dani: this is "bloomberg daybreak: europe", i'm dani burger in london.

manus cranny in dubai. these are the stories that set your agenda. manus: the nord stream pipeline break-ins -- beings -eight- begins upland three-day shutdown. a key confidence gauge signals stronger demand, paving the way for larger fed hikes. back to work. goldman sachs and morgan stanley call in employees, dropping covid rules as wall street looks to get back to the office. dani, we never left the office, we were here literally every single day. we have had a jolt in the jobs market, does it embolden the glide path of over 11 million job openings to a 75 basis point hike? dani: the market is training that way.

you have a 75% chance baked into money market feature is that we will get 75 basis points. that is what set off money markets yesterday. we have the third consecutive day of declines for stocks. futures today are doing slightly better, up about half a percent when it comes to european futures. u.s. pagers up about .6%, but it was the worst three-day slide in more than two months. one saving grace might be corporate buybacks. when we are seeing the worst of the interest rates care in equities, $3.2 billion was spent by executives buying back stock. but elsewhere in the world, it is all about whether we need to price in a more emboldened central bank. manus: it's a bit of a stretch, that the cfos of the world will replace the fed. let me show you the bond

markets. at the short end, it went up 50 basis points, the short end rallied by seven yesterday. get your 75 basis points in. be judicious and take your opportunity. frontload would be the narrative that is being pounded on the table. the new york fed warned that you may need to hike and halt. oil up by 1% this morning. you are looking at concern in the energy markets. in the past few months, the worst losing streak since 2020. the euro is above a buck, and gas futures are down by over 9%. we will discuss the repricing of gas in europe. christof ruehl will discuss how we decouple gas and electricity prices in europe. dani: let's get to some of our other top stories. we will start with the energy crisis. then we will get an update on

china's economy with enda curran . manus: jules takes us through the market reaction to the chinese data. michelle will wrap up the narrative from, it could be that pboc, she is going to go for the fed speakers there you go. dani: the new york times is reporting that russian energy giant gazprom has begun to shut off gas flows to germany citing maintenance work. the eu is scrambling to secure energy supplies and fail storage -- fill storage supplies by winter. >> we plan to jointly save 15% of energy between august now and 2023. we need to diversify away from russian fossil fuels.

and here is the good news. we have reached an average in the european union of storage feeling of 80%. dani: let's get to energy reporter stephen stapczynski. european gas prices have fallen rapidly this week. we have inventories going up rapidly, how much of a head fake is this decline in energy prices? >> the crisis is not over yet. certainly, it is good news that europe is filling up inventories. there is also fear that european governments will go in and try to bring the rally down by setting price caps. that is also leading to this drop in gas prices. but overall, the situation has not changed. the world is short gas, and there needs to be reduced consumption through this winter.

whether the world can do that is a big question. russia will be bringing the nord stream pipeline into maintenance, it will be a three-day maintenance. there are fears it will not come back, if it doesn't, and russia is not supplying gas through this winter, that raises the fear of rationing and shortages even if you have inventories at 95% which is what they want to hit before winter starts. manus: when you see the market that just wanted to put their head in the sand at the possibility of a complete shut off and perhaps paint on fiscal intervention. we will discuss this i'm sure, on a daily basis. stephen stapczynski with the latest on the gas and energy markets. chinese activity constructed -- contracted. we are familiar with all of these reasons. let's get to our chief asia

economics correspondent in hong kong. enda, what is it that rt most in this set of data apart from the headlines? >> i think it is the fact that the manufacturing sector remains in contraction. this is the time of the year when china was pulling out of the hole created by lockdowns in early spring. there is no sign of a bottom in the economy yet. pmi's staying firmly in contractionary territory. the services side also slowing nine, that speaks to the hit to consumers and tourism. taken together, it shows you that the policy support to the economy is not get getting traction or is not enough to turn things around. we do have a date for the congress now, october 16. there will be discussion over whether policymakers can stabilize the economy. but pmi's are telling us that

the manufacturing side remains very much in the hole. dani: enda curran there. let's get the latest on the asia market reactions, juliette saly joins us in singapore. juliette: initially we had stabilization in chinese stocks because there was that modest read in terms of pmi. but you had anz cutting their gdp forecast to china. we are watching byd shares being sold off after brookshire hathaway sold off its stake. a stronger yen weighing on the nikkei, although you see upside in reopening stocks. the pboc once again trying to defend this weak currency, and that is seeing upside on of the offshore yuan, rising .4%.

