dani: this is "bloomberg daybreak: europe", i'm dani

burger in london with manus cranny in istanbul. manus: chinese markets reopen in the red, weighted down by concerns over rising global interest rates, and fresh u.s. curbs on tech. asian stocks and futures kick off the week on the back foot as the strong jobs report friday crystallizes bets the fed will continue with the jumbo rate hikes. plus, vladimir putin cruises ukraine of carrying out an attack on a key bridge linking russia to crimea. the geopolitical risk is alive and wrought with putin and russia but for me, it is the size of the next move from the fed. i love this piece, it is about volcker. dani, good morning. dani: it is a market that is

transfixed. i am chucking coffee this morning because i am unprepared if we have that all over again. the s&p ends down two point 5% on friday. unemployment is to let its lowest in decades, that's giving this market no comfort that we might see any pivot from this fed. continuing to see losses there. you're a stoxx 50 futures also in the red, down .7%. with the 100 futures not as bad -- ftse 100 futures not as bad, but british companies are buying back shares of the most rapid pace on record which may be giving us a left. i think it is all about process and volatility, not just equities. manus: that goes back to the whole concept of a var shock. i should say why i have come back to is simple, -- istanbul,

a big shout out to be team. if you want more volatility, look around the whole of the region here. you talk about buybacks in u.k. stocks, because credit suisse as a monster debt buyback. lambasting the move of a cut of percent from opec. the oil is down -- what will be the talk at imf meetings? is it the need for intervention? aussie dollar is on the low as concern about global growth is out there.

and what does the hot print of cpi due to the fed narrative? dani: can we go back to gold? manus: we have debated what size, could it be a forth hike in a row from the federal reserve. you have the advantage of seeing it, apparently talking volcker, with a commitment to hike rates into tumbling markets and rising unpleasant. let's have a look at walking volcker, actually hiking rates until investors are losing money and we are losing jobs. if we are about to walk the walk where are we going to be? dani: the imf will also have pressure from global financial

chiefs who want the fed to pivot as well. let's get to other top stories around the world. we will kick things off with garfield reynolds looking at u.s. inflation data. and clara marques will be covering the latest russia-u.k. tensions. manus: i mentioned closing ranks around the goal of raising rates to four and a half percent for longer. garfield reynolds is with us, the fed speak is in. the next card print, -- hard print, is that the fill or kill on 75 basis points and be trajectory to 4.5% locked in? >> to some extent, the cpi stun

ner was almost stolen by jobs, 3.5% unemployment and strong wage growth, there is very little to prevent the fed after that. what recession when you have a jobs market this high? but there is concern that if you got an increase as everyone expects in core cpi, that that will further embolden the fed and investors who at various times this week you have either been buying stocks or bonds, thank jeffrey gundlach and others who have been saying bond yields look attractive. but if the fed is going to go to 4.5% rapidly and hold it there, that looks nasty. what if we got a hotter than expected cpi print, on top of hotter than expected jobs, that's when you look really nasty. more cross asset volatility.

dani: that's an understatement. great to see you back in the office, a rare sight these days. when we continue to have this hot data, and unemployment remains low, what language will the fed need to pursue? >> with the fed showing a willingness to push back, i think of the old saying, the beatings will continue. for the fed, they need to continue until sentiment collapses in asset markets. until they get that capitulation, we're going to continue to have this narrative. we're also going to have this situation where investors are effectively fighting the fed by looking for the pivot, beating up asset prices, and loosening financial conditions at a time when the fed is keen to tighten them.

they are saying inflation has to be quashed, and they will do what it takes to do that. part of that will have to involve lower asset prices. dani: garfield, thank you very much. and it's a not so golden return from the golden week holidays for chinese investors. juliette saly in singapore has been tracking the reopen. juliette: covid restrictions meant many people staying at home, tourism down 26% from last year, down 56 from the golden week in 2019. investors selling into markets and midst concerns globally. csi 300 testing april 2020 lows, and u.s.-sino-american tension s in terms of further curbs for tech companies that is

