>> this is bloomberg day break europe. i'm tom mackenzie in london with manus cranny and dubai. >> never say never. the fmo c may need to hike by 75 basis points. u.s. etf -- chinese stocks jon bascom virus cases drop. a study warns beijing risks a

tsunami of infections. gas clash. european supplies are threatened after ukraine says russian pipeline flows through the nation could be disrupted. prices jump. good morning, tom. your interview with goldman sachs, there is value for oppenheimer at goldman's in its $11 trillion global equity wipe out. tom, good morning. >> with a 6-12 month view, you can look to position in this market, even suggesting within technology, there are opportunities. we continue to focus on energy. on a day when the cpi print comes out of the u.s. and whether that entrenches this view from a concern about inflation to recession. when it comes to energy, earnings coming through in the

european space, one line on the siemens energy earnings. the preliminary results published on april 9, if we get more lines we will bring those to you. that company's stock is down 25% year to date. >> good news, lifting the outlook. they warn of a cash burn, and a major steel conglomerate, what they said is raising the prophets 2 billion euros, cash flow remains restrained but downgraded to show a loss. you have full year adjusted of at least 2 billion and sales, net 10.6. the market is 9.44. it -- is it the head fake? >> may lend stocks in china are up today on relief that the

numbers around covid have come down, particularly in shanghai. will that be sustainable? reporting on what happens if they drop the covid zero policy. building on the modest gains stateside, more pronounced on the nasdaq futures, not making up the losses monday but the session ending in the green. futures pointing to further gains as we look ahead to the all-important cpi, there is an expectation it will be softer than the previous months. whether they can build on peak inflation is part of the div date. csi 300 gaining, you're a futures ending 0.7 percent and futures stateside, the s&p zero .4% and the nasdaq, 103 points. manus: disappointment, toyota stock down six to -- 6% after the results came, one point 7

trillion yuan wiped off the value. they are forecasting operating profits below estimates. unprecedented prices and costs in the business, inflation and raw materials are coasting toyota ¥1.5 trillion. they have a boost. juliette saly will tell us about that. let's show you the rest of the market. oil rebounds, wiped out 9% tuesday. it bounced back this morning. a prince in abu dhabi says the side -- saudi oil minister, i have never seen anything like this. dollar-yen, goldman sachs says this is where you go for your recession head. 20% undervalued and you have european gas prices, let's see how the markets react. ukraine won't accept russian gas after 7:00 a.m. today so that is more pressure.

let's get to our economics correspondent breaking down the inflation picture in the u.s. and china. stephen engle is in china -- is in hong kong, with the latest on the covid situation. tom: juliette saly is in singapore. we will have a markets roundup including the move-in toyota. mark will have the latest on the war in ukraine. investors are braced for data out today, the cpi is expected to come in at 8.1%. the fed president opened the debate again for your rate hikes at the fed. she told bloomberg she supports percentage hikes for now. >> we don't rule out 75 forever. what i will do is i think 50, it seems right to me. if we don't have inflation moving down we may have to speed up that inflation moves down and

demand moves down more than we might predict, then we can adjust at that point. tom: joining us is and a current. -- enda curran. what can we make of her comments about 75 basis points? >> more hawkish comments, showing you the scale of the task the fed is facing. she made clear the preference is to go away 50 basis points in the next couple meetings but those are hefty moves. it was interesting to hear her say once the fed gets to the second half of the year, if inflation is it coming back to the 2% level, all options are on the table. inflation data tonight, it -- numbers may show inflation peeking around 8% and that is a long way from the fed target of 2%. we may move into that debate,

inflation may have peaked but it has a long way to come back. tom: if we turn to china, the inflation picture appears to be getting worse. inauspicious moments for the day ahead. >> what is happening in china is an external story, energy and commodity price stories on the back of the russia invasion. china is the biggest oil importer. energy on the ground, the lockdowns and the control of covid is impacting everything from food deliveries through to the delivery of raw materials for factories. consumer prices went up over 2%, producer prices heading north but nothing like the scale of inflation pressure around the world including the u.s. and still at a point where the policymakers can focus on putting a floor under the economy rather than worrying

about break away in the near term. -- breakaway inflation in the near term. tom: thank you very much, enda. two sides of inflation. the hell -- the head of the world health organization delivered a rare rebuke to the covid zero strategy in china, saying efforts to eradicate the virus won't work. >> when we talk about the zero covid strategy, we don't think it is sustainable, considering the behavior of the virus and what we anticipate in the future , transitioning to another strategy would be very important. tom: we have more with our chief north asia correspondent. the world health organization criticized zero covid policy but we have a new study which outlines the massive risk to human life if china abandons it.

