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>> good morning from bloomberg's european headquarters where to 6:00 a.m. in london. i am dani burger with the stories that set your agenda. germany's energy regulator says they may not have enough gas to get through winter as reserves go faster than normal. meet the new boss, the opec new secretary-general in his first interview since assuming the role. he talks oil markets and the biggest challenges facing producer groups. u.s. retail sales and fed minutes will be scrutinized on the direction of policy. here in the u.k., how bad is inflation? we find out at 7:00 a.m. it is a marketing conflict between economic data that shows both strength and slowdown and at the same time, retail big-box

earnings in the u.s. that outperformed. that helped to lift equity market just ray. we saw on depot and market -- home depot and walmart rallying. and the stoxx 50 futures, the s&p 500 just barely positive. we had homebuyer data yesterday, but still, how much does the economic data matter? fed minutes later today and we are heading to jackson hole in a few days time. new zealand continuing to lead the hawkish push, raising rates by .5% for the fourth straight meeting. yields only up 1.5 basis points. i one point they were up as much as eight basis points. starting up to .10%. and bitcoin back above $24,000,

perhaps a little bit of risk on showing through their. brent crude up 1% but still below $94 a barrel, and let's stay with the oil market story. it has been a turbulent time, both supply and demand in question. for the oil market, manus cranny will be in vienna. he will be speaking with the new opec secretary-general today. great to see you, you are in vienna. you are only 767 miles away from me in london, so i am not offended you are not stopping by. you have more important people to speak to their than me. manus: i'm getting closer to you, dani. the last 700 kilometers might be a tough one. i think we arrived in vienna at

22 degrees. it is hot and humid, europe is in the midst of one of its worst energy crises ever. globally, the new secretary-general at opec here will face turbulence in the market this week which has been wracked by palpable sense of fear that china demand is imploding and and iran nuclear deal could be on the table. how many times have we heard that? but we are closer than ever to a new supply alpha and the oil market from iran. you have a crumbling of demand. and you have my pet phrase, prescient optionality traded by opec. they deliver the smallest increase in supply since 1986, point 1%. my view is that they want all options on the table. they have politics at play from the united states of america, perhaps a little tokenism with 100,000 barrels. i think we migrated from demand

destruction at around 130 -- five dollars at the pump in your home country, to something which is much riskier. this is about a new phase of demand, either implosion, i don't know, but we will put those questions to the new secretary-general. he is a multi-linguist, a man who spent time in china are getting oil from kuwait. we will catch up with him later today. dani: really looking forward to that. you will be back throughout our programming, manus cranny there in vienna. let's get to our other reporters around the world. we'll get the latest on germany's gas prices, juliette saly has the rbnz rate position, and what to expect from the fed minutes out later today. starting with the energy story or continuing with it, germany is racing to fill its net gas

stockpiles but the country will still struggle with having enough fuel to get through the coming winter. stephen, this new report out that they have less than three months should russia cut off the gas flow, what does this mean for germany in terms of preparing for the winter, be it stockpiling net gas, or what it means for industry? >> there will essentially be gas rationing if russia cuts off supply. we only have 2.5 months of gas, 95%. then the clock starts ticking, from november 1, they won't have any supply coming in from russia , and they deplete those inventories, that will run out into .5 months. it will be challenging to get through the winter and it will be hard to keep the industry supplied. so you will see a slowdown of

economic act to woody. a risk of ply chains and factories getting jammed. even households perhaps not getting gas. so it's going to be very challenging winter if russia does actually cut oil supplies to germany, which is not outside of possibility. so it is something the government is worried about quite a bit. dani: stephen, thanks so much. the kiwi is fluctuating after the rbnz hiked by another 50 basis points. let's get reaction from juliette saly in singapore. juliette: a 60 basis point hike and it was a slightly more hawkish tone from the rbnz. it is up from the three point

