host: this is bloomberg europe. i am dani burger.

with manus cranny. >> shrugging off covid. hong kong stocks power asia higher as experts downgrade expectations. tech turmoil. apple cuts its outlook for iphone shipments amid reports that meta plans to start laying off staff and twitter asking some fired staff to return. and the u.n. climate talks start in egypt with a deal to discuss climate reparations. we are live. breaking from europe's biggest discount airliner. they have a full year guidance. a billion to 1.0 2 billion in terms of profit. they expect to grow strongly in a recession. this is the debate. we go into perhaps of longest recessions in u.k. history ever

according to bank of england and ryanair tells us we will grow strongly in a recession. and there 81% hedged. they are building up their hedges. dani: it is the idea that folks in a cost-of-living crisis, when things are bad they trade down to the discount airline. 81% hedged is what we are seeing. for 2024 they are now 50% hedged. perhaps not taking any chances when it comes to higher prices of fuel. they also say they see their fares ahead of the 2020 pre-covid levels. they are normalizing and exceeding the number they had before covid. manus: we put all of the questions to our guest in a moment. one of the other issues that michael o'leary is facing --

what are the other issues that he is facing. dani: the markets -- it continues to be another day of asia specifically hong kong stocks powering the market higher. the notable thing, we will get into this with juliette saly, the idea that china, specifically hong kong stocks are powering higher despite the fact that over the weekend official said we are not abandoning covid zero. it shows how pessimistic the market is in that they are still buying the rumor. elsewhere it is a negative session for futures. european stocks are slightly lower. ftse 100 futures down. that might have to do with the fact that oil is down this morning after china reiterating that they are sticking to covid zero. and finally, nasdaq futures, we will get into this with our reporter.

a lot of stories coming through including wall street journal saying meta will be laying off employees. an apple shipments looking lower. what you have across asset? manus: the question is where is the terminal rate? yields are rising. there is a level of disquiet in america. what will it mean for bond markets and equities. we will talk about the mliv response to that. you could get a 100 dollar workout. the aussie dollar is down after a monster rally on friday. the fx is leaning into unswervingly stealing -- sticking to covid zero measures. copper down by 1.36 percent. european traders are more skeptical than the tail end of the asian traders in terms of market volatility.

how does it look? dani: let's get to reporters around the world. getting more detail on the stories for how china markets are faring? we have the latest on the tech industry, layoffs and the cop27. manus: the hopes of traders for an earlier than expected reopening have been dashed. china stocks reversed opening losses. this is a volatile session. we were bull when we were on the last two hours. we are more skeptical? juliette: a little more skeptical when you look at some of the moves on the csi 300 but the hang seng index is still up by 2.7 percent. a strong conviction on a day we thought we would go lower. it very much seems traders are

not believing that china will stick to covid zero and you have big calls with the likes of goldman sachs saying when we do have a reopening path stocks could rise by 20%. don't want to be behind the trade and that seems to be what investors are thinking. a reopening basket has already outperformed the ms ci china index i 20% and we are seeing big moves coming through on that index including the tech players powering the hang seng tech index. it is a positive session for asia. the comments of unswervingly sticking to covid zero has been playing into the market. the key we had a solid october and the aussie which is the laggard in g10. the pboc ditched it stronger than expected yuan. let's have a look at the overall picture. covid zero is still in play and the impact of the -- on the overall economy amid recessionary concerns and we saw unexpected contractions. imports having their first

decline in around two years. this is adding to the uncertainty over the china economy and the commerce ministry not helping saying the momentum is expected to weaken further. the environment for trade getting increasingly complex for china at a time when we have seen covid cases rise the most in around six months. dani: great stuff as always. juliette saly in singapore. let's turn to the tech story where apple is said to have trimmed its iphone output. an meta laying off thousands of people this week while twitter is asking some fired staff to return. a lot going on in the tech landscape. vlad, talk to us about apple. what does this tell us about their short-term prospects? vlad: the first thing it tells us is that demand is down. this is generally to be expected.