>> of course, china is doubling down on the zero covid policies and they will point to perhaps the data that came out today showing in shanghai, the number of new infections yesterday were about half of the day before. that is good news they say, and in the china daily this morning they doubled down that beijing will continue its restrictions. what i think the who is pointing to is the fact that the omicron variant is a sneaky virus. it is easily transmitted. the criteria for lockdowns in shanghai is the problem, because we are now into the seventh week of lockdowns in shanghai with no end in sight because you need three consecutive days of no local transmission. you have had one, yesterday. now you need two more so they can ease the lockdown. every single residential compound in shanghai needs to have 14 days of no transmission,

nobody can contract the virus. if just one person in the residential compound gets it, the clock goes back today one and starts the 14 day process again. it is like groundhog day for those people locked down in shanghai. that is the toll on the chinese economy that we have seen exacerbated through to the inflation that enda talked about, the supply chain and problems at factories. tom: stephen engle, thank you for breaking down the complexities of china's covid challenge. manus: chinese stocks rallied for a second day as declining virus cases boosted sentiment among traders in the nation's battered equity market. let's get the latest with juliette saly. >> on the back of this, three days of no community

transmission, will we get a lifting of these strict virus curbs? that has boosted sentiment. the csi 300 hopes to reverse what we had been seeing in regional no equities. we are seeing a rebound coming through in the tech players in hong kong that had been tracking lower for five sessions in a row. a stronger offshore yuan, and we are looking at core inflation, food and the effects of the lockdown, still a little worrying. what will that mean? in terms of what china lockdowns, the headwinds are doing to the global economy, we got that from one of the biggest corporations in asia, toyota, coming through with a warning saying although you have a very weak yen, they aren't seeing much of an impact. they are seeing a ¥1.45 trillion impact to soaring raw material cost and that sent toyota shares

lower by 3.5%. we have a chart in terms of what they have seen with this coming through with some of their numbers. toyota also saying they are seeing a conservative outlook for the next year as they see supply chains. this is where we expected the estimate to come through, where we have seen them posting their weakest profits since the pandemic hit, sending shares lower in tokyo. manus: dollar-yen drops. thank you very much. the eu has drafted a $205 billion plan to win the -- wean the continent off dependence on russian energy as russian gas will stop from wednesday through ukraine. occupying forces disrupt operations. we are joined by our reporter. when you look at the story, ukraine won't accept some

russian gas as of seven :00 a.m. occupying forces are disrupting operations. is it that or the escalation of weaponization of energy? >> it is a huge amount of politics in these decisions. this pipeline runs through an area that the russians have taken since february 24, and the ukrainians are saying we can't guarantee the security, safety of the supply that runs through occupied territory, therefore we will shut it down. there is another pipeline to the north which they say the russians can send gas through. russians say that is difficult. we will find out. bottom line is, what happens is that the price goes up. traders worry there will be restrictions and it is a feedback loop that the eu is trying to get out of. every time you cut the supply

from russia of gas or oil, the price goes up, russia gets more money for gas and oil. what they are trying to do is just cut that by shifting more to renewables so when they are buying extra gas to replace russian gas, the price doesn't go up. the difficulty is, it takes time. tom: mark champion, thank you. prices rose 5% in european gas. we are watching the prices. another story we are watching his elon musk's deal to buy twitter. he said he would reverse the ban on former president donald trump once he takes control.

risks undermining trust in the social network. >> he has stated he will not be coming back to twitter and he will only be on another social network. the point i'm trying to make is perhaps not getting across. this doesn't and his voice. it will amplify it among the right. this is why it is morally wrong and flat-out stupid. tom: some updates on his funding for the deal, he is set to leave financing for the buyout but financers are skeptical he can complete the purchase at the offer price. manus: he says he doesn't own twitter. who else will be licking their lips in terms of getting in on the deal? coming up, we will catch up with the head of market analysis to joins us on views on the market. that is on bloomberg.

