manus: good morning. it is the birth addition of daybreak europe for 2022 with the stories that set your agenda. u.s. futuristic into the green as the omicron variant continues to spread. goldman backtracks on its return to office. while a bit higher amid

heightened supply from libya. it was for elon musk. tesla's masses -- smashes its delivery record. a warm welcome to the show, happy new year. how full is your appetite for risk? what are the biggest risks? the narrative remains the same, inflation, omicron variant, and of course, the fed. this is what mohamed has warned -- let's not kid ourselves. they are still way too stimulative for what developments are and what forecasts are. so, that is the call. the clarion call. this is the risk that it brings to bear in the bond market,

which is losses, last year, the first annual decline since 2013. we have not seen back-to-back losses in the bond market since 1974. blackrock thinks more losses, vanguard things tend's will hit 2%. it might not just be tightening. it could be a little bit of tightening with balance sheets shrinking. what might that do to the risk appetite? let me show you what is going on. day one, ground zero equity markets are higher. asian markets -- a monster three years for the s&p 500. up over 100%. last year, 27%. do valuations matter? 90th percentile. oil is up 1% on the morning.

it seems to be the market is looking through omicron and the mobility shattering airline travel over the weekend. omicron is being deeply discounted as we go into the opec-plus meeting, because libya's delivery is out. the dollar remains the alta -- alpha, up over one quarter of 1%. let's get back to the lead story. u.s. health officials are looking at adding new testing requirements after last week's move to shorten the isolation period for those who test positive. >> the cdc decided they would cut that down to five days if the person remains asymptomatic so long as when they do go out in the second five days of that 10 day period, back to work or back into society, that they diligently wear a mask. there has been some concern about why we do not ask people at the five-day day period to

get tested. that is something that is now under consideration. the cdc is very well aware there has been some pushback. manus: anthony fauci with the very latest. let's get to our health care reporter in hong kong, good to have you with me. we seem to have a lot of differing guidance depending on which country, which health regulator you talk to. the cdc so far, let's take america and jump forward from there. what we have so far? reporter: actually, the new isolation rules only came out last week, cutting from 10 days to five days for people no longer experiencing symptoms and could go back to work in school faster. now, he just mentioned that the cdc is considering to add a testing requirement to the short-term isolation period. that shows how omicron is really challenging the policymakers,

just a week ago when we look to global cases, it was still like 5 million cases a week, now it went up to 10 million in a week. that is double the previous record. it's unprecedented. the government needs to think much more in terms of how they are going to touch up with the variant. manus: if this is about trying to keep economies open, people back at work, goldman sachs was one of the biggest protagonists of that narrative. even day are hitting the pause button on that narrative. reporter: goldman sachs told her staffers to work from home until january 18. last week they were doubling down on the return to office mandate, asking their staff to get booster shots before

february. everything twists and turns in just a week. goldman sachs decision follows jp morgan, bank of america. that is going to be a big step back heading into 2022, and the beginning of this year, we're seeing this new backlash in terms of testing and omicron waves. manus: thank you very much for the very latest. tesla smashing previous records for the global deliveries where the company joined a trillion dollar valuation. where to the sales come from? where is the lead in the story? reporter: 308,000 600 deliveries , a new quarterly record. surpassing the last record set in the previous quarter.

tesla's deliveries are up 87% year-over-year, really impressive. they were able to do this because engineers have been agile, adapting to whatever semiconductors they can get their hands on. semiconductors have been the achilles heel, letting -- limiting production, curtailing advancements. why we have seen an explosion in the secondhand car market. an analyst called these numbers jaw-dropping, blowing away even the best case expectations. essentially, tesla's back was against the wall, but they have been able to crush the numbers. yes, you on must is polarizing. yes, it is volatile, highly value, but, tesla is executing on its proposition for future growth. you can expect some price action later in premarket. manus: thank you very much.

