>> this is bloomberg daybreak:

europe. i'm dani burger in london alongside manus cranny in dubai. >> we still have some ways to go. incoming data since our last meeting suggests that the ultimate level of interest rates will be higher than previously expected. manus: slower, but higher, equals risk off. jerome powell signals smaller rate hikes, but a higher peak. bailey takes the baton. bank of england expected to announce its own rate hike following the fed's steepest increase in 33 years. cutting characters. elon musk reportedly plans to eliminate half of all staff as he mulls major cost reduction.

it looks like rising rates are rallying for bnp paribas in terms of the numbers and they want to do more deals. good morning. dani: it is a very solid beat on it comes to both net income and trading. 1.1 2 billion euros. the estimate had been under one billion euros. a solid heat on both accounts. -- beat on both accounts. manus: let's get to parabolic -- paribas. >> there was solid demand from clients. so we continue to can market share even versus u.s. peers. is it sustainable? at an overall level, that is what we believe, yes.

>> can you explain to us why and does this mean more provisions are possible in the future? >> there is a particular thing, there has been a decision to apply a moratorium for all mortgages and that led to that impact. it is a one off let us to a basis point impact. the underlying one shows that there is no intrinsic concern about customer risk. we don't see a pickup and cost of risk. we don't anticipate that. it of course can taper up a bit, but we have been provisioning. that is why we feel comfortable that we will stay at 40 basis points year after year that we have guided. >> the federal reserve delivered

another big rate hike. what is your reaction? >> in terms of where we have arrived in fed funds rate, when will it become less hawkish? that is understandable. if you look at the investor point of view, there is a huge amount of money that needs to be invested. for investors, it is like taking a high-speed train, you don't want to get there too early, but you don't want to miss it. >> the energy crisis has created uncertainty. inflation, and slower growth, especially in europe. the deutsche bank cfo said he predicts a recession of around 2% in germany for next year. could you give us a rough idea

of what kind of macroenvironment you see for france and the european economies next year? >> what i can look at is the areas where bnp paribas is present. if you look at that area, i would characterize gdp evolution to be low or slightly negative. that will probably be accompanied by a gradual disinflation. that is what i would say about the business is where we are. >> don't you think that you should perhaps moderate your 2025 targets? >> one of the things that when we look at it today, the headwinds we see coming, we still consider them as look through. there will be disinflation coming, so when you look at the horizon of 2025, we believe we will have a pickup which allows us to deliver as we have put forward in 2025. dani: the bnp paribas cfo

speaking with caroline. we have more bank earnings coming through. you have ing. manus: it is a bit of a disappointment. they have missed on the estimate. i think it is going to be the story about the provisions and the buybacks. the red headline will be in of the buybacks. they have restarted the buybacks. that will be good news because it has been long awaited. dani: it really has. we have to do with this current economic climate. the long-lost provision came in at 400 million euros. that is a higher loan loss provision than expected. manus: yes and the cost income ratio is also on the up, as well. now, where do you go to have

your dreams crushed? broken? it was a party for 30 minutes and then the pity pivot party paused. that is a good alliteration, isn't it? dani: it is depressing. i don't want my dreams crushed. the market really got told off. look at with a two year ended the day. 4.6%. up from some 4.5%. it is the destination, not the path. there is potentially more pain if the two year yield is going to get anywhere close to a terminal rate that is that i. manus: i will counter offer you, i have mcquarrie at four point 25% to 4.5%. you were going to get all this range of terminal rates coming out. what is the speed and are they trying to slow down the

brutality because that delivers a less hard landing? this is the devil's bargain. the size might fall, but the destination will be pretty painful. stocks took a slap. dani: yes, it was the worst reaction to a fed decision since january 2021. can i show you what asia is doing? after the reopening hope party going on, we did not have any confirmation of it, but we are seeing a quick reversal. stocks are getting hit. it is all about the duration bet. european futures have to play catch-up. european equities, futures falling 018 percent. -- 0.8%. 0.1% is peanuts after falling.