tom: investors are braced for the u.s. inflation date due out today. it is expected to come in at 8.1%. the fed president opened the debate for bigger rate hikes at the fed. she told bloomberg she supports percentage -- half percentage point hikes. joining us is janet, head of market analysis. thanks for joining us. we are starting to see the markets price in peak inflation. if you look at the breakevens, this is one example. this ties into what our team are

asking. are you seeing peak inflation? does that lay the groundwork for a renewed rally in these markets? >> thanks for having me. u.s. inflation probably peaked surrounding that judgment but what we think is arithmetically it is likely to peak. what we are seeing is the slowdown in the u.s. cpi will be gradual. it will be slower than people anticipated. we are seeing peak inflation, well above central bank targets. central banks will remain hawkish but we think that is probably peacock-ish this. we don't think there will be a strong rally because of that. there is still uncertainty with regards to economic headwinds building. we have qt as well so we think

markets probably stabilize a little bit but we can't rule a more volatility. we doubt there will be a strong rally. manus: seems like the market has priced in a lot of the downside risk. rates, war, inflation. qt is something you mentioned. what does that mean? growth to value, we have given back all of those post-pandemic gains. is it too soon to step into growth? >> hello. we think it is probably too early to step into growth. the current macro environment is slightly more favoring value versus growth at the moment. we are late cycle and historically, you would see more pickup in that energy prices so that could give more legs to the value rating. we don't think oil has peaked although we could be getting

closer. it is not there yet, given that it usually peaks closer to the end of the cycle. the environment favors more value but because of strong performance, that could be losing steam. that is why we shouldn't be getting, we should be favoring these. we have a more balanced view. manus: blackrock removed its bullish call on chinese equities yesterday. what would you need to see from chinese policymakers are on the ground with covid zero to change your view on china to become more positive? >> that is an interesting question. we get that all the time. when i come to bloomberg i get asked this and finally i think we are seeing more positivity. i wouldn't say positivity but less bearishness from our side. we have added to opposition in

asia and japan recently. we see a number of factors. first, historically speaking we think this is a good indication of credit slowing in the economy and that is supportive of the market. we have started to see a decisive turn in tone from officials in terms of supporting the economy. >> tone, but not reality. >> the economy gets worse, and they will probably action more so i think that is a good sign. there is a lot of bearishness already baked in. if you asked that a few month ago we wouldn't say that but we are at the point where there is peak bearishness and we are seeing policy support. we think there is less bearish. manus: thank you, janet, head of market analysis. time your -- to dip your toast. we will hear from the ceo of a

company returning to the skies and the uae relationship with russia. this is bloomberg. ♪

>> we are lucky to be in dubai in the uae. when i think about it, i think covid is over. we need other countries to open up like we did, the way that we did. it is a booming business. >> do you need china and asia to open for you to breakeven this year? >> when we talk about china, there is a difference between dubai and china.

not only in terms -- in terms of cargo. in terms of the way we operate. talking about many other countries around the world. there is restriction. maybe we can talk about opening. >> when is your best estimate for a reopening in china? >> being honest, i don't know exactly when they will open. i hope soon. >> what is the scale of your russian flights? is business booming? >> traffic is there, when we think about it. it is a fraction of our business. when we look at a couple flights comparing to 130 that emirates operates. >> what about business? is it full of international routes with fully paying

passengers? >> today, our premium classes are doing so well. we are so pleased also to introduce the new premium economy. >> in terms of the money for emirates, you need some of these china and asia routes to open up. willie need more money? 3.7 billion dollars within another year -- within the last year. will you need more capital? >> when you talk about the ownership, really we appreciate the government injection into the equity of emirates. i would say really, in terms of this year financially, we are solid. we are in the green. we have what we need for the company. the way the world is opening, that will continue. tom: that is emirates' ceo and chairman.

