dani: this is "bloomberg

daybreak: europe." these are the stories that set your agenda. manus: the need to slow the rate hike. also, the risks of tightening too far as inflation becomes entrenched. china taxes and forecasts warning a crash and covid lockdown could weigh on demand. risk off, fed angst. china sentiment sending asian stocks in u.s. futures lower. treasuries in the dollar climate. -- and the dollar climb. i just realized the flight did not get back in until this morning. good morning. dani: good morning.

i thought you're going to say a miscalculation of bond yields. there was a bit of a rebate to yesterday's market session. it started out a bit negative. let me take you into these markets. some of the worst of it was after those minutes which continue to take the same tone that jay powell did where he did talk about slowing down the rate hikes and seeing what effects they have. we are looking at the asia-pacific session that is down. european stocks are down this morning. it is up pretty significantly. future 100 -- ftse 100 is down. inflation numbers in the u.k. yesterday starting to shape markets. s&p futures are also down 1/10

of 1%. manus: it is hardly a shakedown. there is a risk of over tightening. dalio, on my linkedin account. what central bankers need to do to galvanize and get control of inflation. do you believe that the pivot tears have been involved in there could be a pivot on the way or is it that the fed want maximum optionality? downgrading to china demand very much in line with the general. he thinks that the china demand is stronger. the dollar behaves as a risk off

asset. that is what the dollar is doing this morning. there is a short on the euro swift eurozone dollar risk. that is how you want to play this. let's get the team around the world. singapore, wrapping up those fed minutes. we also have london covering the u.s. retail sales data. also, trepidation in taiwan. dani: let's start with singapore. there is also a look at european stocks. let's start with the fed. minutes from the federal reserve showed that the federal bank may need to start cooling off the rate hike.

let's bring in our bloomberg senior agent reporter. how much can we stay away from this given that during the fed meeting we had them saying that they need to move further and still get more restrictive? >> there is no whole lot that is entirely new. hopefully enough to keep manus awake this morning. they did emphasize the slowing of the rate hike going forward. they did not provide any more details on when that could be. they are weighing a lot of data in the meantime. they are talking about the possibility of overdoing rate hikes and need to follow how these hikes have percolated through the economy. monetary policy works with a long and variable lag. they only started this rate hike cycle in march.

now we are at 2.5% and set to go lower with another basis point hike in september. they did mention that they did not want to overdo the pace of rate hikes. elevated inflation could become entrenched in the public could start to question the committees resolved. they do not want to get there. they are trying to show markets at the inflation hike is far from over. manus: they are certainly not involving the blink now or pivot mode. good to have you on the fed minutes. better than expected earnings from u.s. retailers. stocks ranging from walmart to home depot. can consumers keep that momentum going? charlie is with us.

the question is, are we taking in savings or paying off the cards, what is your first take? >> it is supposed to be a bloodbath. we had that warning from walmart in july and they ended up beating a lot of expectations. sales were up. they were over the estimate. if you look at home depot, there were a lot of concerns that the u.s. housing market was slowing down but actually, they had record earnings and sales. despite some of these headwinds and inflation and supply chain issues that we have been hearing about and even some of these inventory issues, retailers are able to navigate through these challenges. dani: we have to talk about bed bath & beyond. totally different stuff going on. what is the latest? >> they have been having some

good weeks. yesterday, they filed some paperwork indicating that they might sell about 8 million shares. this shows that they had enough. there were issues with management stepping down. the have struggled with sales and struggle to meet the expectations with this turnaround since they became a favorite. we saw that stock was down about 21%. sort of the opposite story there. dani: thank you. charlie there from our team. u.s. and taiwan have started formal negotiations on a bilateral trade initiative. it is a move likely to flame already hi intentions -- heart -- already high tensions from

china. what does this mean for u.s.-china relations? >> that is something that a lot of people are wondering about following nancy pelosi's visit to taiwan and that response. i think this is different in that it is an agreement to negotiate that the u.s. and taiwan first announced several months ago. now we are getting more details saying that talks will begin sometime early in the fall. where these go i think is a big question. on the one hand, there is strong support on the other hand, there is really not strong support for trade deals. what comes out of this remains

to be seen. there may not be a whole lot of substance here. the other thing to keep in mind is that there is another thing that china may get very upset about later in the fall. the chairman of the committee has a bill that he is cosponsoring with lindsey graham that would upgrade u.s. relations with taiwan and designate taiwan as a major non-nato ally. that is something that is also scheduled to start in the fall. that is something that china could get much more upset about than the negotiation over trade. manus: thank you so much. the very latest between the u.s., taiwan and china.