manus: you are tough this morning, aren't you? cash is closed, futures are opening. the equivalent is seven basis points higher in terms of yield. does it need to close the gap between where we are and where the terminal rate is our? rates -- rates are? oil is down. zero covid is very much reinforced in china. i popped in wheat futures because we have this headline that wheat will be transported. the u.n. have pushed through along with turkey's help in getting grain shipments out across the market. that is pushing the green story after the grain deal brokered by

turkey. dani: let's dig into yesterday's fed decision and little bit more and hear from the man himself, jay powell. he left little doubt he is willing to push rates as high as needed to stamp out inflation. take a listen. >> it is very premature to think about pausing. when people hear lags, they think about pausing and it is very premature in my view to be talking about pausing our rate hikes. we have a ways to go. we need ongoing rate hikes to get to that level. manus: that's dive a little bit deeper into the fed narrative, the team standing by. our markets editor and our chief asia economics correspondent. in terms of the importance of the take away, this was really quite a brutal message in terms

of there is no pause on the table right now. >> certainly no pause. most economists this morning are seizing another new language around a higher peak than expected. people are much now less interested in the pace of the rate hikes. that in and of itself is still a fairly aggressive pace of tightening given how much they have already done. the new focus is where the peak will end up. all of the language from chairman powell was that they are nowhere near pausing. he said they still have a lot of ground to cover. there is no sign of a turning point for the inflation story yet. i think the focus in the months ahead will be less on the pace of fed tightening and more where

the peak rate will be. dani: powell was clear that the risk was under tightening, not over tightening. thank you so much. speaking of that reaction, let's bring in valerie. we were just talking about it. it was this really big about-face for the market that had to grapple with a fed that was much more hawkish than they had hoped for. >> exactly in the markets' takeaway is yes, we will price the terminal rate, but it is now priced out for the extent of 2023. the risk to a higher terminal right tells us the dollar is going to stay strong from here. the fed themselves is not even sure where there terminal rate is. all eyes on this print coming friday. i want to take attention to this chart that shows the two year yield peeking above the terminal rate.

the two year yield is trading on a 4.60 handle at the moment. there is a lot of room for yields to move higher from here. manus: thank you very much. chart of beauty there. let's talk about some of the other issues at play. the ecb is clear, we need to raise interest rates. a little bit of breaking news. forgive me, let's break a little bit of news on the ecb. we have just had a 75 basis point hike from them in terms of what they will do. this is about reinforcing that messag this is a governing council member speaking on latvian tv. it is clear we need to raise interest rate gain. dani: and it is this element of

being data dependent. we have seen the cpi come in extremely hot and they are just reiterating that, speaking in a latvian tv. what should we be watching for today? manus: i think 8:00 it will be more ecb. christine lagarde is due to speak in latvia where we have just heard these comments coming from. 12:00, the u.k. rate decision. the sharpest increase in 33 years. dani: that will be followed by u.s. initial jobless claims. layoffs remain low showing that employers do have less leverage in this tight market. we will have u.s. factory orders and ism services data. manus: coming up, we will discuss the boe rate decision announced at 12:00 later today right here on bloomberg. ♪

dani: it is decision day for the bank of england. markets pricing and a 75 basis point hike. the central banks largest in 33

years. the economic forecast will also be in the decision and closely watched. closely watching it is our very own lizzy burden who joins us now. a lot has changed since september, the last decision, which is probably the biggest understatement of the century. what does that leave them? >> a huge understatement indeed. liz truss is out. there was a time between these meetings when markets were rising for 200 basis points of hikes, but as you say, we are expecting 75 basis points. it would still be the biggest thing the 1989, but everything else could be dovish. you could see an inflation

forecast that is brought down. why more dovish? the impact of the expected fiscal tightening. this slump in sentiment because of all the recent turmoil. manus: in some ways, they are flying blind. you have an npc meeting ahead of a fiscal budget and this is what morgan stanley is saying. does bailey carve out a caffe up for himself today? >> andrew bailey have said the correct sequence would be budget first, rate decision second, but rishi sunak and jeremy hunt have not allowed that. is it a surprise? of course he is going to want to get under the bonnet. part of the impact of the delay is the fiscal holding they need to shrink is smaller because of

the dividend. ultimately, as you say, the bank of england is flying blind, but the delay has not made in much of a difference. it was 75 basis points before. manus: charm and rhetoric goes along way, but markets like to see facts and figures on the table. lizzy burden tracking the bank of england decision. coming up, we will catch up with the ing ceo -- cfo. this is bloomberg. ♪

dani: let's talk earnings. ing has reported net income for the third quarter that missed

