♪ >> good morning from our middle east headquarters. dani burger alongside me. it is daybreak europe. the great rotation takes hold. investors flock to value overgrowth in the fastest pace since 1995. china and u.s. tech stumble. opec holds the line, adding 400,000 barrels a day. demand is expected to whether the omicron.

omicron drives will record virus cases. the government says they can whether the search. good morning. 7:00 a.m. in frankfurt. it is not just a great resignation, dani burger, it is the great rotation at the fastest pace since 1995. this is ripping it out of growth and plowing it into value. good morning. the best theme since 1995. i was trading commodities terribly in 1995. good morning. dani: were you in london in those days? manus: i was. dani: that is where the magic was happening. really driven by that curve steepening. it was also being led by the long end. this is my question for you. is it overdone? is it all technical? is it traders adjusting for this delusion of corporate issuance we are getting? how sticky will this really be? manus: you've leaned into the

supply side of the narrative which is that almost gargantuan amount of flow that will come onto the market. this is up to qatar's. more into days than we did in three months. we went from 72 to 89. i like what david kelly had to say at j.p. morgan. it does not take a lot to push this curve up. with those steepeners comes the big value trade. good morning. dani: banks did really well. autos did really well. tech cost of capital is about to go up and things do not look as attractive. we still are seeing the tech out of the rotation continue on this run. a nasdaq underperforming, downward than .5%. s&p 500 is down as well but not as much. the yen is bouncing back after

its lowest level against the u.s. dollar since 2017. we finally have some buying coming back in the long end of the curve. the 30 year yields up by 10 basis points. how much about yesterday was technical and will be undone? that tech selloff, the rotation is all about the move into value. that tech selloff is falling through from the u.s. to china, but some big names slumping. let's get to juliette saly in singapore. the biggest selloff in hong kong tech index since september. what are you looking at? juliette: absolutely. there were these lofty calls they hang seng index could rise by 50% in 2022. the start of the year means this could be bit of a mirage. down for a third day, the most since september and holding at the lowest since conception. the hang seng tech index, let's

have a look specifically at tencent. it has divested out of singapore, nearly $3 billion worth of shares. actually tearing its investment in the sector for the second time in as many weeks. raising investor concerns about how much more the vesture could happen in this sector and weigh on the heavily beaten down index. bilbili coming under pressure. alibaba not falling quite as substantially as the others. that is after we saw that the daily journal, a software and newspaper business, doubled its take on the chinese internet giant in recent months. quite a bit of pressure coming through. the rising yield and not helping either today. manus: i love that. bilibili, fantastic. juliette saly in singapore. to opec, the big story overnight. increasing production. the group is sticking to the plan.

gradually restoring outflows, approving 400,000 barrels a day. paul joins us from london. it was steady as we go. they look through omicron. much of an impact on the market this morning. they think that demand will hold up? paul: hi. yes, that is one way of looking at it. opec-plus seems confident that despite omicron spreading rapidly around the world and with cases rising, it will not have that much impact on oil demand. the group is expecting the oil market to be in a supply surplus in the first and second quarters, but again, it's not too concerned because of all the work it has done in the last 18 months to cut back production. so, even if they are going to rise in the next few months,

they are doing so from a slope w base. there is another factor, and that is that opec-plus is certainly not going to add 400,000 barrels a day to the market because of supply problems. dani: how much more oil could the group actually add given these issues? paul: this is a big question, but it is pretty clear from the last several months that members such as angola, nigeria, even some others such as russia are either at their capacity production or nearing it. depending on which analysts you look at, the amount of oil that could be added ranges from just 150,000 barrels per day a month to about 250,000. but, the point is there are a lot of analysts out there that think opec-plus is only going to do about half of what it actually agreed to. dani: really great to have you

on this story. that is paul wallace. from opec to d.c. where senator joe manchin says he's not in talks with white house or top democrats on reviving the $2 trillion tax and social spending agenda. that leaves the administration's signature domestic initiative stalled. let's get the details with bruce einhorn. it was not that long ago that the possible non-passing of build back better was a huge issue for these markets. what does it look like now? what is biden's next step? bruce: dani, we are now in the new year and once again talking about joe manchin, the 50th vote in the senate. we need to keep in mind when joe manchin said there were no negotiations going on, he said at this time. we do know that the majority leader chuck schumer has been talking with joe manchin, was talking with them over the break about build back better.

