today, but we are in the period of very dense liquidity, and we are seeing lng finally

flow in. i think we haven't seen a full implications of the economic slowdown in europe as a consequence of higher natural gas prices. i think that is yet to come in the new year. yousef: thank you very much for all of that inside. that is eddie van der walt, our markets live editor. i want to talk about economic improvement in the united states. that is going to likely continue in 2022, according to the institute for supply management of the largest supply management solutions in the world. joining us now is the senior recruitment officer and head of the business survey committed e. -- survey committee. that may get your top level read -- let me get your top level read on how 2022 is likely to shape up for manufacturing and for services. guest: once a month we get

information from the business panel, and that gives us information. twice a year we do information for the forward period, and we are looking ahead to 2021. if we think we actually had a 14.1% growth in revenue in 2021 any manufacturing sector, we think we are going to have another 6.5% growth in revenue in 2022. it is really strong. on top of that, we also asked about the first half versus the second half of 2022. the first half, very calm. the second half growing, but at a slightly slower rate. coupled with that, we also have this from the standpoint of input costs. pmi is driven primarily by the input cost changes, we are starting to see that move more towards the librium -- towards equilibrium. yousef: one thing i delve into as part of the preparation is the price increase predictions

in 2021 and 2022. on the services side, a net average increase of 8.1%. that is on the manufacturing side. on the services side, averaging 11.3 percent. that is significantly higher than some of the current mainstream forecasts. how does that stack up with some of the previous surveys that have been done? tim: highest numbers i have seen since i have been acting as chair in the last five years. if you are a supply management person having to do with that kind of headwind, and has been a tough year for you, and you deserve the holiday break. but more importantly, for 2022, we think we are going to add an additional 8.1% price growth, which will see 8.2% i the summer. what it says is that we are continuing to have price growth

for the first half, and then we will level off and stay stable through the end of 2022 which really says that demand will stay strong, we will still be comply constrained in some sense. we are dealing with the pandemic that has caused massive problems on the labor side. those aren't really projected to clear up for some time. i think we have seen with the latest variant, this proves that we are going to be living with this. many people have done a good job fighting through it, but we have made some gains in the labor side slow. over the last four months, we have probably improved by about 2% month over month. yousef: there has been much talk about diversifying supply chains, and that is going to be a big theme for 2022 as well. i wonder how that ricochets through into capex and some of the investment plans for the new year. tim: capex is very strong. we expect to spend more money on capital investment in 2022, so

we think we actually end at 12% growth in capex in 2021 compared to 2020. we thought it would be 8.7% in may, but we think we actually close at 12%. we believe we will see another 12.7% investment in equipment in 2022, which is a really strong number. we are looking at numbers here that i have not seen since i have been doing this since 2015, 2017. we had really strong records. right now we are sitting at record leadtimes, and we are near record leadtimes. yousef: fantastic to touch base. tim vr a -- tim fiore, ryder system chief procurement officer. the scene of inflation isn't going anywhere this christmas. from brazil to china to the u.s.

, whatever delicacies grace the table, they are probably mark spence of than before. bloomberg finds up why. >> this year has been a difficult year. the price of production has risen dramatically. we have seen price increases across the board from anything from about 10% up to 30%, 35%. today we are at a farm in kent. we are here to find out in the run-up to christmas if turkey will be more expensive. everything has gone up, so this is likely to push up the price of turkey even higher compared to last year. >> we have put our prices up by about 8%, but that definitely hasn't covered everything. we have had to solve as much of it as we possibly could. the butchers will perhaps take a

hit as well. the price of wax has jumped 35%. the cardboard that we use for the boxes that the birds go out in, that has gone up 35%. gas prices have gone up i 20%. if you will, as everyone knows, has gone up a lot. you're getting the birds from the farms to the butcher shop. it is going to be really expensive this year. food prices have jumped up 18%. it has had a very big impact because it is not some thing we can economize on. we got to feed the birds the right rations. there isn't a product we use on this farm that hasn't gone up. > i think in the u.k., staff shortages has forced the government to intervene. however, this has not been

