♪ ♪ manus: good morning from our middle east headquarters in dubai. it's daybreak europe. the stories that set the agenda. biden expects russia to move in on ukraine as roadblocks to his domestic agenda mount. the tech heavy index dropped 10% from its peak. risk sentiment in asia gets a

boost from the easing in china. turkey on hold. a pause to a series of rate cuts on a busy day for the central banks. good morning. are we hitting a critically important point in u.s. bond futures? short gamma and a negative convexity risk. they shorted the cause. you are looking ideal of 192. this is where the mega risk lies in the bond market, where it all begins to unfold. good morning. dani: very punchy of you to start off the morning with a little bit of the creeks. i really like this. this is called the swish moment. should we hit 127?

he says it it would bring the tenure to a level of two into 12, a level last seen in 2019. that would have repercussions for the entirety of the market. dani: i like that. herein lies the point. what we are dealing with globally is an accelerated narrative. this is about trying to get our heads around a structural shift in central banks and the speed with which they will normalize. that's what we don't know. lots of people are screaming at the screen. we are not that mad. when they come hard and heavy -- joe biden stood at the podium last night and his line was, i have a plan. i was like, ok. there's a good one. find new people for the fed. i think he's emboldening the fed.

dani: it doesn't help that we are in a blackout for the fed. it lets our minds wander and expect the worst. at some point, despite the pressures, we have to respect what the tape is telling us and whether it's in u.s. treasury futures or the stock market, it is screaming out. yesterday, levels breached on the nasdaq, turning into a technical correction. breaking a long-term resistance is something that our own macro man pointed out. if we break below this level, we can't bounce back. look out below. there's a lot of danger present in the market whether you want to look at the macro or just the price action. manus: absolutely. there's a small bounce back a lot of results. dani: we are looking at a bounceback in the equity market. we are seeing the deadline coming through intact. a 10% selloff in the composite. nasdaq futures are up 0.5%.

steady when it comes to your tenure yield. futures still falling in today's session. brent crude taking a breather after reaching its highest level in seven years. we were talking about president biden along with the domestic agenda. there's the geopolitical risk. he says he thinks vladimir putin does not want a full-blown more but will move in on ukraine after amassing 100,000 troops on its border. >> if they do what they're capable of doing with the force they have amassed on the border, it's going to be a disaster for russia if they further invade ukraine. our allies and partners are ready to impose significant harm on russia and the russian economy. dani: let's get to our very own derek wallbank. those are the remarks from

biden. warning about russian troops potentially stepping in. how have those remarks gone down? derek: it's 8:00 in the morning in kiev. i think people are going to be waking up and wondering exactly where the u.s. is here. biden said that he thinks that prudent -- putin will move in. the president further said that the u.s. response might depend on what putin does. the keyword is, it's one thing if it's a minor incursion and we end up having to fight about what to do and not to do. suggesting that there could be differences of action if it's minor versus something major like a full on invasion. the white house tried to work set back little bit later, saying that biden had been cleared.

different various things. it showed a lot of confusion about exactly what the nato response might be. it also emphasized that there really is a division within nato countries and within europe about exactly how hard to back ukraine right now as it appears there's a real threat for russia while everyone is trying to dissuade vladimir putin. manus: it certainly has undermined the white house message, hasn't it? we will return to this through the show. the borrowing cost for the second straight month. the pbo say eased as it pledged to do more to stabilize the economy. a very different trajectory to the rest of the world. juliette saly has the latest. talk me through it.

juliette: let's look at the loan rate, cut by 10 basis points. it moves in lockstep with the mls which was cut by 10 basis points from the central bank on monday. that was the first cut into years. when you look at the five year, this is a longer-term. it was cut less than expected, just by five basis points. we've had a call saying it wasn't big enough and reflects some caution about the overall property space. we've seen property developers rally today. let's have a look at the bloomberg intelligence gauge of developer stocks listed on the mainland and on hong kong. i three-day rally, up by more than 4% today. you are seeing hang seng stocks and hong kong stocks in general really leading this rebound amongst asia, particularly in the tech space. the hang seng snapping that five-day losing streak. it's been rising by as much as

