manus: good morning mar middle east headquarters in dubai. rate hike bets. stocks get a boost from earnings. apple and lvmh flow-through estimates despite the supply chain concerns. record sales. biden's warning.

the president tells his ukrainian counterpart russia could invade next month. warm welcome to the show. dani is out. two unicredit, we are getting deep into the banks. light on estimates. the shock of course, we caught up with morgan stanley yesterday, could be you see rate rises earlier perhaps than the market is assuming. nobody is talking about a rate hike next week but european banks will be more interesting. let's see what they've got to say in terms of the bonus pool. we will come back to unicredit as the morning goes on.

revenue going through the target. full-year revenue exceeding the 2021 target and they are talking about a pro forma basis of 14.13%. these are the headlines on unicredit. comfortable beat on the revenue side, exceeding 2021 as a whole. what do you do when the bond market convulses? the equity market has anaphylactic shock, recovers and drops again. stephen roach encapsulates it beautifully from morgan stanley. former morgan stanley economist. the fed is so far behind that it cannot even see the curve. it is pouring fuel on an economy with the lowest unemployment rate in 40 years. the fed is going to have to do a

lot more tightening, which takes me to this. i enjoy his tweets phenomenally. he reflects on 2030. what happened to two-year and ten-year forward rates? if you think we are kicking up a barstool in the bond market, you are mistaken. this account slates -- encapsulates where rates were and we are just getting started. let's have a look. this reflects 2013 and really what robin is saying, yes, you have short moves in the twos, the tens have been ratcheting higher, but if you think you are in the midst of a tantrum, you have a lot further to go on a relative basis if the balance sheet is dramatically reduced.

quick snapshot of what's going on in risk. here we go to the s&p 500, the nasdaq both trying to eek out some gains. it is always very strange when you see yourself in a big box on a big screen on a big floor. stocks are rising. morgan stanley doubts the veracity of this. inflation adjusted rates will rise another 40 basis points. that will take you to 0.1 by the end of the year. u.s. equities will underperform. have -- you have position taking in netflix, good numbers from microsoft, and you have oil. let's talk about china and the stock market. fluctuations abound as the state media are talking up their attractiveness. the clarion call to buy stocks. the csi 300 fell, that is a bear market.

juliette saly has the call as to whether it is time to beat the bears back into the woods. >> yes, state media wants stability ahead of next week's lunar break and the start of the winter olympics, but also state backed companies and mutual funds committing to buy out some of the stocks that contributed to a $1.2 trillion route in chinese equities over the last month. we have seen buying coming through in the afternoon, but not enough to spur a rebound in this market. it is in bear market territory and there's a lot of concern about growth, about the property sector in particular. you are seeing an index of developers in the mainland and hong kong straining through into the hang seng index. let's have a look at the chart. it has been a terrible month for chinese equities, but where you have seen some of the money going into is value. the csi 300 value stocks

outperformed growth for the most on record this month. the last time we saw anything like that was 2014. we are continuing to get bullish calls on this equity market. credit suisse the latest to come out saying they have upgraded china's stocks to market weight from underweight. hoping the next few months will be better for this index. manus: thank you very much. juliette saly with the latest on the bullish call. my guest is the global macro strategist at -- i want to get straight to the chart we used at the start of the show. what we are trying to do, there are many superlatives about the rates market, the bear flat nurse. the scale of the velocity of the move in rates. what i have seen is that we are nowhere near the convulsions of 2013 on a relative basis.

your assessment of the repricing in the bond market thus far. is there much more to go? do you think we will see a rerun of 2013? good morning. >> good morning. we are going to see much more and that is because of course the fed is so much behind the curve and they have to do more tightening in terms of targeting inflation. they might well be able to do five hikes this year, and qt, but what we are more skeptical about -- we see them becoming more dovish as financial conditions tighten. manus: do you see real rates

making it to zero? >> the central banks are looking at this as the target. we do expect tightening from the fed to shock real rates into positive territory. this is what will induce the u-turn from the fed to become more dovish in terms of the pace of the tightening cycle. manus: the more trashy end of the market would say the fed might flop in the face of that slowdown. stay with us. first response to the markets. anna, global macro economist at fidelity international. on the corporate side, the world's most valuable company

reported earnings after the bell. apples strong results defy the fears of the supply chain disruption. laura wright has the details. i know they have given us that supply chain did interfere with it, but run me through what it is that we loaded up on from apple. good morning. >> good morning. yes, apple surging in after-hours trading, up 5%. really incredible, a record for the fiscal first quarter which includes that key christmas period. $2.10 a share. analysts were predicting $1.90. the highest level in 10 years. how is apple able to achieve revenue just shy of $124 billion? the max nominal growth surpassing. apple is pivoting toward a more services-based ecosystem. work from home seems here to stay, but the ipads for a