weighing heavily on the tech space. the hang seng tech testing its lowest level since january 2019 with a drop of 4% in the morning. you are seeing stronger offshore you one today -- yuan today, but it has been a bit of a dampener after the golden week holiday. the only bright spot is property stocks, as we look ahead to support for the beleaguered property sector. when it comes the overall picture, we also had weakness in the services picture, it fell below 50 for the first time since may. adding to expectations we will see more targeted policy support when the party conference kicks off on the 16th. manus: i think you hit the nail on the head with u.s.-saudi

relations, and the unemployment index the lowest since 2010. the fantasyland of 5.5%, we will be talking about a reality check from these analyst notes. jules will be back shortly with a new chart, no pressure. two russia, vladimir putin has been accused of carrying out an attack linking crimea to the russian mainland. putin blaming ukraine, saying they had help from unnamed states. what do we know and where is putin going with this set of accusations? our bloomberg opinion columnist joins us. you saw the potent majority over the weekend of a bridge on fire,

and then the blame game began. what is the latest? >> very interesting to point out how symbolic this bridge is, it connects the russian mainland with annexed crimea. in 2018 when it was inaugurated, putin himself drove a truck over it. russia made quite a big deal of help protected -- how protective this bridge was because it was a very obvious target. after the bridge was attacked, putin came up with a short statement blaming terrorist attacks. what's interesting is how he is keeping options open in how to respond on what is obviously an attack on critical infrastructure. dani: what are we expecting in terms of response? is there any clear direction? >> i think the terrorist attacks label is remember what came

before the return to chechnya in the 200s, the attacks on russian apartment blocks at that point in time. it allows him to say, that is not a military force it is a terrorist force, something to deal with using asymmetric force. with strikes on infrastructure rather than tactical nuclear strikes. dani: now let's take a look at some of the key things we're watching out for this week. today we have ecb's let plane speaking, and tomorrow u.k. labor market data. wednesday, u.s. ppi and thursday, the all-important u.s. cpi data, will inflation still be running hot? and friday, u.k. home prices. manus: the former u.s. treasury secretary larry summers on his outlook for the u.s. economy.

potent language. will the fed be forced into another jumbo hike? we discuss right here on bloomberg. ♪

>> i think we are headed for a collision of some kind or other, and we have just got to manage that carefully. the sooner we start managing for some slow, the better we're going to do. chairman powell was way late to come to that recognition, but he now has that recognition and should be supported in that. manus: former u.s. treasury secretary larry summers on his outlook for the economy to keep tightening. christian kopf is our guest,

head of fixed income at union investment. with the drawdown in the bond market, this collision course is breaking something. we are far from broken in the treasury market, we are just getting started with this drawdown by central banks, is it a fracture or the beginning of a break in bond markets? christian: i think it is neither a fracture nor the beginning of a much bigger selloff, i think we are nearing the end of a selloff. if we look back in 2020 this has been a year of three parts. the first part went from january to june 15 and was marked by rising market yields and falling prices. then a recovery from june until jackson hole. then from jackson hole onwards we have had a second selloff all

the way to the current levels we're seeing. i think we are moving into restrictive territory now, and we're seeing the first signs that central banks are becoming less hawkish. the polls didn't do anything. -- poles didn't do anything. i think there is a good chance we are nearing the end of the bond market selloff. dani: australia is a much different market and many are pricing the possibility that the fed will cut next year. is there still more adjustment to be done for a fed that has said they will not hiking a -- stop hiking and stay restrictive? christian: those cuts that are priced into 2023 i find them puzzling myself. we do not expect the fed to cut rates, we think they will move

to 4.5% then pause. we see the secondary effects of the rate hikes manifesting themselves. you are right to point out the weird shape of the curve with those cuts, i don't think they will come. the same holds for the ecb, once we get above 2.5% it is more difficult to justify further rate hikes in the face of recession in the euro area. manus: the bond traders are going to be throwing things at the screen going just because equities are tanked 22-23%, and we have dipped into the inverted curve. what is it that stops the fed, is it that inflation peaks now that opec is in cutting mode,

are we really at peak inflation and is that what helps the fed pause? christian: this is why the cpi number from the u.s. is crucial. we have to look at this number, and core cpi, and if we get indications that inflation is speaking, i think the fed can pause at 4.75%. the other thing is the tradition larry summers spoke about. this is the position between fiscal and monetary policy. i think fiscal policy is still way too loose for the position we're in. in europe, it is getting looser in response to high energy prices. that is a condition to be aware of. if fiscal policy continues to listen, then we could see more monetary policy hikes. dani: i can't help but think of the u.k., a shining example of