4% today. heavy lifting being done by tencent which jumped the most since august. upb saying this is not about fundamentals. it's about the relief rally that you are seeing from the easing coming through from authorities, giving investors a chance to jump back into these heavily beaten stocks and sectors. dani: thanks so much. that's juliette saly. in the u.k., boris johnson has rebuffed calls for him to resign during a heated prime minister's question in the u.k. house of commons. he was largely supported by party colleagues until david davis told the p.m. he should go. >> i expect my leaders to shoulder the responsibility for the actions they take. yesterday, he did the opposite of that. i will remind him of a quotation altogether all too familiar. in the name of god, go.

dani: yesterday, we had boris johnson repeating that the mp should wait until the civil report comes out. can he survive until that report comes out? >> it seems like he's going to cling on but the report might. -- not tell us anything we don't already know. it might not reach any conclusions that are one way or the other. yesterday, his authority was seriously undermined. you saw that clip of david davis. the p.m. q started with a conservative mp defecting to labor. this is a real problem for boris johnson. the question is whether other mps who were elected in 2019 in the redwall seats, the seats that turned conservative for the first time in a long time, will now wonder whether the man who won them their seats would lose them their seats in the next election and whether they will

turn on the leader. he stays to fight another day for now. manus: it was quite an interesting discourse. lizzie burton tracking boris johnson and his position as prime minister. back to singapore. juliette: england with the most covid restrictions over the coming days with people no longer asked to work from home and mandatory face mask rules. boris johnson wants to transition to living with the virus. mid to tory isolation for positive cases could be lifted by the end of march -- march. unilever says it won't raise its 50 billion pound offer for the business which owns sensodyne. the decision to walk away comes after the share price -- investors question the rationale over the tech slowdown.

booster shots have -- of mrna vaccines don't prevent infection with omicron. scientist focused on a group of german visitors to south africa who experienced covid infections despite having had a third dose of the vaccine. all of the cases were mild or moderate, suggesting the extra shots help prevent severe disease. global news 24 hours a day on air and at bloomberg quicktake, powered by 2700 journalists and analysts in 120 countries. this is bloomberg. dani: thanks so much. coming up, we discussed moves in the bond market with our next guest. manus: the turkish central bank has its rate decision later today. we discuss what we can expect. this is bloomberg. ♪

♪ >> how far will every market fall when fed rates moved to 2%? i think we know that answer. markets are incredibly vulnerable from here. dani: bruce richards there on the fed hike rate predictions and what that means for markets. that's pretty punchy. we are talking about a baseline of four. what does that mean if the markets have to factor in twice as much? manus: absolutely. it's not the first rate hikes that are going to upset us. it connects for how quickly they come. we are seeing futures prices roll down, boones went positive

yesterday. so the risk is this. the inflection point gives you a yield of 1.9. let's ask christophe donay. how worried would he be afraid's got 2%? it's your job to accept -- assess risk. how do you see the risk of us getting to 2%? what would that do to risks? christophe: yes. we are on the upside for sure. since the beginning of the year, the direction is absolutely clear. interest rates response to the inflation and expectations. also, a change in the monetary policy. those are risks the market has to digest. these parens in the short and,

especially by the fed. also, variety of damages. we expect a steepening long-term in interest rates in the u.s.. markets are digesting it. dani: sorry to jump in. do you see a steepening coming? what is the catalyst for it? what brings us there considering, despite hockessin expectations from the fed, we have still seen a flattening in the curve? christophe: we have inflation calling to us. higher risk rates. we have a target of 2.1% for long-term interest rates in the u.s.. we've had three or four hikes by the fed. 25 pips each. the long-term interest rate

curve should steepen according to us. clearly, inflation, long-lasting inflation is persisting, clearly a driver. manus: we are trying to understand the market. the market at the moment is pricing. you have a correctly the -- correction and equities of 10%. we have futures indicating for rate hikes. equities are becoming rather churlish. how upsetting would for rate hikes or more be to credit? are you worried yet? christophe: not yet. we still have some way for higher risk rates before they hit the cycle. by the way, whatever banks we

