>> good morning from bloomberg's european headquarters, just gone 6:00 a.m. in the city of london. this is daybreak europe, here's what you need to know. five magic numbers. goldman boost its call as rafael bostick says they raised their price 50 basis points in march. slow down, omicron hits chinese factories on the consumer as future start the week mostly higher. plus, sanctions in the

spotlight, u.s. senate moves forward with a bill that could penalize russia even if vladimir putin doesn't invade ukraine. good morning, happy monday, getting earnings and from lion air breaking third quarter loss after tax coming in at 96 million euros. that's a steep loss with the estimate at 20.9 million euros. i should say their customer numbers are coming in stronger, 39 .1 million, the estimate was for 30.9. they are keeping their for your loss estimates that they had given us earlier in the year after 250 million euros to 450 million euros. they say their fourth-quarter traffic needs significant price stimulation and says the five-year plan is now to create over 6000 new jobs. in september they said it was 5000, so now this is at a better outlook, given that it's not thousand more new jobs. we have some of the restrictions

easing in the you -- u.k., potentially elsewhere in europe. potentially some easing here as well, but again, a loss of about $107 million. later in the program we will dive more into the results of the lion air cfo. stick around for that, that will happen at 6:30 a.m. london time. that's the earnings picture, and of course the other thing this market has to contend with as we start a new week, is larger hikes at the fed, they are in and they are serious business at the fomc. this is part of why we continue to see a lot of action in the front end of the curve. we sought again after rafael bostick was speaking and he said a 50 basis point hike could be in the cards to hike combat inflation. traders have been caught wrongfooted. this is the picture for hedge funds positioning as of tuesday last week. the most net short futures since

march 2020. that was not the position you wanted to be in. it was not a steeper yield curve that we saw today. he continued to be one of flattening. at the moment u.s. five 30's are only 10 basis away to being at their thinnest level, their tightest level since march 2020. from the illiquidity crisis, we are really getting to the level where the yield curve is screaming out, could this be pricing in a recession, or is all the action done in the front end of the curve? in equity lands we are seeing gains in this mornings markets. we see gains continuing the nasdaq after on friday, nasdaq's cash index gained more than 3%. a huge turnaround after losses early in the day. euro stocks are meaning to play catch up. again of 1.3%. meanwhile, your 10 year yield, that continues to see a move higher as well. that by nearly two basis points.

i should say the japanese 10 year yield is at their highest since 2016. brent crude at its highest since 2014. despite some of the risk on mood and the market, they remain on edge and anticipated a monetary support. speculation of a 50 basis point hike in march in atlanta fed president told the ft that that option was on the table. it does feel like rafael bostick tends to be the first to signal more policy, last january he did the same when it came to normalizing policy. what is it mean now that we have bostick saying 50 basis points is on the table? craig c is open to the idea, it will be data, but he also says that hughes on a base cases, so kind of the quarter-point that

most people are talking about. it's worth noting that he is in a voting member this year, but i think it does go to the point, it speaks to this now rapidly accelerating hawkish and us we are getting out of the fed and economists are adjusting. talking about a potential 50 basis point hike in march. i think all indications are that it doesn't seem the fed has signaled the debate. i think it also depends on data in the coming weeks. it's in terms of what the fed could do if they think inflation is getting out. >> that's bloomberg's and the curtain. over to china where data is adding to concerns about slowing growth. omicron taking a bite at consumer spending.

let's bring in juliette saly in singapore. we are on the ease -- eva chinese holiday. what's the latest in the region? sally: you make a really good point, we know january and february are a low on the factory floor. it's usually the timing of the lunar new year, the nonmanufacturing pmi was at this time last year compared to where it is at 51.1. we are seeing the economy slowing as the manufacture fell at 50.1, just staying above expansionary territory. this comes on the back of a private seller on the weekend that had its lowest reading into years but the survey falling below 50, just showing the pressure on the economy. the pboc has moved to an easing cycle. uber economic said that will cushion the fallout in the economy, it won't happen in the near term, probably not likely to see that in the second quarter. china is on action due to the

fact that it is lunar new year. we have seen tech coming in on what has been a month of selling fear and asia lifted by the tech fears. a very volatile month and a day of trade with a number of markets closed due to lunar new year. also looking ahead to central-bank action elsewhere in the rba will be in focus this week. we have the asx 200 a little bit of an underperformer. dani: bloomberg's juliette saly in singapore. u.s. senators are close to agreeing on a russia sanction bill that could include penalties. former relations committee chair says restrictions could be applied based on what the kremlin has already done. lawmakers this week will be briefed by biden administration officials. maria, how will these sanctions that are being proposed be

different to previous ones? >> these are sanctions that would go well beyond anything we saw in 2014 after the annexation of crimea. there were sanctions, russia was kicked out of the g8, but the russian economy was able to go around some of these actions. the package that we are looking at would hit pretty much every sector of the russian economy and could prevent russian banks from clearing dollars. it would go after the oligarch to remember that the u.s. administration has not cooled down going after vladimir putin. it could be preventive, could happen before a full-blown attack happens on ukraine. when you look at ukraine, it's also worth noting that ukrainian president said the country needs around three to 4 billion euros to be able to stabilize itself after all of the turmoil seen the last few weeks.

today the european union was descending a commissioner with a 1.3 billion euro plan. the question is whether this new money or the focus is on the state of that economy. dani: maria tadeo in brussels. let's get took first word news with juliette saly. >> the socialist prime minister has one portugal's general allowed action and will have an absolute majority in parliament. he has been parliament since 2015 and has pledged stability and higher household income to recover from the pandemic. spotify is taking steps to stop the spread of covid misinformation, as controversy grows. over rogan which posted the skeptics, and they put it into the rules and what is and isn't allowed on the platform. the u.s. has reiterated its

career without conditions, after kim jong-un had intermediate range for ballistic missiles for the first time since 2017. it reached an altitude of more than 2000 kilometers for 30 minutes. elliott investment management partners are said to be nearing a deal, sources tell us the pair will pay $104 a difference getting a takeover that could be announced as soon as monday. at that price their makers will be valued at around $13 billion. global news, 24 hours a day on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts and more than 120 countries. dani: coming up next, could it be fined. we will discuss how many times the fed will move. the head of fx strategy joins us. plus, as millions in china

prepare for lunar new year, we have more on the current economic lows later in the program. this is bloomberg. ♪

dani: welcome back to bloomberg daybreak: europe, i'm dani burger in london. let's return to the fed with a more hawkish stance after chair jay powell indicated that the door remains open to faster hikes for inflation. joining us now is the head of fx for -- fx strategy. happy monday. the noise coming out of the fed over the weekend was really amplified by rafael bostic. gaming for the ft said 50 basis points could be an option in terms of a hike in march. the last time we saw that was in 2000. if we are to prepare for a half a percentage point raise, what

does the playbook look like for this? >> i think we have to concentrate on the economic data. the first was 50 basis points and some commentators have been erring that view for the past few weeks. but if we look at the data that came out last week, that on the surface of this, but when you dig into it, it was a big lump that was because of -- that suggests growth will actually slow as stocks get used in the next few months. so that is something that maybe they won't do 50, and of course this friday we have the tables data if we look at the market consensus data for that we may be looking for moderate gains. nothing suggests a fed should really step up the pace beyond the 20 five that's already anticipated for the markets. i think it stated that other factors are looking at the inflation data in the economist do anticipate that these -- this

will be slowing during the course of the year closer to that peak level in the fed will be watching the data. in my view, there is nothing yet that will make it go from the 25 that everyone expects to that 50 in march. >> it's interesting you talk about the data because last year the inflation numbers just so unknown, and there is a question if even you knew what the inflation numbers would be, could you even figure out what the market we do? in this year we started out a bullish dollar positioning. where we are standing at the moment is a higher or lower greenback. >> i think that's a really interesting question and it will be due during the first half of the year. i think for now, i have remained dollar bullish and have been dollar bullish for a while, i am getting uncomfortable, particularly in the latter half of the year. and that is with the flatness of the yield curve.

for instance, if we go back to the fed meeting in january, we look at the market's reaction, the market begins to price and 25 basis points in rates, bringing up to 125. for next year, the expectation doesn't really move in that curve flattening suggests that the market is thinking it could be slowing, the economy and the cycle of interest rate heights -- hikes could be short-lived. if we project with the government is doing in 10 months time, i don't think there are many supportive factors. i think the dollar could have better to go for now. i think we could see 110 and euro-dollar and by the middle of the year perhaps it will get going. beyond that, i think the government will start to struggle. dani: how much of your view is complicated by a dollar that's viewed as the preferred haven currency? >> certainly, that's a very important part, particularly when we have geopolitical issues

going on. these are in the headlines and have been for a while. looking at price action if the geopolitical is playing second fiddle to what's going on in terms of fed expectations, but that could change. it does depend on what happens and if tensions do escalate in ukraine, russia, and we had those missile launches in north korea, isaac we had seven or so so far this year, which is quite worrying, it is a lot. it could be a more of a safe haven flow because of these geopolitical's. the dollar is still the only real currency on the global payment systems. sanctions can be used because of that reason. in the dollar, because of that is a safe haven, and that could appetites dollars upside in the near months. dani: does it play into a yen

that strengthens or a swiss franc that strengthens as we see geopolitical tensions are is an assumption that it filters through the dollar? >> i think we could see those currencies, but i don't think they will strengthen against the dollar. we could see is strengthening more against the euro, if there's tensions in ukraine's that worsens in the markets get to see another increase in gas prices, and that would really be damaging to the growth in the euro zone. and if we had that, yes, we would certainly see currencies having the potential to gain against the euro, the yen also gaining, but not necessarily against the dollar, but under other currencies. >> we will dig into the picture and you will stick around with us. that's head fx strategy at bravo paying. everything changes, nothing changes, maintaining political stability with peasants and pms

staying in their jobs. this is bloomberg. ♪

dani: welcome back to bloomberg daybreak: europe. italy has finally decided on its leadership after eight weeks. sergio will stay on as he remains prime minister. the surprising outcome that should maintain stability and way the prospect of a new election. we go to francine lacqua. we have this status quo after a week of negotiation. does this show the dysfunctionality of italian politics at this moment? francine: it 100% does. i had to say we had at least eight votes in every couple of hours we had a new name.

in the end we stay exactly where we started with the president who repeatedly said that he did not want another term and he wanted to retire. this was opaque at best. people in other circumstances and it didn't lead to a new candidate. it means that some say we don't know what this means, it probably weakens mario draghi, it also means that they are finding out how difficult it is to find some kind of coalition for elections. it's probably a good thing for a market, but the fact that after a weeklong negotiation they couldn't come up with another name also shows the fact that it's not easy finding a fresh face. dani: you make a really good point that this perhaps means stability for the market. but, given what you are saying, does that stability continue,

are there still risks on the horizon? francine: and the shorter-term mario draghi could become weakened. he didn't match the support. the markets will be looking at the. people charge for seven years that he is actually quite good, and you have the prime minister saying as it is, that means it will push through the reforms and he will have access to the 200 billion euros and that's the linchpin of the reform program for italy to be a success. the question is, mario draghi changes in one of the things we have been hearing from negotiations last week that did not lead to him to become president was that lawmakers thought he was too dictatorial in his decision-making. i don't know whether eyeing the presidency becomes softer, so it doesn't push through the roof as

a could, or whether we get the same mario draghi going forward. dani: thanks so much, and with a beautiful backdrop of room behind her. still with us is jane, perhaps we are now one at risk event in terms of italian politics taken off the table. when we look at ecb, we start to hear more calls of their moving in 2022 as well. to what degree will it be difficult for the ecb to hang on to their strategy of remaining accommodative? >> this is going to be interesting, i think this is what the market wants to see. i think it will stick to the script confirm what they announced in december, and really, one of the things in their favor is political wage inflation. there is not a lot of wage inflation and there are plenty of reasons for them to not have the risk of second order inflation affects coming

through. and there's another factor if we look at inflation and particularly germany and the euro zone that we could have base affects coming in and that inflation could peak very soon. that could come in their flick -- in their favor. they would be the first for the rate hike by the end of the year. the ecb could continue in the near term to push against that while it has these factors in its favor, it could become a little bit more difficult as the year progresses. >> it's not just the ecb we will hear from, it's a busy calendar. followed by brazil and discussing the ecb and the boe. when you look at the calendar, what in your mind poses the biggest risk? >> i think for the bank of england, everyone assumes it's a done deal and will get 25 basis points. one thing interesting in my mind about the bank of england is that we haven't had an awful lot of commentary and for quite a

long time. so the guidance that may give will be really interesting. so the market there is priced in a lot in terms of rate hikes. at about a hundred basis hikes. there we go again maybe in may, but if with about what's in the headlines of the u.k. press, is to deal with the cost of living. we will see peak energy price increases really affecting the incumbents. the hikes coming in april, and we suspect that the market may have priced into much in terms of the bank of england rate. that could be a shock to the market. dani: you can't trust the bank of england that has maybe talk to big game and can get there as the market is pricing into much. you contrast that with latin america that is ramping up their rate hikes, ramping up their tightness in the market. how are you viewing on a global

scale, this story of synchronized tightening? how are you expecting these different currencies to trade given that the story is starting to change depending on the region you look at? >> i think we differentiate between a lot of e.m. and g10. in terms of inflation risks, i would argue that, generally speaking, that central banks to have to work harder to maintain credibility, and in there's a lot of e.m. with central banks that really get through and start their interest rates hiking cycles. they have to fight inflation, but in order to protect their currencies in many stances. i think as we move to the g10, i think this will be increasingly interesting for that long dollar trade. we see more central banks in the g10 continue to hike into it. we see new zealand, norway anticipating the rba could give

it and start going by the end of the year, that does dilute at the dollar. >> thank you so much for joining us this morning, jane foley, head of fx strategy. coming up, we will speak to ryanair's cfo. this

dani: good morning from bloomberg's european headquarters. i'm dani burger. this is "daybreak: europe." five is the magic number. goldman boosts its call on fed hikes. they could raise by 50 basis points in march. omicron hits chinese factories in the consumer. stocks and futures start the week mostly higher. plus, sanctions in the spotlight.

the u.s. senate has a bill that could penalize russia even if vladimir putin does not invade ukraine. the curve flight nurse are still in this -- the curve flattening or's are still in this morning. that 50 basis point hike could be in the cards. the markets might have priced in two much hawkishness. what does that mean for the dollar concerns in the second half? when it comes to markets, we continue to see a rally. nasdaq, the cash trade on friday, remarkable. we start off with losses. it turned to more than 3% gains. how long will that last or do we sell the risk? euro stoxx playing catch up, up 1.4%. selling in the japanese 10 year, yields at their highest. brent crude continues to march higher, up 1.4%.

to the travel sector, where ryanair took a cautious view on a piece of trouble rebound, saying it will cut prices to stimulate demand this quarter. we are joined by the ryanair ceo. your numbers this morning, perhaps some disappointment looking back at the prior quarter. how much confidence do you have that especially as we head into the summer months that demand will start to normalize? guest: thanks for having me on the show. as you said, the $96 million loss impacted by the omicron in the last week of december, two christmas and into the new year. we noticed in the past few weeks as the u.k. started to relax restrictions that more passengers are booking into the summer period. we will be stimulating pricing for the romaine are of this financial year -- for the

remainder of this financial year. we will fly about 114% of our pre-covid capacity in summer 2022. we are planning to grow from 100 million customers in the current financial year to 65 million customers next year. we are well on track we believe with options that exist in europe to grow to 225 million customers by march 2026. we had taken 41 game changers by the end of december. these are the boeing a 300 aircraft. we will have 41 of those by the end of december. we believe 65 of those for peak summer will enable us to increase capacity by 114%. i think the summer is shaping up

well at this point in time. there is a question mark. i imagine with fuel rising, there will be downward pressure in the next few months. dani: talk to me about that. you're cutting prices to help stimulate the demand, but prices have been a headache for all of the major airlines. how do you make sure the costs remain concerned in there is not margins? guest: we are the best hedged airline in europe at this point in time. 100% of our fuel requirements are well below current prices of 91 dollars a barrel. when we look at the peak

easter period, we hedged 70% to march 2020. we have locked in our single largest cost at very attractive levels, where at the same time a lot of our competitors have no hedging, very limited hedging. on labor, we have no issues at all. we took the decision very early in the covid crisis to keep all of our pilots and cabin crew current. we started to ramp up operations last summer. we had 90% on-time performance over christmas, which indicated we had no issues around labor. we have staff going through training at the moment for promotions. we have first officers being

promoted to captain this year. we have very few recognitions -- of resignations in our cabin crew. i think we are very well placed when it comes to labor. we will also be locking in very attractive airport deals. 15 new bases, 720 new routes this year. dani: that will probably be good news to travelers from england who are now contending with less restrictions. you no longer have to get a test starting next week coming back into. the country for what you have seen so far this month, since some of these relaxed measures have been put in place, what is the size and scope coming specifically from britain and the u.k.? guest: ireland and the u.k., there was relaxation in travel restrictions over the past couple weeks. there is more interest looking into easter, looking into the summer. i think we have seen enough over

the last couple summers and people are very keen this summer. this will be a -- record traffic numbers and that the big unknown will be more risk to the upside than the downside. dani: i will make sure to stock up on the sunscreen. i am in need of a tan as well. on a more serious note, as we look at tensions ramping up in ukraine and russia, have you had to amend any of your flight paths? guest: not at this stage. we do have presence in the ukrainian market. indeed, it is one that in time could be a very interesting one. but we have had no impact. we have a lot of flexibility

built into the schedule. it is something we are assessing on a daily basis. but i am happy with the operators that we have at this point in time. dani: when you look to the rest of europe in terms of easing restrictions, how confident are you that european guidance will follow suit from that of the u.k.? how much of a risk is this for ryanair that they do not? guest: i think we are starting to see a united front coming across europe. there are certain buckets where they take a little bit longer to catch up. it rolled out in the middle of july last year. the vaccine passports will continue to play a big role over the next number of months and into the summer period.

the irish quickly followed the u.k. with restrictions. the germans and the austrians will not be far behind. we have already seen the italians announce the need for tests will disappear at the start of february. we have every expectation that morocco will open up soon as well. there will be a gradual lifting of restrictions. it is helpful seeing the u.k. lifting there's off the past midterm break. i think this falls into that with easter and summer this year. dani: really great speaking to you this morning. that is neil sora hand, ryanair cfo. coming up, restrictions on russia as moscow continues to boost trips along ukraine's border. the u.s. might bring on a sanctions bill that could penalize moscow. more on that next. this is bloomberg. ♪ is bloomberg. ♪

dani: welcome back to bloomberg daybreak. i'm dani burger in london. two canadian singers have forced spotify to do what social media. users mitchell removed their music over controversy with joe rogan, who hosted vaccine skeptics. joining us with the details is bloomberg's laura wright. spotify trying to perhaps rectify some of the issues that podcasters, singers, viewers have pointed out. what are these changes? laura: they have updated their roles. they have added content advisories. in the past, spotify had a laissez-faire approach.

