♪ manus: good morning from dubai. i'm manus cranny. here are the stories that set your agenda. markets on the edge the u.s. says russia is adding troops along the ukrainian border rejecting claims of a pullback. stocks decline while treasure risk that and yen are big. fed minutes, the fmc says there

are probably hikes. plus, a cavalcade of a $750 million buyback. i'll catch up with the c.f.o. to the bruise on commerce bank, this is what we have. a positive net result despite the high one-offs. the net income interest $1.3 billion. the europeans not in the same hiking cycle by any measure as the u.s. expectation, $1.22 billion. you're looking at a net income a very, very comfortable beat nearly three times -- 421 million on the net income for commerce bank. the estimate was for 161. they're sticking to the cost-cutting path in germany. we will catch up with the c.e.o.

-- the c.f.o., my apologies. i just prod patina. we'll catch up a little bit later on. breaking news headlines in the past hour and a half have literally shown the fragility of the global market. russian-backed ukraine eastern separatist have received fire and shells overnight from the ukrainians. it must be said this is from the russian side of news flow. we're waiting for any allegation. gold at an eight-month high that is the haven of choice for goldman sachs. a less than hawkish expected

fed. was it really? i warn you. hawks rarely lose their talons. you may sea say spools roll over on the fragility of russia and ukraine, but you don't want to slow down the economy to a recession. that's a graphic manifestation of it. i want to show you across the risk spectrum. the risk says go to fast and you could tip us into a recession. 10-year yield below 10% again. you want to go to the belly of the curve which is where citi said in a risk off environment. ruble takes the strain on the emerging market currency front. up goes the dollar by .3 of one percent. the futures are sub $100. but oil on the ocean according

to plats is trading at over $100. a lot to consider if you're running an airline. emirates are restoring many of its roots. but even as airlines prepare to take off, well, you have surging fuel prices and the head winds are mighty across the speck, some would say -- spectrum, some would say. the president of emirates is with us. good to have you with us. a lot to get through. you've live fluid many crisis and many conflicts. you've got ukraine-russia. you've got america warning americans not to come to the u.a.e. are you concerned about the spector of conflict on your business and the risk warnings from the u.s.? good morning. >> good morning. a number of questions. but certainly the -- the threat of any kind of a war in europe

aggression over there will have very disruptive effects on the business. but as i said, we can be sure within the european economy there will be repercussions not only with it itself but what happens after that. air space, one thing or another. at a time where we're seeing robust demand, yes, there have been some headwinds not the least of which is that. and soil putting up over $100. we're returning to where we were a few years ago. but nevertheless, we are still -- we are experiencing large amounts of cancellations either from the united states market as a result of the suggested not travel order or for many other mark come to that. we're actually in good shape at

the moment. >> that's good to hear. the company gave you a few dollars last week. three or four flights in five days. so don't worry. we're all in -- we're all in on the product. you'll be glad to note, i'll keep you afloat. how busy is it? are you back to prepandemic levels? >> during the course of october, november, december of last year as omicron started to get a grip perhaps in -- in many of the european markets, the reverse happened as far as our lows were concerned. we put six 380's a day for example. and they're all full. and they remain full until about the middle of january when restrictions were -- were at their peak. but we're still operating with it. in fact, the united kingdom has got a few from the united

emirates and they're doing very well. as are many of our european roots so we're still in good shape. and as these -- these restrictions start to di-mile-an-hour, certainly in the west not too much in the east, the market is moving very rapidly too. it's quite a good story. i'm confident that it will continue not with stand some of the things we talked about earlier. >> let's dig a little bit deeper because you have this east-west differential. australia is opening. but give me a sense of getting to break even, tim. when you have europe reopen, the u.s. as you said no major cancellations at the moment. how important is it for you this year that china, asia, hong kong really normalize to help you to break even as it were? tim: well, let me just clarify that during the three months that i mentioned, the airline had returned to profitability.