notable laggard in negative territory. terrified that key components have been prioritized for the iphone. the regional breakdown is interesting. china is the outperformer. japan a notable laggard. what do the analysts think? i was speaking early this morning to someone who believes march is going to be the difficult quarter, but if applicant get past this, they have a multitude of products coming out next year. for example, the iphone 14 in september. i will let you know a secret. i am still using the iphone eight. it feels vintage at this stage. apple will be entering the metaverse in the autumn. exciting things to look out for if you can get past a blip in the next quarter. manus: i thought i had gone moderately upscale with an

iphone 13. the producer of this show says i look a lot younger on this phone than i did on the last one. the very latest on apple and the first takes from the analyst community. juliette saly is standing by in singapore, let's get the first word news. >> president biden has spoken with ukrainian president zelensky over growing tensions with russia. following the call, zelensky tweeted that the call covered diplomatic efforts to de-escalate the situation and potential financial support. biden is planning to raise the issue with german chancellor olaf scholz when he visits washington next month. lvmh has posted record annual sales with revenue of more than 64 billion euros, topping the previous record set in 2019. gains by the french group exemplified the v-shaped recovery experienced by much of the luxury industry.

softbank's chief operating officer is said to be making preparations to depart the company after clashing over compensation and responsibilities. bloomberg understands -- because of his contributions, including a turnaround in the listing of we work. 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. manus: coming up on the show, we are going to keep an eye on the markets. volatility is back with a vengeance. scale of rate hikes and the impact on your equity portfolio. later, lvmh posts record sales. consumers snapped up luxury. we will discuss the outlook.

this is bloomberg. ♪

manus: is daybreak europe. the nikkei managing to add over 2% on the far left. the moves and the japanese government bonds caught my eye. a three standard deviation move in the u.s. paper. jgb's playing further catch up. the likes of zinc and iron ore. iron ore stockpile falling by 3 million tons. chinese stockpiles at major ports falling, giving that a boost. then of course on some of the

other futures, you have equity futures just on the s&p 500 up 0.6%. so is it -- it is such an awful word, dead cat bounce, but maybe it is just drawing breath, if or move capitulation. that will be the word everyone will start to write in their narrative, i assure you. have we reached a capitulatory point? from a market point of view, one just said since the 1980's i have inflation, i have wars, i have deep concerns about where we are with fed policy. let's start here first of all. there are many headwinds. the nasdaq is down 15% from its zenith to now. what is the biggest risk to markets right now and then we

move forward? >> there are issues due to the potential russian invasion of ukraine which if it has significant sanctions will result in major implications for growth. it is a growth stock to europe and beyond. right now this is what we are watching. there are not many upside scenarios there. manus: we will come back to europe in just a moment. three to four rate hikes is what you are assuming for this year and then perhaps they run out of puff. i want to talk about gdp from the united states yesterday. . . 6.9% i went, u.s.

exceptionalism. then i read the rest of the report. inventory built the highest since 1981. >> we think they are going to use the combination of the tools to show that they are fighting inflation as they are under huge pressure. we think that the maximum cap on the balance sheet is going to be about $100 billion. not initially perhaps, but they will get there at some point.

it was a few months before we had an issue last time. manus: they flopped the last time. maybe the more interesting part is this. we are going to show our viewers what mortgage backed securities are. in the statement from the federal reserve, their primary objective is to hold treasuries. this may well mean that mbs begins to get sold. what is the risk from that -- forgive me. i'm assuming the fed is going to sell the mbs's. we don't exactly know what the fed is going to do with mortgage backed securities. will that make a significant difference? mbs may well be rolled off or sold. >> i think it is really all about overall financial conditions. what we are paying attention to

is what curve they are going to use and how they are going to manage that. this is going to be their main focus because it will look at the yield curve, they have flattening and this is going to become constrained for them. trying to manage the curve is the main focus for us. manus: you are game on for physically selling treasuries as pozner is at credit suisse. where can that take 10 year yields to? give us a target in terms of where we go on tens, and do the curves invert? >> it is dependent on where real rates are. we might well see 2% or perhaps up to 2.5% on 10 year yields.