the outlook already in asia. juliette saly has the skew. there are short positions. what do you think? >> hello. they are on track for their first launching. if they were not making enough headwind, you have this supply crunch. great outlook for china. they are down from 3.3%. the mira also downgrading. economists keep blessing these projections and we have an average of 3.9% when it comes to projections for china's economy. management telling us they are downgrading an average of 30 basis points. august has some complications for the outlook. another job support is coming through.

nearly 41,000 also lowering due to complications. if they are complicating the outlook, what does this mean in terms of how they are going to hike? if they are going to be aggressive for the month of july. unemployment rate at 848 year low at 3.4%. dani: thank you so much. the world's biggest hedge fund has the close the short position of from 10.5 billion in june. joining us now is men well. -- is manuel. do you have any idea of why they would have made such a move? >> a great point.

we are going through regulatory times to combine this data. it is unclear on if they were trying to hedge other parts of their portfolio. we need to bear in mind that the positions could be bigger because they are not forced to disclose all of them. we are still exploring that avenue. it is deafly a dramatic drop in european stocks. manus: thank you. all these markets have that july burden. dig deeper. we know you can.

manuel, with the team tracking bridgewater's positions. let's look at your agenda. 9:00 a.m., right decisions. -- right decisions. -- rate decisions. also, u.s. jobless claims. michigan, philadelphia, all of those softer data is coming to play. dani: certainly. our guest coming up will add to that. u.s. home sales and some fed speakers. they are speaking at separate events about the economic outlook. first, the fed will wrap on rate hikes eventually. we will discuss that and get the latest news from our past with

bnp paribas. manus: plus, oil markets are facing a high risk of supply squeeze. production capacity dwindles. we are on thin ice. we hear from them, later in the show. this is bloomberg. ♪

>> we still have about 4 million people in the workforce, we still see strong unemployment rates. the labor market has pulled in more workers. dani: the fed governor there on the labor market. u.s. futures are still lower after the fed minutes. also, it has underscored the delicate balancing act of a

slowdown. joining us now is alexander jekov from bnp paribas markets. it feels like we are in the summer woes. fed minutes seem to be around the same tone. are you willing to take any bets of directionality heading into jackson hole? alexander: good morning. i think the fed minutes show they are going to take a more balanced approach. that is also our take. we think they will height rates -- they will hike rates again. we don't think it will affect the dollar in a positive way. you're already in peak hawkish and is for the fed in that is what matters for the dollar. the thing that the dollar really cares about, we don't think it

will be hawkish enough to keep the dollar stable. our view is that the peak hawkish this will drive the dollar lower. especially in some of the emerging market currencies. manus: good to have you with us. that is a gutsy call given that goldman sachs and nomura are ripping the forecast to shreds. you are wanting it to be long. defend yourself. alexander: absolutely. i think it is a key risk. we look at our models, monetary

policy domestically and what the fed is doing. the fed has reached peak hawkish in us and monetary policy will continue to get tighter. they will raise rates most likely by 50 basis points. plus the economy of next quarter has an improving story. that is one of the things that we like to allocate. dani: i know your also aussie versus sterling. looking at yesterday's inflation data in that u.k., it is above

expectations. this that change it all your sterling outlook? alexander: what is interesting is that sterling failed to benefit significantly from higher inflation. i think it is because the growth outlook is not favorable. in addition to that, negative real rates make funding the current deficit quite challenging. that type of set it -- set up usually does not bode well for currency. we think positioning has squeezed recently. the way we like to express that view is to be short versus long in the us trillion dollar. manus: the one word which i am loathe to use is doomed loop.

it seems like it is on the edge of a much bigger and more significant repricing to the downside given the toxic outlook. is the market skewed to the downside and material evaluation of the sterling on crosses and outline? alexander: we think it was a few months ago. especially in spot markets. what we have seen is extreme sterling shorts a few months ago. it has been squeezed out of the market. that reflects investor types. i think the investor is less bearish now than before. that will make short the pound much more attractive period dani: -- much more attractive. dani: we are starting to get

more bearish given the energy crisis in europe. how are you expressing that? alexander: the best way to express the bearish outlook is a short swiss. with security did in germany and the eurozone, it is the best proxy for growth expectations. the hawkish snb pivot we saw is for the currency. we think it will continue and behold the trades looking for 96. i think it can also fall beneath that level. manus: you hold the line. we will leave it with you. alexander jekov, fx strategy at

bnp paribas. coming up, we will get around of all the top stories this thursday morning. this is bloomberg. ♪ and it's easier than ever to■ get your projects done right. inside, outside, big or small, angi helps you find the right so for whatever you need done. with angi, you can connect with and see ratings and reviews. just search or scroll to see upf on hundreds of projects. and when you book and pay throug you're covered by our happiness it's easy to make your home an a check out angi.com today. angi... and done.