monetary and fiscal policy moving in opposition. if your concern is more global, what does it mean for the u.k.? that tension feels especially acute. christian: we've got this strong tension between fiscal and monetary policy in the u.k. there's not much left of the torah government's -- tory government's aspirations. this collision between fiscal and monetary policy is making things very difficult for the u.k. bond market. and we do need fiscal tightening in the u.k. to prevent a big overshoot of yields. manus: they've had one savage attack on the gilt market, they broke that and trashed sterling. what will imf tell kwasi

kwarteng? this week? christian: i actually think the seven days of turmoil have set the scene for this year's annual imf meeting. and will guide the discussions taking place there. we also have issues of financial instability in the u.k. we have seen the damage lbi investment has gone on the long end of the curve. but underlying these technicalities, we have a conflict between fiscal and monetary policy in a world where we need to prevent on anchoring of inflation expectations and more pronounced inflation. what the imf will tell the government is to tighten fiscal policy. there will not only tell it to the u.k. government, but to europeans another policymakers.

the times of easy fiscal policy are over. this is what we have taken away from the turmoil in the bond market of united kingdom. dani: we also have the boe removing the training wheels on friday, no longer having effective qe buying the long end of bonds, is this a market where vigilantes will be testing the boe yet again? christian: the boe has announced it will retreat from asset purchases at a time when we have no direction on the future course of fiscal policy. that does create tension. i think markets have stabilized a lot the last couple of days. the margin calls have put more liquidity into u.k. pension funds, so the technical levels are not as severe as they were before intervention.

that said, the underlying forces of sterling weakness and the bond market selloff are in place, and it is the government that is running a very loose fiscal policy at a time when the country has an 8% account deficit. when investors are retreating from the u.s. bond market, that implies to england and the united kingdom, investors will be retreating. they will not want to fund a country that runs a huge twin deficit. manus: let's see whether they take another smack at the currency and the bond market. ' opecs's decision, that's harder, is something that to meet did not seem appropriate. what did you make of the opec guys and girls taking 2% of the global supply of the table? christian: that's another one of

those fractures. you see the amount of nervousness by western policymakers about the high level of inflation. they want anything that brings inflation down. these production cuts are indeed not helpful when you want to bring down petrol prices in the u.s. there was discussion about releasing further oil from the strategic reserve of the united states, but ultimately, these are headline numbers. we are concerned with core inflation, that has to do with the labor market, wage pressures , and an overheating economy that is independent of what happens to the oil market. dani: i'm afraid that's all we have time for this morning. safe travels to d.c. this week, christian kopf, head of fixed income at union investment. we look ahead to china's party

conference. this is bloomberg. ♪

dani: welcome back to "bloomberg daybreak: europe". let's get the first word news, simone foxman standing by in doha. simone: emmanuel macron has arched citizens not to panic and to act responsibly after a refinery strike left petrol stations with no fuel in some regions. the transport minister says the government may release additional feel stocks to alleviate the tight market. a labor strike has hit the country's two biggest refineries , affecting two thirds of capacity. chinese chip stocks have slumped after fresh restrictions on u.s.

technology added a disappointing start to the earnings season. a spokesman criticized them as unfair, and said they will hurt the u.s. companies. 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. manus: coming up on the show, from istanbul and millions have made the switch from the big three to the best kept secret in wireless: xfinity mobile. that means millions are saving hundreds a year with the fastest mobile service. and now, introducing, the best price for two lines of unlimited. just $30 per line. there are millions of happy campers out there. and this is the perfect time to join them... add a line to your existing plan, or see for yourself how easy it is to save

