>> this is "bloomberg daybreak: europe." the stories on your agenda. manus: stocks suffered the biggest selloff in almost two years. the dollar and treasuries jumped. jp morgan, the pres. biden: latest in a forecast for the u.s. and for standard chartered. plus, tencent adds. the tech giant declined in asia, warning of a industry crackdown. good morning. are we waking up to a realization that -- is under pressure from china? or is it just a moment?

what does the 2020 two recession look and feel like? dani: for feels like the trend is clear. one or two steps forward, two or three steps back. yesterday, the worst u.s. equity selloff in years. we take you into it. the asia pacific index, that is falling this morning. we'll get into that story in just a bit. the same time, european stocks up and down. u.s. stocks are popping up a little bit. nasdaq, both of them falling significantly. this is cisco, target, other big-box -- big box retailer. -- big-box retailers. manus: how many times will we use the year 1987 twice in a day?

nobody calls black monday, i am not, you are not, no one is calling black monday. michael jackson had his song "bad," in that year. dani: i like it. manus: this is a -- there is a tragic attempt, let's have a look. the dollar rose over, it is not a haven anymore. it has lost. 100 and $75 -- $175 spring into action. it could be a premium run, we do not know. there has been a paradigm shift. down by 10 basis points. bitcoin, you have seen it.

strategy, still buying bitcoin. we are a little bit lower this morning. dani: i think he said something like is luna tattoo will be a reminder of his humility as he invest in the future. tattoo removal is painful. let's get to some reporters from around the world. we have the latest from singapore and from the fed in hong kong. manus: singapore, the latest on tech. finally, we are joined in london. stories about the agent agree selloff for the soft and wall street. the biggest in about two years. we have these earnings reports. increasing concerns about inflation weighing on the consumer.

what does it mean? how may times, use 1987 before the week is out? [laughter] >> i think you can look at the state to play in the lessons from the asian trading session. yesterday it was a pretty terrible day for those markets. much lower in the equity index. testing is awfully slow. the losses are moderate. some of the other markets are showing more of a tech feel. a little bit of like what dani with -- what dani was saying. china is going to emerge.

things are not quite as dreamy. dani: thank you. point well taken. that is our bloomberg editor for the asian market paul dobson. some big-box retailers may be array of hope for the fed play against inflation. here is what that chicago fed president had to say in an exclusive interview with bloomberg. >> 50 basis points beyond that, 75 beyond that, that restrictive setting of policy should be working to bring inflation down. we do not have to constantly increase the fund rate to be restrictive. we can get to a restrictive setting and sit there for a while. maybe we sit there longer than a lesser stricter setting and it takes longer for inflation to come down. dani: joining us now is our

chief correspondent. to some degree, is this what the fed wants? to have consumers no longer spinning on goods, perhaps spending on services? >> the big shift to everyone has been talking about. they are looking at normalizing spending. that shift is underway. this is under the view that consumers are starting to pull in their spending as well. -- as well as the margins. you have to say, the latest remarks from fed officials, jerome powell made it clear that they would hike the interest rates to appoint where inflation

is under control. i think it will become clear until much later in the year. manus: we get the sense that we are clutching at straws we are trying to create this narrative that maybe the worst is passed. that is my thought. thank you very much, enda curran our chief asia commerce correspondent. tencent is adding more pain in the stocks. juliette saly is qualified on the story from singapore. juliette: manus, this is the deal on crackdown. we are seeing tencent closing its long revenue growth. you have most of shanghai and a

tech along debt -- lockdown. we heard from the president saying that they really need to see the policy report that has come through. that will be a bit of a lag until it comes through. tencent pledged -- plunge the most in two months. when it comes to the price tack -- price tag, you will see it rally that she will need to see a rally to get up to that price tag. a lot of bullish momentum is on the stocks. jefferies and city will have a by on the stock. we could see some positive momentum coming through particularly of we see these new gains. dani: thank you.

