dani: this is "bloomberg daybreak: europe." the stories on your agenda. manus: agreement on the deed. apple pay, the iphone maker is raising salaries as it faces a tight labor market and you --

union efforts. . chinese -- china's premier -- warns the economy -- first emerged. that is the story. good morning. a lot to contend with. dani: there is a lot. let's give into the futures. they certainly say a lot. looking at nasdaq futures falling. after that apple move, they are raising paid certain is around tech specifically. there are now trading lower by half a percent. small cap into those playing

better today. european stocks are down. they're down. a lot of choppy trading in this session. in some ways it looks worse than it did at the start of the pandemic. manus: last week it was over target. now we are affixing a in over baby tech, big tech. a local bank said that the fed will go the full way and take the economy into recession. you can see the pay rate rising. we have an emergency at central bank of russia. will they cut 300 basis points? you see a huge swing. capacity is tight.

400,000 down to 8000. $400,000 a few months ago. i love a yahoo! trader. the rest of the world coming in on the story. we will break down the market reaction in china. juliette saly is in singapore. dani: let's did into the fed. there is a lesh hockessin tone the markets have expected. there was a general consensus that we would asap -- half-point moves. debate over what to do after that was right. traders no longer think about that basis point being a sure thing. we are joined by our economic respondent. is this a case of them backing off? we don't believe you will be able to carry out those hike points. >> there seems to be something

like that. the minutes overnight suggest that the next few meetings will see moves of 50 basis points each. beyond the neutral, they are also saying that will make it a good time to sit back and digest where they are at. they're making a point that the fed is singling that they make on hold for a while. markets are not even convincing, a lot of chatter about how fast it is going. another pause could be there. markets are saying there may be some slowdown. manus: that is a personal

opinion and not proven by anything else. when we look at the risk for the fed, yesterday we spent some time in england, there no softener bills. while component part as an economist you think the fed will be most preoccupied which would allow them the latitude to pause? >> i think they will keep an i on consumer strength as that has to be the case. that will be a ghost sign for the fed. also, i mentioned about keeping and i on financial markets being impacted. clearly, they are a bit nervous. this not forget the global picture. news coming out of china is negative. very deep slowdown.

we will clearly have some impact on how the feds see the rest of the world. i think there are some key metrics for the consumer in china will be one the key points it will be watching in the months ahead. manus: thank you very much. we will keep an eye on that data. chinese assets have been wavering. there was a dire warning on the economic risk. for more, let's go to juliette saly. i wonder if this team is up or abandoning the growth target. what is the reaction? >> that is what china is saying. the premier league could be abandoning at the growth target. were talking yesterday about the comments downgrading the consensus for a half percent growth. there is a warning that they are facing more headwinds. paving the way for more targeted

stimulus. little bit of a boost coming through. you look at the property sector. we are showing lead lashes in that asia space. they are dropping down the benchmark. we are looking ahead to alibaba and what they will tell us about the overall picture of the lockdown. we know tencent is slowing. the other big story here in asia was the bank of korea. trying to get ahead of inflation. the governor saying that that is their main target, to stabilize inflation, similar to what we heard from other central bankers yesterday. the fifth hike since the summer. the same time, upgrading the forecast and downgrading the global growth forecast. up 3% from this year. dani: thank you very much.

there is even an opinion piece asking about if central bankers are telling us too much being clear about rate hikes to come. great stuff. elon musk is dropping plans to partially fund twitter. we have been covering the annual shareholder meetings. >> the biggest take away from the meetings, they did not receive enough votes to be reelected. recent filings show that he was one of the people speaking to musk as he was forming a decision on whether to buy the company. in 2018, when musk tried to take tessa private, silverlake and durban were the names that backed him on that transaction. we also got confirmation that

jack did not seek reelection. a moment in history for twitter. the first time in the company's history with the cofounder does not sit on the or employee. we have updated findings drop the course of the day from elon musk. he is up to the equity portion for this bid. reducing the margin low. he also says he is talking to existing shareholders. including jack dorsey. potentially having some of those additional shareholders roll their shares over into a pipe -- private equity. manus: he gets all the good gigs. all the tech gigs. some breaking news headlines. this is from the parent -- prime minister.