he was also talking to him about the voting rights bill that the democrats want to move forward. as far as what comes next, first, we know there's going to be a deadline january 17. that is the date chuck schumer has set for a vote in the senate, the voting rights bill. that -- the crucial thing there is will joe manchin, will senator kyrsten sinema from arizona be willing to allow for an exception to the filibuster, to allow that to go through? once we are past that state, then we are looking at what happens with the bill back better plan. we know that senator manchin wants to have some changes made to various things like the clean energy tax credit, the child tax credit. there is still a lot to be decided. even if there are no negotiations going on at this time, i think in the days and weeks ahead, we will see a lot of back-and-forth among the democrats about that. manus: thank you very much, bruce einhorn.

the very latest. juliette saly has the first word headlines. juliette: europe trying to tackle covid outbreaks by streamlined quarantine rules and prioritizing reopening schools. the continent again the epicenter of the pandemic is the omicron variant spreads. france has shortened quarantine times. germany will discuss such a step on friday. and president macron of france is moving ahead with plans to bar the unvaccinated from restaurants and oth venues. boris johnson says that u.k. can weather a record wave of covid-19 sweeping the country without tighter restrictions, but warns the national health service is undergoing strain. 218,000 new cases reported yesterday, driven by the fast burning omicron variant. the prime minister announced plans for daily testing for some critical workers, but says the vaccine booster program and

current rules are enough for now. israelis prime minister says preliminary data shows a fourth vaccine dose does bring a significant increase in antibodies. israel is the first country in the world to offer a fourth shot, starting with over six. >> big news, a week into the fourth dose, we have a higher degree of certainty that the fourth dose is safe. that is the first big news. the second is we know that a week after the administration of the fourth dose, we see a fivefold increase in the number of antibodies in the vaccinated person. juliette: a record 4.5 million americans quit their job in november, highlighting churn in the labor market. the increase was brought across industries and pushed the quick weigh -- quit rate up to 3%.

the unprecedented level of resignations, including a record one million in labor and hospitality alone suggest a lingering struggle for employers to retain talent. a nine month suspension. the debt manager has taken steps to return to its core business after raising more than $6 billion for mistake led bailout. huarong shares were suspended last april following a delay in its 2020 results. global news 24 hours a day on air and on bloomberg quicktake. this is bloomberg. dani, manus. dani: thank you so much. juliette saly in singapore. we are both thanking you this morning. manus, coming up, we have growth stocks selling off in the biggest new your rotation since 1995. we will discuss the market moves and look ahead to the fed minutes later today. manus: yeah, too fast, too

furious. what else have we got? the oil market after the opec-plus approval of 400,000 barrels a day. weighing in on global energy. 6:30 a.m., join us then for crystal. this is bloomberg. ♪

>> once it passes and it starts to go back to normal and workers fully return, i don't see any reason why any economy wouldn't revert back to the low-inflation regime that we've been in for 20 years. dani: the minneapolis fed president there on inflation in the u.s. growth stocks have sold often the biggest new your rotation since 1995, partially unfed

rate. hike expectations really moved by the steepening and tech suffered, dropping the russell 1000 growth index down more than 1%. joining us is the fund manager at mng. what do you make of this rotation? are you a seller of these longer duration equities? >> good morning. we've been here before. last year on many occasions, the yields began to rise, everyone got scared. acid growth into value, primarily financials. we are seeing it again. we need to see it over a protracted period of time to be comfortable this is here to stay. neel kashkari, exactly what he set about work meaning in the long inflation environment with what the ecb councilmember said exactly as well. he believed the french inflation is also topped out. fact that up with the manufacturing figures which

found a whopping 14 points yesterday. that is the biggest fallen over a decade since the financial crisis. i think inflation is starting to of eight somewhat. we are anniversaries from high numbers last year. manus: so, you are a little bit of a skeptic on the great rotation. that's fair enough. it takes more than two days trading for anyone to be convinced, even me. but what i want to get a sense from you as you look at risk this year, i've written down the pivot. monetary policy backtracks. and fiscal policy is wounded. so, by my reckoning, i've only got one tick in the progress box -- pro-risk box. how would you assess the great pivot that is to come in 2022? inflation, mp, fp. randeep: let's not forget, fundamentally, the economy