let's have a look at the month of august, it has not been a good one. we are on track for a monthly loss of 1.3%, wiping out july's gains. we saw a major market seeing about a 60% drop, the biggest drop in turnover in 17 years. $320 million worth of shares changing hands in august, down from a billion last year. manus: that is a resplendent chart. juliette saly in singapore, keeping it real with pretty hectic charts. u.s. job openings, consumer confidence, both topped forecasts, adding to fears about inflation and what the fed might have to do. could we see 75 basis points month, the data raises the prospect of that move.

michelle, i was wondering what you are going to cover but here we are, jolt me up in terms of the job openings. the consumer remains confident, gas prices coming down for 77 days. >> good news and bad news for the fed out of this data. the good news is, it matches the message they have been trying to send on the growth outlook, saying there will be paying for households and businesses but underlying strength in the u.s. economy. the bad news is, this pushes more towards the 75 basis points an area than 50. so a lot more for the fed to deal with in terms of convincing themselves and everyone else that they have this flight in hand. the data for august sentiment at a three month high. one thing important out of that

report was consumers were spending more on discretionary items, including cars. that is a good sign for household spending. the jobs data moved close to a record in openings for july. both indicators smashing survey expectations really makes it more cap located for the fed. dani: and we have more jobs data to come this week. and we are seeing persistent tightness in the data. with the data we see coming forward, is it the same we are expecting, what is it mean to get figures in the job market that are not loosening? >> the pressure is high right now. what we're expecting to see is a slowdown in job gains month-to-month. our survey stands at 300,000 from 528 in july.

and unemployment staying around 3.5%. we will see if other indicators like wage gains and the participation rate hold true to expectations. but coming out right a. there is a high probability that market and feds will see things differently. we will be listening for more from the fed in the weeks ahead. dani: and we know they have done away with forward guidance, so the data dependence is more important than ever. let's take a look at some key things we will watch out for. 10:00 a.m. u.k. time we will have the latest cpi for the euro area, and from italy specifically. 3:30 p.m., we get the eia weekly crude oil report. manus: today russia's gazprom set to halt flows through the nord stream pipeline for three

days of maintenance. the cleveland fed president speaks at an event in ohio, and her colleague rafael plastic speaks in georgia. coming up on the show, activtrades' senior analyst ricardo evangelista joins the team. dani: and we will speak with christof ruehl on the impact of energy prices. this is bloomberg. ♪

>> you've likely seen that over the last four meetings we have raised rates of 225 basis points. we have shrinked our balance

sheet and more rate hikes will come. we will do what it takes to get there. the pace of when we get back to our 2% target is uncertain. as a result, our commitment to bringing inflation down, leads to worries about recession and i understand why. manus: richmond fed president thomas parkin speaking to the huntington regional chamber of commerce, channeling his inner mario draghi. joining us now is ricardo evangelista, fx strategist from activtrades, you look at the jobs data, it is 2 for 1. does this lower the bar to another 75 basis point hike in september? ricardo: good morning, thank you for having me. unemployment will be very important for the fed's decision

making process. i think the expectation points at the continuation of growth for u.s. employment. new jobs are still being created albeit at a slower pace. this vitality in the u.s. economy, it fits into the arguments the fed is defending about the need to control the speed of inflation. amidst this background, it is fair to assume the planets are all aligned for the fed to raise interest rates by 75 basis points by september. dani: just looking through your note, strong dollar calls versus the euro, starlink and again. -- sterling and yen. is there anything in your mind

that could change the trajectory of a strong greenback? ricardo: it is difficult to see an alternative scenario. from whichever angle you look into the currency situation, it is difficult to identify a different path. the dollar is pretty much looking stronger against any other major currency. so i don't see anything else within the possibilities that we can expect to change the situation. we can expect the dollar to remain strong. manus: i need some excitement, we have heard "king dollar", but we have got to move on. what about dollar-yen, we had roubini saying 140 breaks the

bank of japan, what breaks? we can't all just bang into dollar, something has got to break. ricardo: there is a lot of geopolitical uncertainty. the perspective for global growth -- prospects for global growth are not very good. one would expect that environment to support the yen, however that safety pillar has been somehow diluted by the strength of the dollar. once again, it is the narrative that is there an eight -- that is dominated by the strong dollar. you will not want to hold onto yen despite the attractiveness of the japanese currency during times of high inflation. japan is almost magically immune to inflation. dani: which manus was hinting at. you have chatter about

intervention but you have had officials from indonesia and korea contemplating this idea of intervention with a strong dollar because of the impact it has had on them. are you expecting more currency intervention, especially from more developing nations who have been at the fate of a strong dollar? ricardo: it depends how bad things get. things can get to a point where a very strong dollar will be detrimental to some economies. we could talk about the euro in relation to the dollar damaging the situation in europe, and further exacerbating the ongoing inflation problem. i wouldn't totally rule it out but at this stage, i can't see it happening yet. manus: i'm desperate for something that gets me excited beyond king dollar, but maybe

that emboldens our contrarian call which is a much larger-the ecb. and monetary policy needs to just get on and get shocking in terms of grappling with inflation. what is the risk of an outsized 75 bip move from ecb? ricardo: maybe a 33% chance of a 75 basis point hike by the ecb. however we must take any hints from central bank officials that they are very committed to just get on with the job and leave everything else to the fiscal side.

