dani: this is bloomberg daybreak: europe, i'm dani burger in london alongside manus cranny in dubai. manus: fed chair jay powell hardens his hawkish pivot, signaling two or more 50 basis point rate hikes. bond yields search. china urges investors to support stocks, seeking to stem the

markets sliding towards a two year low. elon musk secures billions from wall street in his bid for twitter. he pledges $21 billion of his own money. good morning, i take note when the first word in their quarterly review is disaster. but it applies perfectly to the state of monetary policy. bond markets beware. dani: bond markets have taken a bath happened they, looking at a 10-year yield that is pushing up against 3% and a 5-year yield that is just under that right now. manus: and this is some of the groundwork that hoisington are putting out in terms of the decline in income. disposable income is imploding and businesses are on their knees. bond markets have exploded, you

are looking at potentially the sharpest tightening since 1982. dani: what was the top of the chart? i do have what is priced in right for us. manus: the producer, he will find it for us. dani: we will wait with bated breath for that. it is three 50 basis point rate hikes that are priced into this market. the third one is just under 50 basis points at this moment. yes, very high expectations. nomura expects 50 basis points anime, 75 in june and a 75 again in july. manus: let's see whether it was be bond market that pushed that cut through or whether it was the fed that has taken the initiative. renault's results are in, first

quarter revenue is 9.7 5 billion euros, that is comfortably ahead of the estimate. they are confirming therefore your outlook in terms of the rest of 2022. the margin is nothing compared to what tesla delivers, full year operating margin around 3%. chip delays are the big well for this business, the market is severely disrupted by the conflict in ukraine. the semiconductor crisis and inflation. dani: also getting some sap lines coming through. they are reporting a beat, cloud sales are accelerating, revenue coming in at 2.8 billion euros, the estimate was 2.75. they are getting that impact from war and winding down the russian business, we will have a conversation in the next hour with the cfo. manus: we have reports that

janet yellen and tsuzuki talked about the possibility of joint intervention. let's have a look at dollar-yen, it exploded higher in terms of the yen. that almost tested acceptance -- tacit acceptance of g2 intervention. the market is ultimately worried about demand in china rather than the supply constraint morgan stanley are worried about, they say $130 by the end of the third quarter. that is an explosive move in the short end of the curve. and you are looking at the yuan at breaking that 6.50 level, the biggest weekly loss since 2019. if you want to hedge a, that is getting expensive in china because international investors

some would say are billing. dani: investors bailed on stocks yesterday, finally that rout in the bond market having an impact. u.s. stocks unable to keep gains. now we are looking at a pretty ugly premarket european session, down nearly .2 percent for euros stoxx 50 futures. the nasdaq 100 following more than 2%. that is more immune to the premarket selling, basically flat on your nasdaq features. but we are seeing s&p russell 2000 futures continue to fall on economic concern coming to the fore. manus: let's get to the reports around the world. enda curran has more on powell's latest comments.

david english gets us current on the chinese market and maria tadeo with the latest on the ground in ukraine and francine lacqua is looking ahead to the french election this weekend. dani: let's start with fed chair jay powell who appears to be heartening his hawkish pivot. he is potentially endorsing two or more half-point rate hikes. let's go to enda curran for more , this seems like perhaps the most clear path to tightening that powell has laid out to date. enda: he more or less confirmed a 50 basis point in may, but he said there is a case for frontloading which people have interpreted as saying they might go by another 50 in june as well. we have had action this morning with nomura coming out with a note that they say they expect the fed to go by 75 in june and july. the whole fed conversation is

now focusing on frontloading a very aggressive rate hiking cycle which is prompting warnings of a u.s. recession. manus: maybe he would be foolish not to jump through the 50 basis point window that the market has given to him. our chief asia economics correspondent and the current. china is urging the country's biggest investors to buy more stocks as beijing tries to stem the stock route. the csi 300 at a two year low, has anybody listened, david? david: not just yet. we have a couple hours to go because we're just coming out of lunch break. we will see what kind of afternoon this gives us. it is really in the afternoon where you see most of the action. to your earlier point, we talked about the securities regulator, it is a weak currency this week.