manus: it is "bloomberg daybreak: europe." let's get the first word news. juliette saly has the roundup. >> global oil market say the high risk of the supply screeds is here. -- supply squeeze is here. demand is remaining resilient adding that there is slowing consumption in china being exaggerated and pointed to supply issues. >> by think we are running on

thin ice. it is becoming scarce. this is an issue. we don't want oil markets to run on without the insurance. >> egypt social think of, a date before the indifferent meeting. he was appointed advisor for the president but no further details were given. it was announced he would take over. a were thinning fiscal outlook. that raises questions about the viability buying for the top job. this is according to the institute of fiscal earnings. this is due to the fact that neither -- global news, 24 hours a day, on-air and at bloomberg quicktake, powered by more than

2,700 journalists and analysts in more than 120 countries. this is bloomberg. dani: thank you so much. i'm looking at two year yield this morning following by two basis. that expectation started to back off. manus: just think of all the language. a lovely story this morning. the pension fund, looking their lips. lips. - [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

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manus: it is daybreak era.

i'm manus cranny. dani burger. dani: fed hedge. the fomc saw the need to eventually slow rate hikes, but noted risk of tightening too far or inflation can become entrenched. goldman sachs and nomura cut their gdp forecasts, warning of a power crunch in covid lockdowns. the combination spells risk off. asia stocks and u.s. futures lower. treasuries and the dollar climb. you are back in dubai after a fantastic interview with the new opec secretary general. oil encapsulates all the risks we are seeing in this market, including those warnings from china. dani: the oil market had battered away those warnings. oil is up zero point 2% on wti and brent.

that leans into what the secretary general had to say to me yesterday in terms of china coming back. there is more jet fuel and demand. it is reflected in the cross asset allocation this morning. the people who deliver oil to china believe in the narrative. crude. the magic words from the fed minutes, which were weeks ago is that they could trim back at some point, but the other key line is that many saw the risk of over tightening policy. that is something the bond market will prey upon. the dollar is a little bit better bid. euro swiss is the preferred short on the risk of a slowdown in europe. dani: we are starting to see some of that sour sentiment clay through asia stocks.

they are not down that much. china is leaving the risk off mood within asia stocks. msc i asia-pacific. you continue to see europe move higher, bouncing back after yesterday's losses. that coincides with the ray dalio relinquishing the bulk of their short bets. they did have some 10 billion now it is the $800 million worth. the ftse 100 climbing after a u.k. inflation figure surpassing 10%. that set bond markets on fire. how often do you see guilt leaving the move? putting into all of that the fomc, summer earnings. unable to get past the 200 day moving average, is the bear market rally finally over? manus: we will debate that probably after the next fed meeting. that could perhaps trigger that

bullishness. the fed's meeting minutes have revealed concerns that the bank may need to start cooling off on rate hikes as it made clear it still needs to push further into restrictive territory. officials agreed on the need to eventually dial back the pace of rate hikes while monitoring the effects of tightening. many of whom saw a risk off over tightening policy. let's take that narrative to sylvia. so, the deeply dovish people out there who are desperate for a pivot from the fed will lean into these minutes and go, this is a pivot moment for the fed, but we put it to you that financial conditions are too loose. they have not finished their job yet at the fed. this if anything will embolden the hawks at jackson hole. would you agree? >> basically, i didn't interpret

the fed minutes last night as being that dovish. inflation is still the main concern for the fed. i think the risk management discussion was a bit more complex. so the fed shows some risk over tightening, but equally they cited the risks of inflation becoming entrenched, so implicitly there are some risks of doing too little in terms of monetary policy tightening. the other thing that i will stresses that the fed is data dependent. there is a risk of reading too much into the minutes. really, what the fed will do in the next two months will depend on data, inflation expectations, and the labor market. so far, data suggests the fed will do more in the next two months. expect them to strike during

jackson hole? will we get a fed that tries to combat any notion of dovishness? >> that is my contention. financial conditions have eased since june. based on the recent price action in equities, that is something that goes against what the fed needs to bring inflation back to target. i think that they will try to curb the message a bit. specifically chair powell in his speech will likely correct the message a bit and inject some hawkish and us into the debate. whether they will succeed in correcting financial conditions, that is to be seen. there is still a lot of recession risk around surrounding the global economy.