but we must take that with a pinch of salt. it is a very easy win for ecb officials to come out in public and say such strong words. and telegraph the idea that they will do it. this will have an immediate impact on markets. it will somehow ease the situation for europe, and this is that. -- a cheap way of achieving that. dani: if anything, what has been supporting the euro get back to parity has been higher stockpiles of energy. but have markets accurately priced in just how bad things are likely to get this winter? ricardo: i don't think so. i don't think the worst case scenario is priced into the

euro. which would entail a complete cut off of gas by russia. it would have serious consequences for economies, so we would see a dramatic slowdown in activity in germany, for example. and this would be bad news for the euro. dani: how low does it go, ricardo? ricardo: as low as 0.95. dani: ricardo evangelista, fx strategist at activtrades. returning to wall street. two big investment banks removing their covered particles, paving -- covid protocols, paving the way to bring workers back to the office. this is bloomberg. ♪

juliette: i'm juliette saly in singapore with the first word news. the last leader of the soviet union, mikhail gorbachev, has died at 91. he passed away in moscow after a long illness. he became common's party leader in 1985. the overhaul brought down the berlin wall in 1989 and ended soviet rule two years later. unprecedented floods caused by weeks of monsoon rains. more than a thousand people have been killed and half a million forced into relief camps. pakistan's foreign minister says

shelter tents and mosquito nets are needed urgently. u.s. life expectancy fell by almost a year in 2021, the biggest two year decline in the century as the covid pandemic ravaged country. life expectancy dropped to the lowest level since 1996. snape is said to be planning to lay off around 20% of its staff. the social media company which owns snapchat will start the layouts today. the team working on applications made by third parties will be the most affected. 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. dani: juliette saly in singapore. i was just scrambling to see who has been cutting jobs, peloton,

linkedin, apple laid off recruiters last month. but this all seems related to the tech sector. manus: but is it a natural pause? snap on the 23rd of may trimmed back on sales forecast, and you know that is dangerous. and the next day, lyft said they would bring on fewer people as well. we will catch up with columbia university senior research fellow christof ruehl 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. eating all these different things and nothing's ever working. i've done the diets, all the diets. before golo, i was barely eating but the weight wasn't going anywhere. the secret to losing weight and keeping it off is managing insulin and glucose.

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manus: this is "bloomberg daybreak: europe."

>> turning off the taps. the nord stream pipeline begins place to shut down while gazprom holds deliveries. jobs jolt. u.s. labor data and a key consuming or -- consumer confidence data paving the way. goldman sachs calling employees and dropping restrictions to get back to the office. wall street yesterday transfixed by strong u.s. data which seemed to just enforce this idea that the fed can and perhaps will go at it another 75 bits. manus: then you had the new york fed, williams making a very cogent message, which is we may move into this hike can hold pattern. we may stay there for longer. whatever that terminal rate may be. in terms of the risk assets you have to your paper, down 50 basis points in the past month of trading at the short end of the curve.

up seven basis points yesterday. go big or go home. consumer confidence and the jobs data may embolden the narrative. oil has managed to rally upwards of 1%. will opec cut production next week? that is the question you are asking yourself and the market. you may have political instability in iraq, but they are reassuring not at the moment. euro-dollar parity as there seems to be movement to decouple gas to prices. that emboldened the move down on european gas futures. germany dropping by 20% yesterday. how will they decouple gas and electricity price without some absolutely major fiscal implications? dani: as of now it is an equity market that is still concentrated on what we started talking about, this idea that the fed is going to be aggressive, they are going to keep it there.