we actually would have closed rates in nominal yields. we are close to an entry point in duration. we are underweight and looking for a rise in real yields. manus: some food for thought on a friday morning. stay with us. we are going to head to rome. it is the fourth round fail. italian lawmakers have not been able to select a president. she is on the ground in rome meeting some of the best -- eating some of the best pasta in the world. this is bloomberg. ♪ ♪

manus: it is "daybreak europe." the latest search for italy's new president. prime minister mario draghi is still seen as favored, but after four rounds of voting, he still has not got the backing of the lawmakers. let's get to our surveillance anchor francine lacqua in rome. you set out on monday, you are still there friday. how is the search going? good morning. >> the alarm is going off in room. there is a lot of excitement about whether we get a double vote today. i remind everyone, the way the vote goes, the way there is no -- the fact there could be an unknown 75 lawmaker we have never heard of as president of

the republic is how things work. i would not panic with the way things are. in the past they have always gone through the process. the thing the markets want to know is whether mario draghi stays prime minister or becomes president. it is not clear with every day that passes whether his chances are increased. or whether his chances diminish because they have not been able to elect him so far. we understand instead of one vote today there could be two. that would start today which could speed up the process. if mario draghi does become president, it would not be the first vote today. it might be later this afternoon. not confirmed, but that is what the markets will be watching. manus: mario draghi has been attributed -- and i heard your interview with the former prime minister -- with getting through a great deal of change. many other prime ministers have not been able to do it.

if he moves from his current role to president, do you think that will bring the market instability or more stability? what is the consensus from the guests you have spoken to? >> whoever is prime minister from this moment on, whether it is mario draghi or someone else, we'll have a tougher time to push through reforms. mario draghi is very businesslike, very well-regarded. he pushed things through but he also had support of a lot of the parties because it was in their interest to get him to do the hard work. we are looking at elections in 2023 which means a lot of the parties will be less -- will be less likely to do business with whoever is prime minister from now on because they want to get the votes when it comes to 2023. if mario draghi becomes

president of the republic, you have a pair of hands to guide it. in times of crisis, the president can step in. in the shorter-term we could see volatility, but in the longer term you would have a safe pair of hands at the head of the government. manus: thank you very much. francine lacqua onto her -- on tour in rome. anna stupnytska has been listening. in 30 seconds, our biggest risk is when i go to the ecb next week -- what is the biggest risk there? anna: that it sounds hawkish. this might be the biggest surprise for this year. they might start laying the ground for rate hikes. i think the markets would be surprised. manus: you are a good sport.

we wanted to get italy into the conversation. we will give it back to you next time. anna stupnytska. coming up, we are going to as a business owner, your bottom line is always top of mind. so start saving by switching to the mobile service designed for small business: comcast business mobile. flexible data plans mean you can get unlimited data or pay by the gig. all on the most reliable nationwide network. with no line activation fees or term contracts... saving you up to $500 a year. and it's only available to comcast business internet customers. so boost your bottom line by switching today. comcast business. powering possibilities.™

manus: good morning from our middle east headquarters in dubai. these are the stories to set the agenda. rate hike bets ripple. treasuries resume the decline but stocks get a boost from earnings. consumer windfall for apple. lvmh blows through estimates. supply chain concerns hang there , but they push record sales. plus biden's warning.

the president tells his ukrainian counterpart that russia could invade next month. emmanuel macron and vladimir putin speak today. let's bring you a little bit of breaking news on the french gdp side. there we go. french gdp for this quarter blows through estimates. it expands to 0.7% on the quarter. year on year that takes you to 5.4%. the u.s. had an amazing performance yesterday on their gdp up by 6.5%. the french come in at 5.4%. this is a strong boost for micron. consumer spending investments, europe's second-biggest economy power the gdp boost. you are looking at pretty much a good reading. you have supply bottlenecks at all the major producers. three months until the election and this is going to be a boost for macron going into that.

consumer confidence held up. let's see how that plays out for the rest of the day. 0.5 -- 25% was the expansion and 7% is the actual. certainly blowing through in terms of the estimates. the euro rises this morning. euro stoxx 50. you're going to have to do it all for a bit more. that is the view from morgan stanley. the fed is so far behind it cannot even see the curve. it is pouring fuel on an economy with the lowest unemployment rate in 40 years. the fed is going to have to do more for tightening. what does that mean? i have just had a conversation with anna from fidelity. she says three or four and the fed will stop. they are going to run out of

steam. she think's duration looks tempting but i want to give you a framework to reference, which is taper tantrum 2013 and this is brooks of the iff. this is to your paper, tenure paper -- tenney year paper. when you look at the 10 year, you see how much higher they were, how much higher two years were. you have repriced in the two years, but if you want to understand what a taper tantrum looks like, this is not it at the moment. the question is for other people out there are saying, what is the new terminal rate? this economy is so on fire. the terminal rate is not to percent, it is 3%, and that is the bigger debate. how do you run down the balance sheet? what mortgage backed securities do you sell?