remains quite strong regardless of fiscal policy, which probably added too much to the punch will. i think they are likely to see growth continue to go forward. if inflation comes down, we are likely to be in a normalized world. tech companies have come up. the investment areas that will likely see continued investment, both public and private as we try to hit those top 26 goals. i think we are going to start to see a return to some sort of post omicron normality which hopefully we will see this year. dani: in terms of other risks ahead and other surprises ahead, i know one you are looking at is the ecb. if we have european growth strong, the ecb has not indicated any rises in 2022 but if this is a risk to you, are you expecting some tightening to come from the ecb? randeep: that is the main standout given that christine

lagarde was so open about they were not going to tighten this year. the issue they have, the unemployment remain so high in the eu, especially the southern countries, they don't want to disrupt that. we have the french presidential elections coming up. we have issues in eastern europe at the same time. that is probably the outlier that we see. the ecb has to be do something. having been caught in policy areas in previous years, they will move forward very slowly. manus: we would like to set up the risk story at the start of the year. politics is front and center. the kazakhstan government -- you've got a resignation on the back of energy crisis. that is very pressing. when you look at global geopolitical risk, markets tent to get their way through these, but which are the hot button, top risks on the politics

that could unseat markets in 2022? randeep: obviously, russia on the ukraine border is well known. i think nato are preparing for that. especially when it comes to energy and gas coming into europe, that could be huge quite frankly. we have seen who can shut off the gas supplies. we have seen energy prices in europe. that continues to be a concern. taiwan has constantly said this is a domestic issue. the u.s. does not see it that way. china is so important to global growth any tension there, even if it just results in economic sanctions, will have huge reverberations not just around asia, but globally. those will be the two i will keep my eye on this year. manus: ok, we will keep an ion that -- eye on that. natural gas contract is amazing. down by 50%, up by 20%, all on

the turn of a dial but how much gas comes from russia. we have more work to do. we will pivot to the east. coming up, it is the china tech selloff. how is it going to play out for the economy? there you go. down 10% across-the-board. this is bloomberg. ♪

>> i don't think financial transmission of the property sector is a serious danger. you could have a major developer of default, but everyone is ready for that now. i don't think it will come as a surprise. i think is a macro economic

problem, it can continue in 2022, but as a financial risk, it is pretty little. manus: derek scissors on the risk from the property crisis. tech in play today. some of the big names jumping this morning including bilibil.l i love that. randeep is our guest, fund manager at m&g. i should not hone in on bilibi li, but here we are. day three in the drop in tech. do you see it as panicking or is it a splendid opportunity to jump in? good morning. randeep: i am not panicking in the slightest. it is early in the year. people are starting their positions again. we have seen yield drive. a little bit of a rotation. let's see if this is a long-term pattern. you bring up alibaba. while a lot of chinese stocks have moved down in the growth

area, alibaba hasn't. it is obvious it is reaching evaluation floor. it had a pretty awful 2021. it is still a high policy, high-growth company, pretty much a monopoly. i think the market is reacting to that now. there are not many sellers yet. dani: but at the same time, there does exist this risk in china of a hole in the economy. perhaps the government policymakers are trying to jump in, but you have zero covid policy. hong kong is set to rest -- limit restaurant operating hours. what do you make of that factor? randeep: let's follow england's lead. it is pretty obvious now this variant of the virus is not that severe, so would not should be as severe anywhere else. the south africa figures are incredibly promising and they are starting to reopen again. once we get through this period,

hopefully, we should return to some level of normality. that is not just across europe, but across asia as well. and might be a bumpy few weeks or a few months, but we are not valuing equities over that time. we're looking at them over the years and decades to come. manus: you know, it is great to have a guest on sometimes that is just as pragmatic as you are in terms of not getting caught up in the excitement, the biggest rotation since 1995. what would shock you this year? to adjust your risk factors? randeep: as we discussed earlier, the policy issues will be the bigger issue. we have midterms in the u.s. i think republicans are going to come in quite strongly when it comes to the two houses of the u.s. congress. russia with ukraine would be a shock. and china moving on taiwan where

