manus: good morning from our middle east to headquarters in dubai. dani burger is alongside me in london hq. upheaval.

the jobs report fuels hike expectations. the ecb could raise rates. taking a pause. fluctuating after several weeks of gains. saudi arabia boosts prices seek -- signaling confidence in demand. and bolstering a border. strengthening europe's eastern flank as president macron heads to moscow. i am back in dubai. the bond story has not changed. a monster jobs report. heading ready for the hottest print since 1982. this could throw fire all over the bond market bear story. dani: i have a better one. bond yields jumping the most since god was a child.

that is bit -- that is a bit of hyperbole but the move in the bond market has been gigantic and the removal of accommodation. a bear market is on the way. manus: it is a lie. the belly of the curve across the g10 is now about zero. and the repricing of short and rates is quite dramatic. it is the debate between mellifluous onto tate of tightening. a shout out to lisa abramovich, it came off her twitter account. between may of this year and next year, the g4 central banks will shrink by $2 trillion. four times the target.

it is a question of whether it is an active qt or passive and there in lies the challenge of the repricing in the bond market. dani: in the words of christine lagarde, something significant has changed. we are still in reaction mode last week's central bank. we are just .04% higher. the three year yield -- the damage in the bond market has gone global. reflecting what we saw in the u.s. last year and in bund yields as well. brent crude is just above $93 a barrel. and looking at bitcoin yet again above $40,000 after being hurt by all of the issues around risk sentiment. can it continue to post these gains?

the country is returning from the lunar new year holiday. data out shows the recovery in services and manufacturing is beginning. let's get to juliette saly in singapore. what does the data tell us? reporter: we saw a drop in the pmi since -- the lowest since august. important that we are off where we were last year showing the effect of omicron on the overall manufacturing sentiment. when it comes to services though, that was eight standard deviations higher than what the market was looking for suggesting the hit to the services sector has not been as bad as feared due to the omicron variant. but as our mliv block puts it, until we see a clear indication of china coming out of the zero covid policy, you will continue to see a number of mediocre

readings. china returns from the lunar new year. playing catch-up. the csi 300 up by about one point 5%. on track for its best return post lunar new year since 2019. it different story across the rest of the markets. repricing. after the best week in five months. selling in the tech players. speculation that softbank could be selling out of its alibaba shares. flat offshore yuan. a fix from the pboc. don't be too put off because it is just a little bit of recalibration. the bloomberg dollar index was down by some 1.2% during the week china was closed. manus: juliette saly, thank you. the other big story, the ecb governing councilmember clouse says he expects interest rates

increases as early as the fourth quarter as the euro area central bank made a hawkish pivot last week. christine lagarde no longer excluding a hike this year. we look at the earlier rates and it tells the whole story. clouse not is adding fuel. the short end is quite literally lit up in europe. good morning. the significance of his comments. >> another week, another hawkish central banker. he made the point that rates might go up in october this year. he is talking about inflation of 4% in the euro zone. and rates may go up again next year also. he did not -- he said the trajectory for the ecb is probably about 25. he said what is going on in the

euro zone is different from what is happening in the u.s. he said the inflation in europe is being imported. a hawkish signal but tempered. dani: it is being imported -- it is a global story. how does the ecb fit into the global picture for central bank story now? >> jp morgan had some nice figures over the weekend to make the point that by year end average interest rates should be back around to percent globally which gets us back to pre-pandemic levels. and by april, central banks covering half the local gdp will raise interest rates. no doubt we are going on a trajectory but there are some notes -- the services industry in china remains dovish. the bank of japan remains in the dovish camp also. central banks are tightening an

interest rates are going up but there are plenty of questions about how high they can go. dani: question marks we will try to work through in the rest of the hour. thank you for joining us. helping us work through that is kit juckes. a perfect time to have you on. over the weekend, -- your call on the euro is 116 versus the dollar. kit: i think there -- i think we started the year with the story being about the fed hiking and others not. that has changed and we are likely to get a hike from the ecb. i do think the global recovery has enough momentum that when we get through the turbulence we will see with this adjustment in