we have seen investors bailing. we have just gotten the march data. after another big outflow in march, they are basically saying foreign investors are going to come back. the equity market across asia were in really bad shape today. australia has done over 1%, ditto in japan. we are coming off the lows in chinese markets, but the march 15 close. we were very close to that, a little bit about that right now, but we have a little bit to see what happens. dani: that's david ingles giving us up-to-date to date on all things markets. now let's get up-to-date on the war in ukraine, where putin says russia has seized mariupol. a top ukrainian official has told bloomberg it is too early to save moscow has taken that

keyport city. >> yes, most of them are locked in the steel plant. as well as many civilians which are at that same steel plant, many late -- mainly their relatives. there was an exchange suggested of the wounded, unfortunately, we did not receive an answer. dani: joining us now is our european correspondent maria tadeo, can ukraine keep up this fight in mariupol? maria: that was the diplomatic advisor to president zelenskyy speaking to us yesterday and repeated that mariupol is a ukrainian city and they will continue to defend it not surrender. they have 2000 soldiers who are in the steel plant.

they say as long as the plan holds, that will be a ukrainian city. what the russians are doing is spinning a pulse victory. i had of the may not victory parade. they continue to say their priority is that they do not get the bridge that connects donbas and variable to the russian federation. they want to impede a land bridge in the south and east, and they want to continue to fight. this is why that military aid that was signaled yesterday by president biden of $800 billion is so crucial. to me it was interesting that they expressed their disappointment when it comes to germany. ukraine is still pushing to get more heavy weapons from the german chancellor. and of course the perennial debate about the energy embargo continues. manus: great work on the

interviews this week, maria tadeo in brussels. let's get to the latest on the french presidential elections. the leaders of germany, spain and portugal have asked voters not to back the far right leader marine le pen, but stopped short of endorsing emmanuel macron. joining us now is francine lacqua, the polls are widening and i am skeptical when i see foreign leaders telling me how to vote when i lived at home in the u.k. or ireland, do the french sure the skepticism? francine: i'm sure if you are french and don't like being told what to do by foreign countries, you could take this the wrong way. if you look at the polls and the market stability, it means they are expecting a macron win. i would suggest it is different polls to when we saw this run-up between the same two candidates

five years ago. the results of the presidential election will not determine who governs france, we need to look at june for the parliamentary election to say how much person the power gets elected this sunday. but, the polls are widening and markets also believe when you look at pricing that emmanuel macron will become president. equities is what i would watch out for if we have a surprise win by marine le pen on sunday. if we have consolidation of power of the legislative in june, watch out for bund support for the fx. i was looking at a note by citigroup which set a microphone victory should provide mild support for -- macron victory should provide mild support for euro-dollar. dani: she will be back this sunday for our special coverage of the election from 7:00 p.m.

london, eight p.m. in paris. i might make an appearance as well. next up on the show -- i certainly am, working late, getting up early. we will have more on jay powell signal for a more aggressive stance on u.s. interest rates. manus: and we will assess the outlook for aviation with etihad airways ceo tony douglas exclusively at 6:30 a.m. london time. this is bloomberg. ♪

>> it is appropriate to be moving a little more quickly. i also think there is something in the idea of front and loading whatever accommodation one thinks is appropriate. that point is in the direction

of 50 basis points being on the table. we will make these decisions meeting by meeting, but i would say 50 basis points is on the table for the may meeting. it is unsustainably hot, but it is a very good labor market, and it's our job to get into a better place where supply and demand are closer together. dani: jerome powell on the prospect of 50 basis point hikes. hoisington describes the u.s. monetary policy as a disaster in their latest note. abinbev $1.1 billion impairment charge, they are in talks with a turkish business to buy this interest. the earnings season rolls on, let's get back to the fed conversation. joining us is william hobbs,

chief investment officer at barclays, i think one of the ways the debate is well encapsulated is what is happening with nomura. you have managers saying -- and nomura saying 75 basis points and 75 again, obviously the two can't be right. william: there is a lot more of a debate. the levels you are getting under the bond market right now suggest an interesting one year return if yields stay as they are. you are seeing the term premium reemerge. you are getting to a state where there can't be too many more rate hikes priced in on a 12 month view. you are seeing an adjustment from the bond market looking at that normal neutral rate further

out. will the fed accept a higher rate of inflation. certainly it is getting to be an interesting debate. we are may be seeing the peak in inflation, but you are going to lack the stimulus check fx, but the key thing to watch will be the labor markets which the fed needs to cool before we see more of these hawkish noises coming out of the fed. manus: they are hawkish, the market got them there. they did not get there themselves, i will leave that thought with you. let's unpack some of what you put on the table, hoisington describes monetary policy as a disaster.