juliette saly in singapore. $7.8 million hedge fund is shutting down. giving us more is charlie. it was not that long ago that there were talking about trying to raise fees, now they are throwing in the towel, why the sudden change? >> is manus and oracle? [laughter] on this very show he was asking are any hedge funds on life-support? and wall street has been talking for a while about potential collateral damage and we got it. i remember reporting on this in 2021 when the reserves were sweeting ash squeezing his heart as they could. dani: only a year or so ago. >> they feels like ages. as you say, they are trying to

turn things around, fewer shorts, less capital. it was not enough. five of the six biggest were down double digits for the past month. tough to recover. we note they will be returning some of the funds by the end of this month and then the rest by the end of the next month. manus: i would not to dare think i'm any type of oracle but, 2008, it was the hedge fund, i'm taking you back -- it was the beginning of the beginning of a very tumultuous time. [laughter] that is a very fair reflection. i'm not saying it is any kind of warning sign. when i am saying is if you go back to 2008, you look at liquidity in the issues and you

will be able to understand. that is what we talk about these things. dani: i also think it is fair to discuss the sum -- the sometimes smaller markets, like stable coinbase collapsing. are the signs of more things to come? with less liquidity with those risks become more acute? manus: i think he summed it up, is not about the size of the crypto. they can shut down anytime at all. [indiscernible] dani: good point. manus: i hope not. 1230, u.k., ecb publishes -- from their policy meeting.

u.s. jobless claims come in. it will be important in terms of benchmark in the economy. dani: also we will have speakers at an awards ceremony. also, monetary policy. plenty of speakers on the docket. coming up, we will have much more analysis of the latest selloff and what it means for central bank policy. we will speak with william davies, chief investment officer from columbiathreadneedle. manus: lockdowns, the story later in the show. this is bloomberg. ♪

dani: -- >> we are going more

conservatively than aggressively. to your point, we are dialing down areas. >> it is a different phase, different approaches. neutral to some degree. >> today is more validation that the consumer is not a strong. we are stirring to see inflationary pressures really affect the areas of companies. it remains to be seen where that goes. dani: futures pointing to moyer pain ahead in europe. jp morgan says we can climb out of this hole and sees no recession. joining us now is william davies

, cio from columbiathreadneedle. william: these are interesting times. when you get the shark moves as we have seen, there are opportunities that arise. absolutely, yes, there are opportunities there. we can be optimistic in certain areas. economies are slowing. manus: we are still sort of doom and gloom. almost a nihilistic. take me out of the bottom of my class, where is the missed opportunity? william: doom and gloom is right. there is a lot of the around. i think one of the things we would highlight, if you look at the beginning of this year,

there is significant weakness in bond markets. inflation is problematic. they are helping drive interest rates higher. what comes with that? a similar economy. we expect that. is that comes through, we expect to see destabilization's and rallies in the bond market. inflation is higher but growth executions are coming down. dani: what do you make of the argument that there is a wide range that we are falling into a liquid bear trap in the market? william: i would be very careful about suggesting that in the market. we be part of that is because we have seen not read -- weakness. there is a lack of confidence there. as we get some stabilization and a rally -- dani: is there note liquidity

problem? >> certainly sometimes. that is similar to what we have seen in other markets. once we get stability and have some time in recovery, things will be a little better. manus: were they as much of a target as the past 48 hours? i want to focus on the context that if it does slow down, does that were you in anyway? william: that is interesting. if you look at the profit warning, they are higher labor costs. yes, there are problems in terms

of oil price and trade rates going up. the thing that is interesting is in full trees. people are changing what they are buying. their disposable income is down because they're spending more on staples, fuel. i think that will be one of the challenges for this year. seeing where we will see those changes. when inflation is higher than is right now, it is much tougher. manus: so how do you see if they want to be higher yields, you say, investment bonds are interesting. what about an investment grade?

william: i think there are opportunities. you're right. if you look at the high-yield area, there is great exposure to energy. we will be a little bit more wary in a slowdown of over committing high yields. dani: in terms of short-term trajectory, looking at investment rates, that jumped five basis points. is this more of a long-term plan? william: we believe as those growth expectations come down come down we believe it will be recession like 2008, not like that. there could be a few -- of

regression is possible. dani: a mild recession? william: yes. certainly, quality and investment grades will be attractive. manus: a light period of time. the dollar remains early triumph it. very quickly, it would not sync the americans at this time. the dollar looks even more aggressive than it did. in the realms of memory, do you think we need something like intervention in the fx market against the dollar? william: the dollar could only go up, that is the mantra of the moment.

we will see a slowdown in the u.s.. we have to look. everyone is position that way. maybe rates do not go as highest people expect. actually, the dollar may not get much stronger. at some stage, we will see some sort of turn. manus: finally, a voice of reason. we love it. go against the grain. chief investment officer at columbia threadneedle, thank you. dani, you sent me a story about wells fargo. a variety of recessions. the nasdaq is down.

dani: it was up this morning when i checked it about 20 minutes ago. jp morgan is cutting theirs as well. it is scary out there. speaking of something that may be array of sunshine, china invite -- dividing investors in terms of their look at the covid lockdown. we will have more on that in a bit. this is bloomberg. ♪

manus: this is "bloomberg daybreak: europe." let's get first word news. juliette saly in singapore. juliette: bloomberg has learned that the eu top regulator --

into the european union after they split. ecb, known as disk masking -- mapping. they have found capabilities in the region. target shares plunge the most in 35 years after a cut in the forecast due to soaring inflation. there is little sign of easing. target profits are supposed to come in basis -- two basis points lower than the forecast. tencent shares tumbled elite trading after warning of sales in the quarter. they blamed it on left out in china and the war in ukraine. now they state revenue -- by as

much as 5.5%. 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. dani: juliette saly in singapore, thank you. checking on these markets and the global market rally has been sleeping -- sweeping through the past we for hours. u.s. treasuries had 10 basis points. the worst of this route is what we are looking at right now, it might be over. manus: if you think about the conversation that just happened, the recession risk is real. it is real in wells fargo and across spectrum. what to se

manus: this is "bloomberg daybreak: europe." these are the stories on the agenda. dani: market rally. biggest selloff animals two years. growth warnings abound. jp morgan slashes its forecast. plus, tencent adds to the pain. tech giant warns that the industry cracked out end quickly. the trend feels clear. more recession, more pain in equity market. manus: absolutely. a wisp of symmetry.

yields falling in bonds. equities under pressure. very crowded trade. that is what we're hearing. it has come down. maybe it is overly clout -- crowded. one thing that i found, they are trading in oil. 117 million dollars. they say it is a paradigm shift in the market. time to buy. almost like a bank run. dani: i thought he might be looking at getting that tattoo removed but he said not so. 's the hope of a turnaround thursday does not seem to be

taking hold. i want to point out nasdaq users, yet again, underperforming. will the equity destruction mean we get that big -- for financial king -- financial conditions to continue? asia-pacific is down nearly 2%. let's dig into these market moves. i look at market action today and yet again, we are struggling to find those buyers coming back in. it is -- is it all about doom and grooming -- is it all about doom and gloom right now? >> if you are speaking to -- he

was telling me that he thinks the problem is that investors have gotten used to strong forward guidance with a decent time rising. this way they can say oops, we misjudged inflation. we might fight for some basis points. were that means is very little is sustainable. that puts a lot of strain on companies and of course, it puts a lot of strain when you have people going, i don't know what is going on. powell comes out and then treasuries tank. there is a rule lack of

sustainable moves at the moment. this is because of that uncertainty being generated by the war in ukraine, by lockdowns in china. and are still suffering during the pandemic. manus: what is interesting is that in one of his most recent post, important distinction is the next regime. in your estimate, it is not -- in the stock market which is repricing. >> no.

if you look at the stock market, one of the things to keep in mind is that there was so much liquidity pumped into markets. it comes up and then it goes into a different stratosphere. dani: what do you make of this argument, or discussion that we have been having, the bond market is going to come back. finally that hedge will become effective again. >> you would think in the long term we would get lower yields. it is a fascinating battle.

one of the difficulties of that is that the fed wants to get to at least neutral. they might want to go further. this is around the time when the fed rate in the yields meet. treasuries are three, that does not give them much wiggle room. it would go on tightening for some time to come. manus: they say the worst is done for now and the bond market. the bottom line is that it is about the risk of recession.

very serious probability, threading the needle on the balance sheet. for the moment they want to be long of the market. a great analysis. that is the way these markets are every day. or markets live reporter, keeping it real. when three have? -- what do we have? china is dividing investors. the story, next on bloomberg. ♪

manus: it is "bloomberg daybreak: europe."

it is not good, these equity futures. it was a moment of reprieve, we have run out of reasons why did not last. jp morgan, goldman sachs all weighing in. target is down the most since 1980 seven. walmart crashes, cisco crashes. dani: it is the culmination of all of these things coming together. this equity picture, if you flip up the board and look at that gmm, bonds are faring a little bit better. the really -- the three io -- the three yield -- the three year yields are over. manus: jp morgan asset managers

still say you can trade after the recession. they are reducing their portfolio. china's covid zero policy is crushing economic activities. >> our executives cannot travel. if they travel they have to go through all these quarantine measures. that is not sustainable for us. it is business as usual. >> they say there have been local governments that are very good with dealing with omicron. i think in a few weeks time we will get more understanding of where we stand. >> is there some balance between health care and business? >> we have not seen a meaningful slow down and our ability to get

things done. >> it has always been challenging, even before the pandemic. the industry is growing faster than our ability to grow. >> the long-term perspective in general, i think nobly has any doubts about that. manus: they are driving outflows from china. let's bring in mitul kotecha. great to have you with us. month after month, what is driving the outflows? good morning. mitul: good morning. the reality is that there are