to the oil markets, as i said, we are edging higher. limiting supply, contending with a tightening. our energy reporter is here. it's almost as if the prince has been handed a gift in an ironic way, because libya is that the lowest production in a year as we think they will add 400,000. lay out the context. what can we expect? reporter: tomorrow, opec-plus will be meeting. they will decide whether or not to boost supply. it's widely expected that they will boost that supply. opec, talking about omicron, opec does not see the impact of omicron having an enormous take

on prices. they think asia will be able to pick up the demand despite maybe a drop in demand in europe or the united rates were omicron is spreading quickly. that is one thing they will be looking at as they go into the meeting tomorrow. they expect a tight market, they will advance apply. -- add that supply. manus: let's see if they are brave enough. let's get up to speed, i am ahead of myself. >> president biden has reaffirmed u.s. support for ukraine solver tape. -- sovereignty. the white house says the u.s. and allies will respond if

russia invades ukraine. sanctions are among measures discussed. china's evergrande shares have been suspended from trading in hong kong after an announcement containing inside information follows local media reports the company has been ordered to pare down apartment blocks and a development. a building permit was illegally obtained. u.s. airlines close out the bumpy holiday season with staff shortages caused by the rapid spread of the omicron variant, adding to problems for carriers. flight aware.com says more than 1300 flights have already dropped for monday. the latest spider-man film has held onto its top box office bought for the third week in a row. it generated $53 million for the

weekend in the u.s. and canada according to suggestions by sony. a big jump from 2020. a fraction of the $11 billion pre-pandemic. global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. manus? manus: thank you very much. coming up, we will discuss markets with our guest, her view on risk as omicron grips the world. this is bloomberg. ♪

>> this pandemic, we are in the

midst of the storm. it will continue in 2022. >> [indiscernible] >> the chinese stock market is well endowed. [indiscernible] >> a lot of the big caps -- you will see a little bit of a pullback. >> [indiscernible] >> that is going to be a big rotation as we start this year, a lot of underperformers rally. manus: just some of our guests weighing in on the markets as we start 2022.

we start in a mixed range. the impact of omicron on the global recovery. it appears to be less severe as some earlier variance based on the rate of hospitalizations. happy new year. welcome to the show. let's set the stage. the markets seem to be looking through the risk, the perils of omicron seem to be less at this juncture. the quarantines or less, there is near-term havoc, but are you looking through omicron with an optimistic lens for risk as we start? good morning. guest: absolutely. i think we see omicron rips through a community extremely quickly, but does not result in

a high level of hospitalization and that peak tends to happen relatively quickly. there are a couple of questions we have to keep in mind. the impact on economies. if so many people are in quarantine, over a number of weeks not months, the other is the impact on supply chains and inflation, the third is on markets. what we have seen is markets tend to look through a variant once they have seen the pekin hospitalizations, and that could come very quickly. we are kicking off 2022 where we left off last year, the same questions and concerns, probably the same optimism going through markets for the year. manus: let's talk about where you look to take risk. couple of equity indices. obviously, a monster year for

the s&p 500. europe did splendidly as well, longest winning streak since 1998. harris, best year since 1999. do you think 2022 can deliver those kind of double digits in those dominant markets? america, asia, europe? guest: i think more than 20% seems like a tall ask at this point. for 2022, we have had three years in a row for double digits of the s&p 500, in europe we are going to see some challenges that some structural issues coming back to the four. i think double-digit is possible, we're just at that 10 plus percent, a little above. i do not think we will get to 25% for this year. manus: we started the show talking about the same clarion

call. go faster, accelerate the taper, accelerate the moves. what is the tightest scenario you see coming from the fed this year? are we going to see a more aggressive pivot from the ped -- the fed in 2022? guest: at this point, i can't imagine the fed hiking before may. we know that any ongoing high inflation disruptions coming from omicron, in the fed's view is still part of the transitory nature, as things improve, as we start to reopen better and there is a little bit of that hope that we will get much more herd immunity than we would have had, the slightly milder variants getting rid of the more bitter than strain in delta, the fed is going to be looking at all those

