dani: this is "bloomberg daybreak: europe."

these are the stories that set your agenda. smart money dumps stocks. equities slid. but tiger global and george soros piland before the rebound. germany slaps a levy on gas. plus, nouriel roubini says they are only two options for the u.s. economy, a hard landing or uncontrolled inflation. a warning there, and from u.s. data showing homebuilders sentiment alongside new york manufacturing data sliding, a clear risk in the market. that risk manufacturing in equities that continue to power higher alongside haven assets. which of them is right? asia stocks charting higher despite data from china. european stocks catching up to the u.s. rally yesterday. we are looking at an s&p future

and nasdaq session that are weaker but only slightly. there was that bloomberg scoop that apple is laying off its recruiters, about 100 lego in the past week. looking at the cross at set -- cross asset picture, a change from yesterday in the offshore renminbi, we saw the biggest drop since 2019. perhaps the rate cut is not enough, spurring a move to havens and bonds through the globe, especially australia and new zealand where yields are down by more than 10 basis points, 10 exactly for the kiwi 10 year yield, repricing that china pain. brent crude sliding below $95 a barrel. iran a possible nuclear deal they are pushing oil lower. we will get more on that in a moment. let's get to our reporters from

around the world. we have a look at bhp bumper earnings and the latest on the iran nuclear deal, and juliette saly with asian markets. let's concentrate on the u.s., money managers filing the 13 as for the second quarter and shows where they have been positioned during a bumpy period for stocks. joining us to dig into this is charlie wells. i know these can be a bit backward looking, but did of us a sense of traction, where we are going, given that we've been so polarized with the tension in the markets? charlie: it explain some of the whiplash in the markets. looking back to the end of the second quarter, these hedge funds in a very risk off position and the conviction was incredibly strong. some of them cut exposure to equities broadly by over 50%. i'm talking like tiger global.

when you think about tiger, they had 46 billion in equity exposure at the end of 2021 and last quarter it was down to about $11 billion. significant drop but that hurt them in july, they sold the dip and mist of the rally. dani: i know there was a lot of excitement over that. what about some of the individual names? charlie: when we think about tech, we saw some of these funds picking up amazon, interestingly, over the second quarter down about 35%. looks like an attempt to buy the dip. when you look at microsoft, you saw some hedge funds, the same hedge funds picking up amazon dumping microsoft. d1 capital and maverick. we also cite some -- saw some defensive plays. the mood was recession concerned. berkshire hathaway, not a hedge

fund, but picking up a lot of occidental petroleum. very recession preparation mode, picking up a significant chunk of colgate-palmolive. dani: charlie wells breaking down those filings. the corporate news for bhp, the world's biggest miner, posted its biggest ever profit. the producer plans to push ahead with growth options on a stronger demand outlook on china. >> we think china will be a tailwind on growth. we can see positive growth support of policy settings in china as they come out of covid lockdowns. we think over the next six to 12 months, china if anything will provide stimulus to global growth that will offset what we see elsewhere. dani: let's bring in our asia energy team leader. the string of record profits for the mining and metals companies continues.

what does the outlook look like for bhp and its peers? david: full of surprises today. we saw bhp deliver record earnings. maybe the biggest surprise was its bullishness on china. certainly compared to its peers. china the biggest commodities consumer, the biggest market in the commodities universe. unlike other sectors, unlike economists that have been relatively negative on china, here wasn't bhp, one of the businesses more exposed there than any of the market, giving positive signals. it expects growth and the economy to improve the next 12 months and it sees signs of recovery in key sectors like infrastructure and the automotive industry. along with those surprise bumper results, also a surprise on the

outlook on the upside. dani: the market not to positively positioned on china, especially the commodity producing currencies. david, thank you. sticking with the energy story, iran has sent the eu its official response to the proposal for reviving the 2015 nuclear accord. that signals it may be near to a deal with the u.s. to restore iranian oil exports to global markets for let's get to our -- global markets. let's get to our energy reporter. what is the status? stephen: we are looking to see what this means that they sent the letter back to the eu. according to local reports, they are expecting a response in the next two days. the foreign minister in iran said there is a possibility a deal could be done in a few days if the u.s. had a pragmatic approach and agreed to terms they wanted. at the same time there had been