the u.s. would be forced under law to react to that. i think those will be the biggest concerns, especially if they mean meaningful economic sanctions being put on those two countries. dani: if these are the biggest risks, do you see anywhere these are being priced in? randeep: obviously, china had a pretty bad last year. they have started pretty weak this year. it is not reflective at the moment in any shape or form in u.s. valuations and probably not as much in european valuations as well. manus: the other thing -- i think that shocked markets before christmas was the the bank of england raised rates. it was not exactly the drama of a quarter kind of thing. how do you look at u.k. assets? the best year since brexit. the pound is battered and bruised, so to speak, which has

its own advantages in many ways. very quick snapshot. were you surprised by that? what happens to sterling and u.k. assets this year? randeep: i was a little bit surprised that they moved so quickly but it was a tiny move. it was a signal of intent especially after the imf report that inflation was too high. the u.k. market has been battered ever since the brexit bolt. it is not really recovered and it's been one thing after another. whether it be politically uncertainty and then covid coming along. i think the market is underpriced. we do have a prop -- higher propensity towards value stocks, financials or commodities. if they start to do well, we should start to do well. you look at world bank figures, you look at the goldman sachs or hsbc figures and developed markets globally have u.k. as the highest grower this year, more so than the u.s. dani: really fantastic to have

you on the program with us this morning. randeep, fund manager at m&g. we talked about opec. deciding to pump out more oil. that is next.

>> good morning from bloomberg european headquarters. this is bloomberg daybreak: europe. the great rotation takes hold. investors block overgrowth at the fastest pace since 1995. opec holds the line at 400,000

barrels a day. demand is expected to weather omicron. omicron drives record virus cases but governments bet they can weather the surge. it finally seems markets have woken up from their post-new year's hangover. we had steepening in the curve that prompted this rotation you and i have been talking about this morning. i take you to at tw go on the terminal -- ftw go on the terminal, factors to watch. you see how investors flock to value yesterday. growth did not go as well. the biggest rotation to start the year since 1995. manus: do you know what we are going to get on this show? a bell. you just taught me a new function. so what is it again? anna: --

dani: the easiest way is ftw go. come to me with any of your function questions. mark: -- manus: the greatest rotation since 1995. that pivot on capital, tesla takes a smack down, 4%. what you need to ask yourself, and mng has just given a big dose of skepticism. stop making radical assumptions about where we are getting. we have been here before. that is the message. don't everybody jump on the bandwagon. jumping into value and out of growth. it is a building consensus. banks are bad and that is the important thing -- our bid -- banks are bid and that is the most important thing. dani: maybe is not going to be as dramatic this year as many of

us expect. manus: the yield curve has done more work in two days -- there you go. more work in two days then three months. let's talk about the markets. tech under pressure. dollar-yen off a five-year low. 30 year taper coming off the high, trading above the 2% level. a shift in direction. let's shift the narrative along to the opec story. they are going to stick to the plan. gradually restore output. 400,000 barrels a day. good morning. 400,000 barrels. the market fairly bleak. there was no press conference. why do you think opec-plus is confident enough to add 400,000?

>> good morning, and can i still say happy new year? this was a nonevent. no press conference. i think opec is confident because the most important influences -- influence is omicron. a virus where the fatality rates and hospitalization rates are fairly low. probably this is how things get normal. back to opec, it is connected to other important features of this decision. it is the seventh increase of 400,000 barrels a day in a row.

underneath, the delivery is much worse. expectations are half of it will be delivered because remember opec is not a homogeneous group. it is many countries and they have quotas. many of those cannot deliver. the expectation of the market is more bullish than it sounds because actual delivery will be much lower than 400,000. number two, opec itself has upgraded its demand from the first three months of 2022. it is an outlier of the forecasting. it was an impetus to demand we have not seen yet. dani: what is your expectation for how much output we actually get from opec-plus? >> i am somewhat bullish.