things and probably trying not to overreact in a year where growth is going to be decelerating closer to par where we have the midterms, less fiscal support. it is difficult to imagine them reacting much sooner than that, difficult to imagine them hiking three times this year. manus: what does that do to the dollar? there was a strong currency globally last year. a lot of that was predicated on the picture, and on pricing. a hiking narrative from the fed. does the dollar remain such a strong currency in 2022? guest: it was a surprise for investors last year. we are going to have that support from central banks, tightening more than the ecb, the bank of japan, the dollar weighted index.

those are the currencies that have the biggest way. we're also probably going to see u.s. growth be stronger than some other regions including europe. that should keep some support for the dollar. i am not sure how much stronger it gets from here, but i do think we will see some underlying support remain throughout the year. manus: stay with us. my guest this morning. coming up, the omicron variant is complicating plans. we look at what is next for the stock market after a record-setting year. this is bloomberg. ♪ [speaking foreign language]

>> it has been very difficult to predict on a weekly basis how cases are going to go.

there is data out of south africa showing the surges have fallen off as fast as they have increased, hopefully that's going to happen in other places as well. >> i think we -- we don't know what the long-term impact will be. we have to double down on masking, we have to really emphasize and encourage vaccination. >> after you have been vaccinated [indiscernible] against getting reinfected. with modern technology, we can sample and pull out white blood cells, we can make a single antibody that can do the job. that single antibody is called a monoclonal antibody. >> the reality is, if we proceed with having populations not

vaccinated, we will continue with this pandemic and maybe we will need to jab ourselves more often. manus: some of the virus experts with the very latest on omicron, the advances with technology on fighting the variants relative to where we were at the start of 2021. esty is trying to determine where to deploy capital. if we talk about ground zero for covid and variants, zero-tolerance policy, it is china and asia. we saw some breaking news headlines from hong kong. we are grappling with the of offing story. let's focus on china. this time last year, everyone came on the show and said buy china. they could not gorge enough on china. what is your view on china risk

as you start 2022? guest: one year later, i still think we probably have seen the worst of the performance for the chinese market. we had so much bad news priced in, we had policymakers telling us they will gradually bring some support to the economy, they want to manage the deleveraging of the property sector. i think the beginning of the year will be tough because we have the olympics coming up, the terrible fear of covid, zero covid policy that they are not letting go of, omicron which slips through the cracks and infects people despite vaccination and all sorts of other things, though it is milder but leads to quarantine. that first quarter could be a little trickier in terms of chinese growth, but beyond that, hopefully things improve.

we're going to have to deal with the regulatory overhang. i keep thinking the worst is behind us, we keep hearing that may be they are not quite done. i think that continues to weigh on sentiment, but at current valuations after the performance we have seen, it is difficult to imagine a much more negative scenario. i do think there gradually we should be more optimistic about chinese prospects. manus: you see the fed, bank of england moving towards a tightening narrative. certainly raising rates. what do you expect from the pboc? they would appear to be a on a slightly different trajectory. guest: we are going to see the divergence starting to remove the support and hike interest

rates and the pboc, we have seen them move more in the reserve requirement ratios. we know policymakers want to have some yields, some support for the bond market. they don't believe in the zero or negative interest rate policies we have seen in a lot of other major central banks, but we also know they found a massive support they gave can 20 -- 2008 and 2009 led to unbalances, and lead to problems that they had to fix eight years later. they really do not want to replicate that again. they are navigating this tight rope, they want to stay with yields, support economies, and i think they want to have that yield advantage on the other central banks and not become overly accommodative either, but we should see some easing come through in the first part of this year. manus: thank you so much.

setting the agenda. coming up on the show, oil edges higher. libyan supply tightens. we discussed. right here on bloomberg. ♪

manus: good morning from our middle east had. -- police headquarters. u.s. futures higher for 2022 as we start trading on day one, even as the omicron variant continues to spread. goldman sachs backtracks on a return to the office. oil reopens higher. tighter supply.

