manus: good morning from our middle east headquarters in dubai. dani burger in london. left off in sight. bullard says the fed could hike as soon as march. 10 year yields with their biggest jump. the dollar edges lower. unrest continues in kazakhstan.

troops moved to crush dissent in the oil and mineral-rich nation. 6 p.m. a.m. in london. the bond market is grappling with a shift of gears, but is it a redux? the two-year, the short end continues to do the heavy lifting as bullard really for the hawks. dani: the greenspan conundrum is not in full force. and flattening yield curve may rise financial stability risks. those are the words of the fed themselves in their latest fomc minutes. they talk about the issue for lenders, what that does to the financial system. the fomc, the fed, they are worried as well. manus: for those of you who might not be familiar with alan greenspan, if you look at that white line, that was sheer torture in the bond market.

they were untelegraphed. 400 basis points in terms of rate hikes. and yet the long end of the curve did not become unseated. therein lies the greenspan conundrum for a new generation. dani: for those who are used to stocks only going up, it is a new world for them. speaking of which, we are looking at stocks moving higher today. maybe a little bit of dip-buying. maybe the bond market is not worrying as much as it is, considering 10 year yields. we are looking at a yield above 1.7228, though that is unchanged. buying in brent crude up nearly 0.9%. bitcoin, the entirety of the crypto space continues to get pummeled by dip-buying elsewhere. bitcoin below 20 -- below 42,000 dollars.

ethereum down 6%. manus: dani, a little bit of breaking corporate news. yes, we do corporates on daybreak and macro. micro electronics the back of samsung. revenues above the outlook range. they are seeing revenue up 11% in the quarter. this is on the chip side of the business, above the range of the guidance. we will come back to that when we get a little bit more detail. samsung and the tech stock story lit up across the asian session. one bank reckons the rout is almost up. i wonder who that could be? juliet: it is morgan stanley. they have been tracking this rout you have been seeing in

tech stocks. tracking against five similar instances, they are essentially saying in those times you saw a decline of around 18% from the loftily valued tech stocks. they are saying there could be a couple more weeks of rout. that is all going to depend on rising yields. it has not been a great week for the nasdaq, on track for its biggest weekly drop since november. the interesting point to add is around 50% -- sorry a canoe record number of tech stocks -- a new record of tech stocks have jumped. seeing market values cut in half from the 52 week highs. we have not seen this since the.com crash. dani: always a scary superlative to throw the .com crash in. samsung's quarterly profit has climbed over 50%.

it is reinforcing hopes the memory chip industry will emerge from downturn. joining us now from seoul is our stock reporter. what are the key takeaways from the report? >> good morning. the huge jump in profit is coming from samsung semiconductor division, which saw its income doubled from a year ago, and a strong demand for foldable smartphones and other consumer electronics considering the peak winter season translate into strong profit. this profit figure was as you said analyst -- above analyst consensus. it was due to one-time special bonuses to employees. investors are focused more on the likelihood that the 2020 two annual profit outlook may be upgraded because the memory supply situation could be more tight given the ongoing shutdown in the chinese city of xian. we will hear will -- we will

hear more from samsung later this month on january 27 along with divisional breakdowns for each of its four businesses. today we saw the samsung stock price rise as much as 2% after the earnings preliminary figures . that was probably thanks to expectation the memory chip down cycle, that may come to and end sooner than expected. manus: thank you so much. our stocks reporter on the very latest on samsung. president joe biden has warned that the insurrection at the u.s. capitol is part of and assault on democracy that donald trump and his supporters are continuing to wage. a year after the deadly riot. this was a very forceful use of language. bruce, how do you think

democrats and republicans are treating this anniversary? bruce: in very different ways. we saw president biden give a speech from statuary hall in the capital where a year ago the rioters had marched through, some of them carrying confederate battle flags, really shocking images. i think president biden's -- one of president biden's goals was to remind voters, especially independent voters, of just what happened a year ago. we have speeches from president biden, vice president harris, speaker nancy pelosi. remarkably, there are almost no republicans there. liz cheney was there, and her father, former vice president dick cheney, they were the only republicans present. republicans in the senate were in georgia for a more real -- memorial for one of their

colleagues who passed away. former president trump scheduled something at mar-a-lago in florida for the day and then canceled it a couple days ago at the urging of his allies, even though he said it was because -- he is blaming it on the media. going forward, the key thing will be whether this helps biting rally support for his legislative agenda -- helps biden rally support for his legislative agenda. chuck schumer has said there will be a vote on voting rights legislation. democrats are hoping this anniversary will provide some momentum to that. dani: thanks very much as always, bloomberg's bruce einhorn. let's get to the first word news. juliette: the world health organization says while the omicron variant may appear less serious than previous strains, it should not be considered mild. the who says global cases soared