so we were actually quite surprised at the pace at which that happened. we're very pleased that the cash build on our balance sheet. we just got back to precovid levels. we're very happy about that. but you're right. if we do not have the east in a good state within the next few months, it continues to be a challenge for us to maintain our profitability and our break evens. but i'm confident that certainly certainly australia the end of this month hopefully new zealand not far behind it, we will have large chunks of our market back. but, you know, the summer will be the pivotal point if we do not have those markets restored, it will be a different story. i'm not so sure about china. but i think the other areas in the southeast asian theater will be -- will be back with us.

manus: you mentioned the price of oil and jet fuel obviously is perhaps one of the biggest headwinds for you. what is the consequence of as everybody saying to me $100 oil. manus, i'm not going be flying as many 83-80's. what is the impact of $100 oil, tim? tim: of course, it affects our bottom line quite significantly, but is it -- and we have to adjust our prices accordingly. but is the market so elastic that it doesn't really matter surprisingly? so many people have been banged up for two years -- and i'm not saying that we're going to try to raise prices to a level that we'll be back to the situation. but the fact of the situation is that we have price points that are very healthy for us. we've never seen them before. and people are moving at those prices. so question yes, it is a difficult one at this level. but does that affect the -- the

possibility going forward? yes, it will. but the -- the bottom line is not quite as challenged as it might have been two years ago or four years ago where we had prices that level. in addition, we actually took some positions which are still paying out to us. couple of years ago prior to the pandemic kicking in. and so that's mitigating for us. manus: down to the hedge there, boys and girls. good calls by them. i know typically when we get together we talk about what planes you're ordering and you're looking large on the freighter side. let's get your latest -- your latest views on the triple 7 axis. you've been quite scathing on boeing to deliver. is there any incremental progress that you can tell us? >> well, i believe that we -- we are getting to a stage where boeing will be able to deliver

the aircraft in 24, 25. but i don't think it will come any sooner than that. they -- this particular part is vital to the network and the preplan going forward over the next 10 years and more that we really want to say that. yes, currently i've been hard on boeing but probably with good reason. the important thing is that we've got them out the door in good shape with high levels of quality. so we can get the work rate that we apply to these airplanes. so yes, i believe that it will be some time in late 24, middle of 24 for the 777 one. manus: with the airbus 8350 and the 777, which one are you more interested in? tim: actually both. they are -- the 779 is vital for

some of the long range and the 350 is a very versatile aircraft that we fly out to eight hours. and that's a large percentage of what we do. so we're hoping that we'll get those sooner rather than later. and start reinvigorating our -- our the airplanes themselves vital to what we do in our business model. manus: let's reopen the bars on the 8380, tim. tim: we got such a huge pushback that we reopened it. manus: i'll see you in the bar on the 8380. there are reasons to remain, tim, in this country, and you probably have one of the most handsome one of all. an i.p.o. was currently a

consideration when he was with bloomberg shark. or shark bloomberg. are you having discussions for emirates the airline? how progressed are those discussions? tim: to be quite honest, it's gone a little bit quiet on that side of things at the moment i'm not saying it isn't going to happen. i could never really tell what the level of the i. perform o. was going to be in terms of what was going to be put out there. and i know a number of financial institutions are interested with following this with great interest. i can say no more than that. i'm not party to what the government may or may not decide going forward. i'll fall back to the fact that i'm simple airline manager and i'll do as i'm told. >> you're very good on deflecting on those ones, tim. but you are a global airline man. what do you think is the most

appealing jewel that gould to the market here? come on. >> as far as the emirates group is concerned -- manus: yes. tim: look, the emirates group is a multi-facetted group. there are all sorts of possibilitieses that you could if you wanted to look at hiding off bits of pieces from all of those. we've often looked at that not as what has been said recently, but what business units could be more -- could be separated and operate on their own within the group. and there are a number of possibilities. i'm not going to say what those are because that is for the government to decide. but let's say there are possibilities that could be selected if they decided to go down that path. i have not had any clear message that that's what they're going

to do. but you know, we -- there are ways and means of doing this. manus: give myself a call when you have that breaking news. come an join us. good sport. and great to have you with us this morning. and thanks for the update. that is sir tim clark, the president of emirates. coming up on the show, we're going to have more on the markets and the impact. plus, three quarters of a billion dollars and a share buyback. we speak to the c.f.o. this is bloomberg. .