equities and other assets that we will start seeing a range of currencies to better against the dollar just because everyone is playing catch-up on the policy front. between now though and the middle of the year, i think it could be awfully messy. there will be days when we will come in and look at oil prices because of the adjustment going on in the bond market. we are at that point where on days where everything is feeling risk off and volatile, the dollar will be strong. when the sun shines, i suspect we will see a weaker dollar and the other currencies do better. and in that world, the euro-dollar could potentially go higher. i won't focus overly on that as i try to navigate some of the turbulence we are bound to get. manus: i love your honesty.

welcome back to the dark side of rec this tv at bloomberg. you have a "yuck" day, where do you hide? kit: um, i think you hide in the dollar. that is the biggest problem. the dollar will do well most days and there are days when the bond market is not selling off but the swiss franc and the dollar will do well. the yen will have good and bad days but that will be more tricky with the yield adjustment. the bank of japan, we talk about everyone normalizing policy but the bank of japan is not raising rates this year. we can say that with some confidence. i think it is u.s. dollar. we look at the foreign exchange market and that is the

challenge. it is the safe haven currency for 2022 on the days when you need one. and this morning, i thought, we are doing ok despite the big adjustment in the bond market. manus: kit, thank you. we will talk more about the dollar and the fed in a moment. kit juckes back with "bloomberg daybreak: europe." juliette saly is in singapore for the first word news. reporter: canada's capital has declared a state of emergency as police struggled to control ongoing protests. the mayor says the demonstrations pose a threat to the safety of residents. there protests started in reaction to canadian and u.s. laws requiring truckers crossing the border to be fully vaccinated. hundreds of trucks continued occupy auto was downtown area. president biden and president

macron have discussed their response to russia's military buildup on the ukrainian border. they talked about moves to strengthen nato's eastern flank. that comes ahead of macron's trip this week to moscow. global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. dani: juliette saly in singapore appeared coming up, hike bets ramp up. larry summers says we should expect a hike at every meeting. manus: efforts to continue to find a diplomatic solution over tensions regarding ukraine. french president macron heads to kiev as the german chancellor is in washington for talks. this is bloomberg. ♪loomberg. ♪

>> markets have to be prepared for a rate hike at every meeting and they have to be prepared for the possibility that as the inflation process continues, we might need to have meetings with more than a single 25 basis point rate hike. manus: former u.s. treasury secretary larry summers for the markets, you need to be prepared for a rate hike at every fed meeting. kit juckes is the head of affect strategy at socgen. i don't think the market is prepared for a rate hike every meeting. do you agree? kit: i half agree which is a messy answer. the market needs to adjust

upwards its fed fun rate estimate. it has done work pricing and more hikes this year than it was pricing and before so it will not be surprised by a rate hike at the next meeting or the next one. chinese water torture affect. but it still is not really pricing in the kind of rate you would expect if you took three steps back and look at the inflation and strength of the economy. dani: i will take that as a win for team daybreak. you wrote in your latest note that going into the labor market decision, the data was a lottery. we have cpi coming later this week. how unknown is this american economy right now? kit: we know it is really strong. that is known. it is the noise around omicron

and a lot of seasonal adjustment and things like that. the individual data points as released have huge uncertainty. remember, when people talk about supply chain issues you can look back at the economy and say it is generating a huge amount of demand because of fiscal policy and now coming out with the only thing holding back employment growth which is finding workers. the surprise in the jobs number was that the participation rate was up. people are coming back into the labor force. the economy as strong. i look at the cpi numbers and i think i know there is more upward pressure on inflation because there is so much demand. americans have cash still. they have employment prospects. that is a recipe for as soon anything reopens, people are trying to get out and wanting to spend on services as well. this will keep the upward

