dani: this is "bloomberg daybreak: europe." i am dani burger along with manus cranny, and these are the stories that set your agenda. manus: the global jobs report adds to the case. mary daly says the fed is far from done. investors now down on this inflation data. hong kong is working toward reopening the borders of mainland china. the u.s. senate passes a democrat landmark tax fund and -- bill. this time it is siemens energy first off the clock. dani: yes, siemens energy coming in.

their net guidance for the full year, they now see a full year net loss. that is the number to dig through here, not too positive. we are also looking at a miss for third-quarter revenues. it is higher energy prices and also some -- we will get into it with siemens energy later. there are looking at a lower full net year guidance. manus: one big question is what is the state of play for that huge turbine for nord stream 1. when we get the updates, we will bring them to our viewers. we are waiting for the ipo to come through. in terms of equities, a little flat this morning. dani: that is a good way to describe it. we are seeing it flat reacting to those jobs numbers and we are

possibly positioning for a fed that could be more aggressive with unemployment as low as it is. especially when you look at the nasdaq. , flat after underperforming. . the msci asia pacific index is down, being led by china tech shares. s&p 500 index, little change. bank of america is putting out a note on friday from michael harden saying that after the july rally, it is time have a bear market rally and it is not sustainable. manus: let me take you into the bond market. i would say there is a propulsion of the bear market case in the short and on the back of the jobs numbers. it ramped by more than 20 basis points on friday. you look at the curve coming

back slightly, then the notion that we are in a short array is comical, according to mohamed el-erian. the dollar-yen is the greatest short in the world. i do not personally think so because there are so many tail risks out there. and there was an anemic response to the 10% implosion last year, with goldman -- last week, with goldman saying you have a ways to go before the upside. 100 25 bucks for the first quarter, and copper is taking a hit for commodities this morning. we are waiting for the cpi this week. all ahead of the call that is expected to hike for a little bit. dani: let's get

is going to say, we are going to have inflation calmed down to 7.5% in a couple of months of -- months from now. that will be fine. i still think that rates will be high and part of what is going on with bond market is because 10 year yields are pricing for the first recession, and a recession is what we need to have to get inflation down from these levels. but two year yields from the front of the market. we will need aggressive rate hikes in order to meet those conditions. dani: thank you for joining us. that is garfield reynolds. the senate has passed a landmark tax, climate, and health care bill, moving more on president biden's domestic agenda. let's get more with bruce einhorn. give us a slimmed-down version of the bill. where does it go next? bruce: it is a lot more than

what president biden originally proposed. i year ago, we were talking about trillions of dollars of spending. it is still a lot, especially if you consider that democrats only a few weeks ago thought that this whole bill was dead. it is all about expectations. i think 47 billion sounds like a whole. it includes a lot of spending on climate, but in total, it is $374 billion then climate spending, for renewable energy. there are tax credits for electric vehicles. there is also spending on pharmaceuticals, allowing medicare to negotiate with companies on drug prices. there is also money for deficit reductions and there is a whole lot in there that democrats are hoping they will be able to run on in the fall for the midterms. the next step is at the house

has to vote on it. nancy pelosi has said she will signal a vote sometime this week. that is likely to pass. and once that does, it goes to president biden for signature. manus: let's see how that passes through. bruce einhorn in hong kong. mark critz -- markets are moving. annabelle droulers is in quarantine in hong kong. there is a lot to deal with. that might be a breaking headline. annabelle escapes from quarantine. we look at the trade numbers. annabelle: we will pick off and thank you for that wonderful introduction. there was a good report for us and export growth was strong. the trade report has a record hit, coming in at $100 billion, a growth of 18% on the year.

in terms of equities, china is now up, although the session is still looking weaker this afternoon. one of the downsides is that there are a lot of risks around the fed and the chance it might be hiking by more basis points. that is one of the main drivers today. dani: as we wait for the new thriller, what is the latest with hong kong using -- easing? manus: we just hope that police will not show up at your front door. annabelle: basically, the government said the government -- quarantine requirements will now be having a big change. coming into the press conference today, that was the best case scenario, even though it is not

as much as other places with no quarantine. we are seeing some stocks moving higher today. there could be more passengers coming in. broadly, it has not been enough to boost the market move that it had hoped for. tech stocks taking the brunt today. no quarantine might be the only thing that drives the rebound here in equity. dani: thank you. coming up on the program, hedge funds seem to have a new mantra in the u.s. we will discuss this with marie dzanis, head of emea from northern trust asset management next. this is bloomberg. ♪

>> we are far from done yet.