and still the expectation that at the turn of the year the fed will need to turn a bit more dovish. dani: let's --manus: let's pivot to the u.k. there is hardly one bullish story out there from the most expensive electricity ever to inflation, which some would is deeply unanchored now. do you agree with that and do we need a paul volcker style hike from the bank of england to re-grasp the inflation narrative and break this spiral? >> there are some signals materializing in the u.k., meaning that the labor market is very tight and recent data shows that the growth rate is quite strong. at the same time, inflation is running at a 40 year high.

so the risk of inflation is elevated. if we look at inflation expectations, long-term expectations, they are still in the range of the last couple of decades. so i think that according to that measure, if you start too early to say we are seeing a price wage spiral, however, if we had to see signs of that, it would be too late for the bank of england something about it. being hawkish, however there opportunity windows to hike monetary policy that are limited. dani: sylvia, if i can pick up on the thread that manus mentioned, one of the bearish stories in the u.k., that of energy. this week, shutting down an

aluminum smelter in slovakia at the end of next month. you also have halting is in factory in the netherlands. this is finally demand to structure and where energy prices are too high for industry. extrapolate out what that means for the your ian economy as a whole as we see some of these metal manufacturers start to pull back on out put. >> what is happening in the manufacturing sector in europe is clearly concerning. i'm most concerned about consumers at this stage. clearly, the high inflation is squeezing real income. the situation will get only worse in the winter, given that the energy crisis is set to worsen even further. and really, my expectation now is that there will be a

recession in western europe starting in the last quarter of this year. dani: ok, thank you so much for joining us. great to get your views. now, let's get to the first word news with juliette saly in singapore. >> the u.s. and taiwan have started formal negotiations on a bilateral trade initiative. the first round of talks will take place early this fall. it is likely to further inflame tensions with china, already high after nancy pelosi's visit to taipei. in the u.k., the next prime minister faces a worsening fiscal outlook and that raises questions about the viability a big tax cuts promised by the candidates vying for the top job. the institute for fiscal studies says it is hard to square their promises with managing finances responsibly due to the fact that neither have pledged spending cuts to finance the giveaways.

ukraine's credit score has been lifted out of default by fitch as the nation and ask its agreement with creditors to delay credit payments. bondholders agreed to deter for two years to help the war-torn country. britain is set to face days of disruption in the so-called summer of discontent. rail workers are set for nationwide strikes as staff hold walkouts in london. that action will be followed by an eight day strike. it threatens shortages of everything from toys to consumer electronics and clothes. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. dani: -- manus: thank you very much. foil markets are facing high risk of a supply squeeze this year.

my interview is up next. this is bloomberg. ♪

manus: it is daybreak europe.

i am manus cranny in london. dani burger in london. demand remains resilient. the first interview since taking over. >> september 5 is when we will meet. i have demonstrated time and again that we are willing to do whatever it takes to do with the market requires, but i can't preempt and tell you what we will do, whether it will be an increase of more than 100 are not. it depends on when we sit down and look at the market parameters. manus: do you think there will be more pressure on the u.s. for you as a group to do more? >> i can't say. prices are coming off nicely for the interest of the u.s. for whoever wants the prices to go down, so the noise depends on what rice levels are acceptable to whoever will make that noise.

for us, the noise doesn't make us make a decision. the noise we are use to. what counts is when we sit down and look at the numbers. manus: russia was in that opec-plus meeting. did they lobby hard against a more substantial increase? was this the most you can do without fracturing opec-plus? >> i think we have demonstrated that we have been very close with russia in this alliance is 27 and. the russians have played a critical role in supporting the stability of the market. the meeting was very short and swift. that is a sign that there was no division. it was a clear, unanimous devote. in 15 minutes, we were done and dusted. manus: that is part of the argument, isn't it? people are questioning that you are not proactive or on the front foot and you have this almost pacifist role at the moment. >> in july and august, we went

on the agreed plan to step up. in july and august, we decided to be more active and moved to increasing by 650,000 by both months. that is a sign we are willing to be more proactive when necessary. it is not a fixed plan. that is the beauty of our monthly meetings. we can regularly evaluate to do. manus: the new opec secretary general they're speaking to me yesterday in vienna. of course referring to the u.s. administration as noise. there is a new one for you. he said cranny, cranny, you should have gone back, the biden noise? but we moved on. manus: he probably --dani: he probably would have said the response was noise as well. a swedish ship carrying diesel