a record 71% for the week while deaths rose 10%. case numbers are expected to be much higher due to underreporting. government sources in kazakhstan have moved to crash protests after russia and its allies deployed troops to shore up the nation's leadership. authorities say thousands of antigovernment protesters were killed by security forces after the president announced what he called and antiterrorist operation. the u.s. and eu have urged kazakhstan to seek a peaceful resolution. china's delta variant-fueled covert outbreak is not showing signs of easing with cases cropping up elsewhere in the country despite a drop off in the recent epicenter of sian. the national health commission has reported 115 new domestically transmitted cases in the previous day. shen jen has discouraged people from leaving the city after announcing new infections.

various international says it is optimistic about the travel industry's recovery, but the recent surges and covid-19 infections. the company's president acknowledged challenges, but says the rebound remains on track. >> the business came back very quickly once we got past the variant. we are expecting the same thing with omicron. we are -- we have 30 brands in 140 countries. we will see bumps but we don't think it is going to bump the recovery. 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: juliette saly in singapore. coming up, bond market redux. goldman makes a call and the fed hikes rates. will the treasury market and the

long end spike? dani: you have the currency outlook for 2022. we are going to speak to james lord later in the show. this is bloomberg. ♪

>> the fomc could also begin raising policy rate as early as the march meeting in order to be in a better position to control inflation. >> the federal reserve bank of st. louis president james bullard saying the central bank could raise rates as soon as march. manus: and the bond market is facing a new problem. goldman sachs say even as the fed hikes rates, treasury yields

will stay low. it is the greenspan conundrum coming back to life from the noughties. let's put that question to the chief investment officer at flow bank. it is different this time, i'm sure that's what they will tell us. we are going to raise rates, run down the balance sheet. do you think the long and remains anchored -- long end remains anchored? good morning. >> i think markets are going to take a toll. the fed is going to act. we are going to get qt. it is better to early then too late. i do not think they will go so far that the economy is going to be choked.

qe pricing in certain sectors and certain assets. investors are going to find a good investment opportunity. i am not that negative after all. it is good that the fed starts to prepare that they might act earlier than what we saw. dani: a good investment opportunity. is it the rotation into value? do you see that having lasting power in this environment? >> what i would say today is we

have a situation which is worse than in 2000. we have on the one side very big stocks, they drove up the market. it is really different from 2000. twice as many stocks. the valuations of these companies are so much bigger and they apply so much growth expectations on the long end of investors. at some point when this reverts on the back of rates, the hydration bet is going to lead to different valuations. this is going to happen to

specific types of stocks and markets. investors could find movement away from those. they could also find enough repricing. manus: where do i diversify to? that is the question that comes to mind. if momentum made my return on equity last year and i delivered well on the back of momentum, where do i go to outside of america to hedge myself? >> i think obviously if you want to apply the diversification strategy, this is something you can probably do. what i personally prefer, probably due to the fact we are managers, we have measured

diversification, which is helping us to maximize diversification from the bottom-up perspective. we are not looking at betting on different sectors. we are really looking into exposure that any asset in a portfolio can provide you. different risk exposures we are going to buy into. dani: we are coming off the back of multiple years where one of the most profitable things you could do would just be to buy a passive s&p 500 etf, sit on that, do nothing, and do really well. that type of exposure gives you the concentration to which you are describing. i know this is a controversial question, but our markets now distorted given that amount of money in passive management that is putting people into those highly concentrated stocks? >> passive investing has a share

in that extreme concentration we see. compared to the concentration we see in 2000, we see every other stock, the nasdaq, there is still stuff that has significant weight. there is a very big stock and there is something else. i also think the last two years, retail investing, we could see a contribution of retail trading to stocks that move the market. what i'm hearing today is that

this is going to deflate eventually. this move of asset managers in the very big stocks is going to be so much more powerful than what we saw in 2000. it's going to be a very very bad wake-up call. dani: so maybe it is active, the way forward for this year at least. you are going to stick with us. that is tatjana puhan at tobam. coming up, china's economy and what needs to be done to prevent default. it is over default fears, default rate climbing, fears about evergrande and other property developers. we are going to discuss that next. this is bloomberg. ♪

