dani: "bloomberg daybreak: europe." i am dani burger in london with manus cranny in dubai. manus: contagion or contained. warning of bankruptcy after bailing on a takeover from by nance. -- from binance. following wall street into the red with cpi print dipping. the fed says it is time for the pace of rate hikes is slow. 2024, here we come. joe biden plans on running for reelection even as house and senate rates -- senate races are

undeclared. pres. biden: it has been our intention, regardless of how the election goes. manus: the distance between the reality -- they are boosting it by a billion dollars. 65% of credit. good morning. dani: good morning. perhaps it emphasizes the undervaluation of european banks. bank owners are like astute shareholders, says the ceo. [laughter] manus: there you go. astute shareholders. there are one or two of those in ftx. let's talk about that meltdown. we have the ceo who will speak from credit agricole. trashing bitcoin, down 22%.

do you believe that that in itself is a contagion moment across assets? they are hedging on single stocks, the most since 2000 and eight -- 2008. dani: and a billion-dollar hole, finance decides not to step in and find that. one reason why you might want to plug that hole is if you believe there is a wider contagion you believe will be bad for the industry. perhaps there is some skepticism , perhaps it will not cause contagion if no one has stepped in. the are their argument is that this is an erosion of trust on the bank. what happens then? manus: if you look at the assets through the week, the token got trashed. in a regulated world, would that happen?

it does happen in equity. does it trade down. we had a guest in the past hour that said bitcoin is worthless. he would take it negative in terms of valuation. there is one view on crypto, not the whole view. dani: if it went to zero, you would imagine it has some contagion effects. it was a big down day yesterday. because of what we are talking about. it has come back. juliette saly will go over that for us. for the rest of this market, i love it. this is the word from julian emanuel that when i read it i thought of you. centrism from the u.s. election, crypto, cpi.

i know you love a little bit of alliteration. manus: i do. it is that bitcoin bite back that could put it in the markets. we are trying to get a fourth b but we are not that creative here. you have cpi and we are waiting for that to rise. we have a red ripple as well as a -- china in terms of close downs, stockpile is building. bitcoin is going back up. yields are dropping in australia. don't look at the resolve of the hikes and how high we will go if we need to. you are seeing a little bit of movement in these rates ahead of the cpi. dani: let's get to our other top

stories from around the world. we'll talk about the crypto story and the latest on the midterm elections, what to expect ahead of that data today. manus: we are on this roller coaster for bitcoin. that is the first time in two years. this was after ftx was said to have sold -- left investors with a cash injection in a company that may need to file for bank of c. let's get to our cross asset team leader. where do we stand at the moment? talk us through the structure of where we are with ftx. why did fall apart? >> according to the ceo, it fell apart because of possible regulatory inquiries that were

reported on in the past couple of days on ftx as well as the financials. when you have a multibillion-dollar whole that is a concern, this had been moving so quickly. it was only over the weekend that they said they were going to sell those tokens from ftx and things went downhill. binance offer to buy ftx and then said they were not do that. this is all happening super quickly. there is a lot to be worked out in terms of counterparties, investors, the haircut they make take. -- they might take and the effect on customers. there are a lot of second order effects that we are only starting to figure out now and starting to see as ramifications become more clear. dani: is one of the ramifications more regulation? thank you so much for joining

us. actually, can we get into that quickly. if this was a regulated exchange, how do u.s. regulators approach the story? >> there is talk from the sec about this. even some legislators expressed some concern about it. a pro crypto senator. they are going to be looking at this and wondering if it would happen to a u.s. regulated exchange. also, how do we handle and exchange that is not regulated? they're all all of things that happen outside of the usual framework. how do you handle it and when something like this comes up that regulars have had a hard time trying to figure out internationally? dani: how does the exchange and up within a billion-dollar holder. something that would not be

allowed by other regulators. danielle, thank you. let's get over to juliette saly and singapore. a lot of damage in u.s. equities. it seems that story is continuing in asia? >> exactly. we have this locked down happening in a key hub. that is really weighing in on chinese stocks in hong kong. we do have a bit of money going into the yen. the movement you are seeing in yields did say that they are starting to see those rate hikes into the economy. let's look at what we are seeing in terms of persistence levels. it has been a great start to the month of november despite the fact that we are seeing some sterling today hitting the level of the 50 day moving average.

we are getting a lot of analyst calls about whether there will be a formal rally. this seems to be on some shaky ground. there saying that the increase make some shortcomings. we are trying to push through this level. manus: i am looking at that story. they recommend we go from h percent this year into 3.25%. that is the debate. thank you very much. let's continue the conversation about politics in the u.s.. the president plans on seeking reelection, joe biden. he plans on making an official call as they stave off the midterms. let's get to our reporter on this. josh, 79 years of age, what is

the move in the democratic house in terms of these midterms? he is able to claim a victory. trump candidates did not break through. >> he is able to claim some of a victory. this is still ongoing. we can talk more about that in a bit. biden has always said he is planning on running for reelection. the question that would hang over that is, if not him, who? vice president kamala harris would be the obvious alternative. it could be a big battle and with trump, he is an existential threat. of course, we expect donald

trump to announce as early as tuesday. the only question is will that bait joe biden in so he can go toe to toe with trump again. we will see if he huddles with the first lady over the holidays , thanksgiving coming up, christmas coming up. he is not leaving the door open. dani: thank you. josh, good to have you. let's stay with the u.s.. we also had a cpi reading the other day. joining us is enda curran. first, we had to deal with midterms. what are we expecting for inflation? enda: headline inflation at 7.9% . core inflation at 6.9%.