where is the terminal rate? desperately seeking susan. the s&p 500 bounces. the nasdaq has put in its worst inning. you have talk of a 50 basis point hike. that seems to be the consensus is narrative. a bounceback in the nasdaq. brent was trading near $90. nymex up 0.7%. yields are rising. 1.8141%. to signify. comparable sales. fourth quarter sales, what drove the beats? good to have you with us this morning. a lot of ceos battling through supply chain, battling through omicron. so tell me, first of all, where

you deliver -- where did you deliver on the quarter? >> good morning. it was a challenging year in 2021. the company is growing 3.8%. the technology is extremely important. business is growing 21% in 21. at the same time, we are strategically growing were we want to. the company is sure to achieve its eighth consecutive year of improvement. changing the side of the company, because at this point in time, cash is coming from our

digital division. we are well set to have another year of growth in 2022. manus: that growth, what will be the biggest headwind? we talked to ceos who say it is chips, ships, staff. where is your supply chain crunch? is it chips? parts? how do supply chain issues play into your challenges? >> they have been extremely detrimental to our capacity to deliver to customers in 21. but you have two different issues. one is the component shortages. that has been a big issue in 21. we had to redesign products to try to better deliver to customers. we could not deliver everything

customers were demanding. we believe we have seen an improvement on that side in q4. we believe we are going to see an improvement, probably back to normalcy. you know, our capacity to find boats and containers, this has been also a major issue in 21 and we do not see that coming back to normality until the end of 22. 22 will still be hampered by supply chain issues in general. manus: apple were able to tell us that supply chain constrained them by $6 billion. can you give the market a frame of reference? if the chips, ships, and supply chain writes itself -- rights

itself at the end of the year, give the market a sense of what the headwind is to you. they need to understand whether to take you on board as an investment based on normalization. eric: it is difficult to give a forward-looking statement. let's look at 2021. we have guided we would be at the higher end of that guidance. probably a few percentage points of growth, but also it is a lot of work to be able to readjust, to communicate to customers, to rebuild a supply that was very broken and probably q3 has been the worst ever when it comes to our capacity.

between one to three points of growth is what we can see in terms of the supply chain. manus: you talked about the digitization and growth. old deck better looks as if it is under pressure in america -- build back better looks as if it is under pressure is under pressure in america. let's try and deal with of the year ahead of us. the global lighting market you are targeting, how is that going to grow this year and more importantly, where is it going to grow the fastest that you are present? eric: we are the market leader at this point in time. we have recouped our 2019 levels at the end of 2021 on the consumer side of the business. but on the professional side of

the business, we see 89% of where we were in 2019. there is still a big reserve of growth back to the historical level. on the consumer side of the business, which was the one that was mostly hit by covid. a lot of businesses were closed. at the end of the day, we have seen the gdp estimates, all the regions have increased. for the world there is a level of 4%. manus: when you look at the input side, chips are an incredibly important point, but

i'm looking at an energy crisis in europe, input crisis across the board. has the energy crisis in europe stopped you? have you had to pare back production? is that some thing we should take on board for you as well? >> it is mostly assembly. has a company, we are providers of energy efficiency. our business could run later in this period. -- run lighter in this period. manus: you can probably give me a topline pay rise that you are going to give across the board, but where are you -- where is the hottest -- you are smiling. you are already in wage negotiations with yourself probably. what is the wage rise for your staff at signify in europe and

where are the tightest labor pockets? are you seeing on the technology design side a real tightness in talent? eric: well, first of all, let's talk about 21. we have reached the three objectives we had given at the beginning of the year in our guidance. that is a very good thing because it will add to bonuses to an even level in 21. our policy in terms of renumeration is to try to follow inflation, try to follow the buying power of people in different countries where they operate. you may have different percentages depending on the local users and local conditions. we have been doing that over the years.

we pay employees based on merit. we know how to do that and we are going to do it again in 2022. manus: i hope when you talk to the board they are generous with your lti. thank you for being with us this morning on the global lighting market and his aspirations to renumeration. >> president biden has spoken with ukrainian president zelensky over growing tensions with russia. zelensky tweeted that the conversation covered diplomatic efforts to de-escalate the situation and potential financial support. biden is preparing to raise the issue with olaf scholz when he visits washington next month. pfizer has the nod from the eu drug regulator for its covid-19 pill. it is the first oral treatment for the virus recommended in the bloc.