♪ manus: it's daybreak europe from dubai and london.

breaking news from nestle. the 7.02% that the market was expecting. limited cost inflation. this is different than heineken. limited cost inflation impact through price. these are the headlines. organic revenue upped their pricing by 2%. the estimate was for 1.72%. that's your breaking news. we had airbus along with standard chartered. airbus very comfortable beat. standard chartered not so comfortable but a buyback in play. the officials say they're ready to start raising rates soon and we're on alert to persistent inflation that would justify a faster pace of tighting. we're trying to work out if it's hawkish of doveish. let's go to kiran ganesh.

last night what went through my mind but i no longer had to do what i do. was it hawkish tilt, mutual tilt? what do you think? >> i think it was a hawkish statement. you see they talked about rate hikes, inflation. they said the balance sheet is substantially larger than it needs to be. it is a hawkish statement. and if we had been presented with that two months ago, we would have wondered what is going to happen to markets here becauses that much more hawkish statement than what we were seeing last year. but the market reacted positively too it but it was released yesterday in u.s. trading just tells us so much about how much is being priced in over the past few weeks. we've gone from two or to three to six or seven. so i think the bar for a hawkish

surprise now is higher. and i think that that is demonstrated by the fact that the markets reacted positively in light of a hawkish statement. manus: you're able to say something i'm not able to say. so we stretched too far across the curve. i mean, we were almost at an inversion point. kari says don't go too far too fast because you could tip into a recession. do you think it's stretched too far? do you think there's a little bit more to go? do you think the equity market has absorbed short rates having moved so aggressive? will do you think the equity market is comfortable with this narrative of five, seven hikes? >> if you look at the u.s. market just on 10% from the peak. so they have gone through this process of having to absorb this

new rate outlook. we think there is still a bit more upside to go on the 10-year yield they're into today. i think we the end of the year you'll be in the 2.1, 2.3 range. a bit more to go on the long-term interest rate. but we think as long as the fed who has got a credibility on their ability to deal with inflation, then we don't think that that 10-year is going to move much higher it is today. of course, you'll get the fears starting to mount as they start increasing interest rates. but we think that's the least worst option and the fed has got a choice between retaining it's long-term credibility and hiking rates quick quickly over the last few months. the alternative is to have a steeper curve with less credibility. manus: there are a number of gray swans not least the conflict and spike moments.

we dealt with one of those in the past couple of hours where there are reports that the separatist had been -- you know, there had been more. there was a quite viralent reaction market. went into the dollar, went into the yen. at any level, are you advising clients to be more defensive? toy think these markets are prepared at any level for an escalated conflict risk between ukraine and russia? >> so there has been a bit of a premium getting price into oil. and you've seen that oil has been moving up and down on all of the news flow we've seen around russian troop movements for example. there is a bit of getting priced here. what we're trying to do is you need to stay invested in markets because still a growing global economy but also be invested in energy, commodity and oil because this is a part of the market where the higher prices

in any case -- we just heard from the emirates president about growing airline demand and that oil is going to rise to $100 a barrel by the end of the year, and if you get an additional boost in those areas perhaps other parts of the portfolio are getting affected negatively. we are concerned as a geo political hedge. manus: everybody who comes on the show nose i love the fact. the two to three month spread is the tightest since you were in 1990. i won't ask you where you were. i was at university. sir, thank you for your time. coming up on the show, challenges for the chip industry. we'll hear from cal sinjer.

that's here on bloomberg. .

♪ >> covid caused everybody to step back a bit in the buildout and the supply chain and it increased a radical reduce in demand so you have demand scale up radically. we're in a position that there's a meaningful shortage. it's going to be a couple of years until that's fully resolved. >> that was the intel c.e.o. pat gelsinger. and you can watch more of the interview in europe andle east. that's that there. let me show you what's going on with the global market app. we have the reaction to the risk of russia and ukraine and then

there were reports on the press that across twitter about an escalation in the eastern ukraine separatists saying that they had received mortar and incoming shells. that has yet to be confirmed by any western reports. now, the immediate response mechanism, i think it's much more in the currency and the commodity board. if you look at the -- if you look at the dollar, you're seeing that immediate spike higher that you had. now the belly of the curve is where citi said that the government bond yields dropped. and the dollar as they say, you know, was -- was the fomc minutes hawkish enough? certainly didn't seem to think so. in terms of gold, your eight-month high, we know that that's one of the preferred hedges for goldman sachs in the commodity complex. let me roll it over and show you the rest of these equity marks.

u.s. equity markets are a little bit lighter. the s&p 500 down by 1%. standard chartered, the c.f.o. andy h

manus: a very good morning from our middle east headquarters in dubai. the stories that set the agenda. markets on the edge. the u.s. says russia is adding troops at the ukraine border, rejecting claims of the pullback. fed minutes. the fomc reiterates a probable merge hike. questions remain if it will be a bumper.

a cavalcade of corporate's this morning. standard chartered with a buyback. the cfo is waiting in the wings. let's have a quick snapshot of markets. lots of pressure this morning in regards to eastern ukraine and potential missile threats coming in as potential issues as reported by or a. we are waiting for any verification. money went into treasury. s&p futures down by a quarter of 1%. 10 year yield is declining, hopping backwards and forwards. we've had ubs here with us saying, reckon that you are going to see 2.25%. the hawker surprises very high. there was a hawkish tilt in those minutes.

it did not up safe the markets. speculation about angst between ukraine in the east and russia. it is down by 8/10 of 1%. standard charter planning a $750 -- $750 million share buyback. it becomes more optimistic about its earnings in the rising interest rate environment. the adjusted pretax profits grew 55% in 2021, less than the company compiled results. let's get to andy halford, the ceo for standard chartered. it depends where we start in these numbers. on the very first line in the fourth quarter, it comes in less than the market had expected at 139 million. what dropped in the fourth quarter?

andy: yeah. hi manus. we were up very strongly. coming out of covid and the tricky parts of covid. we were pleased with the returns we got for a year as a whole. it was actually up. the fourth quarter was a little bit weaker, less volatility in the market. just to be careful about the commercial real estate sector in china. other than that, they remained quarter -- a remain strong. it's worthwhile pointing out that this year has been strong again. we are very happy with how last year went. manus: very briefly before we move on, are you concerned about a material slow down in china? andy: no. we are not.

the growth we have seen overall in china in our business there has been really strong. the commercial real estate sector has been going through a few ups and downs recently. the overall level of access in china remains high. we will very much cope with that. manus: 750 million in a buyback. jeff reit's -- jeffrey said $1.7 billion. this is going to disappoint many. why so far away from this estimate of 1.7 billion? andy: you pick the highest estimate out there in the market. estimates were ranging from half a million to three quarters of a billion. we are doing that now. the next three years, we should

be returning the excess of 5 billion, about 20% of our market cap. we see the pace picking up. manus: part of this narrative on the buyback over the next three years, is it that you are struggling to find the right assets? you passed on the city assets in asia, malaysia, thailand. you passed on those assets. are you struggling to find a lock turn asset to buy? andy: no. that's not the way that i look at this. with the assistance of interest rakes -- interest rates that seem like we are's -- they are starting to normalize. [inaudible] we have enough to invest in the business but also return on these investments.

this has significant organic growth opportunity in the markets and therefore they will get bigger returns. manus: where is the growth going to come from? the landscape in hong kong is challenge. i'm being generous with that word. are you forced to look outside and build outside hong kong as the hedge? andy: generally, we have seen customers being strong overall. about 6% last year. we are in a part of the world that is growing. business has been slow of late because of the interest rates. [inaudible]

the last few showed up as they were to asia. we have a good spread and we can withstand the ups and downs in the market. manus: so rates have been part of the re-rating for your stock. as a rising rate environment a much -- enough to shake up the stock price? how many rate hikes are you expecting? markets have five. will we get five this year? what is the risk of seven? andy: it's less about the number of the rate rises. it's more about how much of an increase in the rates we expect to see. today, our internal plan is that we will see rates rise about 170 basis points both ways this year.

the way the market is pricing at the moment, we are being quite conservative. was him -- whether the market is right or we are right, we've been seeking to do this for a while. we should actually break through that barrier and interest rates will be hopeful to that. it will be unhelpful for the last couple of years. it will bring back pre-covid levels and returns will be back to what they are expected from our business. manus: you have lived through many a hiking cycle. what is a risk of 50 bits in march? andy: i think we will see gradual increases generally rather than cliff edge increases . the government is wary about that. i think they will address the inflation pressures that there

are out there. we will see a number of smaller increases. manus: i want to circle back to hong kong. there are many iterations. we are seeing stories that cities are moving some of their senior equity people out of hong kong. are you actively talking to any of your staff about moving to singapore or to dubai because of the constraints, the social constraints? is it getting harder to get synced -- senior people to stay in hong kong? are you in active discussions to move people here or to singapore? andy: generally, we are not. we have gotten very good business in hong kong. it's a huge part of our overall activity. we are very committed to the work of this.

some of the restrictions recently have been a little bit more invasive. we are very focused on hong kong. they are going to be great engines for growth over time. manus: in hong kong, hsbc is talking about doubling their junior banker bonus. you are smiling. you go head-to-head with hsbc. simple question from the cfo to the cfo. will you double junior banker bonuses? andy: we have not doubled our overall bonus. it has gone up significantly compared with the year before. that was low because of the results -- manus: that is significant. what is significant? qualify that. andy: we are probably a quarter

up of where we are -- were last year. manus: where is the hard -- hottest part of the market for you? wealth management or the investment bank? andy: probably more in the wealth management space. there's a little bit more market. that's where we have seen the bigger pressures recently. manus: ok. this is a tough question. powell has been in the seat for seven years. you promise the market quite often, acquisition tomorrow. are rate changes alone enough to justify you and bill remaining in these positions? do we need something more radical? are you ready to put your hat in the race? do we need something more radical from you and bill? andy: i don't think we do.

i think we have got more confidence now that we are two years out from getting the return levels then we have been for a long time. history will show that the last two years, very low interest rates have made it difficult to get the returns we want. we've said today that we lost about $2 billion from our top line and bottom line over the last two years. rates now projected to reverse back to where they were pre-covid, another 2 billion on the line. on the line is about 4 billion. a to increase is proportionately huge. with the interest rate improvements, well factored into the market, we will see back at levels that they were over the last several years. we are going to say, actually, this business is firing on all

cylinders. the markets have reacted in response to that as well. we are looking forward. manus: united we stand. well tangled there. you are a good sport. rolling with it. we wish you well. let's see where the rate environment takes us. the chief financial officer for standard chartered joining bloomberg this morning. let's get the first word news with juliette saly standing by in singapore. juliette: thanks. germany is the latest european nation to unwind the virus restrictions that disrupted life for two years. the chancellor says covid curbs will be rolled back in three stages by march 20 starting with the end of vaccine checks at non-essential stores. austria and the netherlands have also announced plans to scrap restrictions. hong kong considering testing its entire population for covid,

almost 8 million people next month. local media reports say the government hopes to finish the program within 14 days with the help of medical workers from mainland china. the city has seen another 5000 confirmed cases today. amazon is settling a feud with lisa that had threatened to hammer the financial company's bottom line and disrupt e-commerce payments. the online giant says it will not remove visa credit cards from amazon and will no longer levy a fee in singapore and australia. amazon had been unhappy at the charges made by payment protesters across the industry, amounting to $110 billion in 2020. global news 24 hours a day on air and at bloomberg quicktake, powered by 2700 journalists and analysts in 120 countries. this is bloomberg. manus? manus: thank you very much. up next, oil is a crazy world.

we see the crude prices plunged to negative territory and now sorted nearly $100 a barrel. we take a look at how we got there. this is bloomberg. ♪

manus: it is daybreak europe. i manus cranny in dubai. the two-year covid crisis has many markets pretty much on a wild ride. if you are crazier than the oil market. a total collapse in 2020. we were in vienna and it was cold. it was a barren time. the brink of $100 per barrel today. tech takes a look at the story so far and where we might go from here. we are joined now by our energy reporter. i remember the night well. we were in vienna.