some local forces and a hard leaning newspaper in iran that said there have been discussions of reviving a nuclear deal from all corners, which indicates potentially the folks who are leading iran could be closer to closing in on something and that could be in the cards. if there is a revival to the 2015 iran nuclear deal, iran will be able to add more oil to the market at a time when the market needs the oil. things are tight and it would add more downward pressure oil prices, which is why we've seen a selloff the last few session, because of this potential of a iran deal. dani: stephen, thank you. the pboc has offered no pushback after the yuan slid to a three-month low. that's get the market action in asia with juliette saly in singapore. juliette: certainly we've got the 2022 lows insight pretty you

want after the offshore you on -- yuan slid yesterday. it is strengthening today but the difference here is the widening discount between on and offshore. signals a lot of pessimism about this currency and that is normally when the pboc steps in. today they didn't, today weaker by 1.5%. also watching china's bond market. big drops coming through in deals on the taint year yesterday continuing to happen today with the yield on china hovering around may 2020 lows. this is a story of a bond rally. also in australia and new zealand, the rba continuing to say they are data-dependent and there is no set path for rates but they did flag they are likely to hike again. we are also watching a sell down in softbank on a report that the

hedge fund elliott management has offloaded almost all of its stake in softbank. all of this uncertainty over the chinese economy, the surprise cut yesterday, leading to a fairly flat market on the msci asia index, some of the index -- the weakness being offset by gains elsewhere. dani: thank you very much. juliette saly in singapore. let's look at some of the key things that participants will be watching out for today. in less than an hour we will get the u.k. labor data. unemployment is expected to remain around 3.8% in the three months to june. the jobs market remains red-hot through the quarter. then we will get the germany survey for august, investor confidence. that has been hard-hit by soaring inflation, the energy crisis into the war in ukraine. 12:00 p.m. u.k. time, walmart

will release its second-quarter running reports, followed by home depot. a couple of other u.s. data points this afternoon, housing starts and industrial production, following the weak u.s. data yesterday. will it confirm that or be hot enough to spur more bets for fed hikes? coming up, we will hear from dr. doom himself, nouriel roubini and his forecast for the u.s. economy, as you can imagine, not a happy one. plus, germany introduces a household of the on natural gas as putin squeezes energy flows to europe. more on that later. this is bloomberg. ♪

>> we have inflation still well above target, around 8% and falling gradually. inflation around 6%, you are

still a negative territory so the fed rate should be well above 4% or 5% to push inflation. if that doesn't happen, inflation expectations will get -- and we will get a hard landing. you get a hard landing or inflation out of control. dani: economist nouriel roubini, a.k.a. dr. doom, doing what he does best, pessimism on inflation's bite. mark oswald is with us. in that conversation, he goes on to say that markets expecting a pivot and the fed cutting rates next year sounds delusional. our markets delusional right now -- are markets delusional right now? mark: i don't necessarily think they are delusional but old habits die hard. above all, because the fed

hasn't started to reduce the size of the bounty. we have a situation where all of the excess during the pandemic is still there and burning a hole effectively and a lot of people's pockets. the assessment naturally is now at the beginning of the second half of the year after a very tempestuous first half of the year, valuations in equities and credit and high yields on government bonds make them more attractive. that doesn't necessarily mean the markets's rationale on the fed is correct. i think the big dichotomy is if the markets may be right that the fed cannot go as high as mr. roubini is suggesting, but equally i would say they are very wrong on the idea that the fed will a sickly reintroduce the fed put -- basically

reintroduce the fed put and reversing or stopping its quantitative tightening. dani: mark -- manus: -- through the start of next year. dani: bank of america says it could induce a 7% reduction in equities, how are you looking at the effects of qt and what markets are most mispriced and perhaps expecting qt not to follow through in qe in the future? mark: well, i think the one way -- i am concerned about the u.s. without a shadow of a doubt, but on the other hand, it is the fact that european equities facing this energy crisis that isn't going away, with all of the problems related to the drought in europe and power supply and transport, it is the fact that european equities have rallied so hard. and secondly, we have seen this

big crunch in credit spreads, particularly the last five to six weeks. which worries me, apart from anything else it encourages the fed to say sorry, markets, you are meant to be doing some other work for us here and we are telling you we are not actually going to relent at the moment, why are you loosening financial conditions? dani: i know we have a great chart from our markets editor valerie, the idea that we seen the spreads move dramatically, tightening something like 170 basis points for high-yield. you couple that with equities and at least the financial conditions are loosening. you set the said put -- fed put is not coming back, but does this translate into a fed call where they have to slam down harder because can shins are loosening -- conditions are loosening? mark: i would make an

observation on the high-yield spread. the high-yield spread is quite bad news in a funny sort of way. the high-yield spreads or cutting down because the bulk of the borrowers are u.s. shale producers and they've seen a swing in cash flow. instead of investing in off stream oil and gas, they are paying down debt, which is good news in terms of allen sheets, bad news in terms of the -- balance sheets, bad news in terms of energy prices. this is really where the problem lies. it becomes self-defeating between credits and -- self-f eeding between credits and equity. the news on credit isn't as good as people think. dani: what do you make of the muted supply volumes we've had, say perhaps for oil and gas?