a week year leads to high prices. some moves are not desired. this goes back to the bank of japan. some governors have talked about this. dani: it is all about the volatility. i would just point out that we did see a trough in the yen and the dollar. this is very much so dollar story. something we have been debating that has fallen this month. one of the biggest gains since 2020. clearly, still on the mind. manus: yes. i think they are still there. i want to talk about pay rises. 100 and 54,000 employees. apple has gone through

overnight. the hourly staff in the u.s. is going to go up 45% from 2018. yesterday, the u.s. went up 10%. 45 percent rise from 2018. you have a big you -- unionize asian coming. this is what irks the markets in terms of pay rises. pete set aside. i think part of the concern is with apple, one of the biggest companies if not the biggest public company in america, needing to get pay rises. with this at mean for companies down the line? four wage price inflationary spiral. it is a hit from of sites in tech. a video which is 7% from market. in his snowflakes on the demand side. cloud provider dropping 14%

overnight saying that there are concerns about corporate spending. these are all different kinds of text companies. they are all very macro worries drop that they are grappling with. manus: zuckerberg came out and said that there could be significant losses in the metaverse. i have not wrapped my head around metaverse. they are to lose significant money in the near term. a big roll of the dice. a lot of guidance as well. dani: it is. especially where investors are prioritizing cash flow. this is my question for you if you are losing money in the metaverse, is it even real? manus: i debate reality every day. i think what we have is a migration of panic. last week it was about the consumer. now, you have a much more

dramatic message. chaos in supply chains. ultimately, it gives the consumer more money to spend, underpins the very essence of society. millions of people are suffering. dani: coming up, we will get more into this debate. it does look like we will have to bring that demand down. it is all about the fed. will discussion the minutes and expectation for rate hikes. manus: a little bit later, we check in with the chairman of illycaffe spa, andrea illy will join us. this is bloomberg. ♪

>> i think as long as we stay the course on tightening, which i think we will, the dollar will be fine. if the fed blinks because of financial panic -- which i think there is a high probability of -- then i think the dollar will come under pressure. manus: talking about the dollar. minutes from the federal -- federal bank saying there should be a hike in june. optionality. traders no longer think that they are ensure bet. fabiana fedeli is the chief investment officer at m&g. i think they are on the forward pricing. we are seeing the market less

sure and may do the full 200 that is priced in for the rest of the year. do you see any risk that the fed could fold? fabiana: there is a chance that at some point will. they know they are behind the curve. we have seen the wage hikes. that is not good for inflation. the fed will have to really get back on track. they may decide to close it. dani: can you buy it until then are do we need to wait until the fed takes a breath? >> flow really counts is not the

fed per se but the growth outlook. right now, there is a lot of downside risk. we have moved to a more neutral position because we thought there was a lot of bad news priced in. but the risk is still to the downside and there are a lot of risks. you've seen that in the recent earnings base. can see what that brings to earnings. manus: you fill me with dread whenever someone comes on and actually agrees with what i said i get panicked. there is more downside to come. what does that mean specifically for growth? with all of that in front of

you, how much more of a downside is there and? is not just the writing on the wall? >> there are two points here. kind of wide large strokes investing. you really need to go more granular, much more selective. what is interesting about this, and you have not seen it in a long time is that there are boundaries between the stocks, even the boundaries between defensive stocks and nondefensive stocks have been crossed. seen a lot that have turned out into valuing. i would not talk about growth anymore, talk about companies that have earnings disability. when they will be on the positive side. there is not too much implied in those valuations.

dani: that is interesting, that if they come down enough it does not make sense to use the growth moniker. we are spending on the metaverse. it will cost us money. is that still work in this environment? >> oh not, on the single stocks with there are still companies that will fare well in this environment and there are companies that will have issues. companies that have low balance sheets. companies that need to go back to the market to raise more capital for their growth. it will not be easy for anyone but some companies will be more resilient than others. we are starting to pick some names in technology. we are very cautious and selective but we do feel the technology weather in the u.s. or china, they are very

interesting. you have to be really be selective. some companies will continue to have issues. manus: how much of the guidance from china is already in zeitgeist? some are worse off in some ways. i know you say, on what you talk about more nuanced things, that is great. i need to know if you think that is already priced into the tragedy. >> i think there are a lot of negative sentiments on china and if anything, we are prone to being sensitive to good news. there is any opening of the economy. seen the latest changes in stimulus message, even though they have not help the markets.

any good news would be positive for that market. the aware of what you are wishing. that will have an impact on prices and it will impact inflation. dani: you give us anything but a broad view. inc. you for joining us. fabiana fedeli, from m&g. we will hear what saudi aramco has to say about the oil markets. this is bloomberg. ♪

manus: it is "bloomberg daybreak: europe." the oil markets are balanced.

companies need to invest more in production to meet the rising demand. we spoke to the aramco ceo with francine lacqua. >> i do not want to talk about prices. we do not have a lot of spare capacity. spare capacity is lower. that is very low. usually gives a confidence to the market. any type of disruptions in productions anywhere in the world, that will kick in. right now it is going down quickly. you have these battles with no spare capacity. francine: does that make you

nervous the prices shoot up? >> who want to mitigate any interruption that might happen. we have seen a lot of interruptions in different parts of the world. that will always help. right now, i've been talking about it for a long time. lack of investment is not bringing out the supplies to the market. there is not much of this going on. francine: what is the solution for the? -- four that? the timeline will not match we need that extra supply. >> you are correct. we will be spending approximately $700 billion. we went down to almost 300 billion. that is not enough.

especially with the increase in commodity prices. we need more, in order to help the supply in the market. it will get used. we announced our increase by a million barrels in 2020. it will come to the market in 2027. it gets down to engineering and bring in that capacity to the market. francine: does that mean we could see a lot of volatility in prices? >> there is a need for more investment. it can come into the market much quicker. it is a short cycle. you need and investment. that is not happening that much. we're doing our part in terms of investment but you need that to happen. dani: as a business owner, your bottom line

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manus: this is "bloomberg daybreak: europe." these on story for set your agenda. dani: aggressive policy agreement the need for half-point hikes in june and july. markets are not totally convinced. apple pay, the iphone maker is raising salaries as it faces a tightly were market and using eyes asian. nasdaq features fall. plus, a bleak outlook.

china warns the economy is faring worse now than when the pandemic first emerged. the trend has been in for the past couple of weeks. the front end coming in with yields with economic concerns and corporate concerns, coming in head to head with the hawks hawkish this in the mix yesterday. manus: i just wonder if we are desperately grabbing at straws. it looks like they will go the full monty this morning. let's have a look. two year yield dropped over the holidays. we are having an emergency meeting from the bank of russia today. the currency flies higher. the market is tight. the markets have shown that clearly. there is not enough spare capacity. it is below $30,000. if you listen to scott who is at $4000 a couple months ago. it will be $8,000.

also, if he is buying crypto. take me seriously. i have to ask you about it. little he starts talking to me about bitcoin. and i say, is she there? dani: at least it was bitcoin. it was not like i am buying whatever the latest elon musk coin. it was mainstream. manus: yes. he was currently mainstream. that is good tableside chat. let's look at this. valerie created this chart. this is that reserves in america going down. that is the real risk. dani: at some point, because

this is the emergency reserve you assume they will have to be refilled again. manus: let me throw another thaw at you. reserves implode. we have a tight market. is this all playing into the bigger geo political situation in regards to taiwan, a moment to provoke global inflation as a result of zero covid. geopolitics in taiwan. prices are high. you can see this wrench. i have gone full barrel. to your point we have been pointing out in this market, a lot of the fears being priced in.