enough to plug the hole, forcing forms like this to introduce creative and innovative ways. yousef: a look deeper into the supply chain and exec he what is making your christmas dinner more expensive this year. let's get to the first word news and see what else is happening with angel feliciano. angel: here in the u.k., prime minister boris johnson is urging brits to take care had christmas. he is considering whether to tighten pandemic rules next week amid a record surge in cases. yesterday, nearly 120 thousand new infections were reported. that is double the rate seen at the start of the month. omicron appears to be less severe, but more contagious than any other covid-19 variant to date. that is the conclusion of a u.k. government study. it adds to the existing body of research showing a lower risk of hospitalization from the spring. the u.k. health security agency says people with omicron are 50% to 70% less likely to go to hospital than those with delta.

the u.s. said moscow needs to de-escalate tensions on the ukraine border. it comes as key have says russian troops arc -- as kiev says russian troops are continuing to build up at of a possible attack. prasm it -- president vladimir putin warned of cooperation with russia's european neighbors. president biden has signed into law a ban on products from china's xinjiang region. china urged to the mistake, thing the bill was in disregard of facts and truth. 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. i'm angel feliciano. this is bloomberg. yousef: thanks, angel. i want to get straight back to the markets. u.s. markets are closed, but at

the same time we have a low bit of trade in europe. some of those indexes that are online are going to wrap up trading a little bit earlier than usual. we are much lower on the euro stoxx 600. dear euro-dollar -- your euro-dollar broadly contained. gas futures have been much of the focus of the last 48 hours, that cratering accelerating. brent crude, just 50,000 crude contracts trading. zillow we are -- usually we are just under one million. here's what is coming up. let's get you a snapshot of what is around the corner. we are going to get into the brexit conversation and the impact on labor. u.k.'s exit to the eu -- exit from the eu change the job market, but by how much? this is bloomberg. ♪

>> 3, 2, 1.

[cheers and applause] >> let's paint a picture of an economy. on the one hand, more jobs, lower unemployment, higher wages, and stock market. but on the other hand, backup supports and rail yards. companies struggle to meet demand. prices rising too much, too fast. the story of the u.s. in 2021 and the historic return of inflation. >> costs rising across the country. >> runaway costs. >> consumer prices remain too high. >> it came gradually, and then suddenly. crude oil prices jumped in february, then lumber and used cars in april. u.s. consumer prices have been climbing almost every month since, rising to 6.8% in november, the highest since 1982. >> consumers are feeling it, and here on the backend, when we are looking at a lot of this data,

you can see it rippling through the economy. everything from gas prices, food prices, raw goods, lumber or metals, you are seeing those prices going up. >> there's plenty of argument about how it happened and who is at fault, but we know it wasn't any one thing. a fast and huge rebound in spending was partly to blame. americans started buying again after holding back during the early months of the pandemic, using cash from emergency government programs. as demand was picking up, a lot of companies were slow to restart, struggling to get supplies and bring people back to work. that plus outdated infrastructure help come up production. -- helped gum up production. >> prices are going all the way from the boat to the port, where they are often stuck, to the shipping companies and the transportation companies who don't have enough truck drivers, to manufacturing plants to the consumer. >> most economists agree that

the government also had something to do with this come about the trump and bided administration's past spending bills that sent trillions through the economy. and then of course, there's the federal reserve. it pumped even more cash into the economy and cut rates to near zero, making it cheaper and easier for banks to borrow and loan money. all of those factors combined to help push inflation up to where it is now. >> too high. >> uncomfortably high. >> today, it is the federal reserve who could put the brakes on inflation, but it is taking its time because it has a tough choice. if it puts the brakes on hard, it would probably reduce inflation, but could also slow down or even stop the economic recovery completely. on the other hand, the fed could slowly lift its foot off the gas and hope inflation mostly guys down on its own. that is what the fed has been doing so far. >> the federal reserve is keeping in mind that they are working with an economy that is

still recovering. >> one reason policymakers are being so careful is that they don't want to make the same mistake as last time. after the great recession, some people think the federal reserve hit the brakes too soon and the recovery was weaker than it could have been. this time around, the more generous economic policy has been largely successful. all of that money the fed and the last two administrations come to into the economy is partially why the recovery was so much stronger than after 2008 and why it has been faster in the u.s. than in other major economies. >> there's been a huge recovery. >> a huge v-shaped recovery. >> the u.s. recovery will continue being stronger. >> the u.s. recovery and continued strength looks more positive than we see in the rest of the developed world. >> we are experiencing the strong gust economic recovery in the world. >> no matter what happens, we are likely to have high inflation for at least the next few months or get a economists are expecting prices to rise 3.7% next year, still above the 2% that the fed is aiming for, but that is lower than it has

been, and energy costs hold back and supply chain issues improve. there are signs that inflation should start easing up. >> we are pretty much at peak inflation from supply chain issues right now. >> already starting to see some moderation of some of the inflation pressures. >> signs that some of these supply shocks are loosening up. >> we are past the peak inflation in terms of markets pricing that in. >> we have passed the peak in inflation hysteria. >> the truth is, we don't know what happens next. plenty of investors and economists got the inflation call wrong the first time, and it could catch us by surprise again. but we do know that a dangerous price spiral leading to an economic meltdown is pretty unlikely. the federal reserve should be able to step in and keep things from getting out of hand if prices keep rising too much, too fast. would we paint that picture of the u.s. economy that has got a problem, we also have to ce de that it is just part of the story. the other side of the coin shows

a record-setting recovery, faster growth, more money and more jobs, all made possible by the same decisions and policies that help push inflation higher. one of these two pictures will probably define the post-pandemic era for economists. in the new year, we will see which one. yousef: bloomberg's danny lie reporting for bloomberg quicktake. welcome back to "bloomberg markets," live on tv and on radio. let's get straight to the united kingdom, where covid cases surged to a new record for the second day in a row yesterday, fueled by the omicron variant. bloomberg's u.k. reporter was a burton -- reporter lizzie bur den joins us. where does this leave boris johnson on whether to tighten regulations after christmas? lizzie: it piles pressure on the

prime minister. his scientific advisors have been telling him to act now before it is too late, but mp's gave him a hard time last time he wanted to tighten restrictions. they are likely to draw on new research from the u.k. health security agency which shows that even though omicron is more infectious than other variants, it is actually less severe. but the other side of that research is it shows that even though the vaccine booster works against omicron, it loses its effectiveness faster than other variants. because omicron is so infectious, we are likely to see a significant number of severe cases anyway. that is what is happening in the u.k.. national health service bosses are saying there's already huge pressure there. but whatever decision johnson makes, we are not likely to get an answer until the week after christmas, sources are telling bloomberg. yousef: on the brexit front, it has been almost a year since the

u.k. severed ties with the u.k. what has been the impact on the labor market over the past 12 months? lizzie: brexit has exacerbated the labor crunch in the u.k. about 200,000 nationals from the eu left in 2020, and industries that were historically reliant on eu work are suffering, especially retail. we saw empty shelves there. over the summer we had the fuel crisis because of the trucker shortfall, which again comes back partly to brexit. so in those industries, employers had to dangle bigger salaries in order to lure workers and to cover the wage bill, they have had to hike prices. heading into 2022, that cost-of-living price could create a real problem for boris johnson, which is ironic given the importance of brexit to this government. yousef: absolutely, and that is

why we will steer across all of it. we've got much more ahead on "bloomberg markets." we will dig deeper into some pockets of opportunity. volumes are lighter, but that doesn't mean there isn't a trade out there. this is bloomberg. ♪

♪ yousef: 1:00 p.m. in london, 8:00 a.m. in new york, at 5:00 p.m. in dubai. this is "bloomberg markets." u.k. stocks drift higher on low volume. a tailwind from the s&p 500 hitting an all-time high. the spike of covid cases upend travel plans. united and delta cancel hundreds