estimates, but has announced a buyback program of up to 1.5 billion euros. joining us now is the chief financial officer at ing. great to have you another program. let's start with the buyback. morgan stanley had expected 800 million euros, so you definitely surprised to the upside. what gives you the confidence to do so and can we expect more? >> thank you very much and i think we are very confident about the underlying results at ing with a couple of exceptional items. net interest income is rising in the back of rising interest rates. income is strong and resilient. costs are under control despite high inflation. the most important thing that gives us confidence is the fact that our loan book is very resilient and that nonperforming loans are relatively low. and that gives us the confidence

to continue our program of share buyback and returning cash and capital to our shareholders. manus: good morning to you. is this the start of a much bigger upside conversation about buybacks and dividends if nims is going to rise? guide the market today. is the risk to the dividend and buyback to the upside? >> thank you. i think we have given market guidance that we will bring the level of our capital to roughly around 12.5% by 2025 and we will do that in roughly equal steps in this share buyback is in that path. we will converge on that gradually taking into account the macro economic picture and the expectations of the company.

overall, we are confident of sticking to the market commitment on the back of rising interest rates and the net interest margin perspective. dani: your loan loss provision is up in the market was expecting something less. you talk about nonperforming loans, but it does seem like there are some nerves if you are setting aside this pile of money for your long-lost provisions. >> yes, i think it has been quite a strange situation for the past three or four quarters. i think what you see here on long-lost provisioning is something which was more normal, more through the cycle, and does indeed reflect certain expectations of a recession coming, but it is something we are quite comfortable with and

this is really a rise. manus: we are looking at what analysts are saying. they are making probability theories. from what you see from a retail client and come the real consumer, are there any signs that you can see that we are already in a recession? >> let me make two points. we do see that the pace of the loan growth is beginning to slow. consumers, businesses, large corporates are having less loan demand than they were a year ago. so that is clear. the second thing that is clear

is that this impending recession is a rather strange one because it is a recession where the level of vacancies remains very tight as well. that is a leading indicator. how strong would the unemployment level rise? we see it as having a mild impact on our customers and our loan portfolio. dani: but are you expecting that or are you preparing for that to change? we had warnings it would be especially cold in europe. we are facing an energy crisis. costs are going to rise. do you think the consumer can hold up to that? >> i think so and i think particularly in markets we operate in northern europe, belgium, netherlands, as long as employment levels are strong, people are being paid their

salaries, with all the aid and help the northern european governments provide to people on fuel subsidies, i believe that is the case. i believe our customer base is resilient and can observe some of the shocks with the help of the government and banks like ourselves. manus: thank you very much. a moderately bullish call with a buyback on the slate. the chief financial officer at ing. coming up, our exclusive interview with mohamed alomar the chairman of americana restaurants. the conversation on bloomberg. ♪ xfinity rewards is a program whose sole purpose is to say "thank you" with experiences big, small and once-in-a-lifetime. sometimes it's about cheering hard enough to shake the stadium! sometimes, it's as simple as movie night right here at home, on us.

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manus: this is bloomberg

daybreak: europe. i'm manus cranny in dubai. dani burger in london hq with the story setting your agenda. >> incoming data since our last meeting suggests the ultimate level of interest rates will be higher than previously expected. dani: slower but higher equals lower risk assets. smaller rate, but a higher peak sending stocks lighting. kaylee takes the baton. the bank of england is expected to announce it 75 basis point hike. cutting characters. elon musk reportedly plans to eliminate half of all staff i see most major cost reductions. manus, we have a bunch more earnings to grapple with. the german gas giant breaking up the moment. manus: absolutely.

we have a 40 billion loss curtailed on russian gas. this is about the flow of gas from russia through those pipelines into germany as the giant energy producer in germany. a net loss of 40 billion euros for the first nine months of the year. they are set to receive an aid package that will lead to the nationalization by the end of the year. dani: also looking at bmw coming through. strong showing from bmw. margins also stronger-than-expected. the low-end is 7%. the estimate had been for 8.5%. see a spotty consumer. not necessarily true with every earnings report we have seen. manus: there is strong demand

out there. we're looking at stocks up 5%. i will be back with you shortly. let's move the agenda along. americana restaurants is set for a landmark dual listing in abu dhabi and riyadh. mohammed alabbar is set to still -- sell a stake of 30%. the man himself joints me now. always great to get you on bloomberg. well done, ready to sell 30% of americana. why now? >> you know, we bought the company five years ago and we put our head down. we have done some reorganization. this is a 58-year-old company. this is a great company. our food business is only about