i think that is a fair question. they are giving people a pay rise. it is a tight labor market and some morning some other tech companies. let's get back to davos. the final day of the forum. there with a guest is francine lacqua. francine: thank you. this is my dream guest. it is day four. we have not had a lot of sleep. we are going to spend the next few minutes focusing on coffee. the price of things. we will speak with the chairman of illycaffe these things that i want to touch up with you. climate change, agriculture, how

is it doing business in general given all the uncertainty out there? andrea: the price of coffee runs twice as high. as a consequence of the drought in brazil which destroyed 10% of the plants. we are not sure about it. francine: are these --? andrea: yes, they are demilitarized. i don't see the conditions for pricing to go down in the next 10 months. they're constantly acting in any

culture because in general they will decrease year-by-year from climate change. francine: there also shipping costs. are you able to pass on these higher copy races to the consumer? andrea: there is a concern. we have had a perfect storm. it is not only the coffee, it is packaging due to the general situation and there is energy as a consequence of the war. there are shipping costs as a consequence of the economy. we had a cost increase of nearly 15 million. francine: that is how much? andrea: 15%. we are only a portion of that. it is increasing.

hopefully by the end of the year, the increase will help make another adjustment. francine: what is it difficult to pass on a 20% increase? you are on the higher end of premium coffee? andrea: yes. we are also global. in home, out of home. it is an exercise which is tricky. there is a trade-off. the right moment in the right way. now we wait for the rest window of opportunity. francine: is there a danger that if you hike prices too much, people move to a cheaper brand or drink less coffee? >> a little bit.

people are kind of dependent. it is also an accessible luxury. it is a pleasure in life. it is something that is considered better in terms of a successful life. i don't think this is a danger. there is also training between the consumer and producer and also competition. francine: talk to me a little bit about agriculture. we are the first ones who had a conversation with that, maybe six years ago. try to mitigate the impact of climate change by doing inks differently from how we group products in the past. that is some -- >> that is some of the work. everyone speaks about that now. it is, irrelevant solution for

security and sustainability in the future. many crops in companies are consuming energy. growers are shifting towards it because by consuming organic compost and biomass, the you can dramatically reduce destructive agents. the chemical in the defense -- in these places are less and less so that it is not as much of a biological fight. it seems to be more effective. francine: is this also a consequence of war that everyone says they understand the fertilizer and the fact that we do not have enough because of what is happening in ukraine? andrea: in brazil, i had the opportunity to visit many forms.

they are accelerating as much as they can. for the sake of consuming much less mineral fertilizers. if you add too much fertilizer, you will have higher emissions of greenhouse gases. do not want that. everyone wants to have a sustainable agriculture. the general things is to remain sustainable in a way that is good for climate change and mitigation. francine: do you feel like as this began, there was very little visibility. -- visibility, some good can come out of it? >> yes. there have been many different possible readings about the situation. i think we will find the solution. one of the ways to see an exit

to create prosperity and jobs is accelerating. also the one we mentioned. deforestation. is all about sequestering that in the combined effect of agriculture. francine: thank you so much. andrea illy, chairman of illycaffe. next on we see each other, and espresso is the first thing we will do. [laughter] manus: can you just get me a machine? francine: i will send some right over. [laughter] manus: thank you. great conversation there.

first word news, juliette saly is standing by. she is ready with first word news. >> we start with 18-year-old gunman that opened fire in a texas school. he allegedly warned about his plans on social media. it attacked killed 19 children. the governor says he posted on facebook that he planned to shoot his grandmother and also to target the elementary school. they say the messages were private and were only discovered after the attacks. russia's defense ministry say they are seven ports after they had criticism. they claim they will operate during an 11 hour window each day. the shipments may take time to resume. scott minerd says bitcoin will plunge to $8,000.