of flights. gas prices plunge as u.s. ships carrying lng races to the continent to offset russian supply. lead to be with you around the world, whether you are at the trading desk or at home. if you are off, i am glad somebody is already sell rating. volumes are lighter. here are some of the highlights. european markets are going to wrap up trade a little bit earlier because it is the day before christmas. the euro stoxx 50 lower by 0.25% . if you look beneath the surface, consumer staples are about 0.3% weaker. in the gilt markets, we are as flat as a pancake. your 10 year at 0.95%. g10 fx also very quiet. a little bit of movement and energy. let's start off with brent crude at $76.14 a barrel, down just under 1%. alexander novak, the russian energy minister, says $75 a

barrel plus or minus is the range he is looking at for the benchmark for stability going into 2022, but where we are not seeing a lot of stability is the wild ride in the energy crunch in europe. now it looks like you've got this whole flotilla of lng headed towards europe. we understand at least 15 vessels with lng have declared western european ports as their destination as of thursday, up from 10 on wednesday for you that is according to data compiled by bloomberg. it is the third day of sharp declines. we saw double digit moves on one of these contracts for natural gas, to the tune of about 22%. let's focus on how the omicron variant is impacting the holiday season. united and delta are expected to cancel 200 christmas eve flights because of staff shortages linked to the coronavirus infection. it is a blow to airlines who are trying to recover from the pandemic, with the holidays one of the busiest times for travel.

let's bring in bloomberg's laura wright and get some more analysis. what are some of the other numbers that can give us a better idea of the scale of damage and destruction being caused by covid-19? laura: omicron is having an impact on the airline sector, and it is why airlines cannot pull staff at this time. the seven day average of new covid cases in the united states stands at 186,000. that figure is likely to increase significantly. yesterday, new u.s. covert infections were reported at over 260,000. this challenges the broad-based recovery in u.s. domestic travel that we had seen. for example, tsa weekly flying data was almost back at prepend amid levels for this week. yousef: and what about the state of play for some of the european travel destinations?

it is getting more and more difficult, isn't it? laura: it is a mixed picture. i have been getting feed data comparing this week to the same week in 2019. interestingly, greece is the outperformer from that basket of key european countries, down just 3%. that contrasts with the united kingdom, down 30%. the u.k. is still facing travel bans from france and germany to rising omicron cases, and that travel ban also represents their underperformance as well. i spoke with one analyst yesterday, john strickland, director at j lsp he told me airlines are experiencing -- at j a less. -- at jls. the industry is terrified of missing out on a third summer. it is really unbelievable that this far on in the pandemic, we

are still facing substantial disruption. yousef:yousef: thanks for that. let's dig into the impact on markets. we want to get to ameriprise's financial wealth advisor. once again, your prediction as to whether the worst is yet to come in february and january in particular, the peak of winter, before things may get better with a broader reopening? guest: i clearly don't have a crystal ball, but omicron really took everybody in the past week or so just because it spread so quickly, and as always, there were is a reflex knee-jerk reaction to the market until more information came out, and we got our santa claus rally after all in the last three days. but moving ahead, i think next

week, as the year ends, we will probably end with a very solid year across the spectrum. i think inflation is going to continue, traveling will be a challenge until we get past the holiday season and the weather gets warmer, and of course, subject to a new variant at some point coming out, it is all a learning process, and it seems like we have to just go day by day or week by week, but from a higher level, that is kind of what it looks like. yousef: the big focus for the markets is going to be inflation, and whether that is going to be constrained or contained in some way or another. the bank of ireland weighed in on this. i want to run a soundbite of that. >> we see near-term sell side risks. i thing it is very likely that u.s. inflation will move above

2% in the first quarter. yousef: nothing freaks a market out more than upside risks to already high inflation outlooks. what is your analysis? nancy: i think inflation is definitely going to continue, but perhaps not nearly as high. i think we experienced about 6% this past year, may be closer to 4% is my speculation for next year. but i think it all has to do with how we recover from the pandemic. every time we make a few steps forward, it seems like we have to take another step backward. but the fundamentals are very strong. corporate earnings are strong. these are all very good things to look forward to. but inflation will continue for sure in 2022.