pressure on inflation going and it is not just a supply chain issue on cpi at that level. it is a nest -- it is a reaction to the physical response to the pandemic. manus: let's go back to the terminal rate because this seems to be your point of angst. where do you see the new terminal rate in this new hiking cycle that delivers a soft landing? last time around, they never got to the terminal rate. i think they got to two point 5%. i think it was 100 basis points shy. where is the new terminal point to deliver a soft landing? that is a critical part. kit: i suspect it is probably 2% plus to deliver a soft landing and i suspect the market will price in 2.5% again because the

market does that i the time we are done. most of the cycle since i started has seen a lower terminal rate. manus: are you calling the market dumb? kit: i say we buy insurance. at some point we will pay up. we will price in 2.5%. dani: always the diplomat. kit juckes, head of affect strategy at socgen. brent crude fluctuates. this is bloomberg. ♪this is bloomberg. ♪

manus: it is "bloomberg daybreak: europe."

dani burger in london. brent crude is fluctuating as the rally cools off after seven weeks of gains as the market flashes signs of tightness. saudi arabia raises prices. make hay while the sunshine's. we are going to restock and china and raise prices. we are off to the moon for oil. a bullish maneuver by the saudi's. >> every month, saudi arabia gives new crisis. they are boosting it quite a bit signaling saudi arabia things the bullish sentiment continue and there is justification for higher prices. it is a continuation that shows intentionally that they supply demand mix match -- mismatch will continue with brent crude at about $93 per barrel.

$100 is within sight and there are a lot of bullish factors we are sitting on including the situation in ukraine. if it were to worsen, that would be more risk premium for oil. inventories being drained in the u.s. and even china. prices are still not high enough for them to stop buying. there are a lot of different factors that saudi arabia was looking at when they raised prices for their buyers. dani: a great round up there, thank you stephen. still with us is kit juckes from socgen. you have the loonie looking stronger. and strong oil prices. how bullish are you on the loonie versus the u.s. dollar? kit: it is in my mind a badly -- it is in my mind badly undervalued. i don't have any hopes of a

getting down through 120 again anytime soon although i think fair value would be more like that then where we are here but i do think it should be trading down through 125 in the course of the next few months but it is reliant on the days when prices were high and the economy is doing well and equities are not going down too fast. good start to the week. manus: a lot has been written about the euro marching ahead relative to the aussie because of tightening potential from the ecb relative to patience from the aussie. when you take the aussie in isolation, are we under pricing the fact that they may be forced to pivot given the trajectory of the ecb, the fed, and the bank of england? kit: in the long run we are. they will have to turn the policy around.

but their inflation data is not bad enough at the moment to push them into a corner. that is reflective of the comments we got last week. at some point, there economy is very strong. terms of trade are astonishing. they are in a good position to benefit from global recovery and you can see that in their export numbers. they have chosen a path that keeps the currency down and monetary policy easing in fiscal pulitzer cash and fiscal policy -- and fiscal policy relatively tight. it is a real one for being patient because it could take quite a long time. dani: every time i look at aussie rates, you continue to see them push higher despite a central bank trying to that down -- to bat down the calls for

rate hikes. at what point do the vigilantes win out? kit: in 1994, the market priced the bundestag raising -- the bundesbank raising rates because the u.s. fed did. central banks always do win if they want to and in the case of the australians, they can win by raising rates next year and they can squeeze the market out for a fair amount of time. but everything, everything would change if, for example, inflation data showed a big pickup as they start to reopen. manus: the other big shock, or not a shock, but the action from the bank of england was pretty much expected but it was the foo l who voted for 50 basis points.

let's talk about the bank of england. how quickly do you see them moving? is there a risk for a 50 basis point hike at the next meeting? kit: it might be. it is not impossible. i think it is more likely to be 25 still. they have a particularly big here and now inflation problem. the other central bank that faces that -- the worst set of choices -- they need to get on top of inflation and that is a theme we don't talk about it much. talk about the global economic recovery and the policy of the central bank to be behind or catching up to the curve but in the case of the bank of england, they have a worse growth-inflation trade-off than they have before and they are

seeing it and they want to act quickly to deal with the inflation and then give the economy a chance to get back on its feet. we are going to see slower growth now in the u.k. and if i were on their committee, [indiscerni

dani: good morning from bloomberg european headquarters. it is 6:30 a.m. in london. manus cranny is live from dubai. bond upheaval.