40,000 people. the management have done an amazing job and the company is performing extremely well and it is about time we give some money back to the shareholders. manus: give some money to the shareholders and monetize for yourself. >> it is time for the public and for our customers to own part of our shares, as well. manus: i wish i could eat more pizza. you are going for a dual listing between riyadh and abu dhabi. what is the topline benefit of that? why now? in terms of the dual listing. >> if you were to look at the activity in both markets, the uae and saudi arabia, they had liquidity. if you look at the track record of the past few years, i think it is only ideal for us to

really be able to take advantage of these markets and really benefit our shareholders and our customers, as well. manus: when i catch up with other people involved in the ipo roster, talking about creating depth and liquidity, do you think this move now with a consumer orientated ipo changes the liquidity and the depth of the uae markets? >> it does change it in a very interesting way. this is a very interesting industry. i don't think there is a company like americana where it serves you as a customer three times a day. keep in mind, we have 270 million customers in the region.

we have 12 international brands, 12 countries. if you look at the performance of the company, over 2 billion in restaurant sales. amazing management team, great track record, great balance sheet. i think it adds a very interesting industry to the whole stock market. manus: everybody is screaming the word recession to me and interest rates at 5%. your business, do you think it will be resilient when a slowdown downturn comes? >> let's go back and take a look, we have gone through corona. that is an unfortunate good experience to see how resilient our business is.

you see how we managed our cost. then how the business came back again. we are dealing in a very interesting industry. this is not like buying a t-shirt. this is how you survive, you need to eat three times a day. it is up to us to deliver that quality product and service all the time and be creative about it. manus: before we move on to the other part of your business, have you had to raise prices? how much of you raised prices and do you expect more price rises next year? >> this is a good question. if you look at the past eight or nine months and what we have all gone through, if you look at our performance, you will realize that this is a very resilient business to be honest with you. but at the same time, we are

responsible enough that we transfer prices a little bit to customers. it is something we have to judge with a lot of wisdom. manus: i want you to shift your hats. prime dubai property prices are up. we can both have a little joust here. kenneth endure? do you think you can see the monster price rises? >> we have all been there. you see these property prices up and down more. the truth is that you have to look at the prices of a global city of dubai compared globally.

even with the increased dubai prices, it is still reasonable when you compare them with global cities. pick london, singapore, new york, chicago. dubai is still very affordable. manus: here's the other side of that trade, which is for normal people, normal people like me who perhaps come to the city with families, they are looking villas now. it is up 26% on the year. that is a big risk to the growth story of the city, isn't it? >> at the same time, i'm in the business were a beautiful villa is still renting. the great thing about this amazing city, still a great value when it comes to living.

or even sale value or the local currency here, it is still available and easy to get. manus: let's close off with this. we talked about the amount of inward investment. the cliché is russian money is coming. there are many other global investors turning to dubai and the you a. how much more global investor discussions are you having? >> dubai always has the main's a lot of arabs are moving in. indians are moving in. russians. they are always on the same percentages.

the other 90% are still the basic ingredients of the city's growth. manus: is the russian money done? you know the truth. is the rush of russian money, is that going to run out in 2023? >> i could be wrong. i think we are at the end of it, to be honest with you. traditional markets are what is moving the market for us here. dubai is an international city. there is not one major fare that moves it this way or that way. manus: we need a little bit more irish money. i need to walk and talk one of the palm villas. congratulations.

we wish you well. let's catch up soon. >> i wish you well. manus: the chairman of americana restaurants. my cohost, as if by magic, reappears. [laughter] dani: i was here and listening the whole time. such a good interview. my take away was him telling you prices and dubai are such a good deal and it is affordable, hence why i make you biased and whenever you come to london to visit. manus: i have to say, she's got the membership at this superduper private club that i'm technically too to join. i'm not bitter and angry about soho house. no shot out there to the ceo. blocked at every turn from membership. dani: what a name drop. you said it, not me. shall we get back to the important stuff? memberships we may or may not have. markets taking a bath yesterday.