that is the promise to the american people. we are committed to bringing inflation down and we will continue to work until that job is done. >> it will still be appropriate to raise rates in september by half a percent? >> absolutely. we need to gain independence. manus: san francisco fred -- fed chief mary daly on the fed bringing inflation down. marie dzanis is the head of emea at northern trust. good morning. dani: marie, we are just hearing from mary daly there, and the message is clear. they are going to fight inflation, and given the strong u.s. jobs numbers, give us the top down view of northern trust asset management. how have clients been reacting? marie: certainly well for the

summer. with friday's jobs report, it has the likelihood of significant increase in the rates. and possibly even 75 basis points. what that could mean is a 50-50 chance of arrest session. -- of a recession. what is different is that with the strength of corporate balance sheets and looking at financial markets, that this would have an impact, but not as great. we will have our capital markets assumption out in a couple of weeks. we do see client reactions. if i look towards emea, it has certainly increased pressure around inflation, the energy crisis that is going on, and we see things like germany look towards conservatism and also emerging markets that have a higher percentage of food and

energy in the cpi will experience inflation more. looking at that, clients are paying attention to more volatility and search for yields and total returns. manus: to happy with us this morning. when you talk with the clients, it is fastening -- fascinating how we move between fear, greed, and hope. when we look at the hedge fund positions, we look at the bond market positions and the equity market positions. there is this much deeper sense of malevolent fear building short positions in equity and bonds. what can you tell me about what your clients' thinking is? marie: we serve interested to show -- institutional and intermediary marketplaces.

they are actively looking for a vehicle that is highly liquid. the etf has been very prominent in the past six months. what i mean by that is if you look at globally, there were $250 billion in closed in etf, but in emea, there was $60 billion year to date in flows. they are looking for being able to implement quickly, have highly liquid solutions, be able to trade, and there is a sense in emea is that they are utilizing strategies with esg. dani: what about the divide of value versus growth? last year, it was clear about this trend, but it is more modeled. -- muddled. it feels like those kinds of

factor trends are not as clear. what has the appetite been around those types of strategies? marie: we have seen factor implementation has been incredibly positive, meaning that people are making more deeper calls on factors and looking for strategies. the numbers of inflows affects the data strategies and has also increased on esg. manus: on that esg transition narrative, which is still happening to everyone in 2021, if you can help discern this for us, that has given pause given the war and the change in the energy transition narrative, given the change of past positions in the united kingdom in terms of green cuts. is the esg foot broken? marie: absolutely not. you will see aggressive targets for net zero than the nordic

with a date of 2025. there are places in the netherlands that have quick benchmarks. even in ireland and the u.k., you are not only seeing green transition strategies, but also looking at net zero as part of tabletops for doing business. we are talking about climate having a place in top-down portfolios as well. dani: looking at bank of america, michael hardin saying that they are 13% below levels on the s&p. of course, that depends on what your strategies are and what kind of client you are, but what is the importance of staying involved in the current environment versus staying in cash? marie: they are seeing over a large period of time, there was a large gold above cash. we saw that in the u.k. and with the search for yields, there is more active deployment of cash.

we are watching through this at northern trust asset management, but we have a spectrum of clients that have all kinds of his and perspectives -- views and perspectives. manus: how much concerned are your clients about exposure to europe? -- they want more clarity around china, but how much more concerned are they about europe relative to the u.s.? marie: there is a lot of global portfolios serving all different types of investors. they will want to have conviction around certain strategies.

also, while the percentages may stay changed, and we will have updated information on capital markets shortly, it certainly doesn't lose the conviction around the opportunity of having rife exposures. manus: we have a busy week in terms of the earnings and also a bit of cpi as well. dani: a lot of possibility of volatility for this week. we will take a look at what to expect from companies this week. this is bloomberg. ♪

>> the risk is difficult to navigate completely because it tends to come from yields. however, it is part of investing. >> september is to have a diversified portfolio, so at carlyle, we have been taking advantage of a broad platform with liquid credit. >> it is staying away from the difficult types of exposures where the fundamentals could hear your rate with the recession on the -- deteriorate with the recession on the horizon in europe. >> there are downside risks. it could be a complex market in the coming months. dani: bloomberg tv guests talking about what the credit

risk is. this is our mliv survey from last week, and people responded saying that the worst is yet to come for the corporate bond market. manus: people are most worried about interest rates and what? in the next six months. high-yield have gone up. that is what i am worried about. let's look at what has outperformed, and it is definitely high-yields. have we seen a peak in the junk rate? here is the rub. we do not know how deep this recession is. is it an aggressive slow down? or as our last guest said, not that deep? given the jobs data, you could be inclined towards equity at this juncture. dani: it is credit risk, so risk