consider, we are talking about the fed now. we will take the risk to derail the economic cycle and the economic growth. this is the first constraint under which central banks decide monetary policy and interest-rate hikes. consider that there's another constraint which is a preservation of the way of things. preserving economic growth, you have to preserve consumer confidence. for that, wealth effect accumulated in many asset classes. that's absolute crucial. it's very important for central banks to find tune their monetary policy in order to eat the wealth effect. dani: it's interesting. i've seen the thought that we

should not be concentrating on equities. high yields, credit. that's what we should be concentrating on. in the equity space, you like companies with pricing power. often, those are large-cap stocks. they are tech socks. they haven't done well. how do you square the micro and the macro forces? christophe: regarding the tech sector. in fact, we have a shortened force which is rising interest rates. eating variations, have we have a negative correlation between interest rates and valuations, especially for these companies. the second driver is the long-lasting trend in which we are, due to this innovation. everything started 15 years ago.

at that time, we are achieving the end of a long list -- long-lasting innovation wave. we are approaching this point, before to switch to the next innovation wave. in between two innovation waves, it's normal to have some doubts regarding the stability of some tech companies in the long run. it explains also why today, we observe a correction. the correction could last, not only in terms of magnitude, but also in terms of time. we need time to digest and understand what's going on for the next years in terms of innovation and the impact on the profitability of the tech companies. this is a long-term process.

it should take maybe two or three years. these two forces are combining both together nowadays and it should last six months. manus: let's just round this off. you are saying we are in a correction. we are down 10%. you say this could last. to what scale and over what time? do you think we will make it into a bear market? how quickly is this going to unpick? christophe: it's very difficult to quantify the magnitude of the correction. it could be within the range of 10 to 20% let's say in terms of magnitude.

also, able to be entered into a long trend. a long-lasting one. we have to be patient. patient to have visibility on the next innovation wave. what would be the next technologies creating an additional profitability for tech companies? it's a matter of years, two or three years to understand this change in the structural forces driving innovation. just a comeback on your point, it's not only a matter of magnitude of correction. maybe 20%. not necessarily right away from now. it would take time to reach this. a long-lasting bull trend, we have to be very patient i think. dani: 20% in a long waiting bull trend. that will be tougher folks who

got hooked on that short-term sugar high. you will stick around for us. coming up, joe biden says he thinks russia does not want a full-blown war but will move in on ukraine. we talked geopolitics and market impact, next. this is bloomberg. ♪

♪ dani: welcome back to bloomberg daybreak: europe. president biden says he things vladimir putin does not want to full-blown more but will move in on ukraine after amassing 100,000 troops on its border. we've seen the impact on markets locally with stocks tanking. let's get into geopolitical risks.

again, it's been really localized. some 30% for russian equities. when you look at these geopolitical risks on the horizon with russia and ukraine, do you see potential for more contagion broadly? christophe: it's a risk. it's difficult to assess where the geopolitical evolution progress is going. a few years now, five or six years, we have been facing rising political injury applicable risks. we experience what we would like to call rising populism trends in different countries. on one hand, we have geopolitical tension lasting between russia in the u.s..

it's also between the u.s. and china. what's behind this geopolitical tensions according to us is technological leadership which is between u.s. and china. china is a very serious challenger for the u.s. in terms of world technological leadership. geopolitical tension for sure for different reasons. i mentioned technological reasons and world economic leadership as well. we are also having other reasons linked to what i call rising populism. we have sovereign is him trend rising everywhere. especially in some eastern europe countries like russia.

they are still there to say. it's just a matter of the position of human beings. manus: always difficult to forecast geopolitical

♪ dani: good morning from bloomberg's european headquarters. i am dani burger with manus cranny live from dubai. this is "bloomberg daybreak: europe." president biden's warning. he expects russia to move in on ukraine as roadblocks to his domestic agenda mount. nasdaq correction. the tech heavy index dropped 10% from its peak. risk sentiment gets a boost from easing in china.

turkey on hold. istanbul looks to an unorthodox series of rate cuts. could we be heading towards the swoosh moment? it's been an ugly past few days for risks. you and i have been talking about this morning this technical level on u.s. futures where a huge amount of options are building up. should we reach that level, we could have more hedging, and that means more damage to come in this treasury market. manus: absolutely. and we know from the open interest that there is 332,000 open. why are they banking on about futures? it opens pandora's box to 1. 95, and that takes you to the higher land of 2.1%, or the eight rate hikes that we are hearing could be on the cards from american asset management.