the market in china has slowed down. the appetite has slowed down. iphone 14, the entry-level models for the iphone, this generation. it is significantly down from last year and apple is making adjustments. analyst have -- analysts say they expect apple to increase the production of the pro models because the demand for those has been resilient. it is the regular iphones that are taking the real hit on the demised -- on the demand side of things. manus: good to have you with us this morning putting context around these reports. we have the twitter story, the most read story on bloomberg. they fired a bunch of people on friday and now they are ringing people up say in combat. and then you have meta.

this is a much more aggressive story in tech with meta set to fire a lot of people. is that the bigger story to focus on? vlad: i really don't know. i personally still think twitter has an outsized influence for how big of a company it is. keeping a close watch on how the company develops is a big deal. for meta, we have seen this intensifying over the course of the deal. and apple is halting hiring outside -- except for research and development. this started earlier in the year with the crypto industry which dropped jobs in substantial numbers. it seemed exclusive to the crypto industry. but the global economy drives everything and tech has the

relationship with it where so much of it comes down to the consumer. investors looking at the metaverse. it is not paying off in the near term and everyone is trying to fix their balance sheet. twitter itself, months ago leadership said they were cutting back on office space. what we are seeing with twitter can now be extended to the broader tech industry it is a unique situation. that is why it is such a big deal with people keeping a close eye on it. there is a lot of unpredictability. manus: that is what keeps us all jumping and focused in terms of what happens next in big tech. vlad, thank you very much. the latest on the tech stories. the world faces threats from war, the energy crisis, the risk of a global recession but climate change is top of the

global agenda. yousef gamal el-din is on the ground at cop27 at this event in egypt. give us the sense of the size and scale and presence in the decision-making. yousef: basically you have over 100 heads of state expected to arrive in the next few hours. 200 delegations from across the globe. and 45,000 greta tatian's -- accreditations. they have labeled this and implementation cop. cop 26 was the cop of goals and now they want to put it in action. going into this, the stakes could not be hired. u.n. secretary general put out a statement to give people a bit of perspective on where we stand. change is happening with catastrophic speed devastating lives and livelihoods on every single continent.

egypt will be keen to show that progress can be made despite the massive obstacles in their way. think of the ongoing geopolitical spat between the u.s. and china. think of the ukraine war. those are the things that make it incredibly difficult to cooperate and coordinate which is why the vision of cop27 was a huge diplomatic breakthrough giving participants a bit of a platform an opportunity to build some momentum and come out with more decisions and agreements over the next few days. a lot to pack in here. dani: certainly is and you will help us do just that through our program. we will have an interview with kristalina georgieva. we will be bringing you other big interviews throughout the week. here is a look at some of them from cop27. coming up, we will check on what

is happening with global markets. larry summers says 6% or more is where the terminal rate could go. this is bloomberg. ♪

>> i am moving upwards my view

on the possibilities for the terminal rate. it is not what i would expect but it would not surprise me if the terminal rate reached six or more. dani: larry summers with his thoughts on where the fed might ultimately go, 6% or higher. u.s. equity futures are lower this morning but we have asia stocks rising as the extreme pessimism means people continue to buy. manus: we have got our guest here. larry summers is upping his worst-case scenario at 6%. can you see a justifiable landscape that 6% could be hit in rates? >> the main concern is back to

the fed. where do they stop and look at stagflation as a risk? growth is not slowing at the peace they want it to. if they see growth -- if we see sustained levels of inflation and larry summers could have something to play with but we are looking at march data. if inflation stays elevated i think we have a case for going higher than 5%. that is when we will go back to the volcker playbook. if it does not pullback than the fed has no reason but to keep increasing especially given the wage inflation is still elevated. we still see a low labor supply number. it is not the case that the fed is afraid to raise rates yet. dani: they need to see some cracks in unemployment before

they can pivot. walk me through your playbook in that scenario. is the curve going to invert further? what happens to your yield? -- what happens to two year yield? let's look beyond 20 years and look at the volcker times. the yield inversion was more severe at that time. we are still in the baby steps of yield inversion. if we do see stagflation we could see a consistent level one or two percentage points beyond where we are now. we need to look back at inflation numbers. where is inflation coming from? that is what the fed has to deal with. in my playbook ice dill -- in my playbook, we will go to 50