of default is still priced into those markets. let's get the first word news. standing by with that is leigh-ann gerrans. leigh-ann: the u.s. senate has passed a landmark health care, tax, and energy bill. the bill was passed after a year of democratic infighting. 51 democrats voted in favor versus 50 republicans against, with the bill now heading to the house. the democratic majority is expected to pass that on friday. hong kong is reducing quarantine for inbound travelers starting on friday. arrivals will spend three days at hotels to quarantine. that is down from seven days. after that, they will be suspected -- subjected to four days of monitoring at home. they have 4000 covid cases a day

since july. china trade numbers hit a record in july, beating estimates. it's a numbers climbed to 100 alien dollars, peaking past the record set in june -- $100 billion, peeking past the record set in june. ukrainian officials say russian forces -- largest nuclear plant for a second day. that attack happened hours after the head of the u.s. atomic safety energy -- consequences. oscar has denied -- in the u.k., the economy shrunk for the first time since the coronavirus shutdown of 2021. economists surveyed by bloomberg predict that gdp shrunk by 2%.

inflation might accelerate past a 40 year high to more than 30% this year. these key figures are due out on wednesday. global news, 24 hours a day, on air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am leigh-ann gerrans. these are the stories that set your agenda. -- this is bloomberg. . manus: good to have you with us. a quick snapshot before we get into the earnings interviews. this is following the united states of america, and japanese rates up by nine basis points. japanese

manus: it is your monday edition of daybreak europe with manus cranny and dani burger. dani: i blowout u.s. jobs report and more action from the fed. the fed is far from done as investors count for wednesday's inflation data. hong kong will shorten hotel quarantine to three days and is working towards reopening the border with mainland china. and the u.s. senate passes the democrats landmark climate and health care bill in a win for president biden's agenda. along with all of that is also earnings season with interviews. manus: absolutely. posting a bigger than expected loss in three months through to june with downturns at the subsidiary and the russian business. 429 million euros loss.

certainly less than expected. outweighing strong orders in gas and power. the ceo of siemens energy. the market will be disappointed with this level of loss you are telling the market and the guidance, lowering the next guidance. how low can we go, how bad can we get? what would bruise you the most? >> good morning. maybe just to give a different view, i'm very glad how resilient the business is. we see a superstrong order intake. all the orders are needed for the energy transition. they have been resilient in this very difficult market environment. we have two factors that make me not satisfied with the business performance. the one you mentioned already, you can see they have revised

their outlook for 2022. and posted substantial losses. the restructuring of the russia business. with regard to russia, we are to conclude everything in 2022. there is no negative impact in 2023. there is one key driver to conclude everything. there was an element of not remaining, which is russia, but wind will be a turnaround for a couple of years. i think we are in the right track, but it is a slow and painful exercise. dani: the u.s. has been at the center of some of the turbine drama happening when it comes to nord stream 1. it has been delayed that russia is blaming the lower level of gas deliveries. what is the latest? what is the update when it comes to that turbine and the flow of

russia gas? christian: the situation, we are still in debate with the russian customers. we have to prepare everything from our side. it also requires inputs from the receiving end. i always have to underline, if you look at the installation itself, six trains to be operated. just one unit is running. this unit is a spare unit which is scheduled to be exchange in the coming september. so for me, it is not clear to link the turbines with the gas flow in a direct way. we don't see a technical reason at the moment. at least -- manus: it is the messaging -- christian, to the world, what matters here is whether it is, a, the customer, gazprom, are

they in a hurry to get this from you? or is it really sanctions? which one is it? the conjugation you are interested in is not what the world is interested in so which one is it? christian: a couple of things you have to ask the russian customer. from our side, we have to judge everything that is needed to ship the turbine. we cannot see anything holding us back to get it to russia. but obviously, and requires somebody to take it. this is not clarified yet. in this regard, from our side, we are ready. dani: as you said, a drag on this earnings report. you have done more to buy some of it back. how long will it be a drag on your earnings? christian: for me, it is

important to incentivize them step after step. they have not yet published in outlook into 2023. keep in mind, we are still a majority shareholder irrespective of the transaction we are discussing. we are waiting for the finalization. one thing is clear, it will take time to turn it around. and certain things also need to have been in the market itself because nobody in the wind market of the oem suppliers earn money and that is not a desirable market condition for nobody. we need wind energy, but also everyone has to be able to earn money in this market. that is not the case. not only -- manus: do you regret the trade? christian: sorry, do i regret

what? manus: do you regret -- obviously, you are going after the rest. each time we talk to you, you talk about the future, etc. my question is -- you are so far down this road now, is there any sense of regret? is it still 100% the right trade? reputation is everything, isn't it? christian: absolutely. i think the midterm picture has absolutely been impacted. i think it fits very well together with the rest of siemens energy and how to manage projects. i think the logic of the transaction makes absolute sense. obviously, the problems are there. the good things about the problems is we have seen them before and we know how to fix it.