but they go on to lay out what a recession looks like, largest 12 month decline in real weekly earnings since 2000 affecting 72 million people. real per capita disposable income down for the seventh month in a row. do we need a full on historical recession as you and i and dani remember, do we need that kind of momentum slow down to tame inflation? william: i would be a little soft on the central bankers. i think it is an unbelievably complicated tight rope they are presented with. we have come from a period where disinflation was the buzz word, and suddenly you are hit with these massive shots of the pandemic economy and the need to merge that for all sorts of reasons.

maybe they are behind the curve, but i wouldn't be too harsh on them. i am terms of the recession, we would argue there is not the signs, the purgatory forces are not required. so it could be more of this normal slowdown, we don't think that is a foregone conclusion but it is no doubt complicated. you guys know that the lack with policy makes it complicated being too precise. but we understand the problem with the central banking as you know is that the relationship between how inflation expectations are set is a money business. dani: it is one that economists have had a difficult time trying to keep up with this past year or so. in terms of inflation showing up, perhaps the economy is going to be softer but how much of the pain shows up in margin pressure? do we really have a grasp on

what this is going to do to earnings season, or are we overestimating the impact to margins? william: i think the difficulty with the pricing power story, because when you look at the curve in that inflation context, let's buy stocks with pricing power. the problem is the overlap with some parts of the market that might be vulnerable in valuation terms to the real rate story. real rates are starting at the 10 year level to nudge into positive territory. you've got to be quite humble about which force is going to dominate. is it going to be the earnings season pricing power story, or the fact that real rates have to go into positive territory to joke that economy a little bit and bring inflation to heel. it is a hugely complicated investing backdrop.

dani: boring days. william: exactly. manus: you have a big line in terms of the abinbev. volvo is going to sell 300,000 electric trucks. net sales were ahead of expectations. in america they want to sell 300,000 euros, and in europe they want to sell 300,000 units. renault also delivered a comfortable be. coming up, china is urging investors to buy more stocks. would you? this is bloomberg. ♪

manus: its bloomberg daybreak: europe, i'm manus cranny in dubai. dani burger is in london. it's been a heck of a market for the bond market, aussie rates are flying higher by 30 basis points. u.s. rates, you saw a dramatic move, the highest in to your paper since 2018 at 2.71. and get ready for those bunds, 45 basis in two weeks. a depth charge in the bond market. but let's transfer the conversation to china because they are urging some of the country's biggest investors to buy more stocks, stepping up efforts to stem the slide toward

a two year low. william hobbs is the chief investment officer at barclays wealth, to me, this is a domestic message to a social issue which is by more stocks, make the nation feel good, reduce the tension because we have got covid ravaging around us. how do you interpret a missive from the regulator to buy more stock? [laughter] william: again, you go back to the previous story. the context is still that dance between central bankers and bond markets, and that hollow mirrors and what it is going to do. you should see the global economy slowdown more in the second half, that is bad for the em-dm relative performance. we have a position at the moment that suggest dm will outperform.

but as you allude to china, policymakers have got a complicated job ahead of them. that slowing property market previous to this covert outbreak is keeping further complication on. dani: last time you are on, the story had just broken that china was stepping in. saying they were going to help the stock market and attack. we are now a month or so from that time, china adrs are getting beat up, is there any hope of that trade? william: one of the risks to our review that em underperforms dm would be that china policymakers follow through. you do a big infrastructure push or something along those lines, that could help sentiment in some of these areas. but with a lot of these long-duration stories, the

nature of the cash flows is vulnerable to the real interest rate story. dani: william hobbs, chief investment officer at barclays wealth and investments. we are going to talk about the aviation sector

manus: this is bloomberg daybreak: europe, i'm manus cranny in dubai. dani burger in london. dani: fed chair jay powell hardens his hawkish pyramid, signaling two or more 50 basis point rate hikes to cool demand and bond yields search. china urges big investors to support stock, seeking to support a market at a two year low.

elon musk secures billions from wall street in his bid for twitter while pledging $21 billion of his own money. it is a bond market that is bruised, jay powell saying 50 basis point hikes are on the table. and finally, the equity market has taken a hit. let's get a check on where we stand after yesterday's session where equities fell more than 1%, europe playing catch-up. an 8% decline on euro stoxx 50 futures. a little more calm in tech which sold off the hardest. the russell 2000 and still down more than .2%. manus: somebody switched on the lights, it looks as if the equity market had a damascene moment. the dollar-yen is interesting this morning, you had a 20 year lows on dollar-yen and janet yellen talking to suzuki about

the risk of joint intervention. i have not seen that since 2011. that was when the yen was strengthening dramatically. that is on the tbs report, nymex drops by 1.3%. china demand is battering the oil market at the moment. there was an explosion in the 2-year yield yesterday. the dollar remains king dollar especially against the yuan, the biggest weekly loss on the yuan since 2019. let's talk about the aviation sector amongst possibly the hardest hit globally by the spread of covid. two years later they are returning to pre-pandemic levels, here to assess the outlook is the etihad ceo tony douglas. thank you for coming up to see us.

you described the first quarter as fantastic, and say the jury is out for the rest of the year, but what goes through my mind is, is there any demand erosion? pricing is expensive, is there any demand erosion at these prices? tony: great to be with you. it's been a long time coming. the pandemic has given commercial aviation the beating of all beatings. the high-class problem that we have had over the last six months is revenge tourism, the market has come back like a fire hydrant. and of course, this is something we have been praying for throughout the pandemic. at the moment, i would say avoid disappointment, book your tickets on etihad.com immediately because you are absolutely right. manus: i love that phrase, revenge tourism. translate that for me into

business class and first class, i want to start at the front of the plane because that is where the real profits come. are they full, are you able to raise prices in those cabins? tony: the nomenclature of business-class you to refer to everyone in the front as a business traveler. whilst that was the case in the name, history tells us that 45% of business-class travelers were actually on leisure. what we've seen post-pandemic is about 90% of people on business-class tickets are actually on leisure. i think it's a clear signal that people are prepared to trade up now for space and get a better experience in that regard. we launched our all new a350 into paris with a brand-new business class on it, and i have to say we have taken into a whole new level. manus: are you going to beat the pants off emirates in first

class? tony: it's for the public to choose, but i don't think they are going to be disappointed with etihad. manus: london is that holy routes whether it is to dubai or abu dhabi, we have fear from war and we have fear from recession, has any of that come to bear or is it still revenge tourism, people were locked up and they are not pure for? tony: it's revenge tourism. that really is the headline. restrictions were easing off country by country. at times we were seeing sales increases by 800% within 72 hours. so i think it's an indication of people wanting to get back to that sense of normality, see family, and the amazing places that are around the world. manus: part of that world is still closed off fundamentally,

to the west, not to china. the jury still out on the rest of the year, does that change of china opens more fully for you in the rest of the year? tony: for sure, given the scale of the market. our current view is that china may well be closed for the rest of this year. however given the fact that most of the rest of the world is now open, what we're seeing our aircraft that are particularly full. london heathrow being a case in point. manus: with london being full, american no masks, u.k. no masks did get on the plane. do you think we in the gcc and the uae, are we going to get to know mask quite soon, would it make any difference?

tony: i don't think it would, because many will elect to wear a mask anyway. it will be a personal choice. having said that, the one thing many of us have learned through the pandemic is to give up trying to look into a crystal ball and take a view of what may happen going forward with covid. hopefully it will continue on the trajectory it is on now. with that in mind, i think there will probably be an end to masks. manus: as he said, that will be a personal choice. pricing is something i am fixated with, freight was what saved me. it is what every ceo has told me from your industry. just to be a sense of where freight was when he went in, and the percentage uplift, and can that volume remain for you? can the pricing differential that you get from freight remain? tony: last year, freight was the