basis points but the journey is still ongoing to fight inflation. manus: are you in the demand-side driven inflation? or are you in the camp that gets lambasted regularly? if china reopens the inflation narrative can ease a little bit? >> if china opens the inflation narrative does ease a bit but it is still a wildcard. where does the currency go? if it depreciates, if we see outflows, it becomes more severe. manus: the yuan? >> yes. if we see the chinese currency to appreciate considerably, we could see a case where we have reverse inflation element.

however, if we see the yuan strengthened, the story changes and we still have inflationary pressure. china offline most of the year. if we do see that in q1, q2, the inflation story becomes more palatable. dani: what do you make -- what do you make of a chinese equity market that has been rallying so strong despite officials continuing to say that covid zero is here to stay? >> friday we saw one of the biggest selloffs of yuan. i think down the line we will not see a shift. perhaps after winter passes and the broad consensus is looking at q2, q3 we could see a change

in chinese policy in terms of the covid zero policy but it has not changed. if we see winter passes in china and europe and we do not see a spike in covid levels, i think we can anticipate that china may ease covid measurements in q2 and q3. dani: go ahead, manus. you are staying with us. we are both so enthusiastic to thank you we cannot figure out who should do it. earnings from europe's biggest discount airline. we will speak to ryan ayres ceo, michael o'leary later in the show. this is bloomberg. ♪

manus: tomorrow's midterm elections are expected to usher in a new era of divided government in the u.s. bloomberg's emery harder explained what is at stake -- annmarie hordern explains what is at stake. >> history says -- look at the last seven presidents. almost all of their party's lost seats in midterm elections and some of those losses were significant. emma kratz had hoped they could run the issue of abortion rights following a controversial supreme court decision. but surveys show inflation is a bigger issue for voters and president biden is getting a lot of the blame for it. in the house all 435 seats are being contested. republicans only need to pick up five seats to take control. goals indicate they should do that easily and probably pick out more. the senate is seen as a tossup

with 35 seats being contested. right now the chamber is divided 50-50 with the democrats in the majority because vice president kamala harris can vote in the case of a tie. republicans need to gain just one seat to gain control. the senate could come down to close races in a number of seats including pennsylvania, georgia and nevada. it is possible we will know who will win for a number of days. dani: annmarie hordern explaining what is on the line for tomorrow's elections. let's say republicans do take the house after tomorrow's election, what changes for you? how do you need to alter your playbook? >> we need to know what the republicans will do going into

the presidential elections. we expect fiscal change in terms of how much biden can pursue in terms of packages. furthermore i think the fed might have a look back and look at the hawkishness and taper it. i think the main risk is that the agreement on the debt ceiling which we had many before -- many times before. i think that will be the main issue going forward. manus: the physical squeeze which could come to bear in a physical battle with the debt ceiling, does that invoke peak bond yields at this kind of level? does it build that narrative and does it reinforce the two peaks? >> have seen this before in the u.s. many times. we have had a last-minute negotiation on the debt ceiling

and we could see some pressure there in terms of yields but i don't think it changes the overall narrative. inflation is still above where the fed wants to see. we will see a change in the narrative but the overall theme is still the same. we have inflation running way above target. we still have a period of time where the fed things inflation will come back into play. the fed perceives an element of inflation. it does not appear that they will pull back anytime soon. this narrative is more about risk. it will be used as an interim risk on, risk off barometer. dani: i want to wrap it up and get your thoughts on tech. we have seen a lot of job cuts coming through and valuations falling. would you buy? >> no. last year at this time -- if you look at arc, kathy was doing well last year.

we have seen progressive selling off in terms of tech. we have seen earnings drop. we have to consolidate these companies in terms of their employment status, how much they cut and change their model according to the economy. amazon has not done well over the last two quarters and i don't think we will see a change in the short-term. manus: the 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... save hundreds a year over t-mobile, verizon, and at&t with xfinity mobile,