the punch from powell. it was not a dovish pivot. it was a more hawkish pivot. we are seeing markets react to the more higher terminal rate. the worst post fed reaction since january 2021. euro stoxx 50 futures off the back foot. manus: you've got to be a little bit brave. buy convexity. what else have you got? dani: we are going to talk more about this. jay powell opening up the new phase in the inflation fight. again, the path might be slower, but the destination is higher. this is bloomberg. ♪

dani: fed chair jay powell put an end to a 30 minute stop rally as he insisted rates will be going higher than previously thought. even if at a slower pace. >> we still have some way to go and incoming data suggests that the ultimate level of interest rates will be higher than previously expect it. dani: joining us now is skyler montgomery. the other thing he said that stood out to me was his insistence that the risk is under tightening, not over tightening. can we finally be done with this

pivot mania? can we finally stopped trading on this narrative? >> i don't think so. i think markets will continue to trade the pivot story, the tightening story. i don't think the fed has changed their message. they told us they are prioritizing inflation. tightening financial conditions. tightening, it is going to impact hiring. countries are passing on rising costs to resilient demand and household wealth remains elevated. the u.s. sector is dominated by long-term fixed-rate. there is a large amount of accumulated equity. the fed needs to get the policy rate above.

that means we will guide the market higher. it should be closer to 5.5% terminal. they are not stopping. they are not stopping until we get a recession. manus: it just depends how badly they break something and that is when it becomes political and not monetary. good morning to you. we moved to pivot light. do you think that the bond market is fully reappraised that and priced that. the markets are 5% in terms of the futures. what is the consequence of that across assets? >> we have always looked for the pivot a year ahead.

it has moved out further. as i said, central banks are not going to stop in the fed is not going to stop until they had a recession. central bank policy has been a market driver this year. investors are looking for any signs central banks are changing course. you are seeing it in some places. you are seeing a slowing and a tightening from notable central banks. central banks have always envisioned slowing the pace of tightening. slowing tightening is not a pivot. we aren't getting a pivot. the market looks through tightening. as the pivot gets priced, this

is not 2019. we are not at 2019 inflation levels. it is not good for risk assets generally. dani: what does that look like? if the market still has the pavlovian buy the dip urge, still trading on a world that looks like the post great financial crisis, how painful doesn't get when the market learns the lesson that the market is not going to do that? >> this is the issue. we have had these rounds and rounds, but inflation keeps coming in hot because we still have resilient demand. we are having these rounds where you have the bear market rally. you lose quite a lot of money by being short the bear market rallies. the end of the game is whether

we get to terminal and at what level the terminal rate is. that means that you still have some pain there. maybe some more pain in fixed tech lease -- in equities at this point. the selloff with correlations that are positive is likely to continue until we get the price terminal rate right. manus: yes, still a way to go in terms of volatility. a little bit more pain involved. dani: we are going to talk tech with tom mackenzie in lisbon at europe's largest technology conference. he's going to tell us what is coming up next. >> on the ground here, we are getting reaction to what is happening with twitter.

we will bring you part of that conversation. we also sat down with the first lady on ukraine. that is coming up. this is bloomberg. ♪

dani: muska plans to eliminate 3700 jobs at twitter, half the current workforce as cathie wood said she was turning bullish on the company. let's get to tom mackenzie at the web summit. we got to start with cathie wood. how did she view twitter under its new leadership? >> it is interesting. she's controversial, you love

her, you hate her. she still is the touch point when it comes to the tech sector. the questions about twitter are really interesting given that some of her funds were selling off earlier this year. when we set in with her exclusively, she said we have a relatively small stake in twitter and she is super optimistic about twitter under elon musk. >> the subscription advertising model is a very smart move if he goes in that direction. the verification is very important to people and could help clean up the platform considerably. >> the way she is looking and viewing twitter is potentially what she describes as a super app, providing banking services for example. amid all this concern, given that he has dissolved the board, cutting jobs, reactivating

banned accounts, here's one person saying she is fully behind what he is going to do. manus: a great interview, tom. she talked about him coming from the payments background, the paypal mafia so to speak. coming out of that world. i remember people used to say apple would be a payment while at. i don't use it while it anymore, i use the phone. we also had some other prominent speakers yesterday as well. the first lady of ukraine. >> indeed. she made a call for the tech world to get involved in that country. she sat down with us and she said, you need to take sides in the tech world, for good or for

evil, you need to work with us in ukraine. she also talked about the resilience and the morale of the people in ukraine and she warned against ukraine fatigue setting in in the west. that would be consequential for ukraine and the world as well. manus: thank you. great work at the lisbon web summit. try to get into the building now, tom. that is mission accomplished. dani: apparently birds, as well. great background. bloomberg markets europe is up next. this is bloomberg. ♪

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>> good morni