thing that saves not just eddie hot but pretty much every commercial airline. we had a 74% increase in cargo related revenues. so it was the best performance we've seen ever, and that's not just in terms of volume but it is on yields and the price associated with it. the one to look out for is safe right, cma and maersk made between them $20 billion net profit. that is unheard of. at the moment what we see is a trajectory that keeps rates high for the rest of this year. but how that plays out into 2023 will be something we will keep a weather eye upon. manus: how much did you make on freight? tony: we made 1.7 billion u.s. dollars in terms of topline last year. manus: will you make the same

again going into next year? tony: i think there is every chance we will sustain it, and there is even a chance of throwing in a double six and beating it. [laughter] manus: security is an issue for everybody. we have had some heightened security moments in abu dhabi and the region. the question is what are you doing to secure the airport more, are you ready to spend more on security, is it high on your agenda to do something with that? tony: i think we are blessed living in the united arab emirates, it is the highest safety and security standards in the world. at etihad it is our number one priority. commercial aviation historically has been the safest form of any travel. certainly here right now given some of the challenges elsewhere within the world, it is front of

mind and goes without saying. manus: looking at the fleet, what went through my mind, i hope i got the numbers right of dreamliner's and airbus's, what went through my mind is what is your big dice roll? are you rolling the dice on america and australia, where are you rolling the dice with that shape of fleet? tony: we've got an interesting dilemma. we could do with their blowing more aircraft again because we talked quite a lot through our transformation program to restructure our cleat. we are now effectively a two horse stable. the dreamliner, one of the most commercially efficient aircraft, and the airbus which we have just now put into service.

they are the most sustainable and i think that is the most important in the way commercial aviation will continue to develop. we will be deploying that fleet to make sure that not only do we get the best guest experience, but the best sustainability performance because of the reduced fuel burden. manus: and if you say i could do with a few more planes, how many more planes, thoroughly about here -- throw me a bone here, how many planes do you realistically need to up the orders by? that is i could do with x number of more dreamliners and a350s. tony: if your crystal ball is better clara bladed -- calibrated than ours, i will talk to you. covid has taught us to have the

ability to flex up or down. what we are seeing is the kind of challenge we have been praying for, and that is a market that is coming back strong. manus: tony, we do appreciate ceos coming to hq. thank you for the time, revenge tourism, tony douglas thank you very much, the ceo of etihad. more on the election in paris, france and likewise the ground. -- francine lacqua is on the ground. this is bloomberg. ♪

manus: will you begin to see a premium return to the bond market, does that induce people to come back. at the moment. dani: i am just thinking of the word where he says it is out of sync with the markets. let's get to the first word news with laura wright in london. >> fed chair jay powell says a 50 basis point hike is in play.

he signals or aggressive tightening to curb inflation's towards the feds to percent target. -- 2% target. powell spoken an imf panel on thursday with that that about two end its traditional blackout period before next month's meeting. >> it is more appropriate to be moving more quickly. i think there is something in the idea of frontloading whatever accommodation one thinks is important. that points is in the direction of 50 basis points being on the table. we make these decisions at the meetings, what i would say that 50 basis points would be on the table for may. >> president vladimir putin says russian forces have seized mariupol even as his defense minister said more than 2000 ukrainian fighters remain in the city. ukrainian president zelenskyy's deputy chief of staff told bloomberg the declaration is premature. >> yes, most of them are locked

in the azov steel plant as well as many civilians. mainly the relatives. my president suggested to have an exchange yesterday of those civilians, of those soldiers who are wounded to the russian wounded soldiers, unfortunately, we did not receive an answer. >> wall street banks and some international ones are supporting elon musk's run to buy twitter. it would, i'm in the form of multiple types of data from a dozen banks according to a regulatory filing. morgan stanley has pledged to provide the biggest chunk of around $5.5 billion. leaders from germany, spain and portugal have asked french voters not to back the far right

leader marine le pen ahead of the sunday election. olaf scholz, pedro sanchez and antonio close to describe her as a candidate who sided with those who oppose democracy. make sure to tune into our special coverage of the election this sunday at 7:00 p.m. london, 8:00 p.m. paris time. global news 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. ♪ manus: we have talked about an explosion in the bond market. it is palpable in a stray way up -- australia. get ready for another depth charge when it comes to the u.k. rates again. powell played 50 basis points on the table for the may meeting. he is talking about front rating. -- front loading.