manus: is "daybreak europe." the banks in china are being pushed to boost their real estate lending in the first quarter. this goes to the heart of the matter. it is about the authorities increasing the concern about the industry's liquidity crisis, trying to keep that stability factor, one could say in the economy. dani: speaking of stability in the economy, we are going to rip up the script. europe is facing and issue of trying to keep stability and inflation at bay when energy prices are surging. let's bring this question of what this means to the economy. still with us is tatjana pujan at tobam. this is something that ian bremmer at eurasia group raised. one of his top problems, risk

going forward, was this transition, this energy transition of global economy. how acute in your mind is this risk? >> it is a very big risk. europe completely underestimated to strategically plan this and move forward. there is a lot of volatility in the energy prices because of this in 2022. countries like china and the west have to move more into this energy transition. the u.s. back in the 1980's and 1990's, greenhouse gas emissions were a problem. lobbying groups were lobbying

against it. now everybody realizes this is sin issue and we need to do something. once the u.s. start to transition into other fuels, i think they realize we need to have a plan to manage the transition. it is and important topic. i think we should devote much more time and resources on it. manus: how do you incorporate that strategic thinking about the transition into a portfolio construct? what elements do i need to put in that bolsters me to the transition? >> one thing we have been working on is how can we translate temperature forecasts

of the temperature impacts petroleum might have into an investing strategy? this is very approximate because of emission data and models for temperatures that are the best we can do at the moment. even though you cannot do it perfect, you should work with it. try to limit carbon emissions, limit temperature impacts. there is another thing you can do. fund managers are well-positioned. you can invest into assets that tend to have sensitivity toward climate change risk. this is something we have also been working on, hedging strategies against these risks. dani: can you get into the

specifics of that? what have you found in terms of what those assets are, what the investments are that help you hedge that? >> what we are trying to do is measure equities against indicators for climate risks and then what you try to do is turn your portfolio toward those that are sensitive to it. that is one thing we can do to avoid physical risk. on the other hand, regulatory risk, we are trying to get away from emissions in portfolios. when it comes to energy transitions, you need to engage with companies. we are trying to go to companies

that are starting today more exploration projects -- manus: tatjana pujan, managing director at tobam dani: good morm

bloomberg's european headquarters. i'm dani burger alongside manus cranny, live in dubai. this is "bloomberg daybreak: europe." james bullard says the fed could hike as soon as march. 10 year yields are set for their biggest weekly jump since 2020. it is jobs day, stocks are a touch higher. the dollar edges lower.

unrest continues, troops move in to crush dissent in the oil and mineral rich nation. is it the greenspan conundrum come back to bite markets? the fed is broadcasting a better economy allowing them to hike, but it continues to be a flattening. does that mean for investments? are banks not as attractive? is there a rethink in terms of what you do with your portfolio as the fed starts to tighten policy? manus: we have had every opinion throughout the week. one of the biggest moves on the 10 year, 20 basis points in the space of a week. the question is, will it be like 2004-2006, 400 basis points of hikes, but the long end of the curve did not move.

for those of you remember when alan greenspan was there, that is the personification of why there will leave more on the balance sheet. there is the rate hikes, and there is the longer end. dani: i think what you are saying about the balance sheet is fascinating. ven ram sang this was the most important thing from the fed minutes, some members are saying it is about the balance sheet runoff, concentrate on that versus rate hikes because that could keep stability on the long end of the curve. it is not likely have a big sample size, we have a sample size of one. it is really unclear what impact it could have. manus: absolutely. for the moment, i would say it was brutal. a bounce back in the nasdaq and s&p 500. the debate, nobody has really moved on what the terminal rate

is in this cycle. bond yields still rising, brent up 1% this morning. bitcoin down 3.4%. you will have to wait a little longer before you want to look large and go along. dani: where have the holders gone in bitcoin? you have to be hip with the kids and use their lingo. let's get back to the adults in the room, and get your currency outlook for 2020. a big focus as it is every year, the dollar, dropping ahead of today's u.s. payroll data. joining us now is james lord, managing director / head of fx em strategy, morgan stanley. theoretically, a spike in rates,

risk aversion should lead to a stronger dollar, but the price action has been "meh" to use a word. what needs to happen to see the greenback break out? james: good morning. thank you for having me on. i think one of the things, the lack of follow-through on the dollar since we saw the hawkish fed minutes. it is one thing manus is mentioning, we have not seen the terminal rate repriced higher. people have put forward their expectations of one the first hike might come in. it is priced for march, but the terminal rate is hovering after the hike. it has not really moved a great deal over the last couple of months. that is one thing that could