you know i love a trashy light. it's about -- trashy line. it's about travel. we've had an awful lot of traveling drinks, as i like to call them, glass in one hand, bumping along the train, and it's a very bumpy ride. but have we arrived? have we exhausted our bearishness within an inch of our life? is it time to get off the bears train -- bearish train? dani: hmmm. i guess the question is, have we seen capitulation? our last guest, at least in tech, does not think we are there get. we could see a 20% fall, a bear market for tech. are we prepared for that? i don't know that we are. manus: capitulation, there you go. we can shovel anything into this show. with christoph dornay, he's saying it's going to be a long

--. do you go straight to bear market? it's going to be years of transition. paradigm shift. paradigm shift in central banks, rates, in how we live and what we do with technology. i love the intel ceo, he said that ships are more important than the gold. take it away. what have you got? dani: we will hear from intel later. we are seeing somewhat of a bounce. this is the level we have to watch for. if we don't break below that -- if we do break below that, it could be worse from here. you are looking at a rebound so far. manus: absolutely. china cut the lpr. that's given a little bit of a new narrative to risk. it is hardly a breathless reinterpretation of where we are in risk. rates at 1.85%, as i say. pandora's box is open. brent is flat. you can just feel joe biden

dialing the number of the prints and saying, excuse me, can we have some more please? the turkish central bank meets today. they have another conundrum to deal with, unconventional policy moves. policymakers have cut rates by 500 basis points. the has pummeled the lira, attitude runaway inflation -- added to runaway inflation. bloomberg expects benchmark rates to be kept on hold at 14% today. let's get to our guest from istanbul. good to have you with us. why do we think that we are in a hold mode today? what are the expectations? good to see you. >> yes, hi. the turkish central bank is expected to keep rates on hold for the first time since easing began back in september. the central bank actually signaled this at its last meeting in december. also, we are seeing the turkish president ease political

pressure on the central bank to cut rates quickly. of course, due to his unorthodox views that high interest rates actually encourage inflation, last year, the central bank cut by a total of 500 basis points. now, this sent turkey's real yield deep into negative territory. and it is the worst, the lowest among emerging markets at -22%. now, this is also due tohe annual inflation in december topping 36%. that's the highest in two decades and the highest since president as long -- president aslan became the country's leader. dani: what's the outlook for inflation, further lira? especially given that u.s. banks are about to start hiking as well? >> turkey is among emerging markets most vulnerable to u.s. rate hikes. this is due to its large current

account deficit. some say turkey needs to hike rates significantly this year, by around 900 basis points. if not, we could see lira volatility continue. last year, the lira was the worst performing an emerging market the most volatile, losing 44% of its value. standard chartered bank earlier this week said that it expects the lira by year-end to be at $20, saying it does not expect the country to shift orthodox economic policies anytime soon, and especially before the elections scheduled for next year. economists are also concerned that inflation will continue to rise, citing concerns about hyperinflation. dani: great roundup and preview. thanks for joining us. let's now get to our guest, gizem oztok altinsac, chief

economist at tusiad. thanks so much for joining us this morning. here we are on the eve, or the day of a turkish rate decision. those surveyed by bloomberg expect no change. what is your expectation for today? gizem: well, we expect the same thing. we expect the bank to keep the rates unchanged. we expect them to assist the market for about three months. so, we do not expect any further rate cuts in the coming three months time. manus: good to have you with us. the market is trying to understand the speed of the 500 basis point cut we had in the back quarter. a lot of that's in the price, in the currency. the language coming from the president at the moment is a gradual pace of reduction. but you, as an economist, how would you interpret a gradual pace for 2022? what are you expecting for the whole year?