but the ceo noted we have heard this criticism. changes will be made. spotify will make these rules more transparent. the joe rogan experience reportedly brings in 2 million listeners every month and he signed a 100 million dollars exclusivity deal for this podcast. it is known to be controversial. one particular episode led to a letter signed by 200 medical and scientific professionals because of joe rogan's views on vaccinations with young people and unproven medical treatments. dani: it is fascinating your talk abut the financial interest for spotify. it stands to reason he would not want to -- they would not want to pull joe rogan off the platform. laura: it is not clear whether there will be more calls of boycotts going forward. harry and meghan also have a deal with spotify.

it was mentioned on their earnings call. that is how important it is. spotify's share prices tanked over the last year. they are facing a difficult decision with apple music, as they pivot towards the ecosystem of services. first spotify, the most important asset is artists. if we see more complaints, that could be a major problem for the streaming service. dani: i think one of my favorite things i saw was that nickelback should threaten to release new music if they don't take joe rogan off. fantastic reporting. let's get to the first word news. juliette saly joins us in singapore. juliette: after six days of chaos in italian parliament, the president was reelected this weekend after a search for an alternative candidate. mario draghi was originally seen as a top contender for the job,

but in the end faced a veto rum three of the parties, leaving him to remain in the job of prime minister. he had been do to retire, but draghi asked him to stay in light of the stalemate. prime minister antonio costa has won portugal's general election and will have an absolute majority in parliament. he has been prime minister since 2015 and has pledged budget discipline as portugal looks to recover from the pandemic. the u.s. has reiterated it is ready to hold talks with north korea without preconditions. this comes as kim jong-un's regime fired a ballistic missile for the first time since 2017. it reached an altitude of more than 3000 kilometers, flying for 30 minutes. walgreens is said to have begun a talk for its international drugstore unit. it could be sold for as much as 7 billion pounds.

bain capital and cbc capital are considered early favorites. a listing is also a possibility. 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: thanks so much. now to russia, where you continue to see a boost of troops along ukraine's border according to the pentagon. but the reports are suggesting it has also started to deploy medical equipment, seen as a key step for combat readiness. the u.s. and europe are zeroing in on a new package of sanctions. for more, we go to maria tadeo. how would we categorize at the moment the risk of invasion? maria: that is the question when it comes to what we are seeing in ukraine. when you look at the situation on paper, nothing has changed from a week ago. the united states says they see

an invasion imminent. ukraine says this is creating panic. they are downplaying that risk of war. they said nothing has come from the past six months. we did see the the point of troops, 100 thousand men station for months, and nothing has happened. the russians say they have no intention of invading ukraine. but big concerns after that report on friday, suggesting that russia is not just sending military equipment to eastern ukraine, they are also sending medical equipment and blood supplies. that is seen as a key step when it comes to combat readiness of a country. it would suggest that russia is prepping for casualties. i want to stress that russia says they have no intention of invading the country, but there are concerns the country may be ready for combat. the other thing that is worth knowing, over the weekend, nato repeated they will not send nato troops to ukraine. they can send logistics, but not troops, as it is not part of the alliance. dani: what is the state of

sanctions on russia? maria: both the united states and europe are putting the finishing touches on a sanction package. we have seen that the russian economy has been able to grow around some of these sanctions, but the new package would essentially go after every major industry. it would stop some of the russian banks from clearing in dollars, so it would go after the oligarchs. the united states has not ruled out going after vladimir putin himself. the other thing that is worth pointing to is the damage that is being done to ukraine. the ukrainian government says they need probably three to 4 billion euros to stabilize the economy. today, the european union is sending a commissioner to claim the details of their 1.2 billion euro package of help to the country. dani: maria, thank you for keeping us up-to-date with the latest. that is maria tadeo in brussels. coming up, as china prepares for