push the dollar higher again. in addition to an earlier rate hike in the balance sheet that we could see more guidance around how long the rate hike could extend to. it has only been really talked about in the dot plot and not discussed in day-to-day commentary from fed officials. that is one thing that could push the dollar higher. manus: it is now time to challenge myself. 34 years, i it was believed and was told -- one of my first jobs was to mark the high, the low and close on three currencies. one was the deutschmark, for young people, that is the german currency. i was taught that short end rates with a high correlation

coefficient to where the dollar would go, so i put it to you that we have spent three minutes talking with a longer end of the curve where it is the shorter end of the curve that drives the dollar, and maybe it is fully priced. maybe the challenge for the dollar is the dollar is fully priced at 6% in 2021, so it is all tapped up for the hikes to come. what do you make of that? james: i agree the short end of the curve is the driver of currency markets. is it fully priced? a lot of hikes are priced for the next year, but i still count two or three at the shorter end, and we do not see four hikes in that part of the curve, at least what the fed is signaling they intend to do. all that said, i do think we are closer to the end of the dollar rally than the beginning.

the dollar has been going up since the middle of last year. before that it was going sideways, not doing much. we have had a decent rally so far. i think the fed is front loading hawkish rhetoric, and will presumably follow-through by frontloading the action. there is probably a little less and the dollar rally, but we are closer to the end. dani: we are closer to the end of the rally here, but perhaps what is priced in his at the front end of the curve. does that mean before we get an end to the rally we should see a ramp up that prices in more rate hikes than the dollar is currently pricing in? james: that is what i am looking for, a call that the dollar rally has come to an end. he will see a little more of a selloff.

this is what our strategy team are expecting. that will be the part of the curve that leads the selloff, and that will result in the higher, no -- higher terminal rate being priced in further down the curve, not for 2022 but a little further. that, for me, would be an important signal that the dollar rally is coming to an end. let's not forget the fed is not the only central bank around. other central banks are increasingly moving in that direction. the ecb made the important switch in december. in a hawkish direction in absolute terms. they will not be as hawkish as the fed. they are becoming more hawkish, but growth is relatively synchronized around the world with the exception of china. u.s. growth is strong, but it is

not the only game in town worry -- or a period of u.s. exceptionalism. manus: let's unpack before we let you go. we saw the dollar-yen trade at a five-year low. it took a breather. the real effect of the exchange rate at an all-time low, will that break lower? what is your thought on dollar-yen? james: we do think dollar-yen will move higher. the yen is our favorite funding currency at the moment. we have been long since 1.10, and we have a 1.18 target. the dollar-yen, do yields in the u.s. go higher as of the

direction of the fed policy? we think that is a yes. how is risk appetite holding up? will equities trade well? there is more uncertainty about that at the moment given fed policy. other parts of the equity market have held up. every indication at the moment is that in the u.s. and europe will be fairly robust in 2022. that will help equities to recover. the dollar-yen can have another move up. in the back of our minds we are wondering about the hawkish shift, we think it is a little too early to talk about that. manus: don't spoil the party.

dani: is it also too early to talk about a hawkish shift for the ecb? what underpins your call for the euro-dollar? james: in the short run we have a 1.10 target for the euro-dollar. we are expecting dollar-yen 1.18 , but a little more dollar strength. by the end of the year the market may think about when the ecb will be ending this app program. at the moment they have suggested it will be winding down in the fourth quarter of this year. maybe they will end it early in 2023, but we think there will be a rate hike in 2023 from the ecb as well. this year growth will be very

strong in europe, maybe 4.5%. by european standards, that is exceptional. i thing for chance by the end of the year you get a little bit of a shift in the european narrative, and as we discussed, the fed, the full extent of the fed cycle might be priced over the next couple of months given how frontloaded the fed is delivering everything at the moment. manus: good to have you with us. you know you put your head on the block, we will get you back on a regular basis. she is very cruel and plays the tape back to you. i would not like any of my tape played back. thank you very much. james: thank you for having me. dani: he can handle it. manus: he has global head of fx at morgan stanley. thank you very much with being with us.