is facing energy security threats from high temperatures and russian disruptions. a vessel has blocked the rhine river after suffering a technical fault, yet another glitch for the key waterway. joining us now is bloomberg's energy reporter. what does the diesel shipment mean in terms of the entirety of the energy crisis in europe? >> good morning. lots of important points. yes, this is all about options for europe as they are getting through the summer, through these hot temperatures, but really needing to look forward to the winter when they will need lots of natural gas supply, lots of energy supply and they need to stockpile and not use up that energy so they can have enough energy and power throughout the winter. that is what they need to keep their eyes on. this is all about options.

they are bringing in the diesel to supply some of the auto fleets. they need to have diesel for transport. the need to have it for air-conditioning now, perhaps heating later. we have already seen water levels on the rhine being very low. and then blocking ships moving on the river. as water levels are starting to come up, we have this blockage as well. it is another difficulty in the movement of those options and requiring them to bring more energy in. the problem across the globe is we really have scarcity of different types of supply. we are seeing scarcity across power, issues around power. people are trying to switch from things like hydro or solar or wind into coal and oil, which are dirtier sources.

manus: good to see you this morning. that is what is going to make this whole debate, this obliterates in many ways the transition. it goes to at the secretary-general talk about yesterday. more investment not just in fossil fuels. you are going to have to cap electricity or energy into industry, they say it will be households last, the truth is it could be factories last or first, where does it sit for the economy? >> i think they are looking to take off factories first. that is usually how it works with load shedding. they have some of these companies will usually have preferential tariffs that allow them to be taken down when there is a power shortage as long as the industries can avoid suffering any damage.

if you have something like an aluminum smelter, you get the metal blocked up in the pipes and that creates a big problem for a company like that, but this is going to have knock on effects to the economy, if production has to be shut in. if there are uncertainties. all of these things are factors that make it more difficult for the economy to come back. we are seeing the rollover in issues like an elation. also another consumer goods and and products. that is going to be knock on effects for inflation and that creates more difficulties for the economy going forward. manus: thank you very much. the potential of blackouts and brownouts. manchester united's owners are continuing selling and minority stake in the english football club. we look at the potential investors. could britain's richest man beat on that list? we now know that elon musk is

now knock on that list. this is bloomberg. ♪

manus: it is daybreak era. bloomberg has learned that the florida-based glazer family would consider selling their minority stake in the football club manchester united. it is an institution, let's get to leigh-ann gerrans. lots of speculation out there. i have a funny feeling it could be somebody from abu dhabi. what do you reckon? >> i don't know what i reckon, but speculation is right. this is since the glazer family came out and said they are currently holding preliminary

talks to find someone as they want to sell possibly a minority stake in the foot all club, but we have to wait what really happens. but they might not be ready to cede control, so we really have to think now, where does this all go from here? some newspapers are touting jim radcliffe, who is a british billionaire, who lost out on a bid to buy chelsea. could he be in the running? dani: the fans certainly don't want the glazer's. elon musk tweeted about it and then took it back, did that add fuel to regulation higher? >> definitely rose the share price pretty high and it was quite amazing, the global reach. elon musk is not going to buy it, but he said he is a lifelong fan. they are such a global brand that so many people would want

to invest in them if this does happen. they haven't won anything since 2017 and that is why the fans appeared to be so annoyed with the glazer family. they are thinking of holding a protest at the next match against liverpool. 5 billion pounds is the going rate for this club, so it is not cheap. manus: you know what? here's the thing, isn't it? you've got american interest and disinterest and then the russian money is no longer available to buy these trophy assets, so it changes the landscape, but does it change the pricing? >> definitely changes the landscape. the pricing is always going to be interesting because it is all about the fans who are attracted to the club. manchester united will be one of the biggest ones because they

did when 13 premier league titles back in the day, but sadly they are rock-bottom at the moment. i think it is all speculation. this is something we will watch closely and i'm sure the fans are hoping that they will do better at the next match. dani: it was indeed hard-core. leigh-ann gerrans, in so much. speculation from the daily mail that apollo might be buying it. they don't like american buyers, i don't know how they will feel about private equity. manus: sounds like you've got to welcome private equity. were not as the case may be. good to be back with you. bloomberg markets is up next. ♪

dani: