dani: good morning. this is doing better -- this is bloomberg daybreak: europe. i'm dani burger. the bid is back. elon musk revives his 44 billion dollar offer for twitter just days before the beginning of a courtroom fight over the deal. jumbo cut. opec-plus weighs 2 million barrel per day reduction in output as the cartel seeks to stabilize markets. we are live in vienna. no pivot. u.s. and european futures made this week's equity rally as officials reaffirm their commitment to tightening. it has been the pivot party in

these markets. two consecutive days of gains in the american equity market to the biggest rally in more than two years. it almost feels like this is a market that was just so bearish it was primed for any reason to head higher. here's what those days looked like on the s&p 500. will it last considering this is a market that seems to be reading tea leaves? is the market cool enough for the fed to pivot. so far what we have heard from fed officials is no it is not. this rally is taking a pause this morning. not surprising to see consolidation after such a big rally. you have futures in the u.s. a little bit softer. 10-year still has a bid but it's mostly unchanged. it's at 3.6%. while to think that last week this was at 4%. this has been some extreme chop

in this bond market we have had to contend with. the euro climbing toward parity and bitcoin is back above 20,000 as well again. a wild ride, but these days it feels like everything is as volatile as bitcoin. one thing that might again come to crash this morning, we have such a huge raft of fed speakers this week. they are likely to emphasize this idea that they are not yet ready to pick that -- ready to pivot. they still need to keep rates tight. we are going to get kashkari and bostic speaking later today. it might be time for the markets to pay attention to what they are saying and not the tea leaves. juliette saly is standing by in asia because there has been another big rate decision.

>> they did not come through with a smaller than expected hike. they came through with another jumbo 50 basis point hike that has sent kiwi assets rallying against the greenback just slightly holding onto those gains at the moment and big moves coming on in the bond market. there will be further tightening ahead. it comes to the broader equity picture, we are seeing another session of solid gains. hong kong missed out on the rally yesterday as it was closed for holiday. coming back very strongly. hang seng back above the 18,000 point level having its best day since march and we are seeing the best today rally for asian stocks as well. morgan stanley calling and into the bear market rally in emerging markets and in asia.

dani: juliette saly in singapore. alex webb joins us in the studio to discuss the latest major twist in the elon musk twitter saga. and of course manus cranny. we are missing him in london but he's going to be in vienna all day covering opec. twitter shares soaring after elon musk revived his bid to buy the social media giant at the original price of $54.20. he had previous efforts to quit the deal. bloomberg had the story first which was then confirmed by a letter must filed with the sec. -- musk filed with the sec. so what now? >> it certainly looks as though the court case is done. elon presumably completes this deal.

it seems that the die is cast. he's now going to pony up the money and perhaps more significantly, the banks have to find a way of financing this. dani: that is such a good point. that markets are absolutely dead at this point. there was this discourse of everybody wants to see him forced to buy twitter. now there is discourse, what does a twitter with elon musk look like? >> what emerged from the discovery, not least his text messages, is he wants to end bans of people. the most prominent person that will affect, dominant trip -- donald. -- donald trump. he also alluded to the possibility of turning it into some sort of super app that would be imitating what we chat those in particular in asia.

there are some problems with that because regulators in particular in the eu don't like it when you leverage strength in one market to push users toward a product and another one. caveat, does twitter have any strength in a market? a lot of moving parts here. it's going to be catnip for journalists. dani: can we go back to that funding question? $12.5 billion of debt financing. what does that look like now that this is going to be taking place in a much different environment? >> the banks will pony up the cash and try to convert it into longer form debt. the lower interest rates are no longer there. that's leaving the likes of morgan stanley which at one stage had pledged to commit 5.5 billion dollars on the hook. it's going to be a challenge. but they have committed to doing it.

dani: what concessions are they going to have to take? with yields moving higher it's going to have to look a certain way to be attractive to folks. things for getting up early for us. alex webb giving us the latest on twitter. opec-plus is set to discuss and output cut of as much as 2 billion barrels -- 2 million barrels per day. manus cranny is standing by. only here for two days and you are gone already. my heart is breaking. the first in person gathering in vienna, of course you had to be there. >> indeed. we've got this central bank of oil convening. we've gone from five minute rubber stampers to hear we are, his royal highness, the whole of opec are convening. ran around the hotels in vienna last night. couldn't get anybody to speak to

me. but the oil market is spooked. it's up 9% in two days. so we are getting ready for big table setting in terms of forward guidance and action. on the offer side you've got a global recession hanging over this institution. on the bedside you have a nasser who runs aramco. the emergence of extra capacity from the producing nations is very small and the bottom line is this. the market is broken between the physical market and the futures market. the pricing. and of course his royal highness in september 2020 made it clear, whoever gambles on this market will ouch like hell. dani: what would a $2 million per day barrel cut, that is some

of the language we have heard swirling around, what would that mean in a market that is already extremely tight? >> put it in context. there's a couple of things to take away. we are not speculated about $2 million. 20 four hours ago we were talking about one million barrels a day cuts. opec-plus is under producing by nearly 3 million barrels. it really only translates to around 600,000 real barrels coming off the market. i think it's about the language, the intent and the direction of travel. of course this is about trying to read galvanize a message to the market. from the saudi's, from aramco. and from the secretary-general saying we are trading on thin ice. if there was real reopening in

the global economy, then the ability to deliver on that is very razor thin. dani: the other potential spanner in the works is the attendance by russia's deputy prime minister alexander novak. what's the significance of that? >> we are really trying to reckon -- wrestle with this. one voice that's not in the room is the american voice. there must be a certain amount of chiding at global political level. side-by-side solidarity with the russians. whether novak is in charge of sending gas to europe, which he is not, it is a cohesion between opec and russia in the il-4. and more sanctions will come to bear. -- in the eye of war. and more sanctions will come to bear. those sanctions kick in

december. so where is that oil going to flow to? the russians want a floor. i think it's the pageantry of novak coming here which is significant, but of course he's an oil man, not a gasman. dani: all we care about today is the pageantry of manus cranny in vienna. great to have you. let's take a look at some of the key things we are going to be watching out for today. we will have u.s. mba mortgage applications. adp employment change data. adp is usually not the best indicator for payrolls but all eyes will be on that. as we have been hearing, opec-plus will be meeting as the group decides to cut oil production again. later, atlanta fed's raphael bostic during an event hosted by

northwestern university. will he continue to add to the voices to say pivot is not coming? coming up, short-sellers are being forced

>> right now the pain that i hear every day, the suffering that people tell me they are going through is on the inflation side. if we let it go, it's a corrosive disease. it's a toxin that erodes the real purchasing power of people. dani: san francisco fed

president mary daly speaking about the strength of the u.s. labor market. she told cnn that the fomc must follow through with rate hikes. traders began to anticipate a slowing of fed tightening in u.s. equities then saw the best today rally in more than two years. perhaps adding a little bit of enthusiasm into this market. the italian paper finance milan saying volkswagen is eying a potential lamborghini ipo after a pretty successful porsche ipo. volkswagen looking at another potential ipo but this time of lamborghini. it's go back to the overall market story. joining us now is rupert thompson. the mood music in the past two days changing, but i wonder what you make of this pivot party that markets have been

undergoing so far this week. >> i agree with all the commentators that this talk is overdone. the fed is not going to change direction any time. maybe rates do end up going slightly lower than the market expected a couple of weeks or days ago. pivoting any time soon i don't think is going to happen. none of the economic data, the isn came a bit weaker than expected. dani: in the meantime, it's been remarkable volatility in this bond market. 10 year back at .6%. if you look at the liquidity gauges which are markets reporter put together for us, looking at how far off bonds are trading off a fair value, it's not just u.k., it's italy, germany and the u.s., all of them show this drying up of

liquidity. what does this tell you that we are seeing bonds so far off of fair value right now? >> i think it's a symptom of more general drying up of liquidity. you've got quantitative tightening underway. not any longer in the u.k., but the fed is still happening. people have been complained about lack of liquidity in the treasury market even before the fed was starting tightening, so i'm not sure it's that surprise. i'm not sure this lack of liquidity is going to go away anytime soon. dani: will the fed stop? will the fed need to pivot because this develops into not just a little levels but they disorderly market? >> i think it totally depends what you mean by disorderly market.

if it doesn't lead to any major stresses, they won't. clearly if you get major stresses developing such as what happened in the u.k., and clearly you will get some kind of fed reaction. in terms of whether it means they scale back the extent of further rate hikes, possibly for they scale back the extent of the tightening they need to do. you do need a fairly big stress in the market considering more than what you've got at the moment to get the fed to move away from its current course of action. dani: reading through some of your thoughts this morning, you joined this long line of investors who say trying to time this market is a fools errand. i've got to say a lot of folks very willing to go into cash whether it is ray dalio changing his tune on cash is trash or etf's seeing $36 billion of inflows, which is easily at a record good are folks making a

mistake by fleeing into cash at the moment? >> i think you could be clever enough -- if you were clever enough to flee into cash at the beginning of the year, it would be a very smart move. i think our point is it is very difficult to turn the bottom. look at the volatility of 5% gain in the last couple days. i think it is very difficult to tie on the bottom. cash may be paying a bit more, you're still losing in real terms. also if you get out, working out when to get back in is very difficult. dani: fair enough, but the concept of a lost decade isn't unheard of.

is there any risk of this happening where assets just don't return what they should? we are embarking on qt the likes of which we've never seen before. >> i think there is good reason to think that the returns you are going to have are going to be significantly lower than you've had in the previous couple decades when quite frankly you have had exceptionally good returns. does that mean market is going to go nowhere? no it doesn't. equities will rebound, maybe not as fast or to the extent they have done in previous recoveries, but we definitely think valuations are beginning to look cheap. so markets will rebound, but not as they have done in the last couple decades. dani: -- if you assume the

earnings-per-share are going to grow next year, if you assume that we have a recession and you see earnings fall, we do look more richly priced. to what extent do equities have this sour earnings type story embedded in them? >> you have hit on the one area of maximum concern for the market going forward and that is valuations have derated already quite substantially. the shoe that has yet to drop is the earnings picture. if you get a significant recession, rather than earnings growth plus five next year, he will get an outright decline and undeniably that could lead to markets falling or would lead to markets falling. just one other point. talk about the u.s. looking relatively richly valued at 16 times. we would agree with that and that's why we think in terms of

any rebound down the road is not going to be led by the states. it's going to be led by emerging markets. dani: rupert thompson, chief investment officer at kingswood. coming up on the program, the biggest speech of her career. after a rocky start to a premier, u.k. prime minister liz truss addresses for party conference today. you're alive from their next. this is bloomberg. -- we are live from there next. this is bloomberg. ♪

dani: after a bruising couple of weeks for liz truss, the british prime minister will deliver her keynote speech at the conservative party conference later. this comes with top members of her team and open disagreement about her fiscal plans.

let's get over to the conservative party conference in birmingham with bloomberg's lizzy burden. what are we expecting from this big speech today? >> defiant is the tone liz truss is going to try and strike today. she will want to tell us that she is going to get on with the job even if it makes are unpopular. that's a very difficult message to deliver given that she's already had to u-turn on the top rate of tax cut. at the other end of the equality spectrum, there are open divisions in her cabinet about what to do on welfare payments. penny mordant who ran against liz truss to be the leader has said that she would stick with boris johnson's commitment to raise benefits in line with inflation. liz truss says perhaps she wouldn't do that because it would help to incentivize people into work, it would help to save money to pay for her tax cuts,

and i've been asking lots of other cabinet ministers what they do. listen to how much it makes them squirm. >> under current economic circumstances and given all the spending issues are in play, undoubtedly it's going to be quite a bumpy road. i think we need to just settle things down now and take a measured view going forward as these issues arise. >> that was the treasury select committee chairman mel stride. he's not in the cabinet, but he was warning about the difficult you curtains -- difficult u-turns on tax that may lie ahead. this is an issue that risks stoking not just divisions within the party but also under storing this image of the conservatives as the party for the rich. that could widen the gap with labor in the polls.

dani: where do we stand in terms of what sort of u-turn? what has he undone in terms of his plan? >> it's very confusing. it's another communications car crash, just what markets need. we thought the medium term fiscal plan and the accompanying office for budget responsibility forecast were being brought forward. the lack of the official forecast in the first place partly undermined the budget in the eyes of the markets. then he said in an interview that it is actually still going to be on november 23, despite mel strider, the treasury select chairman coming on the hi, i'm jason and i've lost 202 pounds on golo. so the first time i ever seen a golo advertisement, i said, "yeah, whatever. there's no way this works like this." and threw it to the side. a couple weeks later, i seen it again after getting not so pleasant news from my physician. i was 424 pounds,

and my doctor was recommending weight loss surgery. to avoid the surgery, i had to make a change. so i decided to go with golo and it's changed my life. when i first started golo and taking release, my cravings, they went away. and i was so surprised. you feel that your body is working and functioning the way it should be and you feel energized. golo has improved my life in so many ways. i'm able to stand and actually make dinner. i'm able to clean my house. i'm able to do just simple tasks that a lot of people call simple, but when you're extremely heavy they're not so simple. golo is real and when you take release and follow the plan, it works.

dani: this is "bloomberg daybreak: europe." the bid is back. elon musk revives his offer for twitter just days before the beginning of a courtroom fight over the deal. jumbo cuts. opec-plus weighs a 2 million barrels per day reduction in output as the cartel seeks to stabilize the market. plus sanctions compromise eu countries strike a deal on new russian penalties. that includes a price cap on oil sales. the pivot party in this market is taking a breather. a remarkable rally we saw. the s&p having its best today gain in more than two years. are we just reading the tea leaves considering what we have heard from fed officials? they are holding restrictive

policies in place. a bit of a breather in this rally. we had a gain. potentially some short covering in the rally. s&p 500 futures are lower this morning by 0.4% off the lows of the morning but falling nonetheless. yields down 1.4 basis points. recall we are at 3.6% at the moment. we were above 4% last week. a lot of volatility, the euro falling against the dollar yet again. bloomberg dollar spot up 0.1%. a bid back into the dollar after yesterday's jobs numbers. that was part of what got excited -- got us excited about the pivot. rent crude over $91 per barrel, surging after potentially 2 million barrels of a cut from opec, the latest line to be discussed.

opec-plus, they are set to discuss the output cut. it could be as much as 2 million barrels per day when the cartel meets in the coming hours. on the ground in vienna, manus is standing by. opec-plus are gathering for the first meeting in person in two and a half years. it was hurried that they decided to do this in person. why was the pace so quick? >> fundamentally, i believe mohammed bin solomon wants to re-galvanize the narrative, own the narrative, and redefined the trajectory of oil prices. saudi arabia has made it clear in the budget, $76 is what they are banking on. the saudi's and aramco have made it clear there is a spread between what is happening in the physical and what is happening in terms of the oil market.

the sheer magnitude of volatility over the past 2.5 years, the last time opec convened in vienna, the russians exited. threats were issued. oil prices crashed to -$30. we are now in a real war between russia and ukraine and the ramifications are profound globally, taking you to $125. you have this on the offer side, this global recession risk at the moment and on the bid side you have a group of nations which are not producing anywhere near the baselines that were agreed in terms of the cuts. this is about redefining ownership of this market. as i said to you before i think it is the best quote literally ever. speculators against the cartel are going to find it difficult. dani: especially if they do to

million barrels per day worth of cuts. what would that really mean? >> 2 million -- we are down from 2 million to one million in the space of 24 hours. that would translate to 600,000 of a real cut. there's a lovely article here. there is a wildcard you could get a unilateral cut from one of the big nations, i.e. the saudi's might do an additional cut on top of what is being speculated out there or the marauding -- emiratis. dani: stay put. let's continue this conversation and bring in to join manus cranny and i our guest carol,

ceo and founder of crystal energy. thank you for joining manus and me this morning. manus just talking about what to million barrels per day would mean. jumping from one million barrels. are they going to go full out and do a 2 million barrel cut? >> they have increased market expectation for a significant cut, whether it is one million or 2 million. if they go any shorter, there will be disappointment in the market. as manus said there will be many girls taken out of the market. you have more opec-plus members under producing. we are talking about 200,000. even if they take that into consideration, they may decide to do it in a phased approach. we have to wait and see.

for opec to say they are not trying to achieve a price target, i don't think the rest of us are going to believe that. manus: certainly the market has reacted in the past to trading sessions. we are up 19%. do you think a 2 million barrel cut is reflected in a 9% rally? is it headed back to $100, a magic marker? >> the higher the cut, the higher the impact on prices. it will have opec and opec-plus in the market, but there are other forces at work such as the economic outlook which is equally if not more important for shaping the market for the rest of the year and the coming year. you may argue opec-plus is

trying to save prices before they start falling. historically opec-plus or opec actually was reacting to a collapse in prices. but we are not there yet. we are looking at prices of $80 and $90 which are high in my opinion. dani: not only is demand week, it is still a tight market. there is a season-long regional crude spread. demand has been resilient. what does it mean they are breaking precedent and cutting when the market is extremely tight? >> there is the fact of achieving a certain price level and there is a political dimension. russia's production is resilient compared to earlier expectations

when the war started. it was thought there would be 3 million barrels per day or 5 million barrels per day from russian production. the war and the sanctions are taking their toll on russian oil production. there is some political angle to it and don't forget the american elections coming. i don't think the white house is going to be pleased with any major cutting by opec-plus. manus: let's talk more about the politics. how much of a slap in the face is this to the americans and the biden administration? we are suddenly cutting 2 million barrels per day, how much of a slap is this to the u.s.? >> it is a big slap.

just a few months ahead of the u.s. midterm election. if you look at the oil price and president biden's approval rate, you find an amazing correlation where the price goes up and his approval goes down and vice versa. dani: strong words, we are going to have to end there. carole nakhle, ceo and founder of crystol energy. leaders gather in amsterdam as airlines and manufacturers see demand slowly returning after more than two years of the pandemic. headwinds for a tight labor market and fuel prices mean the struggle is far from over.

for more, let's get over to bloomberg's guy johnson in amsterdam, joined by one of the industry's newest leaders. >> welcome to the aviation festival in amsterdam. there are huge numbers of challenges for this industry coming out of the pandemic. we have seen a wave of demand come back. this is an industry that has struggled to meet that demand has we all know. that has led to significant constraints. amsterdam is very much at the center of that story. the airport is going to continue constraints through this winter into next winter and then potentially we are going to have the government imposing long-term capacity restraints. it difficult time for a new ceo. we have the new ceo of klm with us. thank you for your time.

you are nearly 100 days young. you are going to be reaching out , communicating, telling them what you're vision is under plan. what are you going to tell them -- telling them what you're vision is and what your plan is. what are you going to tell them? >> i have worked for klm 50 years before. we have a beautiful brand i love to work at. it is indeed the perfect storm. after covid, after some very good years, 2018 and 2019, really we try to recover. customers are coming back. we have to face all the constraints which is quite disappointing.

>> as you say, there have been shortages of key staff, an absolutely massive problem. how do you describe the relationship with the airport? an ally or adversary? >> it is a very good brand like klm. we build a good reputation for the stock model we have, connecting people and businesses. it is such a waste this is happening today. the labor shortages is in the netherlands, in europe. we see it in restaurants and bars. we need to solve it and i think we can. we hope the airport solves it

soon. >> are they working with you? >> we are working in a good relationship. we disagree on some items. on some items we think they could do much better than they have so far. >> we are going to see capacity constraints longer-term. the dutch government is going to impose price restrictions on aircraft. we are going to see you going back to 2014 levels of aircraft movement. as you think about your plan, how do you grow an airline when you are capacity constrained? >> the question is different. the question is really different because we take responsibility of our sustainability and we think we need to develop a good airport in relationship with the individuals around us, with

sustainability goals and customer demand. we want to coordinate with the government, cooperate with them. in 2013 with the new fleet, we reduce 25% of co2. the new fleet and the use of staff is a far better instrument to keep the airport which is so important for connecting. it is a huge brandon we should acknowledge it more. >> a denser airline, that is the plan? >> denser, lower cost, and

especially important for our sustainability goals. >> is there a danger as more investment goes to aircraft, as you are capacity constrained, do you think the team is going to be thinking in that case we will invest more elsewhere? >> i believe in a strong klm brand airline. we work closely together. we have a better alternative. we are working closely together. reaching out to our government.

we have big topics in the airline industry. one is sustainability. one is diversity and inclusion. we are nearly 100 years old. we need to reinvent ourselves. >> i look forward to hearing more about this. thank you very much indeed. marjan rintel, the ceo of klm. dani: guy johnson will be at the world aviation festival in amsterdam all day, so more to come from that. the world's richest man revives his bid for twitter. we will discuss next. this is bloomberg. ♪

dani: welcome back to "bloomberg daybreak: europe." juliette saly is standing by with your first word news. >> elon musk has revived his bid to buy twitter. the original price. the move backtracks on his -- and potentially avoids a courtroom fight. twitter shares climbed 22% after the news broke. eu countries are said to have agreed on a new package of sanctions that include a price cap on oil sales with a formal deal expected later today. bloomberg understands a compromise has been reached to protect countries with big shipping industries after greece, cyprus, and malta raised concerns about transporting oil

from russia. the finance ministers saying whatever we do, we want to make sure nothing will allow the energy difficulty to flow into financial instability issues, whatever measures we take, we will use every lever for financial stability. the european central bank has raised rates by half a percentage point and signaled more hikes to come. the rise comes as prices registered one of their biggest quarterly drops on record. in wellington, house prices slumped 8.5%. ray dalio has given up control of bridgewater associates, the firm he built into the world's largest hedge fund. the billionaire cofounder transferred all his rights to

the board of directors and stepped down as one of bridgewater's co-cios. the move marks the end of a succession which started back in 2010. global news, 24 hours a day, on air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. dani: thanks so much. coming up, the battle for customer loyalty and the cost of living crisis. we are going to look ahead to earnings from tesco next. this is bloomberg. ♪

dani:dani: let's take a look at the key things we are going to be watching out for. we are going to have u.s. mba mortgage application, then more jobs data. adp employment change data. followed by global u.s. pmi.

opec-plus meets in vienna as markets watch to see if the group decides to cut production. we will have rafael bostic from the atlanta fed discussing at a virtual event hosted by northwestern university. also we have earnings from tesco, due in just minutes from now. the company determines not to lose his reputation for value. charles allen from bloomberg intelligence is with us. i'm told you brought the papers with you. what are we expecting from them? >> the key thing we are expecting from tesco is the emphasis that they are still on their values. dani: they are changing fast, these prices are not is what they say. >> we have a full-page ad saying their prices are going to stay flat at least until 2023. this is some sort of measure or

signal that their position is more important to them than their margin. dani: but that means a margin squeeze, doesn't it? how are they going to stay competitive if their margins will be so under pressure? >> realistically -- we heard archie norman say that, everyone has to raise prices. anecdotally, prices are going up faster than anybody's. these are all matters of weeks in these things. we see really big price increases in a lot of products. it is just a question of do you go today or in 10 days or 12 days? or do you keep them flat for three months? dani: thank you for joining us. we will keep an eye on that. thank you for joining us.

he has the latest word from the -- charles allen from bloomberg intelligence. elon musk revives his 40 $4 billion deal for twitter. the world's richest man intends to close the deal at the previously agreed-upon price of $54 and $.20 per share. i want to take a pause from the twitter drama to wish a very special happy birthday to our fearless leader, it is mohammed elma shed's birthday. he is the producer of daybreak europe and he deserves all the birthday wishes in the world. i'm told all he wants is bond market liquidity. got to give it to him.