let's get to juliette saly with all of your news. juliette: the world health organization says while the omicron variant may appear less virulent, it should not be considered mild. global cases had a record 71% from january 2, and deaths rose 10%. actual case numbers are expected to be higher due to underreporting. bank of america's scourging u.s. employers to work remotely next week as it monitors a surgeon covid cases. -- a surge in covid cases. wall street firms are rethinking the return to office plans. global news, 24 hours a day, on air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. dani: thank you, juliette saly in singapore. big news from one of the meme

stocks overnight. gamestop is surging. bloomberg earns of its plans to launch a marketplace for nft's by the end of the year. joining us now from singapore -- i think we may have lost her. this is classic meme stock, you are digging into that status by going into nft's. why not at this point? manus: i know what a meme stock is and and nft. they are an anathema. in many ways these things were an anathema to me last year, but they have gone centerstage in terms of what portion of cryptocurrency or bitcoin and

maybe decentralized finance and blockchain you want in your portfolio. that is the key, isn't it? dani: it is. even if you do not buy into these things and that the world will be run by blockchain, there is an argument to be made that bitcoin is a store of value. that what goldman sachs argued. maybe for the gold bugs there is a reason to like bitcoin. manus: some think it is not worth stepping into. $42,000, we will find a new lower level. we are down from $67,000 back in autumn. i think we will take a quick couple of minutes of a breather. we will be right back.

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manus: it is "bloomberg daybreak: europe." i'm manus cranny with dani burger. let's talk about politics. huge dislocation, russia and allies dispatching troops to quell protests in kazakhstan after fuel price increases and popular anger. it is the biggest threat to their leadership since 1991. various countries are coming to the rate. let's go to our russia editor. turkey is stepping in with support, what type of support? >> troops and other allied

nations have sent forces to back up the kazakhstan leadership at the request of the president. he said this morning order has been restored across the country in his view. he says he will continue the operation against terrorists. there are reports of shooting in some places where protesters and security forces clash. dani: this is the second time in as many years putin has gotten involved in unrest in another country. what is at stake that they want to get involved? >> the protests in kazakhstan caught everybody by surprise. the intervention is unprecedented in the sense that this is an attempt by forces from outside the country to assist the leadership in putting

down the protests. they have never done that before. russia did not intervene in belarus, but it did offer support. it has been involved in conflicts with ukraine. everyone is watching to see how it develops, and how long russia will keep forces in kazakhstan, and if this will change the balance of power. dani: thank you so much for the coverage. coming up, we will get back to the markets conversation. will bunds go to zero? we have the data due out at 10:00 a.m. u.k. time. this is bloomberg. ♪

dani: welcome back to "bloomberg daybreak: europe." i'm dani burger in london, with

manus cranny in dubai. it is all about bunds, closest to zero since 2019. we also have eurozone inflation data due this morning. the stator chiefs rates correspondent. how much staying power does it seem like bunds has this time around? >> this time around they're all local issues and global issues. bunds have been picking up in a way that treasuries were not for much of the second half of december. with this astonishing selloff i treasuries -- selloff of treasuries driven by the hawkish fed minutes, and strong concerns about inflation and the idea that inflation is going to persist is a major global problem, and central banks led by the fed will have to respond, that is a big part of what is driving bunds toward zero, which

has been the upward bound since 2019. manus: if we look at the german inflation data, it dropped from the previous month, coming in just ahead of expectations. as we push toward zero on the bund yields, and inflation is not as aggressive or topside, it will hand the hawks on the ecb the opportunity to pivot more aggressively when the ppe runs out in march. do you think the discussion will center around what they do with the balance sheet more than rates? garfield: the first thing that will be going on in big contrast with the ecb, they are strongly

committed to continuing to purchase. that is what the inflation data could lead to in europe, that would be the spark for that discussion. even with the germans easing off, there is expect tayshaun that will ease off in the euro zone later today. they are both at elevated levels. there is not necessarily a lot of relief there, especially with the u.s. job numbers coming out. there were a strong whisper numbers coming out. if we get the numbers a lot of people are looking for, we could get a move in u.s. yields that takes german yields with them. you could also get the narrative of building, we have severe concerns about inflation in the

u.s. if we do not have what is going on with omicron acting to lead to sustained lock downs or serious concerns about economic weakness, then that discussion about a more hawkish ecb stance and therefore a swifter part to zero in bunds will get the strength. manus: let's see what that round-robin number looks like later today. garfield reynolds, our editor talking ecb and bunds going to zero. that is it for dani and i. let's see if jobs and growth over rates redux. dani: we are data dependent, so what will they strong jobs number mean for the fed?

manus: absolutely. we will do it all again next week. "bloomberg markets europe" is up next with anna. this is bloomberg. ♪

anna: good morning and welcome to "bloomberg markets: europe." i'm anna edwards live in london. mark cudmore joins us from singapore to take us through the market action. that cash trade is less than an hour away. lift off insight, james bullard says the fed could hike as soon as march. 10-year yield's are set for their biggest jump since 2020. it is jobs day. bubble stocks edge up.