95%. and striking a hawkish tone even though he announced and alluded to the fact that the higher prices are going to start to hurt household spending. let's a could what we're seeing in the currency reaction, you mentioned the kiwi fluctuating. it did initially spike higher against the dollar and the aussie after the rate decision, a get back some of those gains but now were up by about .2%. traders saying it will sell out before the decision and on the back was slightly -- elsewhere it's a two month high for asian stocks so we're seeing some pretty good gains coming through and were looking ahead to the big one, tencent expecting to see its first ever quarter of negative growth. analysts have knocked their forecast down about 21% from the

peak in 2021. dani: now to the u.s., where retail sales and minutes of the july fed meeting are due out today. they should provide fresh clues on how far interest rates might be raised in the cycle. dan, i feel like when we're looking at all this data, will the dovish pivot materialize, especially when it comes to the minutes? are we looking to get signs of that or are we just looking for the fed to back down any hint of that? dan: firstly, i will be surprised if there's any mention of manus's new term, prescient optionality. this is a record of an fomc meeting that transpired three weeks ago. they are unlikely to deviate much from jay powell's tone at the subsequent press conference. but you are right, there is a kind of tug-of-war or disconnect

between markets which believe that peak hawkish has subsided, and fed speakers who are saying we never said we are done, we never said that. somewhere there is some middle ground there. if the fed has overtly shifted to data dependence, then a lot has been on the soft side. so what data are they watching, and it doesn't have to be a dovish pivot, it will be a pivot of some kind. dani: dan, thank you very much. speaking of which, let's take a look at some of the key things we will be watching out for today. in just under an hour's time we will have key cpi inflation, that is expected to have accelerated again in july to 9.8% from the month prior. the tencent second-quarter

earnings, juliette saly was just talking about that. we will also have u.s. retail sales followed by business inventories. seven.pm u.k. time, investors will get the minutes from the fed's july meeting. but first, coming up on the program, from apocalyptic, will discuss changing investor sentiment. plus president biden has signed a sweeping tax climate plan into law. this is bloomberg.

dani: welcome back to bloomberg daybreak europe.

amid speculation that inflation has peaked, according to the bank of america's monthly fund manager survey, strategists are now looking at the basic rate for rising earnings. that survey showing that investors are still very bearish but perhaps not as extreme as they had been in the month prior . have we seen a turning point in this market? >> i would not say it's a turning point. what was really happening is we've seen the bear market transpire but we've seen better than expected earnings season and an easing of financial pressure and then every central bank is fighting inflation

starting to peak. we could get the fed pivot from this point on, but the reality is were also getting a lot of weak economic data coming in. will the balance be more in favor of addressing that or will the fed still continue on its path of being hawkish on inflation? the fed is suggesting that will be a lot more hawkish but -- dani: it does feel like a fed whose beginning to push back against the pivot narrative, we have jackson hole coming up, are you looking at this as a risk event or how are you position going into it? >> we try to analyze previous points, and what we see is the period between a recession

taking place can span anywhere from six months down to 18 months. we all know that you'll curve inversion leads to recession, but it leads to an -- a positive equity market performance. it's not saying where avoiding a recession, it saying it is a bear market rally, enjoy the rally while it last, it's going to end soon. dani: history does back it up. i was interested by your research essentially saying that earnings surprises have been negative in europe. is that the worst of it? obviously in europe, inflation is imported, it is much different than the u.s.. >> absolutely. you're getting a negative beat

on earnings versus expectation, but what investors should realize is there is a bifurcation taking place in the market. that is between the domestic companies in the european companies that have more international exposure. so when you compare the two, that's where you see the impact of the weaker euro because ucl of these benefiting these multinational companies based in europe. the second important factor is yes, we've had higher inflation, it has been headwind for equities, but on the flipside, these very companies are using inflation and passing on these costs. but they won't be able to do that forever. inflation is helping increase the top line, we are seeing a week euro in favor of european