and a boost for elon musk. tesla smashes its delivery record in the fourth quarter. inflation data coming from, you guessed it. the lira. down another 3% this morning. the data we are looking for, inflation at a 19 year high. let's have a look at the lira. this is a continued volatility, and more to come. we have seen 500 basis points of rate cuts since september. the currency is down 31% since september. more pressure coming to bear as erdogan promises growth in the orthodox way of compensating depositors for the volatility in the currency. let's see what the inflation data polls a little bit later on for us in the markets.

to the markets, the broader context of a wipeout on a currency over the past one year, down 85%. u.s. equity futures are higher. a monster year last year up 27%. equity record highs. the best december since 2010. but our valuations becoming stretched in which we see people pay up on the skew to hedge themselves? oil up as we go into the opec-plus meeting. the dollar was the surprise according to flow bank for 2021. will it remain the strongest currency in 2022 with an active fed might be a little tighter in the hiking cycle than one had anticipated? the oil market is up by zero point 9%. analysts expect opec will revive more supply when they meet. underscoring optimism for the outlook and global demand.

just 23 -- the 23 nation alliance is likely to proceed with a modest hike as it restores production during the pandemic. let's bring in our energy reporter. he has been with me through the morning getting ready for this hike in production from opec. everybody talks about a surplus in this market for the first quarter and here we are. we are coalescing around additional barrels. 400,000 is what we expect. can the market take that? >> that is what opec thinks. especially with the omicron variant taking only a minor hit on demand. they are confident there is busy traffic across key asian consuming countries and they think that is going to pick up the demand -- the slack you see lost in europe and the united states where obviously covid, the omicron variant is spreading quite widely.

there is a confidence within those member states that more supply must be added or else you could see prices continue to rise higher. but of course, there is the risk that if there is a covid outbreak in china, you see how quickly that country acts and they could close down everything. they are on sort of a tight rope on where to go, but i think when you are going into tuesday, it does seem like they are leaning toward adding those 400,000 barrels a day to the market in february and continuing on the path they set out last year. manus: when you look at the various factors opec are going to take into consideration, what do you think the most bullish of those is? >> the most bullish view of where opec goes would be if they were to look at the data and see

the widespread omicron outbreaks and say, we need to pause and potentially not add supplies to market. there could be a situation wishes -- which seems to be unlikely where they do see a larger impact on traveling because of omicron or other impacts from monetary policy in nations around the world. manus: and on the gas markets, i started off the show with this. natural gas in europe slows down 25% on the last day of the year. is the supply story him -- story so materially changed to warrant a 50% drop in 10 days? >> that is a really interesting question.

i spent most of the new year scratching my head about that. there is a view now that perhaps it did just surged to a record high in december. when you look at the volume, it is not that liquid. there is limited liquidity which is boosting up prices. everything will time there is a mark or something that shows things are bearish, things are bullish, you are going to see this volatile reaction in the market. yes, gas did fall 60% since they had -- hit the record high in the middle of december. it could very well jump again with very thin liquidity and if there is a covid spike in europe , the market is still tight and while there is a lot of energy coming from the united states, that does not fix the fundamental situation in europe

where stockpiles are at a record low. the market is going to have to digest going forward. it is going to be more volatile. manus: i think that is something we are hunkering down for across the asset classes, not least on the oil market. thank you. natural gas was up 400% last year, so you do have context for what the last 10 days has been about. laura wright has your first word news. >> the u.s. is considering adding a negative test requirement after last week's news to cut the covid isolation period to five days. anthony fauci acknowledged the pushback to the shorter span without any further testing. the possible change would come after a time when many americans are struggling to obtain tests. president biden has reaffirmed support for ukraine.