the prince left the opec building and the rest is history. we went into negative territory over the next couple of weeks. it's been a volatile ride. take me through the next couple of years. >> oil traders started talking about this lens in china in the early 20 20's. everything broke loose in february 2020 when covid wrapped around the world and just cut demand. people were traveling anymore. the oil industry was on shaky ground. they weren't in a good spot. the future of oil demand was uncertain. when people stopped driving their vehicles, stopped traveling on airplanes, oil demand just cratered. there was a true expectation that perhaps this was the peak, perhaps oil demand from here would be over. suppliers stopped investing. you saw the shale drillers

really cut back their rates. opec failed to initially bring in an agreement with their opec-plus members. there was an all-out price where. saudi arabia was giving anybody supplies. it was quite dramatic. what happened was something that no one expected. the pharmaceutical companies came back with vaccines rather quickly. you had these tests and results coming out in late 2020 showing that perhaps folks would be able to cut down the impact of this pandemic. slowly over the course of months going into 2021, you saw that countries are reopening and this oil demand that everyone thought was all out and done, the future of oil was done, it had roared back. people were driving again and flying again.

oil demand came back much stronger than people expected. the suppliers were prepared for that. opec-plus isn't prepared to bring barrels back to market. they are still worried to a great degree whether or not there will be another round of viruses. they were not able to do it to bring that supply to help the market back into balance. now you have it today, wti and brent are both in the $90 range. there's a bit of volatility because of what's happening on the geopolitical stage. it's quite a spectacular rebound from where wti was in april 2020, negative for one moment. now you are back to the highest level since 2014. manus: that's a tight market we are looking at. the tightest since 1990. thank you for stepping in. you can go to pick that up.

coming up on the show, the latest on russia ukraine tensions. where we stand right now. this is bloomberg. ♪

manus: the european leaders are holding informal meetings in brussels this morning to discuss the tensions between russia and ukraine. let's get the latest on the ukraine tensions with maria in brussels. it was a huge flurry of activity in markets and tension on these headlines that separatist from ukraine claimed that forces were fired overnight. this happened often, i'm given to understand. where are we? maria: it's very important you look at this that this was a situation that is very fluid but

has been going on for eight years. we know there's infighting going on in eastern ukraine between ukraine and authorities and russian backed people in the east of ukraine. this is not new but the timing here is very crucial. the idea is that we were heading into a time of the escalation. these headlines show you once again that this is still a very delicate situation and that anything could be used to escalate on the military front. it comes 24 hours after nato issued another warning second, we don't believe what russia is saying. the idea that they are pulling back troops and weapons, we don't see it. we want to be able to independently verify this. nato officials yesterday suggesting that the west should not fall into a trap of believing what russia is saying and taking it at face value just like that. manus: well done. you caught up with one of the

ministers in terms of, was it fake news? we have sultan berg warning on this. great deal of septa system. when the european leaders meet to discuss ukraine, it's about solidarity of purpose. that will be the key thing we want to listen to. what will you be listening out for and pushing them for when they come out? maria: this meeting is starting at about four hours. they've decided to dedicate a formal hour of conversations behind the scenes on ukraine. there's two things that will be key about this meeting. one is whether or not they decide to rip new -- renew financial support to ukraine. at the start of the month, the president said the country needs 5 billion euros to be able to stabilize itself. this has to do with the uncertainty that ukraine is operating in.

the other is that the european union and the leaders today want to send a message that they are prepared to take an economic hit if there is to be an invasion. this is important. at the start of the crisis, there was a lot of concern and hesitancy in terms of how united europe would be on this. yesterday we heard it again from the commission. they will take a hit but we are ready to do it if it means protection for ukraine. manus: ok. good luck with today. we will see when the morning. maria tadeo tracking the special meetings. russia has consistently denied that they have planned to invade . indeed, you are seeing the commentary about the russian foreign minister. saying that the drills are drawing to an end. keep an eye on the news. where's the money flowing? to the havens, gold, dollar,

this is the quadrant. that's what you want to focus on. the tenure paper is not just as anxious now. the dollar rose off of its peak this morning. this is bloomberg. ♪

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anna: good morning. mark cudmore joins us in singapore to take us there all the market action this hour. the cash trade is less than an hour away. here are your top headlines. the uss russia is adding troops along the ukraine border, rejecting claims of a russian pullback. stocks decline and treasuries outbid. the fomc reiterates a probl