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manus: this is "bloomberg daybreak: europe".

we have the stories that set your agenda. dani: shrugging off covid. hong kong stocks power asia higher. tech turmoil. apple cuts its output for apple shipments on china's lockdown amid reports that meta plans to lay off staff this week while twitter asks some of its fired workers to return. and the u.n. climate talk start in egypt with a deal to discuss climate reparations. the question this morning -- where does the terminal rate go? our markets accurately priced? not so if they go to 6% which is where larry summers says could hitch. manus: gareth nicholson says we have these marks -- crash up moments and then moments of realization.

we will look across the markets. it was cross asset ecstasy on friday to perhaps a little angst . down 1%. on brent, better bid this morning on the back of whether china will stick unswervingly to zero covid until the middle of next year. the -- and lme is down. everyone is trying to work out where to go on the narrative versus reality in the zero covid policy in china. cop 26 is underway. yousef gamal el-din is standing by with a special guest. we are at cop27.

we come to the implementation of cop27. i am joined by the director of the department of the department of public health and environment at the world health organization. you have been doing this for 17 years in this key role. cop is playing -- is placing itself in a position to show results. how -- what do they need to deliver beyond the initial steps we got in terms of the breakthrough overnight? maria: for us it is very important. climate change is representing a crisis for our globe. we want the maximum level of cooperation from the politicians meeting here at cop27. every year we have 7 million premature deaths. this is where air pollution is caused by almost the same causes as climate change. for us we would like to see a

protection of human health. we would like to see more action on accelerating the transition to clean sources of energy, the energy that will not kill us as is the case at the moment. yousef: what kinds of learnings do you take from the deliberations here that could make the w.h.o. leaner and more agile to deal with the multitude of crises? there is no shortage of disasters. maria: because we are facing so many disasters, the best thing would be to go at the causes of the disasters. if we attack the causes of climate change, we can take many wins on several fronts including public health. we will reduce our pollution and therefore we will reduce the dots and because the health system is already paying and all of the countries, we can generate more green jobs, we can

generate more sustainable food systems and our cities -- our urban environment can be better planned and therefore protect more of our citizens from exposure to air pollution, injuries from the way we are now having a very sedentary lifestyle in our urban environment. there are a lot of wins. yousef: there is a lot of overlap between global climate change. there is no argument to be made at the w.h.o. could level up. what does it need to look like to better deal with situations like this? maria: we are saying that we need to be better prepared. and we need our help systems to be more resilient to climate change. for that countries need to support the most vulnerable by having a more resilient health

care system that is better prepared. on the other hand, this is related to emergency preparedness for any waterborne or vectorborne diseases that are increasing with the global warming. going to the causes -- reduce the causes of climate change than the benefits to global health will be a norm us -- will be enormous. yousef: i am a geek for many things and one is air quality. i have a little monitor at my place and it tells me about carbon dioxide and oxygen. but then i look at the criteria from the w.h.o. and i wonder does it not need to be stricter? if i am already dealing with pollution, how do other parts of the real deal with it especially places like india? maria: this is exactly why and

september last year at the w.h.o. released new standards for air quality. if the countries will enforce those standards on the pollutants representing so much damage to our health, we can save millions of lives each year. this is so connected to the climate change agenda as well. if we accelerate the transition to clean sources of energy, we could obtain incredible results and the air quality will be one of the indicators to measure that. we recommend all the countries to go for the implementation of the w.h.o. air quality standards because that would be an incredible benefit for public health. yousef: dr. maria neira, thank you for your thoughtful analysis of these topics. dr. maria neira, the director of the department of environment at

the world health organization. dani: thank you so much. bloomberg's yousef gamal el-din at cop27. we will have more cop27 interviews for you. kristalina georgieva will speak with bloomberg later today. manus: let's get back to simone foxman. >> china's exports fell for the first time in more than two years in october. on weakening global demand. exports in dollar terms dropped to zero point 3% from a year earlier, well below the 4.5% gain projected by economists. this as china says it will stick with covid zero unswervingly dashing hopes of an easing of restrictions. more than 5400 cases were reported on sunday. after laying off half of the company on friday, twitter is