wall street, a third consecutive decline, the worst three-day decline a should say in two months. you are seeing a bounce back this morning but the picture looking similar yesterday morning. across global future benchmarks they were not able to last throughout the entirety of the session. a very fragile market. we have a lot of corporate's putting buybacks into the market . bank of america pointing that out. the most since early july last week at 3.2 billion dollars but it is still a very skittish market from energy crisis concerns to central banks. manus: the new york times is reporting the russian energy giant gazprom has begun shutting off natural gas to germany citing maintenance work. it comes as german inflation accelerated for the most since the euro was introduced. soaring energy prices. is this truth and reconciliation

for nord stream? let's get to our berlin bureau chief. the truth will only become apparent if the flow comes back from this maintenance. talk me through it. europe discussing the different models, to get the energy crisis under control. what is the german proposition? >> germany is basically concerned obviously because it is most hit by this fluctuation on the market. they are looking at the eu level. they have been sitting down with partners. they have told their partners basically a price cap which has been proposed, counseled by span, -- by spain, is not the most efficient measure. they are looking at some kind of move that would hack the profit.

they are basically taking a little bit away the profit, for example, some kind of renewable companies are taking at the moment because of high gas prices. and then pass it on later for example for the transformation. really the discussion is ongoing and they are going to discuss this later on with you partners at the special energy council. dani: the impact across germany is clear. we had preliminary cpi numbers in germany hitting 8.8% which probably do not reflect the worst of rising energy prices. what is germany currently doing to cope with impacts, the fallout from the higher prices? >> well, they are already discussing. today and yesterday, compensation measures. basically the fuel tax reduction is going to run out. obviously the consumers'heavily

affected by this. the government is looking for a new measurement, -- a new measure, a full-blown aid package to lower prices for housing and other kind of subsidies. this decision is going on it's a -- and it is going to be a costly package. the government meets eventually to look at whether it is able to keep finances under control, which they are trying. dani: thank you very much. european governments are debating whether to intervene in energy markets and possibly introducing eu wide price caps for gas and electricity. the eu's power price hitting system is no longer functioning properly and needs reform. >> if you look at the electricity price, 94% of the

electricity price is composed of mainly gas. if you look at the evolution of the price compared to last year, eps increased, mainly because more coal is used, but gas increased by 580%, tenfold. we should really address this driver of the electricity price. >> we have been working on a price cap. this is raising a lot of difficulties, so we are not opposed the idea, but the technical implementation seems to be quite difficult. >> we are joined by a senior research scholar at columbia university. i want to start with this

prevents -- this potential proposal that has been floated. separating the price of renewables from the price of power so it is not all dominated by not gas. how much of a strategy would this be? it does seem like it is something that would discourage renewable energy if that is not getting paid for as much as natural gas is. >> first of all, what everybody knows is electricity is produced using other fuels, primary fuels. coal, nuclear, gas, you name it. it is the mix of inputs that drives the price of electricity. if you take out renewables, that would make the price more expensive. it is only in the long term

possible to change anything. the issue which people have to wake up to is the way in which power prices are determined. the question is why to power prices escalate more than natural gas prices in a situation where natural gas? when the most expensive plants are coming online, demand decreases, that has an impact on electricity across the system. it is not an average price. producers including nubile producers are reaping huge profits. when we look at the electorate,

we have only two choices. you can get the price and that is risky -- cap the price and that is risky, or you can tax and tried to transfer that. manus: you put the two propositions on the table and i just need you to simply explain which one will be the best for the economy of europe. is it to cap gas prices? is that a smart way to tackle the energy market first of all? >> the discussion is about capping electricity prices, that is very dangerous. this is a system with two high prices. making sure power remains available, you have to also introduce mandatory targets for production, otherwise the lights will go out. second, if you cap gas prices,

which could be done, it gets very expensive and will distort the relationship between the input prices, and that is very likely to happen. the idea of capping prices always is not a good idea. dani: i wonder if that is what cuts -- keeps consumer usage so high. despite industry pulling back. when we are talking about energy usage, when politicians are talking about it, should we all be confident houses and businesses will get the electricity and gas they need to get through this winter? >> we should not be. we should also look what is

causing this. you get people on the street demonstrating against higher energy prices and lack of energy. we need to revive the discussion about using nord stream 2. the loss of market share in the european union is so large they probably think this is gone for good. together with the escalated military situation. what governments have to do is come up with intelligent ways of unburdening consumers.

you want to demand down to the extent possible. that is my proposition. mark: -- manus: so you have decried cutting prices of electricity, you have warned of the folly and the expense of subsidies in gas. what is the option? are you predicting riots across europe this winter? >> never underestimate the ability of politicians and governments to snatch defeat from the jaws of victory. manus: how do they do that here? >> what you need is transfers to support policy.

spending habits without distorting the fact energy has to -- easier would be a tax for consumer essentials which are a large part of households. that would be the intelligent way to go. a way of cutting taxes for low income households that makes it impossible for them to balance their expenditures. dani: thank you so much for joining us. go ahead manus. manus: thank you very much for

taking the time. we did not get to whether your story would -- in germany for the weekend. returning to wall street, the most prominent investment banks remove some of their last or meaning covid-19 protocols and pave the way for the return to the office 2022 right here on bloomberg. ♪

dani: we'll come back to "bloomberg daybreak: europe. you thought everyone was back in the office but i guess not. goldman and morgan stanley still trying to get them back. manus: they are indeed, they are

using covid rules, vaccination requirements. ordering staff back to the office five days a week. similar moves by morgan stanley. everybody is grappling with what to do this winter. can you afford to heat your own home? goldman sachs and morgan stanley order staff back. >> yeah, they have eased a lot of the reasons people might not have been coming back. outside of new york you can go into a goldman sachs office regardless of your vaccination status without a mask and without the requirements for regular testing. that has been in place over the

past couple years of the pandemic. morgan stanley, they are getting rid of notification emails that tell you when you have been exposed to someone with covid. also getting rid of masks. seeing a lot of things that bring them back toward normalcy, which of course, goldman sachs in particular has been a big proponent of. dani: i was joking around with manus because my own personal bias, it is busy in london, it feels like everybody is back at work, but what is the truth? how does with the banking sector is doing compared to the larger corporate world? >> the banking sector is particularly aggressive. goldman's ceo dave solomon has been an outlier in saying he wants people back full-time, that the pandemic will not change goldman sachs' culture. you have seen a pretty wide gamut of ways companies have

reacted. some of the tech companies, a lot less restrictive, allowing people to work from home for longer, even permanently. responding to what they are hearing in particular from people in the r&d side and that sort of thing. the banks are much more old-school it seems, wanting people back at their desks, wanting people working with each other in person. they are definitely on the other side of the spectrum. manus: the other thing is this winter we have just finished our section about the cost of energy. i don't know what bills are like in australia, whether it is front-page news there. it is front-page in the u.k.. the cost of working from home is going to rocket.

not necessarily in every country. what is it like there as part of the narrative? >> energy costs have definitely increased here, particularly when it comes to natural gas due to various circumstances. nothing of course like the situation facing parts of europe , in particular france. as you said it is facing a particularly scary winter. a lot of these return to office policies will be put to the test again when we move into colder weather in the northern hemisphere. you are going to see covid flare again. not to the extent of the first year of the pandemic when we did not have vaccinations, but you are going to see people getting sick, absenteeism, that sort of thing, and how companies respond will be very interesting. dani: thank you very much. bloomberg's emma o'brien covering everything from wall street to australia for us. u.s. job openings unexpectedly

rise to near record levels. on that next. this is bloomberg.

>> i would be comfortable with weakness in labor markets, but to be honest, we are far from that today. we have an incredibly strong job market. this is not like other situations you have had. >> you will not be able to get the strong labor market conditions unless we get inflation down. >> we have to get our rate up to the level. >> the employment costs of bringing down inflation are likely to increase with delay as high inflation becomes more entrenched in wage and price.

>> it is important that we are clear in our communication. manus: fed policy speakers building the narrative at jackson hole, after jackson hole, getting us ready really for this hike and hold narrative. we started the show with joel's agenda. this is the state of play in the united states. job openings at 1.2 million. this shows you the persistent tightness the market is seeing in terms of the u.s. labor market. this is not what the fed wants to see. going into the next series of meetings, is it? >> certainly not. perhaps they have to slam on the brakes harder. it leads to this message we had from neel kashkari that markets have got the message of what the fed is trying to do. this is to date for u.s. equities. it looks like a bad month but if you look at the same benchmark

picture two weeks ago, we will have been higher into month end. you get this message from the fed they are going to go at it, try to bring inflation back down , and you get stocks that do a dramatic about-face. manus: that is perhaps more pronounced in the growth of the blue line. look at the nasdaq. the blue line below the dow. jp morgan, they look at the data to 1970, ok? they say history shows in recessions, equity markets rally by 11%. so you know, there is a catharsis if a recession comes because it emboldens policy decisions, doesn't it? dani: it does. at the same time, you have to wonder. stocks had to catch up. have bonds already gotten there? we have seen a move up in the front end, two years at a 2007

hi. you start talking about peak bonds yet, or is that premature? manus: no, i'm going to show you a bear market. almost a bear market, i should be careful. the gtv library, the global bond index tanking for the first time in a generation, you see a bond market, always a blood red sky, dani burger. dani: that is a painful one. that is a chart you want to save and pull up any time you want to be humbled. "bloomberg markets europe" is next. ♪

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dani: welcome to "bloomberg markets europe."