a surge as bumper jobs numbers fuel inflation expectations. knot says inflation rates could -- in october. saudi arabia boosts prices signaling confidence and demand. and bolstering the border. the u.s. and france discuss how to strengthen nato's eastern flank. it is time for the silly old bears -- that is the word at bank of america. they say last year it was the inflation shock and this year it is the rate shock and we have seen the rate shock filter through markets in the last week. manus: absolutely. there has been no move away from equities. we battled this morning between bid and offer. $106 billion has flowed in as you can see on the board. the bottom line on the bank of

america flow show is the growth indicators which have been crushed. if you look at a rate hiking cycle with tighter financial conditions, what does that do to the growth trajectory? that is the debate when it comes to the rate shock narrative. dani: last week, we got caught up in the narrative of the whipsaw of meta and ms on going -- and amazon going got. as you say, get worried about growth and that is when we start to have the selloff in risk markets. manus: socgen just said the terminal rate is what is underpriced at the moment and that is what to reprice. the rates are all pricing in but real terminal rates is where you need to reprice. a snapshot of the markets. battling to get into the green. the s&p 500 fairly flat.

inflows so far in the trading. the fed according to the bank of america is at 3800-4000. the dollar rolls over and the saudi's raised their prices of oil to asia by $.60. and the battle for bitcoin to return above this 40,000 level is alive and well. up to .67%. to the political story, president biden has held talks with his french counterpart and they joint efforts to strengthen nato's eastern border ahead of macron's visits to kiev and moscow this week. the u.s. says russia has amassed troops along the border with

ukraine and is planning for an invasion. something the kremlin has denied. let's at two maria tadeo. president macron is on his way to moscow to meet vladimir putin. politics are in play. is there now a clearer path to de-escalate tensions? maria: there isn't. it is president macron who is at the center of the diplomatic effort this week. he has been on the phone with virtually every leader heading into this trip to moscow. some color -- in the meeting between macron and vladimir putin, it will just be the two of them and translators. yesterday, he did not -- he gave an interview preview of the trip. he said the russian people are great but highlighting the sovereignty of ukraine as a

redline. two things -- macron does make officials in brussels and d.c. nervous. this is someone who at times goes so low and goes off script. something to watch out for. what will he tell vladimir putin today. and the other thing is even though the french are trying hard with a diplomatic effort, we know the only country russia cares about at this point is the united states. they have the troops and the money. the question the russian leadership is asking itself is will the united states go to war over ukraine and at this point they factor that they will not. dani: the german chancellor is in d.c. for his first visit. during this trip amid the criticism of germany's stance, are we expecting a diplomatic outcome in the approach to russia? maria: this is the first meeting

that the chancellor and president biden will have. the last time it was angela merkel in the summer of 2021. the chancellor is heading to d.c. for damage control. his approval rating is slipping. he gave an interview yesterday saying there are a lot of misconceptions around german foreign policy and that the allies are together. he said i am going to d.c. to meet with my american friends. we know there will be points of tension having to do what nord stream 2. they have to do with sanctions. and the energy policy. her weeks bloomberg has been reporting the u.s. is working on a plan should vladimir putin cut gas to europe, what is the alternative way and what will germany do? a lot of the agenda for the chancellor who is on damage control already. dani: that is maria tadeo on all

things russia tensions. let's dig into the corporate tensions. with us is paddy mcguinness. he works with multibillion and a few trillion dollar companies as well as being a former advisor to theresa may and david cameron. thank you for joining us. a lot for us to digest what you work with both companies where you have executives in ukraine and those used in the rest of europe. how do attitudes towards approaching these issues differ between the east and the west at present? paddy: good morning and thank you for having me on. i think they differ markedly. those in the east, ukraine, frankly see what is going on now as more of the same. and say we have been in a strategy of tension with russia since 2014 and before so they are somewhat sanguine and look hard at the military realities