pres. biden: -- gizem: well, it depends on the inflation and also, it depends on the credit environment abroad. you know, this year will be a tougher one compared to the previous years with the fed moves on the way. so, i think they can cut the rates in the coming term, despite the rising inflation. inflation is 44% this month. it will be something around 50% by april or may. but despite this rising inflation, if the lira stays calm, if the global environment -- this one, although i think so -- don't think so, then they won't try to cut the rates further, i guess. are working number is 30% for the full-year, but of course,

there are risks. they have -- dani: i was just going to say, i want to linger on that potential peak of 50% in inflation. these are big numbers coming off the back of 36% year-over-year for turkey. what are the consequences of seeing inflation that peaks at 50%. gizem: of course, first of all, it will trigger the dollarizati on. they are just curbing the dollarization right now but these are the short-term measures. they can only work with about three months or six months time. the second impact will be curbing the demand. inflation is very high. the third impact, the third risk is hyperinflation, because none of us know, all of us are

working with a number of european inflation in the second quarter, mainly in the last quarter due to base affects reaching something around 20%-30 5%. if the global and -- 20%-35%. if the credit environment will be tighter, the turkish economy -- the liquidity in the capital will be much harder and there will be pressure over the lira. this will be resolved in a hyperinflation -- this will result in hyperinflation going forward. so these are the three impacts on the asian side. manus: so, the other news that we've had in the past 24 hours in regards to turkey and the central bank is the swap lines which they have signed with the uae central bank for $5 billion. i know there is a broader political relationship context between the uae and turkey. but from a currency, central

bank, economic perspective, what do you make of that swap line being signed? i mean, agreements that qatar, south korea, and china, now the uae. that's thef reserves we are showing. they are under pressure, obviously. xgizem: this is a -- and central-bank balance sheets. what we need is a hard currency. of course, to some extent, this will work a little bit. and again, we've seen the reserves because of the economy. however, we need a fresh capital inflow into the country. because it is not just the current account deficit solely. we are working with -- on the

current account side this year, 2022. whenever the country has something around $170 billion. i am talking about external debt service. even if we are posting a positive balance, it does not mean that it is over the story. ok. , so we need to find -- almost 20% of the gdp capital, a fresh one. we see the reserves in this kind of [indiscernible] is not working. these are not the heart currencies. -- hard currencies. it is not working, it is not providing dollar -- preventing dollarization. manus: that's probably one of the biggest risks.

indeed, transferring into harder assets and other currencies. let's see what the central bank decides to do. gizem oztok altinsac, chief economist over at tusiad, her views on the upcoming central-bank meeting in turkey today. we will keep you updated on those are decisions. juliette saly has her first word news. juliette: boris johnson hasn't rebuffed a new cause for him to resign over alleged breaches of lockdown rules. at downing street just moments before the u.k. prime minister faced lawmakers for questions in parliament, one of his mps crossed the floor of the house of commons, defecting to the opposition labour party. reporting about the lockdown incident has been prepared by senior official and could be published next week. morgan stanley has raised of profitability targets and posted a surprise drop in stock trading revenue in its latest earnings. the bank now sees -- a more than 20% return on tangible common

equity in the long-term, this is up from 70%. equities trading revenue jumped 13%, beating analyst estimates. fixed income revenue, meanwhile, was down 31%. global news 24 hours a day, on-air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. dani: thanks so much. juliette saly in singapore. coming up, the global ship supply shortage, if i can find my words, continues to impact automakers. we are going to hear from the ceo's of nissan and intel next. this is bloomberg. ♪

♪ >> we think this is a great start. maybe the second half of the decade, there would be a chip sack, too, but this has created a lot of energy and we

believe that we should be participants in building out and accelerating this capacity on american soil. personally, i have been very involved in lobbying for getting the bill done. we are hopeful that before the continuing resolution ends in february, that that timing is one that all the legislators are rushing to get across the line. where optimistic. we think it's a great start. if we can go from 37 to 12, and i've set a moonshot objective where u.s. gets back to 30% of the next decade and europe gets back to. 20%. we are looking at 50%, i think that's an incredibly positive way to leave this decade and one that we are optimistic that we will be able to achieve. >> it's interesting, you've made a noise about this. most of the other people who've made a noise in terms of standing up to china tend to be

like facebook and google, who don't have the same amount of sales. china is still the biggest, it is your biggest customer, it is bigger than the united states. do you worry that they might take retribution on you? or do they have no real choice in terms of chips at the moment? >> well, you know, we believe that every country would want local suppliers wherever possible going forward. our objective is billed best chips and delivered them into our customers on a global basis. and, you know, about 25% of my revenue is in china. we have did customer relationships, ones where they are, of course= they want more of their supply chains there, we fully respect that, but our customers want to build the best platforms, the best commerce platforms. if our products enable them to be markedly ahead of what they would be up to do with alternatives, we will be able to continue to satisfy that business. manus: intel ceo pat gelsinger