in a statement, the white house says the u.s. and allies will respond incisively if russia invades ukraine. sanctions on russian banks and commodity exports are among measures recently discussed. goldman sachs is asking u.s. employees to work from home if they can until january 18. the move comes after most of the bank's major peers including j.p. morgan chase and citigroup adopted a more cautious stance as the omicron variant spreads rapidly. goldman has been one of wall street's fiercest champions of getting back into offices. tesla delivered 308,000 vehicles worldwide in the fourth quarter, smashing its previous record. the better-than-expected result drove sales for the year to more than 936,087 up year on year. growth expect tatian's push tesla into the -- expectations push tesla into the $1 trillion valuation last year.

a new variation of 5g mobile services that airlines say might interfere with aircraft electronics. ceos of two companies say they would be willing to halt development for six months near certain airports. the industry maintains power levels will avoid any interference. global news, 24 hours a day, on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. manus: thank you very much. for the first time in 14 years, france is taking over the eu rotating presidency in january for six months. emmanuel macron is also facing elections in april, so what is at stake and how much power will france have? >> the french colors will dominate the eu stage for the next six months. an opportunity for emmanuel

macron to push his vision in brussels at a time when the new german chancellor is getting his bearings. >> the country holding the presidency, especially france, a founding member state of the eu, has a big influence. influence on the agenda, the priorities. >> the eu council consists of the heads of state and government of the 27 eu members. the council has priorities and key decisions. >> we must move from a europe of cooperation within our borders to a powerful europe on the world stage, fully sovereign, free of its choices and master of its destiny. >> emmanuel macron is proposing an eu minimum-wage, a carbon tax at the eu border and an independent european -- he wants to push for a common force that

would be deployed quickly, discussed at the first summit in march. a key issue as france marked a huge submarine contract last year. if you domestic and international challenges will be on his agenda. first, the fishing spat in the english channel with the former member of the eu, the united kingdom. the ongoing covid crisis and the threat of the new variant will also impact eu growth. >> when it comes to holding the presidency of the council, you are more of a leader than you are usually. with the matter of angela merkel leaving, he will use this to show his leadership skills to his counterparts. >> potentially the greatest challenge for emmanuel macron will be elections taking place in april. if he loses, a deep euro skeptic like marine le pen could even end up presiding over the eu.

manus: coming up on the show, in turkey, the inflation data is expected to hit a 19 year high in december. data is due later this morning. showing cpi. this is bloomberg. ♪

manus: this is "bloomberg daybreak: europe." inflation at a 19 year high driven by the slump in the lira.

the inflation data will be released shortly. again, another acceleration in consumer prices. how bad will it be? >> we expect annual inflation to accelerate for a seventh straight month coming in above 27% in december compared to 21% in november. most central banks around the world will be raising rates. turkey is doing the exact opposite. pressures by erdogan mean the central bank has been cutting rates by five basis points in total since easing began in september. there is an unorthodox view that high rates spur inflation rather

than prevented. -- prevent it. that is what he has been pushing for rate cuts. this has been driving the lira to multiple record lows against the dollar over the past few months. last year it had its worst performance in two decades, losing 44% of its value. by far the worst performer in emerging market currencies. turkey has been dealing with double-digit inflation and well above its emerging-market peers. manus: you are living through this currency volatility. you are living through this cost-of-living as it were crisis. what is it like there? take me through. go for a cappuccino. how expensive have they become? >> almost on a day-to-day basis we are seeing price hikes in turkey. it has become so severe some are

finding it difficult to afford basic goods. the price of bread, milk, sugar, eggs has risen massively. this is really hurting most turkish households. eating red meat, fish, has become a luxury for most. turkey adding to inflation pressure by announcing massive increases to both electricity and natural gas prices. some turkish households electricity bills will surge by 130%. the opposition party is calling for early elections saying the government is completely out of touch with the economic challenges facing most turks. president erdogan denies this saying elections will go ahead as scheduled next year. manus: when it comes to the popularity for the president, we know he has taken a dip in the