there is no physical problem belowground. the existing spare capacity of opec less is still larger -- opec plus is still larger than what anybody expects on the demand side to increase. it is covered by existing spare capacity. number three, demand will be lower. people forget that gdp is already back to 2019 levels. it will take a little bit because every year we need barrels for the gdp level of before. lastly because demand structurally looks to be weakening and because there is a

special wildcard people have not paid enough attention to. that is what is happening in china. manus: talk us through the wildcard of china. they have pulled back on their exports. this tv show rolls around. dani is a teacher and i am teachable, as are you, professor. talk us through the risks with china because if they are going to ban exports -- what is the bigger risk? >> china is a very interesting story. what we have in china is a zero covid policy. we know about this. at the beginning, it was hailed because it was enormous sleep --

enormously effective. with omicron it becomes dubious. it is so infectious that it seems very hard and requires a lot of very stringent lockdowns to keep it under lock and key so to speak, under control. what happens here is a curious mixture. distrust in their own vaccination, which is not very effective, and -- countries who limit the fatality rates versus other, i.e. western countries. then of course the everlasting quest for political stability. currently, the demand, economic activity in china is more affected by lockdowns than other countries where, despite the possibility, people are

loosening because of the impact in fatalities is less. the expectation is that china use it up and the economic recovery -- it remains to see -- to be seen. i believe they are highly likely to leave this policy for the congress, which is a five-year event. it is to confirm president she is the first leader to have more than two terms. dani: you mentioned political risk. i want to throw another risk at you. i am blatantly stealing from manus.

in terms of political risk, we had the government resigning over high fuel prices. how do you factor in these types of political risks? >> it will have backlash against the energy transition even in european countries which find themselves in the environment. in china it is a risk because of the oil price. if it is true that china will not loosen up it's no covid policy, do they let the economy continue to be slower? they probably will do what the u.s. has done, give themselves a massive fiscal and monetary stimulus. what i see on the horizon is if

things pan out as expected, china has its attempt to control something which is hard to control like omicron, that will lead to them giving up this very harsh line and replace that on the monetary and the fiscal side with stimulus. more importantly, together with the pending interest rate increase from the federal reserve, it is emerging on the horizon as a possibility. manus: let's close it off with that level of challenge on mobility, covid policy, and supply. do we drift toward $70 as rob mcnally said this morning? is the pressure there for the

bears given the price -- give us a price, give us a target. >> $75 plus or minus five is the move. we talked about quotas at the beginning. there is spare capacity. it is highly concentrated. what this means in effect is that opec-plus is much easier to control because spare capacity is heavily concentrated. secondly it means the usual end of a success story in this case almost does not apply. the big guys continue to control. that is why i think we are seeing some stability. dani: it has been fantastic to have you with us today.

now let's get over to the first word news. here is juliette saly in singapore. >> europe is trying to tackle covid outbreaks by streamlining quarantine rules and prioritizing reopening schools. the continents again the epicenter of the pandemic as omicron spreads. france has shortened quarantine time following a move in the u.s.. germany will discuss such a step on friday. emmanuel macron is moving ahead with a move to ban the unvaccinated from public places. boris johnson says the u.k. can weather omicron but warns the national health service is undergoing strain. staff case is driven by the fast-spreading omicron variant. the prime minister announced

plans for testing for employees. morgan stanley betting on offices in new york city. it has sealed a deal to take over the space that houses the headquarters of blackrock. it is among the biggest property deals signed in new york since the pandemic began. 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. coming up, the race to dominate the electric vehicle market is heating up. this is bloomberg. ♪

>> based on the demand we are

seeing for our vehicles and the rest of the industry is seeing, it feels like demand is certainly there. the question will be how quickly can we all of us execute to build capacity to meet that demand? manus: the demand for electric vehicles. which could grow to 10% of the u.s. market this year. for doubling the capacity for its battery-powered f-150 lightning pickup truck. the carmaker says it is capitalizing and raising the output to 150,000 trucks this year. our global editor for autos. i could see myself in a f-150. a rebrand -- yes. dani in a miata.

tell me this. how significant is doubling the production of the f-150? >> you will be able to fit a miata in the back of that pickup. the f-150 lightning is a success story before it has even been available. it is fascinating we have seen ford double production capacity twice before this is even in production. it does speak to the idea, we have seen for some time that elon musk has proven if you put your full weight behind electric vehicles and you are not just making them essentially to meet the rules like we have seen for a few years with compliance cars from a lot of the automakers, you will see demand for them. ford also is advertising this truck very heavily.