of what russia would want in place to be successful. and the disadvantages of invasion. whereas those in the west are finding it much more difficult to be sanguine and obviously, with such a media focus, are inclined to get a little jumpy. manus: good to see you and good morning. we have had several conversations with ceos and leaders with regards to the tensions but we deal a lot with the ceos from the energy division. we caught up with the onv ceo, and he said to us that nord stream 2, critical in these discussions potentially on sanctions if they are needed. we are going to leave those with the politicians. for the energy companies from your knowledge what kind of preparation for worst-case scenarios would they be in? what they already have made

their chess piece moves? are they prepared for the worst case scenario already? or do they wait just until the last moment? paddy: very few weight for the last moment -- very few wait for the last moment. but they have to allow for some tolerance because there is a worst-case scenario which is not very likely and yes, they will have some preparation but they will not do everything you do in that scenario. they will come -- they will keep some leeway in reserve and that is what i am seeing. dani: one of the other things we heard from executives and i am thinking specifically of the company that offloaded to russia, how frequently are you seeing the coping strategy of different corporations being to

just simply get rid of their exposure to eastern europe? paddy: i think there is a great deal of that and that comes front to mind as a look at the situation they are in. this does not look like a short-term issue. you could argue that this is a tale that goes back the end of the last decade. russia is a problematic actor and increasingly, we are in a situation where the government uses regulatory and sanctions power to pressure you but also the anticipation of that to change behaviors. and we have seen that in society around covid and absolutely in the market and i think that is going on where a lot of people are devasting or thinking about how they could do best in the not too distant future. -- a lot of people are divesting or thinking about how they could divest in the not-too-distant

future. manus: perhaps the bigger unspoken issue is that of cyber threat. we talk a lot about actual risk from actual possible invasion but there is a constant of cyber warfare. give our viewers a sense of just how heightened that is. and is that a bigger threat to corporates rather than anything we are talking about regarding troops? paddy: i think strongly that yes it is and i am glad you asked that question because this is an area where we are all in difficulty because we have been dealing with a pandemic of ransomware for which there is not really a governmental answer and it absolutely has the attention of all. it is striking to me because a lot of the surveys done at the start of the year as we go towards davos show that ceos

have that at the top -- have cyber at the top of their agenda because it is a very hard to price risk. and it is increasingly hard to ensure. three things about state action -- dani: let me stop you because this is very important. there has been hesitancy to invest in it because it could be ignored. are we out a point where you are seeing executives willing to put the time and money into cyber? and where are they putting it specifically? paddy: that is the issue. there is a correlation between what you spend on cyber defense or cybersecurity and the protection you have against

these higher capable actors, the state and the criminal. and that is the problem. it is not just about a budget. and that takes you in the wrong direction. if you talk to a board about the budget and get them to focus on the technical solutions, you don't get them to focus on the fundamental problem which is that ransomware and state action are disruptive and destructive have organizational fact and not just technical effect. if you are a listed company, you are going to have to be telling the market about it and it will affect your value and your relationship with your stockholders and an unspoken truth is if you go to to a ransomware, the length of recovery is longer than you expect. in my practice and i am doing ransomware almost every week with the brunswick group, the

shortest i have seen to be really back to the start line is six months. it affects every part of your organization. manus: thank you very much. join us through the year because i get a sense that these global issues are not going to go away. paddy mcguinness, resilience advisor. coming up, u.k.'s minister of -- ukraine's finance minister joins the bloomberg team and just under an hour's time. juliette saly has a first word news from singapore. juliette: canada's capital has declared a state of emergency as police struggled to contain ongoing protest against vaccine mandates. auto as mayor says the demonstrations pose a threat to the residence.