they went off from that interview but he didn't give me the line, we will repay the government. the money has gone back to the government. that was the big line. tom: lots more coming up including more from as a business owner, your bottom line is always top of mind. so start saving by switching to the mobile service designed for small business: comcast business mobile. flexible data plans mean you can get unlimited data or pay by the gig. all on the most reliable 5g network. with no line activation fees or term contracts... saving you up to $500 a year. and it's only available to comcast business internet customers. so boost your bottom line by switching today. comcast business. po- [announcer] imagine™ having fuller, thicker, more voluminous hair instantly. all it takes is just one session at hairclub. introducing xtrands. xtrands adds hundreds or even thousands of hair strands to your existing hair at the root. they're personalized to match your own natural hair color

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>> this is "bloomberg daybreak: europe." >> never say never, loretta mester says they may need to

hike if inflation does not subside. uscp i is out today. virus relief rally, a sum not a tsunami of infections. plus, european supplies are threatened after supply flows could be -- some modest optimism after a mix -- mixed sex -- mixed session. features suggesting we will build on that today as we look ahead to that important cpi print and whether or not it confirms that inflation has peaked stateside. a very solid session.

how much does it have in terms of --? u.s. futures have gained. ness that futures adding to the optimism that we started -- that we saw yesterday. they currently up. manus: the feds say it is not time to hit it yet. it has been a monster two days. we have had some flow issues but they are warning that the energy capacity is dwindling. >> the lack of investment is catching up on many companies.

besides, the capacity is not there. they lost the production lease to have a few years ago. >> this is philip morris announcing they will be buying swedish match 4106 in cash per share. a cash purchase. just a reminder that we have some earnings coming up. we will get more details when it comes up. let's switch gears. loretta mester says she would support bigger increases later if they should does not ease by

the second half of the year. she spoke exclusively with bloomberg. >> what i'm going to do is, 50 seems about right. we will assess whether or not inflation is moving down. both supply and demand will be moving over time. the aim is that we can use the tools to get it better aligned with the supply. i do not want to rule anything out. if we don't have inflation moving down we may have to speed up. if we see it moving down more than we might be predicting, i think we need to be very committed to being resolute in doing what we can to get

inflation down. that was announced in june and with the policy rate. >> your colleague said he expects unemployment to rise. are you on board with that? would you warn people that it will slow because we need to do that? >> we excess demand. we can race a policy rate and slow that demand. this is not going to be smooth. unemployment rate may have to rise. we may get some negative growth. that has to happen in order to get inflation down. we will continue to do that until we see inflation moving back down. >> when you get two quarters of negative growth, that is the word officials like to use. >> it really will be how much it

is slowing. if you look at what happened in the first quarter, there was a negative read. if you look at the consumer spending side, those were strong. there was a lot of demand that, government spending went down, trade was a big negative and also, the inventory, there is still a high level just not as high as the fourth quarter. we may see some of that happening over time. our goal is to have it start moving down and sustain healthy labor markets. i do not see this as a trade-off right now. in order to make sure labor markets are healthy, we need to

get inflation under control. >> to get inflation down, down to where is acceptable and then what happened? -- what happens? >> the question is, will it take time to get down? yes. we know inflation can be persistent. we have supply chains that are not using. it will take some time. i don't expect we will get inflation down 2%, who we may see those numbers moving down in a convincing way. i would like to see compelling evidence. manus: loretta mester there,

keeping that inflation point dream alive. what more did you read into the comments? >> a pretty hawkish amount. she's very clear you will go by 50, that in itself is the hawkish. as he mentioned, she is not taking it off the table for the second half of the year. she is saying if they get to that timely wanted option b the table. even if we do see inflation peeking, the question becomes, how fast will it come down and when will officials be comfortable with where it is?

clearly right now, the fed is warning they will have economic costs, because that is what they will have to do. >> will are they pressing in at this point? >> they are pricing in a hawkish fed. they might set back into 25 after that. this is now going globally. the drakes are forcing them to speed up. look it was happening with the fed story. we consider that, we are still at early stages, it is hawkish.

there is a long way to go. tom: ok, breaking douglas comments for us from loretta mester. joining us from hong kong. this is the hang seng tech next. -- tech index. some of it will be down to the relief rally on the back of covid cases easing in mainland china. let's get the first word news with juliette saly. >> is china risks a tsunami of covid, it has resulted in a dip.