is there a fear that is rational that there is maybe a freezing up of the primary market making it difficult for corporates to access debt markets? mark: we've already had one freeze up. the issuance this year both in investment grade and in high-yield is way down even though we were last year. yes, one can argue that last year was exaggerated by the fact that there was a lot that central bank qe going into the market. but i think the other aspect is investment grade issuance has been dominated by banks. the banks in a lot of cases are bolstering their balance sheet because they can't sell from the secondary loans that they were using for m&a onto the market because there's not quite that demand. dani: all right, great to have you on this morning, marc.

coming up, singapore's prime minister in waiting warns u.s. and china may be sleepwalking into conflict. more on that next. this is bloomberg. ♪

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dani: welcome back to "bloomberg daybreak: europe," i am dani

burger in london. china's military says it has fresh patrols around taiwan to fight back against another u.s. congressional visit. this follows exercises after nancy pelosi's visit to taipei. singapore's prime minister in waiting says the u.s. and china could be sleepwalking to conflict. >> following the visit, tensions have gone up one notch and that is the risk that can happen though we are starting to see a series of decisions being taken by both countries that will lead us into more and more dangerous territory. if an accident were to happen today, the consequences may be more difficult to manage. so we worry about these near misses and accidents and miscalculations and we certainly hope the leadership on both sides can continue to engage

each other, especially at the highest level, and that sensible and rational decisions can be made to prevent things from deteriorating further. >> what about -- the biggest worry of course is a chinese invasion of taiwan. how likely do you think that is? >> i think taiwan is certainly one flashpoint. it can easily become very dangerous. as we've seen with recent events, and it can escalate quite quickly. not because either party deliberately wants it to become a flashpoint, because as i said, both sides understand the consequences and really do not want a conflict. the leadership on both sides understand this. but as they say, no one deliberately wants to go into battle, but we sleepwalk into conflict, and that is the biggest danger. >> if nancy pelosi really wanted

to stand up to china and really wanted to get emerging asia, countries like yourself, on the side of america, surely the way to come to this region is to come with a trade pact, not the way she proceeded. >> we have been encouraging america to do more in the region. that has been our consistent message. we also understand america's domestic politics and constraints. in that sense, we encourage america to do as much as it can, as much as its domestic politics allow. we welcome the into pacific economic framework and it is good that many asean countries have come forward to be part of this framework at its launch. but as we have repeatedly told the americans, the launches is only the beginning. >> there are very few signs of joe biden wanting to spend

either blood or treasure. trade pacts are a small version of treasure but he will even go that far. >> especially as we view a more uncertain environment, economic slowdown and inflation, these are pressing challenges for countries everywhere and governments everywhere. we have to deal with these realities. i would say from our engagement with their administration and people in the u.s. administration, they do understand the strategic importance of engaging this part of the world. i am sure they will do everything they can to strengthen engagement. from singapore's point of view, we look at it this way -- we want to create a framework in the asia-pacific, particularly in south east asia, where all of the major powers have stakes in the region, both u.s. and china. we think that will contribute to a stable configuration and friendships. >> do you worry about

protectionism being on the rise in the region? >> we do. in a way, the broader concern is the world is at a turning point. we are entering a new scenario, a new world order where increasingly, trade, economics and finance is being used as political context. i think there is another logic at play, which is geopolitics can undermine trade. we worry about that. this will lead us to a more divided and dangerous world. dani: singapore's deputy prime minister lawrence wong speaking exclusively to our editor-in-chief. tensions, geopolitical tensions and china overshadowed by weak data and a surprise cut from the pboc yesterday. some of that still playing out in markets. part of the concern a global

slowdown coupled with u.s. data means we are looking at a rally in bonds. australian bonds, 10 year yields down about 14 basis points. similar view on the kiwi as well. china renminbi giving back some of what we've seen, down about 2/10 of 1% versus the u.s. dollar. coming up on the program, germany introduces a household levy on natural gas with putin squeezing energy flows to europe. more on that next. this is bloomberg. ♪ - [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 and texture, so they'll blend right in for a natural, effortless look. call in the next five minutes and when you buy 500 strands,