they protest our date -- otto was mayor says the demonstrations pose a threat to residents. that signals the end of nearly two years of strict border controls in australia to stem the spread of covid-19. scott morrison says individual states will still be able to implement their own quarantine rules. >> national security committee has decided that australia will reopen our borders to all remaining visa holders on february 21. the condition is you must be double vaccinated to come to australia. juliette: global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. dani: juliette saly in

singapore. coming up, with about a quarter of companies reporting so far, we take stock of reporting season. love that ahead. this is bloomberg. ♪

dani: welcome back to "bloomberg daybreak: europe." let's focus on earnings season and we are about a quarter of the way through it in europe. what have been the hits? joining us for more is the head of bloomberg intelligence. in the current environment, it feels tempting to just look at what is happening with central banks. but it is a crucial earnings season so far. >> thankfully, we have not had any netflix or meta's here.

to get an overall perspective, we have had a little more than a quarter of the companies report and with that, about 60% have beat estimates on earnings and 80% have beat estimates on sales. you have to categories this as a good results period so far. tracking 29% earnings rate -- earnings growth so far. fingers crossed. manus: we might not have meta and amazon but we have plenty of banks and a lot of oil and commodities on the books. what you give gets taken away. you have the payers and the miners but it is down to the results. any standout stats for us to absorb? >> it is an interesting thing

because there is always a reaction and we measure relative to the market. i would say that it is a bit muted this time. it does matter. the company's beating estimates -- the companies beating estimates are flat or down a smidge you have central bank action and that is where the focus has been. however, if you miss you get punished and you are off several percent. there is a differentiation. it is not the enthusiasm we saw in the third quarter for the beats. dani: several percent is not 26%. what about profit margin? for the past few quarters, that has been the key for investors. have we seen any light at the end of the tunnel? >> the quick answer is we still see it more as a risk factor than an opportunity.

remember that most sectors across europe are showing elevated if not record margins. in particular this quarter, what has caught our eye is industrials and materials. 12 of 18 companies have missed on margins. the misses have been relatively small but still notable. skf, a swedish machinery company that makes roller bearings, saw a third of their cost increase come from inflation and could only offset that by 40% with price. that is an instance. and this is only the first half of the year. manus: tim, we will keep an as we get to the end of the season to see what we can deliver. we might have amazon and meta. tim, bloomberg intelligence with

the latest on the earnings season so far. coming up, asian trading rumbling the market a little bit. can we not one out of the park? this is bloomberg. ♪

manus: it is daybreak: europe. the brent crude market is fluctuating. seven weeks of gains pushing crude to the highest since 2014. the market is showing signs of tightening and saudi arabia is raising his prices for march. paul wallace is with me. the saudis are gung ho raising the price by 60% -- by $.60 to asia.

this is an indication of strong demand. >> asia is by far the biggest market for the saudis. it is where they send about 60% of their crude exports. they say they are seeing demand strengthening there. they did not just raise prices for asia. they raised them across the board including for the u.s. and europe. there was not a single grade for which they did not increase pricing. a bullish signal from aramco and one that markets expected but another sign suggesting oil markets are tight and probably tightening. manus: they are indeed. dani: speaking of tightening, i want to take you to the charts. looking --how tight is the oil market right now? >> we are seeing pretty extreme levels of backwardation.

it is a sign that people are buying barrels now and trying to get them as soon as they can. there were comments yesterday from mike moeller, the head of asia, and he was saying these steep levels of backwardation are a sign to financial traders that they should not be short oil and they are going to potentially suffer if they try to show oil with the backwardation levels that there are. dani: thank you for the warning. we are looking at brent crude right now at $93 a barrel but how long can risk markets hold up if we have a global central bank story heading towards tightening the likes of which we have not seen in a while? manus: it is the downsizing in

the central bank balance sheet and how it is done. the qt, active or passive. stocks eking out gains. you saw meta implode by over $200 billion last week. i would say we are on the risk print for the cpi this week. manus: crucial data as people look to see if it is a 50 basis points coming next for the fed. that is it for us. this is bloomberg. ♪

anna: good morning. welcome to "bloomberg markets: europe." i am anna edwards and mark cudmore joins us to take us to the market action. here are your top headlines. yields surge as of the jobs numbers hike expectations. chinese rallies playing catch-up. not possible. the ecb's klaas ot