there is immunity from vaccines that would not be significant to prevent a coronavirus wave. 's they were warned that the strategy is not sustainable. >> we talk about the zero covid strategy, we do not think it is sustainable and it will translate it to another strategy will be very important. >> elon musk said he will reverse president trump's permanent ban. and thinks it was full-ish. global news, 24 hours a day, on-air and at bloomberg quicktake, powered by more than

2,700 journalists and analysts in more than 120 countries. this is bloomberg. manus: thank you. coming up. prime minister boris johnson warns the u.k. government has limited options to tackling living costs. we have more on free speech, right your bloomberg. -- right here on bloomberg. ♪

tom: welcome back. i am tom mackenzie in london with manus cranny in dubai. prime minister boris johnson is warning that his government has limited options in tackling living costs. we are joined by our economy

reporter lizzy burden. how we heard anything at all about addressing the cost of living crisis that was central to elections? >> very little beyond an extension of the price cut. the government is focusing on the longer-term health. the prime minister singh there is very little to tackle the search inflation. 's after the fourth straight rate rise, the ball is in the treasury's court. it is not on the cards. the prime minister said it is just not coming.

manus: what substance is there to the rumor that the queen's speech was rewritten. >> there is no sign to unravel the protocol. the government pledged to do more to take advantage of its new freedoms. one of the parties is reviewing -- refusing to join after the elections last week unless morris done on the protocol. there were reports that the u.k. could move unilaterally going from britain to northern ireland, but that invites the risk of a trade war the block. it could not come at a worse

time. >> thank you very much. breaking news for you on the huge retailer. it looks as if the adjusted margins have be in 4.2%. a tiny peak. net sales, that is a little bit ahead on what we expected. the outlook -- ok, we will catch up. they have the rest of the full-year reiterated. we will catch up with frans in a moment. this is bloomberg.

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manus: it is "daybreak europe." we just have numbers through from ahold delhaize. a margin from the first quarter which beat the estimate. can that endure? let's ask the ceo. first quarter sales are up, we are any a cost-of-living crisis, are you seeing anybody trade down? bring it to life, good morning. frans: good morning. the present inflation will

trickle down to a lot of us. we should see a stronger effect in europe. in europe we see inflation which we can mitigate. there is a market in europe and the u.s.. we are quite confident after this quarter that we will have a good run for the rest of the year. last year, it was still a strong look into supermarket cells. we are confident with the first quarter this year. tom: that is a big market for

you in the business. do you see that strength holding up amid concerns about the cost of living there? even as many point to the strength of household balance sheets? >> on comparably high inflation. it is holding up. the consumer is strong. as you have noticed, it there is a strong dollar.

overall, we see the strong support from the u.s. government. manus: but is a bullish call all around. do think it is misplaced to talk about recession in the united states or stagflation? frans: i would say that stagflation is around the corner. interest rates also moving up. i think europe is ahead in the last cycle. on the european side, it is a little bit more of concerning environment. we see sales bouncing back. also in europe, inflation is rising. that is a concern for us to

protect our consumers. tom: are those supply chain challenges starting to ease? they got worse being what is going on in china and the wharton? -- the war in ukraine? frans: it has gotten better. 's organizations are very strong in the u.s.. manus: any investors we know wanting a more -- you're making good in the second half offering

ipo, can? you tie that down for us? -- can you tie that down for us? what do you think it will be? frans: we think it will be an online market business. we will see how markets will develop. it will be decided by the incoming shareholders in the market itself. we are looking forward to see the value and provide funding to grow even faster. in the first quarter, we had very good development.

also the professionalism. manus: we cannot let you deferred to the market. what is it worth? frans: that is a nice challenge. it is up to the markets. it is up to the market to decide. they will decide the right moment and proper value. >> lovely. frans muller, thank you.

we look forward to catching up with you again. ceo of ahold delhaize. coming up next, plenty more. future is showing gains. 1.3% yesterday was the upside on the nasdaq. manus: also, maybe the fact that sitting on the fence helps the equity story. "bloomberg markets: europe," is up next. ♪

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anna: good morning and welcome to "bloomberg markets: europe." i am a anna edwards. mark cudmore joins us to talk about the market action this hour. never say never. loretta mester says the fomc may need to hike by 75 basis points if inflation does not subside. u.s. cpi data is due out today. chinese stocks jumd