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golo's a lifestyle change and you make the change and it stays off. (soft music) manus: this is "bloomberg daybreak: europe," i am manus

cranny in istanbul with dani burger in london. dani: chinese markets open in the red, weighed down by concerns over rising global interest rates and fresh u.s. curbs on chipmakers. asian stocks and futures kick off the back foot after strong u.s. jobs data friday crystallized that's the fed will continue with a jumbo rate hike. plus vladimir putin accuses ukraine of carrying 8 -- carrying out a attack on a bridge licking crimea to russia. a week futures session, all about the fed and continued hiking after the jobs data. basically what you need to know is we are all in the red in this futures session speed the s&p, nasdaq, ftse 100, and british coming is on track to buy back their own stock at the fastest pace on record. there you go, perhaps a record

time of a short equities check. what to cross assets look like? manus: mliv poll, of the people we surveyed, reckon that earnings will tank stop -- tank stocks. wti, 2% of the production came off because of opec-plus paired oil is down nearly -- opec-plus. oil is down. morgan stanley reckon we will get to $100. oil down, aussie on the offer as well. there is angst around u.s. and china relations around chips and technology. there is global pressure. liquidity is not really there. swaps are still saying 72 basis points apparently for november. it depends on the hot button print. cpi expected at 6.5%, up 20

basis points from the last print. dani: let's talk about peak and borrowing costs, encouraging investors to dip their toes back into emerging markets. because when tightening does ease, investors may find equities and bond valuations attractive relative to their developed market peers. not to mention the carry. let's speak to our micro strategist. thank you for joining us. we did see latin america, brazil's central bank were the first out of the gate to start hiking. are they in a better position than the rest of the globe? >> i think when you look globally, it is a diversified regional story. when you're looking at real carry, it is only latin america. even in asia where we've had hiking cycles so much lower, you don't have much pickups to investors relative to the

dollar. in the central european space, the dollar has a lot of weight. if you're looking for a lucrative story, i suggest latin america, the mexican peso, chile. they offer a good investor rule alternative to the dollar. manus: i'm thinking about wcs, i am on the road, like a traveling will bury with a bloomberg terminal. there is no way that can catch up with the 7.6% for the year. the peruvian sol as well. is there any exhaustion in the riyal, or should i be betting on the next set of moves to come? eimear: when we are looking globally, it is a case of what is happening under current

balances. the euro zone record deficits as people are trying to import expensive energy prices. in latin america, in these places that benefit from higher commodity prices -- i get your point that we've had very -- already, but the dynamics, it is already back to basics at currency markets at the moment. it is that dynamic that stands out. the fact that they preemptively tighten monetary policy to get away from inflation and that should stand out. i think it contrasts what we are seeing in the euro zone, which is the opposite story. emerging markets -- opposite story to emerging markets. the central banks cannot sustain and they are lying on fx intervention or liquidity draining. dani: we saw that in polling last week. when does it get to

a point where reserve training becomes a problem, where they run out of ammo to sustain like a volatility in the currency? eimear: i think it is important, especially for poland, they are going into an election next year where they have announced an ambitious budget. i think you will see a lot of pressure coming on the back end of that curve. investors are quite hesitant to fund an economy that seems to be running such a deficit. we see borrowing costs where the polish government tripled. their annual interest rate payment is three times what it was. there also funding payments to the eu. manus: we saw unilateral intervention by some central

banks, they have unlimited checkbooks. that has not stopped the drop in the yen. in your opinion the imf will intervene this week, i presume that is the jumping off point. but it is not a plaza court and there is no appetite for g7 or g20 intervention. is there room for a plaza 2022, is there room for unified intervention? eimear: i mean, as an emerging market strategist, i wish there was, but i don't see anything from the u.s. to talk back the dollar or do any kind of coordinated action. we think about from just their benefit, they are going into crucial midterm elections, so i don't see any incentive. you have the dollar, and that

often means punitive borrowing costs in a domestic economy. one really good example is the czech central act, where they can intervene. i think this is a lesson we have to learn for the next crisis, fx intervention is another arm of economic policy, you have to have those reserves in place to defend your domestic currency and your economy against an emerging dollar. dani: what does it look like when the crisis is over? will we see a mass building of reserves? eimear: i think that is definitely something that central-bank policy will have to look at. we see the czech central bank come out credibly, but they have the second-highest fx reserve gdp, second only to hong kong. we see central banks try, you