countries with more international exposure. last but not least, the hard data coming out of the omicron variant had a lot of momentum. dani: when you look at germany yesterday saying there would be a levy on consumers for high energy prices, corporate can pass it on to the consumer and germany previously stepped into prevent that from happening. what does that do to the consumer enterprise in power going forward and their willingness to pay for these products that companies are charging more for? >> you are looking at electricity prices, those contracts the these consumers are now starting to expire, and they will be hit with electricity prices which is nearly five or six times what we were facing. so it's going to be a big struggle, which is why we would

say with more certainty that europe is entering into a recession by the end of the year and consumers are going to struggle in this environment. dani: there has been optimism in translating into equity markets, and some of what is contributing to that is optimism around a nuclear deal. goldman sachs came out with a note essentially saying this will take time, it is not likely to happen in the near term. is this a 2022 story, or does it get pushed further out? >> history shows us the last time we had the iranian election it took a year and a half or production to actually come back online. i would agree with that view and say that it is a headwind for now, it is weighed on sentiment in the oil market that's being drawn down due to weaker demand especially coming out of china. that is definitely having an

imprint. i would say it would be a story of the second half of 2022. dani: great to catch up with you this morning, as always. coming up, president biden signs a sweeping tax climate health care measure into law. we will get more on that story. this is bloomberg. ♪

dani: welcome back to bloomberg daybreak europe. i'm dani burger in london payment let's get to the first word news with juliette saly in singapore. juliette: germany will struggle to have enough fuel this winter if russia cuts off surprised -- cuts off supplies. the target would only cover around 2.5 months of industrial power demands. the risk of energy rationing in germany is still high. and the prime minister's rival has warned against throwing money at a short-term fix to a problem. instead of allowing it to rise again in october. the chinese premier has asked local officials from six key

provinces to help support measures. he held a meeting with provincial officials asking to help boost consumption and more fiscal support by government bond issuance. he reportedly acknowledged pressure from covid lockdowns. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. dani: juliette saly in singapore, thank you so much. president biden has signed a sweeping tax climate and health care measure into law. a major legislative victory for the democrats. the bill changes the way medicine surprised and adds a minimum 15% tax for corporations. he says the inflation reduction act is the biggest commitment to mitigating climate change in u.s. history, including some 374

billion dollars of provisions. pres. biden: it's not just about today, it's about tomorrow. it's about delivering progress and prosperity to american families. it's about showing the american people that democracy still works in america. dani: bloomberg's bruce einhorn joins us with more. calling it a historic moment, tell us how historic is it. what is the significance of finally getting this legislation passed? bruce: it significant because it represents the first real action by congress to address climate change after years and years of really ignoring the issue, by and large. for the 40% reduction in climate emissions based on 2005 levels, that would be by 2030. in addition to all the provisions for climate in the

bill, there is also spending for health care, for instance there's subsidies for people who get their health insurance through the affordable care act also known as obamacare. that will last for several more years. there will also be for the first time provisions to allow medicare to negotiate some drug prices, not a whole lot, but a start, which is something that has been on the to do list for democrats really for decades. dani: at the same time, bruce, we have liz cheney, the republican representative, losing in the gop primary, perhaps this was expected, but of course she has been a very vocal critic of former president donald trump. what does this mean in terms of trump's staying power and influence in this midterm cycle?

bruce: liz cheney losing in wyoming, state where the cheney family is almost like political royalty, of course her father, the former vice president, was the representative from wyoming, the same position that she had and just lost in the primary. with this primary loss, of the 10 republican congress people who voted to impeach former president trump in january of 2021, after the january 6 attack on the capital, of those 10, four have lost their primaries are decided to retire and only to have made it through. so does seem that the hold former president trump has on the republican base is still very strong. the big question is whether that extends to the electorate, and we will have to see.

wyoming is arguably the most republican, the reddest state in the country, so liz cheney had been hoping there might be some crossover from democrats to support her in this primary, but there just weren't that many democrats in wyoming to save her. in other states, the balance will be different, so i don't think we should read too much into this primary election before looking ahead to the midterms. dani: bruce einhorn with the latest on u.s. politics. coming up, it's been a quiet year for europe's equity capital markets, but now it's being buoyed by an unlikely set of issuers. there is scrutiny when people come, they say they've tried lots of diets, nothing's worked or they've lost the same 10, 20, 50 pounds over and over again. they need a real solution. i've always fought with 5-10 pounds all the time.