asking dozens of staff to come back. sources say some were sacked by mistake while others are needed to achieve features wanted by the new owner, elon musk. a memo seen by bloomberg says the rollout of paid verification marks is being delayed until after this week's midterm elections. facebook's parent met a is reportedly planning layoffs that will affect thousands of staff starting this week. the wall street journal reports job cuts could be announced as soon as wednesday with employees already told to cancel non-essential travel. edit is struggling with growing losses from its metaverse business and a slowdown in legacy projects -- legacy products. global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. good morning. dani: thank you, simone foxman in doha. coming up, earnings from

europe's biggest discount airline. we will be speaking with ryanair ceo michael o'leary. this is bloomberg. ♪

dani: ryanair has lifted its passenger goal. this is happening as europe's biggest discount airline plays down the likely impact of a recession on demand for flights this winter. joining us now is the ceo from ryanair michael o'leary. this is the idea that customers will trade down in a recession. are we seeing signs of that yet? ryan: we are. -- michael: we will be cautious

into this winter again. everything looks good. what is unusual is we are going into this recession with full employment. last winter we had omicron, the -- we had covid, the omicron variant. i think we should still be cautious. it is fragile but all signs in the near term are strong. manus: good morning. good to have you physically in the studio. fares are up 7%. on pre-covid levels. you talk about fragility. is there any fragility in fares? or can you still robustly price? michael: i am pleasantly surprised how strong it is. the second quarter air force were up 14 -- airfares were of 40%. volume was up 11%. it is rare in this industry to

have both grow. we are 11% up on pre-covid. into the autumn and we expected things to tail off it still seems to be strong and i think that is because many -- ryanair, we are at $67 per barrel until next march. we are strong and growing. so far, we have been pleasantly surprised. we are cautious that things could still fall over if there is a negative in -- negative development in covid or ukraine. dani: you mentioned you are hedging on fuel and you are ahead of your peers. you talk about structural changes. is this a structural change for the industry -- fuel hedging

because of the scars of this period? are you and your peers looking at fuel hedges differently than you have before? michael: we are strongly hedged out to march 2023. i am a little cautious. i do not want to be 100% hedged at $92 a barrel. i think there is a risk that it could fall -- the situation is too uncertain. the bigger challenge for the air industry is the strength of the dollar. but we have hedged all of our aircraft capex. we are in a strong position. most of our competitors are not hedged on the dollar. so many of the airline costs are in dollars. if anything, it is the stronger dollar that poses a greater threat to airline profitability in europe for the next year or

two. as much as oil. manus: those are two huge macro themes. the strength of the dollar you are fully hedged at the weakness in sterling and the bank of england calling one of the longest recessions in history. has a weakness in sterling --does it where you? will that nip at your optimism? michael: we tend to hedge our sterling income and sterling costs. i think the more likely impact of that is will it stop people from traveling to the beaches of spain and portugal and greece summer? at the moment there is no evidence of that. we are going into the recession and there is so much negativity out there but there is essentially full employment in the u.k. there are unfilled vacancies because of the inflexibility of

the no deal brexit. we would like to see some restoration of common sense allowing free movement of labor. u.k. needs labor. it is not providing enough of its own. if you were going to get agriculture and retail and hospitality moving again you need more european students coming into provide labor. dani: there has been so much volatility -- political volatility in the u.k. these are things you hope to see. have you had conversations with any policy makers? are you optimistic of the future? michael: it is inevitable. the adults are back in charge after the last couple of years with boris and liz truss. in business we want to see common sense solutions. it is in the best interest to have a common sense trade deal with the u.k., the biggest market. it does not make sense to cut yourself off from your biggest