can kind of limited but you can't change the -- limit it but can't change the direction. you can create more volatility but ultimately the direction is the higher dollar. manus: what do you think happens next with the pboc? higher-than-expected for the yuan for the 26 day in a row. that is incremental messaging without taking out a mallet. you think after the congress this week that something much more prophetic happens in the yuan? eimear: it is a really hard call pit i think probably the best -- a really hard call. i think the best thing is if they move away from covid lockdowns and we saw a resumption of tourism. i think it is an interesting

world we live in where even the pboc, the central bank of the second-biggest economy in the world has not managed to stabilize the currency and move markets in the way it has been directed. it is a global problem for emerging markets and it is only a very extreme hiking cycle like we've seen from brazil or significant fx intervention like we've seen from the czech republic that are able to support a domestic currency. basically we need action, not just talk. manus: ok. we need them to walk the walk, eimear, rather than just talk the talk. our chief economist is talking about u.s. rates, but it is multipurpose. eimear daly, emerging markets macro strategist, our guest this morning. credit suisse draws interest from two big names.

who wants a bid for sbg. ♪

manus: it is "daybreak: europe" with me, manus cranny, and dani burger. credit suisse a drawing interest from pimco and central bridge partners for a deal. it is a key pillar and they are trying to downsize and it could pay for restructuring pit we got that news flow. -- for restructuring. we got that news flow. dani: charlie, what is the appeal of this business? charlie: they buy and sell

securities backed by assets, similar to mortgage loans, credit card debt and car loans as well. when you look at credit suisse's business line, by some measure this has $75 billion in assets and is possible -- and is profitable. the risk is it is a capital-intensive type of business. but what it could do for the likes of pimco and center bridge is to give them access to credit investments they may be hungry for. manus: everybody -- good to see you this morning -- focused on fire sale by credit suisse, major discount on assets they've got to sell, to downscaled the bank. is that what we are going to see? are we going to see a fire sale of these assets or is it going to be reasonable market value for reasonable talent? charlie: that's a good question. what we know is it has been a terrible, no good, very bad

couple of months for credit suisse with their share price down so far. we are expecting a very significant announcement later this month. as you say, part of the strategy is potentially to say instead of issue new equity for what could be potentially a very expensive restructuring, this strategy is potentially selling off some of the assets in the investment banking china cabinet. this could be in line with that strategy and it could be good business. what the price will be am not sure, but we know there are willing buyers. we've been talking about this business unit, there was interest expressed last month by a number of investors. this could potentially get a good price. dani: as we have been mentioning, we have that restructuring, it is due on october 27. we have some hints of what will happen, we have had debt buybacks. what do we know about the contours of what this will look like on october 27? charlie: it is really difficult.

what we've seen in management change after management change at credit suisse over the years is a reluctance to downsize the bank. that's what analysts say needs to happen, but it is hard to do and expensive. we are expecting changes to the investment bank and sales like this are in line with that. as i said previously, october 27 is a long way away. investors and analysts are looking for an update to potentially give them a little bit of an idea of how long that lasts. the share price this coming this week. manus: i picked up the movement on friday, 5.5% on the debt buyback. then there was a bloomberg scoop on the potential interest. when you see that response mechanism in the equity and debt buyback, does that set of a better concert to go and

announce a big equity raising? charlie: it is really difficult, that could intentionally be -- i think shareholders would not be power about that -- would not be happy about that kind of move. credit suisse in some ways seems to be following some of the moves from the deutsche bank playbook back in the heydays of 2016 and they also bought back some debt and that seemed to work at least in the medium-term but did not have that long-term benefit they may have been looking for. i think potentially working up to some of those equity sales could be something they would need to lay the groundwork for, but it would be difficult work and they would have to show a lot of prudence and diligence. dani: i want to get into today's big take, you can see it on the terminal. it's about this idea that goldman sachs for so long has been trying to get a consumer unit but they have been

struggling, haven't they? charlie: another big bank and another challenge. for the better part of half decade, goldman sachs has been trying to crack the american consumer market. we've seen executives say they want goldman sachs seen as the american consumer as a "lovable teddy bear." the ceo has tried to woo the likes of reese witherspoon into partnership. what the big take shows today, the big final goldman was trying to create of gateway products for american consumers like checking accounts will no longer be offered to the mass market. they will be focused more on wealth and management clients, a smaller pool of customers. why is this happening? it is tough to crack the american consumer, it is expensive, the technology is hard and it is a very competitive landscape. dani: when not even reese witherspoon can save you, you