they are leveraging the f-150, a brand which is incredibly strong. the f-series is their most important model line in the u.s.. we have seen a really significant run with this chart in the valuations of ford and gm because you have seen credibility to the idea they can give tesla a run for their money in electric vehicles. dani: i can only imagine the surge in purchases in dubai once everyone sees manus driving one of these around. you mentioned huge competition coming to tesla. tesla proved you could do this. you heard from executives at ces saying they are now getting into ev's. what does the competition look like right now? >> we take a look at the biggest automakers, toyota and volkswagen, and assess their

plans to take on musk and electric vehicles. when we started reporting out this story, it was really a case where you looked at those companies and looked at them as big contrasts of one another. both had no choice but to push into electric vehicles because of the diesel scandal of about seven years ago now. what we have seen is that toyota, which has been a holdout , because they have had such a strong position in hybrids have not necessarily need to go fully electric. they have been doubters in terms of the prospects for ev's. they have gotten religion and it is the case that toyota in the last few months has one after another significant events to lay out there thinking, their plans for electric vehicles, and late last year put forth a very credible action plan.

we are going to see volkswagen and toyota. they have a lot of cash with their conventional car business going full bore into electric vehicles in the coming years. dani: another function for everybody, you can read crag's work and get the details of bloomberg's auto coverage. bitcoin's $100,000 could be possible. more on that next. this is bloomberg. ♪

dani: welcome back to "bloomberg daybreak: europe." six digits. goldman sachs says bitcoin will continue to take market share

from gold. $100,000, that is what it says is a possibility for the cryptocurrency. john dawson are -- joanne also injured joins us for more. how does bitcoin arrive at this target? >> they looked at the demand for store of value generally and said ok, if gold is going to be this much, bitcoin has some portion now and it is going to increase. people keep saying it will keep changing from gold as a store of value to bitcoin. they think that is going to boost bitcoin to six figures. manus: that means i've still got time to get my inflation hedge on. i am dreadful at timing anything . what does it say for cryptocurrencies? what does it say for pricing? >> one thing i think is interesting is basically,

analysts still have to look at other assets because bitcoin and crypto is so new that they are still fumbling in the dark a little bit. they are basing it on gold. j.p. morgan did the same thing last year. they based a long-term target around 140 thousand dollars based on the behavior of gold also. dani: $46,000 is where we find the price this morning. how should we interpret the moves we have seen in the crypto market so far in 2022? >> it really has not done that well to start the year. one thing i think is interesting as last year, from mid december through january 9, bitcoin more than doubled. some of that may have been institutions really started to get in at the beginning of the year. it looks like that is not happening this year. the institutional allocation may

be tailing off a little bit in terms of the trend, at least for the time being. manus: thank you very much. joanna ossinger with the latest on bitcoin. mark cudmore is coming up next. he came up with this lowdown on the mliv blog this morning. we did more in two days then we did in three months. the trajectory of the curve since the end of christmas is a steepener and it has consequences for the kbw index, the value trade. we have had doubts from our guests and it is time to pivot. dani: mng saying we need a longer laster period of action to make them question the trade of value. i should say maybe we will get a second day but we are looking at nasdaq 100 futures down, underperforming what we are seeing from the s&p 500.

manus: and tell me, what is the new ticker that i need? dani: factors to watch. check it out after this. this is bloomberg. ♪

every day in business brings something new. so get the flexibility of the new mobile service designed for your small business. introducing comcast business mobile. you get the most reliable network with nationwide 5g included. and you can get unlimited data for just $30 per line per month when you get four lines or mix and match data options. available now for comcast business internet customers with no line-activation fees or term contract required. see if you can save by switching today. comcast business. powering possibilities. and there you have it. woah. wireless on the most reliable network nationwide. wow. big deal. we get unlimited for just 30 bucks. sweet, but mine has 5g included. relax people. my wireless is crushing it. that's because you all have xfinity mobile with your internet. it's wireless so good, it keeps one-upping itself. take the savings challenge at xfinitymobile.com/mysavings or visit an xfinity store to learn how our switch squad makes it easy to switch and save hundreds.

dani: -- anna: welcome to "bloomberg markets europe." the cash trade is less than an hour away. here are your top headlines. great rotation. investors flock to value overgrowth at the fastest pace since 1995. china and u.s. tech stocks stumble. riding out the wave. the u.k. a