market. we want to see common sense solutions. the physical challenges are such that common sense nash the fiscal -- fiscal challenges the more we see of that the more it will be good for short-haul air travel. we need european visitors coming to the u.k. we have had a surge of u.s. visitors because of the strength of the dollar. that will encourage more europeans to holiday in europe because the strength of the dollar would mitigate them against going transatlantic. manus: and that is one of the big headwinds. one of the biggest stories we are tracking -- i want to know how this trickles down -- china reopening. there was a monster move in your home sector, less so for your company because ryanair is not traveling to dubai or beijing but there was a monster move in

airlines on friday on the back of the reopening of china. that momentum will have some kind of an impact on your company when china reopens. talk about the biggest impact of a full china reopening -- share travel, business and trade. how will that trickle back to ryanair? michael: when we talk about china reopening what we see as more chinese visitors or their return to europe. one of the reasons the legacy carriers are down is we do not have the asians traveling to europe this summer. we would like to see them return for the summer of 2023. that would certainly help the legacies. 50% of their short-haul flights are typically filled with asian and american connecting travel. the more that reopens the stronger i believe demand will

be for the summer of 2023 and the short-haul carriers will be immediate beneficiaries. there is a challenge. there is a disproportionate advantage given to the chinese carriers and to the turkish carriers. they can overfly russia. the european carriers have to fly around russia because of the political situation in ukraine. the european carriers are going to continue to struggle because of that geopolitical issue. there is no doubt -- i think we are looking at a summer of 2023 where the european industry will still be operating below pre-covid capacity. there will be a stronger recovery in traffic and fairs because of the asian volumes returning to europe next year. dani: one of the risks you i've been speaking of is the idea that you may not get all of the boeing deliveries -- i believe there are 21 max aircraft that you are due to get before

christmas. how likely does that look at the moment? i know you were in seattle last month. michael: boeing blames a lot on supply chain but they have to take some blame themselves. you could see on the ground in seattle there are huge production challenges. they have aircraft manufactured that have left the facility but they cannot fly them because they are missing bits or they have errors. i am concerned. i think we are due to get 51 aircraft from boeing before the end of april. i think we will get 41. i think there is real doubt that we will get the last 5, 10 aircraft in time for the peak. at the moment we plan to carry 185 million passengers. we are gearing up for that. i think they might leave a short some aircraft. we won't know until february or

march. we are operating now on the basis that we will probably get at least 40, maybe 45. i think we will finish up five or 10 aircraft short. manus: let's hope you get what you need so we can all make our liquor flights around europe. michael o'leary back in the studio. thank you very much. good to see you, michael. an un-contentious interview at this moment. we will reflect on that in a moment. meta planning to lay off thousands of staff. twitter meanwhile asking some workers to come back. this is bloomberg. ♪

dani: let's take a look at some

of the things we are watching for today to get you set up for your trading day. we will get germany's industrial production figures. that will show the strength of the german economy despite recession fears. after 8:30 a.m. u.k. time we will hear from christine lagarde who has been bullish of late talking about the need to continue hiking despite fears of a mild recession. manus: she is unsure of what happens with qt. every central banker in the world were bull on for qt. we will get a slew of fed speakers so we will see where they will guide us to the higher land. will they back up larry summers? loretta mester is top of the block. dani: it is about the job

figures on friday what we are seeing today. one place we are seeing cracks is intact. first there was apple said to have trimmed its apple iphone 14 handsets. manus: meta is perhaps the bigger story. we are hearing they may lay off thousands of jobs. that is the journal article. last month mark zuckerberg said many teams will stay flat or shrink but you have the other side of the coin with twitter dumping people and then saying, sorry we might need you back because we did not realize how valuable you were and what you did. that is one of those great ironic moments in corporate history that will go down on how to not to fire 50% of your workforce before you know what they do. you have to leave it to bank of

america. even i do not remember what happened in 1974. i think i was at school. this is what they are saying. dani: [laughter] they are saying they need job losses. it is the great pivot of 1974. manus: i think the whole conversation around pivot is moving away but i will leave it for the bloomberg markets europe team to take you. ♪

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dani: good morning and welcome to "bloomberg markets: europe." i am dani burg