are in trouble. thank you as always, charlie wells. coming up, a not so golden return from the golden week holiday for chinese investors. this is bloomberg. ♪

dani: welcome back to "bloomberg daybreak: europe," i am dani burger in london, and is cranny is in istanbul. let's look at what we will look out for this week. we have the ecb's dovish philip lane speaking. manus: wednesday, ppi hitting the tape. hot print cpi, 4.5% expected.

75 basis points friday, and we get u.k. home prices. am going to have to work forever and ever. china reopening after golden week. consumption data, pboc employment data as well. it is not looking good. let's get to our equities reporter in asia, charlotte yang. pboc labor indicators are screeching at the moment. not exactly a bullish start to the week, is it? charlotte: no happy monday for china stock traders who returned from the holiday and are facing a slew of data. as we mentioned, consumption data. also the selloff on friday. no improvement on the property side. everyone is wait and see and

very skeptical. dani: this is a question we keep asking, and perhaps it is a trial question to ask, when we see this weak consumer spending, will there be any change in the covid zero policy? charlotte: that is the question everyone wants answered, if we will see a change with covid zero. at the moment, it is something we are closely watching for. some investors got really excited, that we are seeing lockdowns again. at the moment, we have a bunch of conflicting signals. nothing in particular that is clearly showing where the covid policy is going. manus: let's talk about the upcoming congress. of course xi is going to waive

the banner of the zero covid policy is something to applaud. the rest of the world might have a different perspective. from a policy point of view, will we see a pivoted to prioritizing reopening? charlotte: yeah, so several things investors are watching for the meeting, first and foremost is what will be the top leadership position and if there will be clear signals that we will see more pro -- policy. also if they will boost the economy. dani: charlotte, thank you very much. our asian equities reporter, charlotte yang. manus, we are at the start of an

imf meeting in washington, where we will have global financial chiefs gathering. i wonder if they are going to feel the pressure, the u.s. will feel the pressure of a world that is struggling with the stronger dollar and continues to have to intervene. i know you got the chart on central bank drawdowns in this treasury market. manus: yeah, this is something that valerie put together this morning. there is a phrase in irish that means me myself first. very much the dollar and the fed is all about that. what you are looking at here, the rate of drawdown, sales by central banks in terms of bonds, treasury outflows the fastest since march 2020, and it is the asia and indeed emerging markets where we are seeing the biggest drawdown pure japan, 20 million must south korea i think valerie put 20 million, the second-biggest monthly drop on record. our guest this morning said this is not an implosion to the bond

markets, we are near the end of the drop. dani: however, but our guest on e.m. was saying we will face an issue because of the need for intervention, that is clear monetary policy, just hiking is not enough. you have to have central bank to continue to jump in to defend their currency. the have seen in japan, in south korea, we have seen the boe have to intervene as well. manus: dani, would you like a little convexity for the week? somebody out there spent a million bucks saying that it will be twice the pandemic high -- valerie, run in now. the tail risk for equity production, the lowest since 2020, and the credit suisse barometer the lowest since 2008.

it is staggering. it could be the best million dollars anybody ever spent. dani: you are flying blind but you would never know, just as you speak, the chart comes up, the power of tv magic. manus: it is actually under here. dani: you are much more tidy than i am. the 150, maybe it is bullish, maybe a hedge in case we see an explosion higher, which i hope we don't come on nerves can't take it. manus: for every bid, there is an offer. if somebody bought the offer, somebody wrote the premium. more from istanbul tomorrow and london on "daybreak: europe." ♪

millions have made the switch from the big three to the best kept secret in wireless: xfinity mobile. that means millions are saving hundreds a year with the fastest mobile service. and now, introducing, the best price for two lines of unlimited. just $30 per line. there are millions of happy campers out there. and this is the perfect time to join them... add a line to your existing plan, or see for yourself how easy it is to save by talking to our helpful switch squad at your local xfinity store today.

anna: good morning and welcome to "bloomberg markets: europe."