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dani: this is "bloomberg daybreak: europe," i am dani

burger in london and these are the stories that set your agenda. smart money dumps stocks, tiger global sold big last quarter. but they also piled into big tech before the rebound. germany has left a gas levy on households amid surging costs for energy. and nouriel roubini says there are only two options for the u.s. economy, a hard landing or uncontrolled inflation. good morning, happy tuesday. you have equities that continue to rally and a cross asset picture, be it bonds or commodities, showing a little more hesitation. in asia, stocks are slightly weaker, down 1/10 of 1%, but for the most part it held up pretty well given the economic picture in asia. that coupled with weak data from the u.s. yesterday, homebuilders, the sentiment looked week, and the manufacturing survey, the second

weakest since 2001. equities in the u.s. seeing a little catch up. s&p and nasdaq future slightly weaker this morning following a scoop from bloomberg that apple is laying off about 100 recruiters. you are looking at a renminbi smaller -- stronger against the dollar this morning but not enough to make up for its against slide since 2019. investors are also repricing china, pricing in the china slowdown. bond yields in australia and new zealand weaker by at least 10 basis points good brent crude sliding nearly 1%, under $95 a barrel. also the possibility of iran oil coming back online. let's stick with the energy story, specifically focusing on the european crisis. germany's government says households will face an additional cost of about 290

euros to pay for natural gas as a burden of russia's squeeze on the continent. joining us is our bureau chief. what would this mean for companies specifically? birgit: the government is trying to ease the burden on companies. germany is facing rising energy costs, across the world, but germany's industry is particularly hit. in order for the energy companies to lower costs, there was the debate that consumers would have to pay a share of this. this is what the government is doing. they have also already announced that maybe some other companies really need some more aid and they are therefore looking at other measures to ease the burden on companies. dani: of course you have the government issuing a levy for consumers. why would they do this?

presumably politically that is tricky for olaf scholz. birgit: it is really tricky and his popularity is going down currently. we've already seen tensions in the coalition are high, you could say. olaf scholz is gambling a little bit. during the winter, one can expect that people will feel cold and they will be asked to cut back on energy consumption. at the same time they will face a higher gas bill. there is a risk for olaf scholz. his popularity is going to slump and it will impede on his ability to keep the coalition together. dani: all right, thank you very much. let's quickly get to some

breaking lines over credit squeeze, a bloomberg a scoop that credit suisse could face delays getting china operations approved after a flurry of executive exits. the regulators telling credit suisse they will be unable to get operations online until they fill some key roles. delaying some of their china operations. a lot of senior management departure causing this. again, it will really be until positions are filled, that's when they will get on-site inspections, the final step to allow them to build out their wealth management business on shore. a big part of credit suisse's expansion, looking at china wealth management. we will bring you those lines as they continue to cross. that's get back to energy. iran has sent the eu it's official sponsor to the proposal for revising the 2015 nuclear accord. this after tehran signaled it may be near a deal with the u.s. that could restore iranian oil

exports to the global market. joining me is our energy reporter. what is the latest on these discussions? stephen: right now iran has responded to the eu comments and they are waiting for the eu to get back to them to respond to that response, according to local reports. we've had the iranian foreign minister mentioned they would be able to make some sort of deal or revive the nuclear deal from 2015 with the u.s. if they were able to come to an agreement in the next few days. there is a bigger mood now in the room that this could become reality. these discussions have gone on for months and been derailed multiple times but it is looking like there is a higher possibility of this deal being revived to allow iran to bring more oil to the market, help stabilize things, which will of course bring more downward pressure to wti and brent prices. dani: stephen, thank you very

much. let's stay on the energy story. joining us is nadia martin wiggin. i kind of want to join the stories together. one, record high power prices in europe, the high relenting lehigh in europe. oil has started to move lower. if were looking at $375 equivalent in natural gas, is it right that we are seeing oil prices move lower? what would be the ramifications as far as switching over to will with the prohibitively high cost of gas? nadia: thank you very much. we had a lot of gas/oil switching already last year. on top of what we saw switched last year, maybe there is another 100,000 barrels per day of demand that can come from oil

versus what we saw in natural gas last year. that was already $500,000 barrel -- 500,000 barrels per day. it depends on china. this is where we look at the disconnect we've seen in the market, where we were going into the summer. products prices went very high and crude prices have come down much more. it's because we had the two largest oil importers in the world stop importing. this is china in particular, which came out yesterday, followed by india. we are not the link distillate stocks into the winter, which is what we need when we are facing this natural gas crisis. what we can see with the german news is they are really trying to affect demand on the consumer side, not just the industrial side like ep in the summer.