the lunar new year, economic woes mount. they are showing manufacturing slipped in january. we spoke to in the current next. -- we speak to enda currant next. this is bloomberg. ♪ ♪

dani: welcome back to "bloomberg daybreak: europe." let's take a look at some of the events we will be following this week to get your trading diary ready. today, a summit kicks off in san francisco to bring together leaders in energy, transport, technology, finance, and government. then alphabet is set to report fourth-quarter results after the market closes tomorrow. this is called the most important quarter in recent memory for big tech. wednesday, we have an opec-plus member do to meet. they will likely stick with their current policy to aim

400,000 barrels a day every month as oil trades its highest level since 2014. then the big ones we are watching thursday. you have ecb, boe policy rate decisions. that will be one to watch even that the boe may not be able to follow through on as hawkish a policy as many expected. friday, vladimir putin in beijing to attend the opening ceremony of the winter olympics and a plan summit with president jean ping. let's stick on that -- president xi jinping. let's stick on that topic. manufacturing slipped in january. in the challenge to covid zero policy, cases are jumping five days ahead of the winter olympics. with those economic concerns, we are seeing iron or get slammed. it is currently on tracker to biggest slides in september 20. china pushing less output from a

lot of these manufacturers. china has clear skies for the beijing olympics. we have enda curran. the pmi's, what does that tell us about the economy slowdown? reporter: the slowdown is continuing. it is quite broad-based now. it is a policy official, both pointing to activity. smaller businesses seem to be h there is more evidence of prices increasing. that suggests that pbi pressures are building. that was a big story last year. that would be another strain on the manufacturing sector. there are some factors going on here. one is the lunar new year holidays underway. factories are slowing down in january in anticipation of that. the second point is ahead of the

olympics, the authorities asked steel firms to come back -- to cut back on their input to clear the sky around beijing ahead of the olympics. but notwithstanding those one-off factors, you have to say all the evidence does suggest more pressure on the manufacturing sector is being dragged by lower domestic demand. there is not a sign of that turning around just yet. dani: not helping the picture are recent virus outbreaks and china's zero covid policy. what risks to the economy does the latest virus outbreak p ose? reporter: this is a really interesting question. how sustainable will the zero covid strategy be? it has been very effective for china since the pandemic began because it allows their factories to continue operating. there is a very obvious public

health dividend. the question is, can the authorities keep infections under control? i think that is an open question. we do see sporadic spreads around the country. tougher strict transit seem to bring the cases down, yet they continue to play whack-a-mole. it will obviously be a test to see whether they can control that. the virus will likely lead to a relatively subdued chinese new year celebration. it is the biggest holiday of the year. normally a big time for spending, but all expectations are that consumers will be somewhat constrained. dani: less than a minute left, but between covid concerns, the

latest economic data, what does this do in terms of pressure for more easing from the pboc? reporter: i think there will be pressure on them to ease. there has been -- they are cutting interest rates. when you look at the numbers, not enough to turn things around. they will be more focused on spending. keep an eye on borrowing and spending, and infrastructure projects. fiscal will probably be the real story in china this year. dani: thank you so much as always. as we close out the hour, we continue to see gains in this equity market. we are looking at futures in the u.s. off their highs for the morning session, up there .2% when it -- up 0.2%. when it comes to s&p 500 futures, losses for small caps. but europe had some catch-up to play, so we are expecting a strong session as we continue to

see buying on the front end of the curve. the yield curve flattening continues. nearing its most flat level since march 2020. that is it for us at daybreak. anna edwards and mark cudmore join us next. this is bloomberg. ♪ is bloomberg. ♪

anna: good morning. welcome to "bloomberg markets: europe." mark cudmore joins us from singapore. the cash trade is less than an hour away. the plot tightens. goldman boosts its core on fed hikes. they say the fomc could hike by 50 basis points in march.