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dani: good morning from bloomberg european headquarters. it is 6:30 a.m. in the city of london. we bring you the story set set your agenda. no time to relax. germany's energy regulator said the nation may not have enough gas to get through the winter, even as reserves go faster than normal. we'd the new boss, will speak with opec's new secretary general in his first interview since taking the role. he talks oil markets and the biggest challenges. plus transatlantic eco-. here in the u.k., how bad is inflation? we find out in 30 minutes time. what is a push and pull in this market between weaker economic

data, some showed strength in earnings. off the back of the s&p 500, just barely able to eke out gains. when it comes to walmart and home depot. european stocks are up .4%, they gain for five consecutive days, the longest winning streak since march 10. how much longer can this bear market rally go? it does not always last. looking at the kiwi to your yield, that is also on the move this morning after fourth consecutive raise from the rbnz. it's up 1.5 basis points, paring some of the moves in the you we had seen earlier in the day. bitcoin slightly stronger and brent crude down from its highs but still up .10%.

it is just under $93 a barrel. we are getting breaking news on juniper earnings, posting a net loss of more than 12 billion euros. perhaps some optimism there. they are seeing a net loss of about 2.7 billion euros, the loss also includes a 6.5 billion euro impact from future cash shortages. so it is clear the role the energy crisis is having, the german utility is struggling to replace gas supplies ahead of winter. negative earnings for the full year of 2022. sticking with the energy story, oil up slightly this morning after tumbling to the lowest in six months. investors weighing the prospect of iran coming back online, weakening a local demand. a lot of new headwinds facing

the new secretary-general of opec. manus cranny is indiana now and we will speak to him later. it's been such a volatile time for oil, what will you talk to the new secretary about? manus: you literally encapsulated the crisis on our doorstep, the potential bailout of french utilities. if you want people to understand the scale of the crisis, on our doorstep, it is nationstates that are grappling with this. the issue for the secretary-general here, we will see massive switching from natural gas which is the equivalent of about $1000 a barrel in france with the amount of gas it takes to fuel electricity. you will see massive switching to oil, that would create a slow on the demand story for

opec-plus, because this week we have been crippled by the implosion in china in terms of demand, in terms of the credit impulse and there is a deep-seated were that were heading toward a global recession the global slowdown. the china data punctured a hole in the demand story for the oil market and on top of that, the risk is that iran comes back with more oil barrels and they can wrap up quickly and get back to 3.5 billion barrels a day into this oil market, which changes the narrative again in terms of the supply and demand dynamics. dani: really looking forward to that conversation. manus cranny indiana, he will be back shortly on the program -- manus cranny in vienna. chinese companies are choosing european venues for overseas fundraising as regulatory

scrutiny and geopolitical tensions make the u.s. more difficult. a few reasons i just said there in terms of fine chinese companies are looking to europe, but break it down for us. a lot of these are happening in switzerland. what exactly is the appeal? >> we've seen all these chinese firms listing so far this year and a bunch more are expected. in a very wide market, it's a cyber leave in a way. all are delisted in china, but it is better than nothing, right? dani: how have investors reacted? had they embraced these deals? >> most of these deals are seen