research trials show it can reduce hospitalizations and deaths among high-risk patients by nearly 90%. pfizer says research shows the drug is effective against the omicron variant. 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: thanks very much. coming up, a little bit of luxury. lvmh posts record sales. we discussed the outlook for europe's economies. this is bloomberg. ♪

manus: it is "daybreak europe." there is a bounceback in equities again. a lot of volatility. you look at the nasdaq up, one

of the biggest etf's lost $3 billion yesterday. the largest withdrawal since september 2020. how solid is this bounceback? that is what you need to ask yourself. fidelity have just been with us. they were talking about three to four rate hikes, so not the frenzied five to seven that has been put out by jamie dimon and the like. the s&p 500 up 0.6%, but the money flows out while talk of capitulation will take over. let's get back to europe because we have just had the french gdp figures beating estimates. germany is due to report numbers in just a few minutes. we have had the headline, 0.7% growth in the fourth quarter for france over the estimates of .5. france's most valuable company lvmh reporting numbers that beat

the estimates. great interview, by the way, with marine le pen. let's talk about the economy. she's going to have to go head-to-head with macron and he has a strong economy. does it matter to the voters? good morning. >> this may surprise you, but the french economy has proven quite resilient. it is having the fastest recovery among the four biggest eurozone economies. that is partly due to the fact that france is less reliance on manufacturing then germany, for example. the manufacturing sector is an france is less than 10% of gdp compared to nearly 20% in germany. that means it is also less impacted by supply-chain constraints. we also have the french carmaker telling us yesterday on bloomberg tv that they expect

the chip crunch to ease in the second half of the year. three months before the presidential election, emmanuel macron has got an ace up his sleeve. especially after the good numbers on the unemployment front we got earlier this week. the number of jobseekers in france has gone to the lowest level in almost a decade. manus: the german gdp numbers are due in the coming hour. what can we expect there? >> we will see very different figures than france. the statistics office has published full-year figures 2021 two weeks ago. that came with an estimate that output contracted between 0.5% and 1% in the fourth quarter. that is big. part of that can of course be

explained by biontech revenue, the drugmaker that partner with pfizer in developing covid-19 shots. the revenue was supposedly delayed and spread across the euro. we are seeing upward revision to previous quarters, but that does not hide the fact the recovery in germany is a lot slower than france at the moment. manus: and then on the corporate side, we have louis vuitton. i did not know you could spend $1000 on a pair of trainers. i do not go in very often in dubai, i stand back and watch the rich people go in. a barnstorming first quarter. you buy a bit of louis vuitton, don't you? caroline: of course, every day. beating expectations again. we have revenues in the session,

the leather goods unit up 42% compared to the pre-pandemic 2019 levels. this is louis vuitton but also brands like christian dior. the biggest division of lvmh. it is doing good because consumers have been putting lockdown savings into luxury fashion and goods, but also people are starting to go out again and socializing. they want to show off their latest handbag, like you do, manus, and they also want to indulge on champagne. one year ago, bernard arno said there is a remarkable 2021 set to continue and if you look at the share price over the past

year, for lvmh and all luxury stocks, in fact lvmh has become the biggest company by market value, not only in the cac 40, but also in europe. manus: thank you very much, caroline connan in paris. we wait for the german data. the french have beaten estimates. two unicredit in italy. decided to step back from a purchase of a russian business. if you're a member, it was one of the important russian banks. it had a bailout. unicredit was on the road to buy that business but they are going to withdraw from that and i think it is due to geopolitical

concerns rather than anything else. just a quick note. other breaking lines from unicredit in terms of the rest of the business, we bring those to you, but that is the breaking news headline. it looks like they are pulling out of that deal with the russian business. let's leave it there. more to come on russia. biden warns of imminent ukraine attack by russia. this is bloomberg. ♪

manus: it is "daybreak europe." joe biden is warning there is a distinct possibility of a russian invasion in february bruce einhorn joins me.

your take? bruce: the two presidents, biden and zelensky, had a long phone call, the second one this month. the white house said that the presidents talked about how the u.s. will be providing more financial aid to ukraine to help its economy. also said biden told zelensky there is what the white house calls a distinct possibility the russians could invade ukraine again next month. that said, ukrainian officials like zelensky have taken more of a calmer approach, if that is the right word, trying to tamp down warnings about the likelihood of attack. meanwhile, there is further action on the diplomatic front. we know the secretary of state antony blinken had a call the

other day with the chinese foreign to discuss the crisis. we know that biden will be meeting with german chancellor olaf scholz next month. a lot of things is still going on to avert another invasion. manus: bloomberg markets europe is up next. ♪

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anna: good morning and welcome to bloomberg markets europe. the cash trade as less than an hour away. here are your top headlines. rate hike bets ripple. treasuries resume their decline but stocks get a boost from earnings. it blows through estimates and supply chain concerns, posting