it will take time but it is the right strategic decision. dani: look, we are in an unprecedented environment. europe is talking about energy, gas rationing. what does that look like for you? what is your disaster plan looking like at the moment? christian: first of all, you always have to keep in mind, we are sitting on a record order of backlog. despite all the concerns in the world and in europe, we do see there's a heavy need for our product in this environment. we will need more highly efficient technology. there's a lot of positive. at the same time, we are trying to be very cost conscience -- cost-conscious. we also have to be aware, we have to execute the record order backlog which will help most of 2023.

and we still see quite a good pipeline for new projects coming. electricity industry is good for one thing. when you are in a crisis situation, we see a resilient and stable market environment at the moment. we have to be very careful in terms of order book and pipeline opportunities. it is a very good market at the moment despite all the discussions. manus: you reiterated on a number of times in this interview how strong the backorder -- the order book is, etc. what is the biggest challenge to delivering on that? you've got labor, labor costs, energy, energy costs. supply chain, outages. those trifecta of headwinds, and will they stymie your delivery on that book? christian: i think the biggest challenge for us is still the supply chain.

we have all learned how interconnected our supply c hains are. the order book is not coming fully to the revenue line as we wish to. this will be with us in 2023. finding alternatives to this is the biggest focus area for us. we will all need to learn how to make supply chain more resilient. that is the key element for us. everything we can control ourselves like factories, engineering, it is much easier to control and see how the supply chain will be the key focus area. dani: given the issues with the supply chain, what units are being hit the hardest with all of that? christian: the one we discussed already. there is a high need of material. like all were doable's need more material than conventional technology. the second part where we see headwinds is the whole transmission side.

some interconnected factories with the area of highest order of growth. more the situation, can we rent up -- ramp up the supply chain because there's an unprecedented case of growing orders. it is a little different in terms of the logic but these are the areas we see the biggest impact. dani: all right, thank you for joining us this morning. christian bruch, ceo of siemens energy. as investors warm up technology stocks again, we will talk about softbank's earnings among others later today. this is bloomberg. ♪

manus: daybreak europe with

manus cranny and dani burger. another tough earnings report -- higher rates, recession risks. the shares have halved since last year's peak and some holdings in private companies expected to be a drag on returns. let's get more of a preview on what to expect with our technology reporter, joining us on the story. there are some big flesh wounds in the softbank portfolio. i'm much more of -- how much more of a bruising will it take in this quarter report? >> that is what we are going to find out later today in softbank's earnings. unfortunately, it is not looking great because softbank has been reporting poorly. the june quarter was the worst performance since 2008.

we are not expecting any positive numbers when it releases earnings today. as you said, the privately held companies are also expected to be facing some valuation losses. but there's less visibility on that because softbank does not disclose a lot of information on that. any details about privately held companies will be closely watched later today to see how much of the damage it has incurred on earnings. dani: we are looking at not just this quarter but perhaps further out, the rising rate environment. what is that long-term outlook for sapphic like with all the tech holdings at the moment -- for softbank like with all the tech holdings? min: there are a few analysts that expect bottoming out in the september quarter. it really depends on how stock markets perform going forward.

we are not seeing any clear signs of a turnaround in the market. we really have to see what happens from here. this a lot of focus on what masayoshi son has to say about the outlook for the vision fund and the market as well when he speaks later today. dani: thank you so much. giving us the latest on softbank. let's stay with the earnings theme. we have the rates for renewables and the costly impact of climate change, a lot of focus on this week's lack of earnings. to dig deeper, joining us now is charles. the energy crisis emerging as a key theme this earnings season. what are some of the corporate that might give us a clue on how things are evolving? charles: the biggest company reporting this week will be saudi aramco, right at the end of the week. if we are looking at bp, shell, we know their earnings are going to be very strong. what will be interesting is

their capital expenditure on production especially after the very small opec increased. we also have rwe, the german energy provider, reporting this week. that will be very interesting. they have already boosted their profit guidance for this year. it will be interesting to see how they do in the second quarter. from the largest oil producer to the largest windmill producer reporting this week as well. they have seen very high steel prices across the entire sector and supply issues as well so they are expected to report a loss. just how bad that will be remains to be seen. it seems like they could not be as badly affected as some of the peers in the group. manus: good to have you with us this morning. we just had siemens energy with us, really pushing back. the order book a strong -- is strong. let's stick with the german theme. deutsche telekom expected to report as well.