not nearly as bad as this year, though. yousef: as part of the outlook for 2022 and some of the big risks that are out there, europe came in as well in the markets live run down, and that is basically because of where some of the spreads are trading for government bonds. the story here being that premiums investors are demanding for italian debt over germany has climbed this week to the most in a year. one concern is that the ecb will cut more quickly, and the other is that italian prime minister mario draghi could step inside early next year. how do you find space in a portfolio for europe? how much space are you willing to make? nancy: quite frankly, very little. we are sticking with the u.s. mostly, until things get a little bit more stable. i am in the business of meeting clients' long-term goals, and speculation is not a large part of that, but i feel that the

u.s. is a little bit more predictable. the fed is beginning to taper. we know that interest rates will likely rise in the next year, although i am not sure that they are going to stick to the three interest rate rises. we will see. definitely at least one or two, perhaps. yousef: and that translates into what kind of calls on the sector level? because with rising rates, or at least a couple of interest rate hikes, your traditional plays that have been mainstream so far , that is going to be a tricky one. nancy: i still believe that big tech will continue to flourish. i'm a big believer that technology and health care and real estate, commodities, these are all things that flourish in this environment, especially with inflation coupled with it. technology is not dead.

it continues to grow, and new innovations, so i think we may see some profit along the way, but definitely still upward. yousef: nancy, thank you very much for all of that. nancy daoud, opus advice you. let's get more news now with angel feliciano. angel: prime minister boris johnson urging britain to take precautions, considering whether to add endemic -- to add pandemic protections next week. omicron appears to be less severe, but more contagious than any other covid-19 variant to date. that is the conclusion of a u.k. government study. it adds to the existing body of research showing a lower risk of hospitalization from the strain.

the u.k. health security agency says people with omicron are 50% to 70% less likely to go to the hospital than those with delta. the u.s. says moscow needs to de-escalate tensions on the ukraine border. kiev says russian troops are continuing to build up ahead of a potential attack. this comes after president putin warned about military cooperation with russia's neighbors in eastern europe. resident biden has signed a law banning goods from china's xinjiang region unless the companies can prove they are not made with forced labor. it is a move that will add to tensions over beijing's treatment of the uighur minority. china urged the u.s. to correct immediately, saying the bill was in disregard of facts and truth. we have just seen one of the biggest u.k. retail deals in years. the billionaire dynasty behind the bears -- behind debeers --

close to 4 billion pounds. 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. i'm angel feliciano. this is bloomberg. yousef: let's jump back into the markets, where we are seeing lower liquidity, lighter volumes, and that explains also the relatively muted price action in things like year stoxx 600, down about zero point 1%. u.s. markets are closed. the european trading day is going to get wrapped up a little earlier because it is the day before christmas. euro-dollar, $1.1317. a little movement in the aussie dollar as well as some of the rate moves get paired back, and then natural gas, that is really the story of today, down 22.4%, deep in the double digits. what a ride it has been for

energy throughout the year. brent crude coming off a little bit as well. let's get a bit of a preview of what is going to come after. we are going to get into the energy story in more detail. then a pickup on that national gas price -- that natural gas price angle. shipments of lng that have set sail towards the european continent or get is bloomberg. -- european continent. this is bloomberg. ♪

♪ yousef: bochum back to "bloomberg markets," live on tv

and radio. i'm yousef gamal el-din. let's get back to european gas. prices are plunging after shipments of lng will help offset flows from russia. at least 15 vessels are headed to europe. let's get to bloomberg's european gas and energy team leader isis almeida. we had a remarkable rally, and then a collapse in some of the futures contract. you see these kinds of radical moves deep in the double digits, stuff tends to break. what is beginning to break as far as you can tell from the data? isis: i think this market is being really volatile. we basically have the highest volatility if you look at the historical volatility. we are at the highest levels on record, even higher than when we had russia annexed crimea in 2014. i think it is pretty shocking to see.