as friends and family deals. they are listed in china, and they are the ones going into these gdr's. those with mandates, he gives them exposure to asia and more importantly, china. but largely speaking, they are friends and family deals. they are targeted at a very niche set of directors. dani: what does that mean for banks that might be generating these listings and for european capital markets? >> so far this year we've had four them and only one of them was a bank. pnc got involved in one of the deals led by chinese investment

banks. the banks are using this as an opportunity to expand, eventually applying for licenses in germany, which is one of the other venues potentially to offer banking services across the european union. dani: thank you very much for that reporting. thanks a much for joining us this morning. she was laying out the details and setting the scene for us. i know you had some skepticism as to whether europe can actually fill this gap left by a less appealing and more scrutinizing u.s. market. why do you say that? >> you need to go back to the origins of this issue.

in the trump administration there was a move to hold foreign countries accountable, in particular chinese companies had to provide scrutiny to an accounting body in the united states. on the other hand, the chinese companies themselves have voluntarily chosen to delist in the u.s. because of security concerns they have, so there has been a mismatch between the aspirations of the chinese companies and u.s. regulators. that is because of the recent developments where companies are choosing to delist from the u.s.. as far as europe is concerned, there are some potential issues. dani: what are those? >> for one thing, the depth of the capital market in europe is not of the same magnitude as in

the u.s.. the u.s. is the largest capital market in the world, and the appetite for high-growth cash burning chinese companies is far greater, so it will be difficult for europe to close the gap with these chinese tea listings. dani: we see the u.s. approaching this with more scrutiny as we have relations between the u.s. and china hitting a rough patch, as we say. what if europe starts making more scrutiny and also asking for a higher accounting rationale if they're going to list in the region? >> it is possible that the accounting standards would be raise, which the jurisdiction. right now the tendency for

better disclosure, but as far as europe is concerned, it's unlikely to be at the fulcrum of a dispute between china and the united states. europe is not going to add to that dispute, so i don't think the security consideration that we spoke about earlier would apply to the european listings. dani: i have to ask about some of these small hong kong adrs in the u.s., a lot of these tech companies that have seen gains of thousands of percent when listing in the u.s.. one recent one which one analyst called the mother of all shorts, these companies that appear like the air of penny stocks in hong kong shooting higher after they list their listing. what do you make of these companies, trying to short them or even trying to ride that wave of these huge gains they have been seeing?

>> we urge investors to act with caution. some of these names have risen by 21,000%. there is little justification for this extravagant rise. you might recall gamestop and amc going to astronomical heights. recently we see asian companies listed in the u.s. which have a very limited profile in asia rising to heights that even their most fervent advocates would never justify. in the case of the stock that you mention, it's trading at 400 times earnings and about 1000 times earnings if you strip out what was gained. this is way beyond any justifiable metric and investors need to be very cautious when

looking at these names. dani: thank you so much for joining us. let's get to the first word news with juliette saly in singapore. juliette: ruling out raising the u.k. energy price cap if he becomes prime minister, his rival warned against throwing money at a short-term fix for the problem. instead of allowing it to rise again in a few months. republican liz cheney has suffered a crushing defeat in her bid for reelection. she is now calling on americans to unite across party lines to keep donald from winning the white house again. she made a point of conceding to her opponent, something she long criticized trump for never doing after the 2020 election.

and local officials from six key prominences being asked to bolster the economy with provincial officials asking to help boost consumption and offer more fiscal support. reported a technology and pressure from covid lockdowns and told officials to strike a balance between virus control and economic growth. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. dani: juliette saly in singapore, thanks so much. coming up, you're in the u.k., how bad is inflation? we will get the numbers in just over 15 minutes time. this is bloomberg. ♪

dani: welcome back to bloomberg daybreak europe. i'm dani burger in london. let's take a look at some of the events ahead today. looking at quarterly gdp, at a time when the recession in europe, cisco will be reporting results today following the big box walmart and home depot. details at 1:30 p.m., followed by business inventories in the country. finally, 7:00 p.m. u.k. time, investors will get the minutes from the fed's july meeting. before all of that, the big data point we are watching this morning in the you pay -- and the u.k., the consumer price index. the meeting expectation is for inflation to speed up to 9.8% from 9.4% last month.