are we going to get more recession indication or is it about capex? what will the market focus on most? charles: it is going to really focus on this business to business unit of theirs. dt a couple of weeks ago said there was a bit of a softening in the enterprise sales unit that they said some of their customers are putting up new capital expenditure on updating some of their technology. it will be see how their -- interesting to see how their business unit does. they also own half of t-mobile u.s. which is a very strong -- which had very strong earnings last week. it will be interesting to see if the management decides to boost the profit outlook there for deutsche telekom, but it will be the business unit that could have a hint of warning as business perhaps cut back a little bit. dani: looking at some of the sin stock split there is this an appeal to u.s. listing versus u.k. listings. what is the latest there?

charles: in the u.s., there's the supreme court decision in 2018 where they basically liberalized or lifted the ban on sports gambling. it has been a bit of a gold rush in the u.s. a lot of lust and len -- london listed companies have been trying to do that. the u.s. operations are hoping to achieve profitability next year. it will be interesting to see what they are saying. you have triple eight that bought the international reparations from william hills, that just completed. it will be interested to see how the eps adjustment on that might take effect. entain also reporting this year. there is speculation about legislation going on in the u.k. as well. manus: they will be reading exactly what's going on in westminster.

charles capel, thank you very much. sticking with that, berkshire hathaway's earnings. they reported over the weekend and they gorged on stocks. we will tell you what warren was up to in the quarter, right here on bloomberg. ♪

>> you look at the different sectors, most of the economy has recovered. it shows good gains. we have seen that. we can do more manufacturing in the u.s. which in the long term will help us with some of the

inflationary pressures such as semiconductors and more microchips. >> what a turnaround it has been since the pandemic. can you take a moment about how much we recovered the last couple of years and can you talk about how sustainable these may be? >> pandemic march of 2020, i was the mayor of boston and we were shutting businesses down, restaurants down. we didn't know what the economy held. thinking about where we are today is incredible. i think this will be sustainable moving forward. companies are understanding, i think we will have a new type of economy. we are dealing with inflationary pressures. i heard you talking about it before we got on the air. we are going to adapt and adjust and move forward. the infrastructure law that was signed into law will see more investment across america. we are going to see more investment in manufacturing. hopefully the bill that is being worked on now in front of the senate will be working on

prescription drug costs and environmental climate change. when you think about what's happened here under the biden administration, it is something that was talked about for the last decade. these are all going to be good investments to move our economy and move america forward. >> a lot of people want to talk about you about the negotiators -- >> i was going to bring it up. >> you said next month if we don't have a contract and not close to the contract, you and i might be having a different conversation. are we close to one? sec. walsh: one thing that has happened since we spoke and and both sides of agreed is health care. that is a big sticking point, the cost of health care. that was negotiated and solved about 10 days ago so i am pleased with that. now they are onto the next phase. usually when you think about contract negotiations, the biggest sticking point is around

health care and pensions. those are in the rearview mirror. now they are moving forward on the other issues. i feel good where we are. i probably should have used my words better. if you don't have a contract by next month. but i am very confident where we are now. i'm not concerned. i stay in close contact with the longshoreman union and the companies on the ports to offer any kind of support. anytime i talked to them, they say we are moving forward. manus: that was the u.s. labor secretary marty walsh on the back of a great jobs report on friday which many people say will embolden what the fed does, 75 basis points in the next two meetings some people say is what we will need. dani: does this mean this bear market rally for equities is going to be short-lived? not everyone saying that the rally -- berkshire hathaway, its

bottom line has been punished in the second quarter. the conglomerate posted a net loss of $43.8 billion. there is some action in terms of buying as well. here to break it down is laura wright. what is the reaction from these earnings? laura: not disappointed. that is in the valley of berkshire hathaway's portfolio. any gains or losses from equity investments must be included as a component of earnings. but for warren buffett, this can be extremely misleading. you have to exclude the equity fluctuations, operation earnings, revenue decreasing 40% year over year. berkshire hathaway were in net purchases, capitalizing on the buy the dip mentality.

the cash file basically unchanged for the quarter. warren buffett sees this as oxygen for his holding company. also $1 billion of share buybacks. berkshire hathaway have out performed the s&p 500 for the first half of the year, experiencing only 2.5% and losses compared to 13% for the wider benchmark. manus: they have certainly gorged themselves on stocks. good to have you with us, laura wright. setting the agenda. we've got through monday and didn't break anything. bloomberg markets europe is up next. are you here for the week or are you away? dani: here for the week. i am here for the next hour. i'm making up for it. this is bloomberg. ♪

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