-- bp in the summer. germany is down year-over-year. dani: a lot to unpack. in terms of china, you say that xi is playing alongside putin in squeezing us. what is the dynamic like it likely to continue? nadia: china is sitting on spare capacity. 2 million barrels per day. to produce the refined products we need. we now have sanctions, the eu, hitting russia, starting officially in january and february of next year. in terms of delivery, we will already see that in the middle of november for sure. you have the delivery of what you can have in the oil contract in terms of legalities hit already this year. that means we need to replace at least 600,000 barrels per day of diesel product coming from

russia into the european union right now. we need another source. typically it would be india and china but china is not doing this, partly because they are in league with russia. we see with the taiwan story they are really squeezing us. in addition, there is an environmental side of this, xi wants to consolidate the refiners. he wants them to not be such a big part of the picture. what we see is it is all about domestic demand in china and that number came out very badly yesterday. this is why it is creating a big problem. dani: talk to me about the swing factor of an iran nuclear deal. what would that put into the market if we get those barrels back online? nadia: the problem is the deal

is coming too late. we are heading into refinery maintenance season in september, that lasts through november, and iran oil would come back to the market, 300,000 barrels per day, 600,000 barrels per day maybe by the end of the year. but it's not going to solve the problem in the winter. when you look at the start of next year, we should some stocks in the third and fourth quarter this year. the start of next year, the market looks like it will be going gangbusters, especially if it is a cold winter in the northern hemisphere. iran oil will really come back in the second half of the year. the saving grace is what we see with xi's policies in china, we will probably only see china back online fully second half of last year. you get that additional demand

coming out of china and we will get the iran oil at that point, which will help prevent $200 per barrel. dani: you mentioned we are in this maintenance period. in terms of confidence and willingness for refiners to go off-line to do this, i was struck while talking with marc oswald earlier, if you look at the bond market, you see oil and gas companies paying down debt, not necessarily spending, not investing, which is bad news for the energy price outlook. what are we seeing, especially in the u.s. shale patch in terms of refiners and producers willing to spend, willing to put in the infrastructure needed versus just staying as is? nadia: when we look at guidance from the second quarter, we see in the oil spot, spending has gone up, capex has gone for percent.

in terms of actual production, is flat. in terms of the previous guidance, almost where it was at the year. so that is exactly correct, we are not seeing the changeover happen. a big change, aramco announcing they will focus on 13 million barrels per day ultimate capacity versus 12 million barrels right now. those are the kinds of investments we need in the next year, two years, three years, to get us out of this energy cycle that is extremely bullish and volatile. it has to hit demand for us to actually get that moving going forward. dani: nadia, apologies, we have to cut it there, we are heading towards a break. we will get you back on the program soon. nadia martin wiggen there. coming up, the fed has made mistakes in the past, but today's big take says they are

able to adapt to changing times. that is next. this is bloomberg. ♪

>> the biggest problem was in front of their faces in 1907, the financial system failed. >> the central dilemma the fed had was it had two incompatible goals. >> i have one lesson in my brain, don't let inflation get ingrained. once that happens, there is too much agony in stopping the momentum. >> i think we did the right thing in 87, i think we did the right thing in 2007 and 2008,

you just pour liquidity into the system. >> in some ways, i think a fateful day ushered in the modern era of the federal reserve crisis management. >> i think it was a problem before the global financial crisis, the smartest people in the universe worked at goldman sachs and morgan stanley and if they were so smart, how could they get into trouble? >> there was not one stock, a series of shocks. a pandemic, a policy shocks, and the war. >> if i were to point to one thing is a culprit for the fed making the inflation forecast mistake, i would think it would be mainly institutional groupthink. >> mmt approach you described, if the fed is no longer independent, it falls on the fiscal authorities to control