break it down for us, what should we be watching out for in this number? >> the headlines were expecting to touch almost five times the bank of england's target. the u.k. any -- and here ups -- inherits the tight labor market. the bank of england sees energy bills rising again, and that means inflation could rise more than 13% later in the year. on the other hand, supermarket inflation is already the highest on record, but that is made even worse because they are the biggest private sector employer in the u.k. in the having their own wage price style role -- viral. -- their own wage price spiral. especially after the job stated we had yesterday, yes the market

may be cooling but it is still virtual. dani: lizzie will be back to break down the numbers when we get them at 7:00 a.m.. germany is racing to fill its natural gas stockpiles, but the country will still truck -- struggle to have enough fuel for the coming winter. stephen, it feels like every day we get a more dire piece of news when it comes to the engine crisis, specifically in germany this time. what does this mean for the coming winter? >> if russia does not supply europe largely, you will see germany having to ration gas. that is basically it. we've seen report saying there will only be 2.5 months of natural gas if russia cuts there output. something has to give, and what

gives is consumption. that means factories and industry and consumers will not be able to get gas if russia does move forward with cutting back supply. when it cuts to 0%, that's when the german government will be really worried. dani: the german government is looking at bailing out a utility giant, posting a 12 billion euro loss. >> the reason they posted such a big loss is because they have to rebuild those inventories. gas prices yesterday in europe closed near a record high level. it is very expensive. having to refill these inventories at a quick pace as well as dealing with less supply from russia.

they have to replace it somehow. it is hard to keep energy prices cheap when you don't have that really low price of fuel. what does it mean for the consumer? there the bailouts, obviously taxpayers are having to pay for them, but as well, this winter and into the future, as the country looks to rid itself from russian energy. dani: stephen, thanks as always for the update. coming up, we are back with manus cranny in vienna. this is bloomberg. ♪

dani: welcome back to bloomberg daybreak europe. oil is up slightly this morning after tumbling to its lowest in more than six months. to -- a turbulent time for the market. manus cranny is in the driver seat this morning, he is with us now from vienna. he will speak to the new opec secretary-general. you are there in a very intense past few weeks for oil. what do you make of the price action we've been seeing? manus: hugely volatile, and this market is setting itself up for the least bullish path in two years. john and tom were talking about smart money leaving its footprints across the spread and

how tight is the market. that is lessening. so the smart money is gearing up for the slowdown. you are now in a more evolved, nuanced market. china is selling down, the demand for energy is collapsing, down 10% in july. you've got bailouts and nationalization in europe. or going to switch from gas to oil? there is a palpable sense of fear in the market and this institution, the smallest increase since the 1980's, my phrase is maximum optionality. they are in wait and see mode, maybe not doing enough. dani: that's the backdrop for

the new secretary. what does that mean in terms of what challenges he will have to approach and how he approaches them? manus: i think there is both the opec set of challenges, the opec-plus set of challenges, that is a major agreement that has evolved here in vienna over the past number of years. the family of opec itself in terms of missing production targets, and at the same time being global in terms of reach into america. i think it's very much that global role that he needs to ensure he has everybody on site, and all lines of communication are open. dani: what about his background, what is his experience and what does the oil market think of him? manus: this is a man of great

precision and data. he understands more truth and he dares speak. but he has traded oil, he has been in the trenches. he knows that every line of news can trade this -- can move this market. he is a veteran global, quiet gentlemen, i would say. dani: great stuff, manus cranny there in vienna. that's it for this hour, as we close out, equity markets continue to push higher as new oil markets are still trading around of february low. that is the context for manus' interview in just a few hours. i will stick around and mark cudmore joins us out of singapore. this is bloomberg. ♪

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