speaking to the bloomberg year ahead conference. meanwhile, nissan ceo has told us reduction is on the recovery track but the chip situation remains uncertain. he spoke exclusively to bloomberg. >> the ship shortage situation is still uncertain -- chip shortage situation still uncertain. -- is still uncertain. -- has a robust business continuity plan and we are -- our plans to ensure continued improvement. day by day, we are in discussions having to make sure to make our plan to be achieved. this is something of what i can tell you. we do have that strong battery technology that we want to -- for the future which is the battery we have announced.

this makes more opportunity to move bigger sizes of vehicle with the leads coming in china, u.s. and japan. we would like to make sure that we are ready for that. >> you mentioned china. i am wondering where these -- whether these ev's you mentioned can turn the tide of falling sales in the country and how do you address that? >> china is our most important -- is an important market. we have to make sure that the market is still moving and we continue to have a presence in china. in the future, how we can further introduce our technology when it comes to the company and how does those fit to the market is going to be most important. >> the question is whether that's enough to help you be the leader in the china market, as you articulated your strategy. >> we would like our presence to remain in china. we do have the expertise of the

electrified vehicle in the past years. therefore, we would like to further continue in china. >> that was the nissan ceo speaking to haslinda almond and rishaad salamat. president biden accuses republicans of forcing them to scale back his agenda as he marks his first year in office. this is bloomberg. ♪

♪ dani: welcome back to "bloomberg daybreak: europe." i am dani burger in london with manus cranny in dubai. the metals market is heating up. copper, nickel all on a tear this morning. nickel reaching $24,000 a ton. we have supply snarls and

china's more easy monetary policy coming into the fore. manus: those cuts coming through for the banks. when it comes to the iron ore market, preemptive strike really in these rate cuts. blast furnace production in china will drop by about 55% in february and march so a bit of a squeeze on the markets in terms of the supply. president biden has accused republicans of forcing him to scale back his agenda as he marks his first year in office at the press conference in the white house. what does breaking up build back better really mean? derek wallbank, economic agenda has stalled, his ratings are imploding. how difficult is this to the economic agenda for the united states if build back better is broken up? derek: manus, i think there has been some thought that build the

back better was not going to get through in its present induration. i am not sure that anybody was holding their breath in terms of their economic a forecas -- economic forecast expecting that it was going to go through. the most likely scenario for this is you figure out what you can test and you test that. joe biden really cleanly said, i think, in his marathon press conference, set that's what he wanted to do. break out chunks, see what can pass, past that -- pass that. there is probably a number of things you can get 50 votes for, but what you are going to do is annoy your voters. that is going to be able to be, that's going to be a really big. -- big hit, both policy wise and

politically, because the prospects for getting done in the second half of his first term don't look any better. dani: speaking of which, voting rights, that's something chuck schumer had sounded confident in the past, but only a few hours ago, we saw that collapsed. what does this mean for the biden administration? that's something they were confident on, like, voting rights was also struggling? derek: i think it's something that they wanted to get to but never really had the votes for it. and both, you know, the republicans sort of blocked that along a 60 vote senate threshold, and then an effort to prove a special carveout for the filibuster so you could take it down to 50, that failed as well. the prospects for that do not look particularly great, although i'd like to say, i've gone through some of the state redistricting that's come out. it is not as bad news for democrats as maybe they feared. dani: thank you very much. derek wallbank.

manus, we are looking at a bit of debt buying in the future session -- dip buying in the future session. manus: yup, bouncing off that correction, but will that enter? bloomberg markets europe is up with mark and anna. ♪

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♪ anna: good morning. welcome to "bloomberg markets: european open." i am anna edwards live in london. mark cudmore joins us from singapore to take us through of the market action. the cash trade is less than an hour away so here are your top headlines. biden's warning. marking his first year in office, the president said he expects russia to move in on ukraine. nasdaq correction. the tech heavy index dropped 10% from its peak. risk sentiment in asia gets a boost