inflation. dani: some leading voices there on the mistakes the fed has made and not made over the years. that is the subject of today's big take. bloomberg writes that while the fed has made disastrous mistakes in the past, it is able to adapt to changing situations by learning lessons from history. for more, let's bring in michelle. in this piece, we have bloomberg economists raining -- economists rating concern. what is the sum of their thoughts? michelle: we brought out the heavy hitters on this one, head of the research division at the fed for seven years, senior advisor to three fed chairs. it is a stark picture. they say the fed has lost control of inflation and the danger they see is looking at

the 1930's, 19 70's, things can get quickly out of control and spiral into a stronger picture. they already say, bloomberg's economics see inflation tax on u.s. households. there is an inflationary psychology that can set in the people see higher prices down the line, they limit spending and then we get into stagflation. they also look at less and less policy space. nine u.s. recessions from the 1950's through the financial crisis. there is less space to make those cuts. longer-term, some of the things that have been innovative in recent years, forward guidance, asset purchases, they may have done more good than harm but they still have some hits to inequality, financial instability affect. always some concerns. no easy solutions, a pretty

stark picture outlined in the peace and a lot of work to be done. dani: no easy solutions, but what could be the path forward from the fed and are there any reasons perhaps for optimism? michelle: as you mention, they do both say the fed tends to learn from its mistakes and adjust to new paradigms. what they see as a prescription is a, bring inflation under control. b, limit the downturn if it comes in any form and work with congress and the treasury on new solutions to make sure the u.s. economy can be brought into stability in future crises and conflicts. on that they mention in 1942, the u.s. had the fed working with the treasury and the fed lowered the borrowing costs for the treasury during wartime spending. that was an example they gave as a way the government and fed can

work together without threatening said independence. longer-term, they talked about how the fed can raise the inflation target to 3% from 2%, give more policy space. they can try stimulus experiments like subsidies to banks to promote lending. and nearer term, jackson hole is coming up, and perhaps powell can massage the message in the markets that have not been listening at all and reset expectations for the road ahead. it's not looking very good, it is looking pretty ugly the next year or so. bloomberg economics sees the benchmark interest rate rising to almost 5% in 2023 and near certain recession during that time. dani: michelle, thank you. our senior asia economy work -- economy reporter. the big take is on your terminal if you want to read more. british airways staff and uber drivers in the u.k. have successfully negotiated higher pay. the latest signs of a tight

labor market. we will look at u.k. jobs data next. this is bloomberg. ♪

dani: welcome back to "bloomberg daybreak: europe." british airways check in staff have approved a settlement with a company that gives them a 13% pay rise. at the same time, uber says it will increase fares across the u.k. to attract more drivers. these are signs pointing toward a tight labor market. we will get u.k. employment data in a few minutes. lizzy burden, what are we expecting? lizzy: we have five minutes until the data, but they are likely to show it is tightening.

the three .5% unemployment rate continuing. but it would mask how tight the labor marking is. you have vacancies at an all-time high. have we passed peak tightness in the labor market? people seem to be coming back to the workforce out of early retirement because they need the money to deal with the cost-of-living crisis. at the same time, offsetting that affect, the long-term issue does not seem to abate, the government wants to limit inward migration. you mentioned pay as well, that's the other element. there's an interesting story on the terminal, you have six minutes before the data, i need you to look at it. it shows reddish women are less likely to ask -- british women are less lightly desk for arrays than male counterparts even though the crisis -- a cost-of-living crisis is taking

a bigger chunk out of their pay. dani: what does the data mean for the bank of england? manus: if tightness is persisting, policymakers at the boe will consider going for another jumbo rate hike. michelle: 50 -- lizzy: 50 basis points. we reckon it will rise to 9.8%. very nearly at five times the bank of england target and the boe sees inflation reaching not just double digits but above 13% as energy bills rise. more important than that, not just the headline right but how much inflation is spreading beyond core goods. you expect food and fuel to rise because of the war in ukraine but how much is it transmitting into services? that would indicate the inflation gains will be persistent in the u.k. dani: lizzy burden getting us

set up for u.k. data, do at 7:00 a.m. u.k. time. in the next hour, about an hour away from the start of cash equity trading. you are looking at european equity futures rising higher. that coincides with australian equities moving higher. it is a dichotomy in markets where we are buying the dip in equities and yet bond yields are moving lower. we are having a bid into havens, and there is concern over china and the data after the surprise rate cut from the pboc. will it be enough? analysts in national newspapers saying no. will there be more easing to come? we will continue the discussion. bloomberg markets:

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