polls. is that due to the handling of the economy? >> absolutely. his handling of the economy is the number one reason voters are losing confidence in erdogan. they are concerned about high inflation, high unemployment, especially after the global pandemic. also, investors concerned about his handling of the economy. they are saying at a time of such high inflation, the central bank should be raising rates. president erdogan insisted rates remain low as he wants to transform turkey into an export driven economy. so investors and voters, extremely concerned about where the con -- where the country is headed. manus: thank you very much. it took a little bit of a wild to go-between now -- it is a

little bit of a while to go-between now and those elections. coming up, china's evergrande group has been audited and tore down a number of apartment lots. this is bloomberg. ♪

manus: day one of 2022, live from dubai. to the latest from evergrande, the saga of 2021. chinese developer shares tumbling from a report that the group has been ordered to tear down a number of apartment blocks. just how many and what is the consequence? let's get to our chief china markets correspondent in hong kong. happy new year. not such a happy new year for the inventory of evergrande.

what size and scale of apartment blocks are they going to have to flatten? >> happy new year. this is kind of the last thing evergrande needed. this is a local media report citing a government order regarding a development just off the coast of hainan, popular resort island in china. the order dated december 30 is that evergrande has to demolish with the government calls illegal apartment blocks. 39 of them to be exact. within 10 days, which is obviously incredibly fast. the key thing is this is a huge development. you are in the middle east. it is kind of similar to the dubai artificial islands. this demolition would only be about one 30th of that.

in proportion to the development, it is not huge, but for the apartment blocks, this is a project evergrande spent about 100 billion yuan if you years ago to start developing. this is just reputationally not great for evergrande, a company that is already severely in debt and looking for property sales to find the cash to repay that debt. again, not a good thing and you are seeing market reaction across the board in hong kong. manus: why such a strong market reaction? the debt issues where the q4 issue. we were told that is not a huge systemic moment. the reaction you are seeing here -- talk me through that. >> it is kind of a cell first ask later.

evergrande suspended trading in its shares and did not say why. it said it will clarify the suspension in due course with an insider transaction announcement. but again, this is a sector that is struggling to raise funds. at the end of the last quarter in december, there was excitement, or at least optimism , that the property market was turning a corner, as it were, that the worst was over, the liquidity crisis was behind us, the lira -- shifting toward more supportive policy. this indication from the local government is that china is -- the government will continue to be tough on property developers, even if is -- it is shifting toward a more supportive stance generally, these companies that expanded far too quickly and

have billions and billions in debt, they are not safe. i think that is very much the message. the fact evergrande shares are suspended means people are selling holdings in other shares. she mount, sooner -- shimao, sunak, falling about 8% to 10% in hong kong this morning. manus: and the developers. the size of the debt that needs to be repaid -- this is what is moving the high-yield market overall is an asia. that is where we see the biggest issue. the size of the funding they need to tap into in these debt markets. >> yes. if you thought november and december was problematic in terms of bond repayment, january is actually more than those combined and that is just the bonds, onshore and offshore, bonds and interest coupons.

the key thing here and the difficult thing about january is the property developers also need to pay different wages. this is extremely key. nomura estimates this could be as much as 1.1 trillion yuan, a huge number, and that brings the developer liquidity hold in january to almost 200 billion u.s. dollars. beijing has told evergrande and other developers that it will not tolerate the delayed payments of these. just before the lunar new year holiday, where we see migrant workers go back to their families, they need money to travel home. the only time they get to see their families. incredibly important month for the property market, and let's see how china and the central bank handles this, because there's also a lot of liquidity

maturing in the banking sector. january on the whole is very key. manus: thank you. the very latest on the evergrande saga. the lira under pressure. this is bloomberg. ♪

anna: good morning. welcome to "bloomberg markets europe." mark cudmore joins us to take us through the market action. the cash trade is just less than an hour away. new year, same questions. u.s. futures kickoff 2022 in the green as investors weigh the impact of in on the global recovery. many