a big shift. he predicted it will hit $4000 in late 2020. yes dear it has become a mockup for quotes. a bunch of yahoos. . >> we are probably going to hit 8000. that is until we are totally flush. if i were, i would be short. 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: thank you so much. coming up, after a surge, central bank is dealing with unscheduled policy meetings. it is not just russia, we are waiting for turkish banks decisions as well. we will talk to our reporter, next. this is bloomberg. ♪

dani: welcome back to "bloomberg daybreak: europe." russia is racing to set up a rally for the ruble. the country central bank is expected to accelerate interest rate cuts and unscheduled policy meetings today. manus: turkey also will announce its rate decision later. their unorthodox policy means they are not likely to join the party. even at 70%. back by popular demand. that is enough for energy. no hard task. we are debating and you are renewing my knowledge of the currencies. we look at the ruble and the

turkish lira and that brazilian, very different. what do you think we will get from this emergency meeting? >> you would not get the bank saying they are going to hold the meeting with something coming through. they will also forecast what kind of cut we can get. we can get between 300 and 700 basis points as well. what we are looking at is a reversal back to something where it was on the eve of the invasion. we are looking at something that would bring us back closer. we are looking at the kind of pain that russia is going through in terms of the strength of currency. exporters are beginning to complain about this. it has capital control. at the time when the country is drifting barely firmly into recession. dani: that export import dynamic

is under whack. a cut, is it enough? >> it would be enough to keep a lid on the ruble so to speak. jan that, there is very little going for russia at all really. huge quantity of earnings in terms of what is coming through commodity experts. that is what is causing this to a large degree. right now, sanctions imposed very firmly moving towards a recession. manus: here is a word you can weave in for extremes. you have the russian ruble up of 26% and you have the lira

crashing down. we know this is unorthodox. what are the chances that something would be done to save the lira? >> interest rates are increasing. everyone is worried about stag flechette and inflation, in turkey, you have more reason to do that been anywhere else. we have a key rate of 14%. extraordinarily negative real rates in turkey. a central bank that is beholden to the president's whims and the president does not want higher rates, he wants growth at the cost of inflation. that will put him in a stronger addition come elections next year. dani: this is something i was chatting with -- about last week.

for the markets, you need trust with them. given what you are laying out with what has happened in turkey, are there any foreign investors left to trust that system? >> very few. foreign investors to a large extent have left. there is nothing much going for a foreign investor in terms of that market. in russia you have foreign investors leaving because they have to. you talk about trust, this has been the ongoing narrative in turkey for a long time. as long as this policy remains loose and we have to waiting -- waving commodity prices putting a strain on turkey, now this whole picture put together and you have a negative result.

dani: thank you. one of our editors for energy and emerging markets. coming up can boris johnson pivot away from a scandal after questions that he is trying to shift the focus from cost of living. this is bloomberg. ♪

dani: welcome back to "bloomberg daybreak: europe." boris johnson has fresh support for people struggling with the record squeeze in living costs. this is happening is he is attempting to deflect attention away from a long-awaited report. it held him responsible for staff gatherings during lockdowns. let's get straight to lizzie

burden, what are we expecting from that statement today? >> let me set the scene. it has been a trip a couple of months. he has united across the political spectrum. this is amid criticism he did not do enough to help household during the cost of living crisis. on friday, you have the economists saying that they are being called to do more. inflation is now a 40 year high in the u.k.. consumer confidence is down to an almost 50 year low. the energy regulator has often said that the price is expected to rise and other 2% in october. for all that, they are expected to announce a multibillion package of support today. is likely financed by a windfall tax. whatever he announces, it will be seen as a reluctant response rather than proactive generosity.

he will be expected to do more. manus: good to have you with us. i watch the prime minister's questions. not sure what tabloids and front pages made this morning. it looked very tough for him at the box. >> this is really no quinn students. this is the attempt to draw a line. there were some gory details. staff members spilling red wine because they were so drunk. there were route to the cleaners, singing karaoke. yet there was no smoking gun.

some members have called it dumb. -- a damp squid. the prime minister has been able to revive his popularity somewhat. there is not likely to be about of confidence. for now, the greased piglet seems to have escaped. manus: he called on the nature of parliament. thank you very much. let's check in, it looks like we got some slippage in terms of equity markets. as you pointed out this morning.

dani: you also have the pay rises. saying that this also increases the support for the fed hiking interest rates that will lead the price spiral. that is it for us. "markets" is up next. this is bloomberg. ♪