i think a lot of traders are going to find it hard to cope with this as well. we did not have russian gas for a large part of the year. flows were tapped, and now suddenly we have this wave of lng coming, and that is part of the swings going on. but of course, when you have a rally that is so big, a lot of traders close their position before the end of the year to start the next year fresh and not be exposed to the volatility throughout the christmas and new year's period, so that is adding to the whole downside here today. yousef: what do you think is going to take center stage over the next few weeks for the markets, in terms of fundamentals? isis: i think these cargoes are going to arrive in the beginning of january and we will see them coming, and the weather has just turned warmer, so the forecasts are now pointing to warmer weather than they were before. all of that is quite helpful because russia has already signaled they will continue to

send to keep flows capped in january into europe, so that will be quite helpful. we also have france, at the beginning of january, will have 30% of the french nuclear power plants off-line, and we are really going to have to watch because that will mean we will be burning more gas to keep the lights on. yousef: where do i need to look if i want to see a precedent? obviously this is a whole new sort of ballgame for volatility in this particular contract, but something comparable, what would you point to? isis: i have not seen anything comparable to this in a very long time, not since the oil price shock in the 1970's, and i wasn't even alive then. but put it this way, i think the crisis is far from ending. it is going to continue, and you can see that clearly when you look at the forward contracts for gas.

you see the declines in those contracts are much lower then you see in the front months, which tells you we are going to need gas in the summer, and it is still going to be expensive at that point. yousef: thank you very much for all of the analysis. bloomberg european gas and energy team leader isis almeida. after moving in tandem for most of the year, the is tumble 100 index in turkey asked the istanbul -- the istanbul 100 index in turkey and the turkish lira are out of sync. traders are bracing for more volatility after president erdogan pledged to continue cutting rates. we heard from the turkish president earlier this morning. he said that they will keep turkey away from the "swamp of higher prices." let's dig deeper into the story. kristine aquino is from the markets live team. from what markets have been telling me over the last couple

of weeks, it is that the turkish lira is such a difficult barometer for the true worthiness of the currency, but also the economic health of the country. it no longer feeds into a broader transmission mechanism. what are you looking at to get a better sense of maybe where the real story is in turkey at the moment? kristine: i think your investors you are speaking to are exactly right. i think -- are driving it. what is clear is that at least this quarter, what has really done a number on the lira and driven the massive declines to fresh record lows is the fact that we still have a central bank embarking on a 500 basis point easing cycle just as inflation has really gotten away from the central bank's target,

over 20% on a year on year basis. that is very much against the orthodox policy of raising rates so that a central bank is able to control inflation. the very heart of that is very much president erdogan's demand for lower rates. he has made it very clear that this is his preference and has made it an incredibly difficult situation for the central bank moving forward. yousef: and the credit default swaps on a five-year basis, basically the premium that is being demanded for maturing government sovereign debt, that is still pretty much at the same level we were heading into the policy change. on a broader emerging markets front, 2021, we've had some highlights, turkey being one of them. where do you think the idiosyncratic risks are going to be in 2022 when you look at some of the indicators? kristine: turkey is probably

going to remain on the radar for 2022. i think there is still a lot more in that story to unfold asked year. i think another particularly interesting region is probably going to be russia. that is one of the favorites in emerging markets this year. the ruble is one of just three emerging market currencies that have maintained gains against the dollar this year. it is definitely a favorite among investors. we can't forget china, especially because they are embarking on a pit to policy easy shape it -- a pivot to policy easing, so that divergence is going to be very interesting to see how it plays out in markets. yousef: i was looking at a note by ben emmons of medley global advisors, and he writes that in the past, when we saw liquidity get withdrawn from the fed, you had the outstanding performers in emerging-market large caps returning in the vicinity of 7% to 15%.

is that your sense, that emerging-market equities will come back into the fold? kristine: i think one big barrier for emerging market assets is the fact that investors are really worried about inflation. inflation is a problem everywhere, particularly in emerging markets. we have seen a number of central banks trying to get ahead of that inflation story. this year we have seen so many rate hikes across the globe, but investors still doubting whether some of these countries are ahead of the curve were actually are falling behind the curve. i think what we see from investor comments is it is going to be a very big factor for them in terms of which emerging-market assets are going to be allocated into. i think it will very much depend on which regions they see getting ahead of the curve. yousef: appreciate your time. that is kristine aquino. that is it for "bloomberg markets."

a big thank you to all of the producers, reporters, engineers, directors, the guests, to you, the incredible audience from around the world come on what is a slightly shorter day. happy holidays. this is bloomberg. ♪

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