number of out floors -- outflows from china. the yield differential is playing a role in the as well. there is not that much stimulus at the moment. inflation risk is on the cake up. there have been a number of concerns here. course, china's stance on ukraine is a factor in this as well. dani: china is no longer reporting flows from investors in the bond market, what do you make of it? mitul: the data has stopped being published and the numbers for april were bleak. i would be surprised to see them pick up the flows anytime soon. that said, even shanghai is

seeing some improvement. it is a slower process than expected. on the data front, i do not know how quickly we will get that again. manus: it is interesting manus: manus: that you bring up china's. verbatim, if the u.s. insists untying those up further, he could turn it into a dangerous situation, all right really missing this chess piece, misjudging the scale of geopolitical angst in regards to china? mitul: it may be a factor but geopolitics is all over.

russia, ukraine. we are seeing different stances from various countries. in europe as well, taking a different stance. geopolitics will play a part in investment trends. i think that will continue. i think there was some concern earlier on. i can see that dying down at the moment. dani: there was a story the couple of our eyes this morning. the ceo saying they were not prepared for this production to shut down. they were not prepared to be closed so extensively. when you look at this, what sort of scarring will though be in terms of foreigners willing to set up shop in china if the sorts of things can turn on a dime? mitul: for any of these

businesses not to have a connection in china, given the size of market potential, i do not think there will be long-term scarring. in the near term, it was superstrong. i expect this year they will beat weaker. the one thing that has been interesting, even during the sanctions that trump put on china, they did not crackdown. there has been somewhat of a hesitation to do that. don't think we will see a big shift in china, we are trying to keep it open. it is a struggle to do so. may be a challenge for the economy and foreign businesses. manus: tell me what you make of this. we are trying to understand what

the next stimulus will be. i love this one. abstract, something of that extreme is needed to ulster the growth story in china? mitul: if we look at the biggest pressure at the moment, it is on the consumer. lockdown at the moment has a big impact. i think if you start following, that means easing some of these lockdowns. i think that will be the key. lifting them as soon as possible.

dani: for what it is worth, the imf was also there. thank you so much for joining us this morning. mitul kotecha strategists. look get to first word news with julie sally in singapore. freight --juliette: the move comes after the country was reopened. finland and sweden are following their nato applications. he has made it clear he will block the process. china's top diplomat has issued a warning to the u.s. over its support of taiwan. we have seen national security advisor's saying that washington was going down the wrong path.

the warning came as they reported that chinese military aircraft -- they are calling it a "big idea that failed." confidence is dropping in cryptocurrencies. 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: coming up, over a year after, more on the capital story on bloomberg. ♪

dani: welcome back to "bloomberg daybreak: europe." i think the debate to have this morning is about the market. manus: the is a migration. [laughter] dani: it is certainly a painful one. yesterday we had the worst class in u.s. stocks. s&p 500, under 1000. someone else saying the recession will be mild and short-lived. manus: you also have deutsche bank calling about different types of recession. the stocks are lower. europe is taking the brunt.

some kind of light bulb went off in the on market. they drop by 10 basis points yesterday. u.s. is calling -- crawling back some of its losses. the biggest swedish pension fund provider says it is time to buy treasury is a paradigm shift. there are big moments of realization but the power of the boomerang continue. dani: it has been a really tough run. let's focus on that. more than a year after capital management was hit. the $7.8 billion hedge fund has given up and is shutting down. giving us more we have charlie

wells. if we are looking at hedge funds as a whole, it has been the macro funds that have done well, equities not so much. >> he really struggled last year. he managed to recoup some of those losses. it was not enough. he try to reorient the firm, use less capital. that did not work. he sent a letter about shutting down. they are turning half that money by the end of this month and the other half by the end of june. manus: another story this morning.

i thought i have seen it all. what is new? >> there was a really great article about u.s. regulators looking into it. there are over 100 private cell phones with the top traders and wall street. the goal is to see the prevalent use of messaging services. they are rolling out their work from home policy. some of the top traders on the street have been using these apps to conduct business. this is a huge concern. at the end of last year, $200 million were extracted from jp morgan. dani: in terms of banking, this is something they have warned about previously. >> yes, it is looming over these

banks. they have not said that. but, they are conducting their own investigation. this is a big concern for deutsche bank. they have change their tune a little bit. they are now trying to roll out new technologies that allow people to use the services. manus: everybody should use it. thank you. charlie wells. the is it for us. up next is "bloomberg markets: europe." dani: we will get into that throughout the program. this is bloomberg. ♪

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