but keep an ion on aussie and u.k. rates as hoisington warns bondvestors, be wary. dani: keeping track of the news yesterday and this morning, i would say about 10% of my energy was dedicated to the fed, the other 90% was elon musk and twitter. so i want to dive into that story. after two weeks of questions over whether elon musk is serious about his takeover, his bid just got a lot more real. he has lined up more than $25 billion in debt financing from a dozen banks, and he is going to throw in his own cash. his equity financing will add to a cool $21 billion.

let's get more with a reporter from bloomberg intelligence. one of the things i was struck by reading would be that the debt service would cost $1 billion. this seems like a really aggressive package, is this something that elon musk is actually going to do and be able to go through with? >> it's a good point, this incredibly aggressive funding package. this is elon musk, so the good still be the biggest -- so this could still be the biggest block ever to force the twitter management to listen to what he wants. if you look at the share price of $47 against the $54 20 cents offer, you would expect to see it move closer to that offer price if the market was taking it completely serious. that reflects the unpredictability of elon musk,

that people are not going to believe it until a tender offer is out there or the board has recommended the offer. manus: oh ye of little faith, i love that, the biggest bluff of our time. in terms of the issue, how do they put this funding together? morgan stanley is in there, they are all in. wall street was to be a part of this. >> it is one of those typical goldmans versus morgan stanley. morgan has been a longtime supporter of elon musk and spacex. the big question is the $21 billion of equity financing.

it is heavily reliant on his test was shares, so he need -- tesla shares, so he needs to get partners. it will depend on whether he get support for that equity package. manus: matt bloxham from bloomberg intelligence on the latest with twitter. let's get the latest with the french elections with francine lacqua. francine: good day, we are joined by the global head of fixed income at candrium in belgium. nicolas, so many questions, do you trust the polls, do you think emmanuel macron will be president on sunday? nicolas: yeah, i think so. i believe that macron will win

the election on sunday. the market does underestimate the risk of marine le pen. it does not care about le pen and believes she won't win. but when we look at the polls, it seems clear that macron will win the elections. ranson: there are -- francine: the worry is the leftover voters, what happens on sunday if we have a marine le pen presidency? nicolas: that would be a big mess for the market. on the oat bund we are expecting widening. the market clearly does not believe in the marine le pen the victory.

what is important to mention is when we compare between now and five years ago, now marine le pen doesn't want to leave the eu , so that is a big change because she is saying she wants to stay in the eu area. it will be a big game changer for the euro market, but at the end, we believe that is not the end of the world. francine: you believe she wants to stay in the euro. she said that clearly in the debate. but then she is talking about border adjustments and curbing immigration. nicolas: there is a big gap between what she says, what she wants to do, and what she can do. she needs to respect the citizen. she needs also a victory for the next legislative elections in

june. if we have a victory, it seems unlikely to have a majority in the parliament lower house. i think that is completely unbelievable to believe that marine le pen will win and we will have a majority to implement. we have also in opposition. so it is very difficult to implement what she wants. francine: if she becomes a president without parliamentary support, what you could do on nationalization and reforming europe, and what can she do on spending? well with this country go through in terms of the increase of the deficit? nicolas: we are expecting a risk in terms of deficit. but honestly, we have to see exactly what she can implement effectively. the pension reform will be a signal for the ecb.

in terms of deficit, it is not so clear. when we look at the rating agency today, aaa+, there is a small risk of a downgrade, but it is not really the end of the game if marine le pen is winning the election. francine: nicolas forest, thank you very much. we will have more throughout the day from paris. dani: i could look at that view all day. manus: that's the eiffel tower, and i just say i get left on roadsides in the middle of very dusty places. [laughter] dani: but i am just a house cat stuck here in the studio, so it could always be worse. manus: come visit. dani: with that, it is friday.

that's it for us at daybreak europe. i will be back for the next hour of bloomberg markets europe as we look at a bond market that continues to feel the pain. this is bloomberg. ♪

dani: good morning and welcome to "bloomberg markets: europe." i am dani burger in london. here are your top headlines. jay powell hardens his hawkish pivot. bond yields surge. the final showdown. macron and le pen face-off on sunday. we are l