there is less pressure on the fed and we want to dabble in the details and keep an eye on as food costs are expected to have some inflation. rent and food are headed in the opposite direction. that would be very important. of course, there is some chatter about a fed move. broderick cetaceans are expected to be drifting lower in line with hints of a broader economy. that would take some pressure off and might start a new narrative coming mid-december. manus: that is the final flight. i will leave you without thought. we will come back to the hot button issue. coming up, crypto dominates the

whole narrative this morning. crypto and the broader markets across assets. the protagonists on bloomberg. ♪

>> we need to make sure if there

are no gaps in the framework where you can see risks like this spread into the broader financial system. i do not think we are at that point. dani: from that u.s. commodity trading speaking to bloomberg earlier. joining us now is frederique carrier, head of investment strategy at rbc. is there a containment risk? frederique: we do not see it as a systemic risk. we are concerned that investor sentiment is very low and depressed. this is an additional factor to worry about in terms of crypto being so mainstream that is an immediate risk.

this is another headwind that investors have to contend with. manus: of course, we are in this desperate zone and are looking for a fed pipit. charlie evans said a fed pipit is entirely premature. do you think it is too premature to talk of a measurable reduction in scale of interest rate hikes? frederique: we expect the fed will continue to increase rates in march of 2023, reaching 2.5%. the fed seems to be standing out in its hawkish and us. the labor market is starting to show some tracks. while the fed may be very hawkish, we will have to reverse quickly.

we do not see interest rates staying at that high-level quite some time. we see the fed having to do a u-turn sometime next year. dani: what would start building that narrative? we are looking at a dollar down 2% in the past week. some folks are ready to make that bed. are you ready to start trading on a peak narrative? frederique: not quite. we do think it will be there and we think that with investment grade going globally, we do think there will be an opportunity. we do think it is still too early for that. u.s. dollar should continue to be strong for some months to come. manus: the debate is this, whether it is too late to hedge, too expensive to hedge, or whether you would be prepared?

we are looking at this. spiking higher, people are hedging again. their hedging to the highest level since 2008. that fills me with dread. what does that tell you? frederique: we think we might be in a new environment in terms of how investment strategy is constructed with the fiscal policy taking a much more active role, perhaps with monetary policy, less so. perhaps higher inflation, higher rates and more volatility. we think those are some of the roles for the past few decades. certainly with the 60/40

portfolio, it should be revised in our view. we want to hold some liquidity, some quality cash flow as companies which will be able to generate cash flow and invest in their businesses should they trade at a premium. we are also looking at some strategies and idiosyncratic opportunities. if governments are going to spend more, we would like to have more exposure to defense and infrastructure and would like some exposure to health care, a sector that performs well. dani: this idea of cash flow being important, you are seeing was happening with d's -- with these tech companies. meta letting go of some of their work force.

has the playbook been rewritten in terms of tech and what type of tech leads this market from here on out? frederique: not necessarily the internet driven ones but technologies which could be applied to industrial companies and companies which can solve some of the companies -- some of the challenges we have at the moment. this has not changed in terms of sustainability. these companies will benefit in the pure technology companies as they are having difficult times and headlines which are in the crosshairs. these companies are trading at lofty multiples and we are seeing the valuation with markets. manus: thank you very much.

frederique carrier from rbc wealth management. coming up, we will speak with the allianz seat -- cfo, giulio terzariol on the buyback program. that is all to come. this is bloomberg. ♪

manus: this is "bloomberg daybreak: europe." i am manus cranny in dubai with dani burger in london. as you said, when you look at on high -- hon hai, the estimate was $41 billion. the income is at $38 billion. we talked about production issues with apple factories.

they are at 57% of the revenue from apple. dani: many folks watching this program will know them by their tradename foxconn. their earnings also confirmed they are seeing weakness in the consumer electronics sector. they say fourth-quarter consumer electronics sales are falling. so our products. this is the theme of why apple is pulling back on producing. their biggest iphone producer. manus: we will keep an eye on that as the morning goes on. dani: in the meantime. first word news, simone foxman. >> good morning. russian troops up been ordered to withdraw from a southern ukrainian city that was the first major center seized by

putin. innate televised briefing, they were told to pull out of the city and regroup on the other of the river. this is after ukraine's troops press forward with a counteroffensive. there will be similar chaos from paris and london as transit workers go on strike with the rising cost of living. a transit operator says travel will be completely interrupted on five metro lines out of 16. disruption to also be on most other services. transport for london is advising people after talks on pay broke down. u.k. said they are planning on cutting surcharge on banks. this is shielding them from the corporate tax rate. they pay and 8% surcharge.

this is as the government weighs tax and spending options ahead of the budget statement next week. global news, 24 hours a day, on-air and at bloomberg quicktake, powered by more than 2,700 journalists and analysts in more than 120 countries. this is bloomberg. dani: thank you so much. simone foxman there. coming up, we will talk allianz after a blockbuster quarter. the ceo giulio terzariol -- the cfo giulio terzariol will join us. that is next. this is bloomberg. ♪ 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.

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manus: is "daybreak europe." dani: contagion or contained? the crypto rout pauses but ftx warns of bankruptcy after by nancy bales on a takeover -- after binance bales on a takeover. asian markets follow wall street into the red before crucial u.s. cpi data. the fed's evans says it is time for the pace of rate hikes to slow. plus 2024 here we come. joe biden says he plans to run for reelection even as the house and senate races have yet to be decided following tuesday midterms. >> our intention is to run again. that has been our intention regardless of what the outcome of this election was.

manus: the numbers from alianza are spectacular. the share of buyback program reporting its best third-quarter profit on record. the munich-based insurer plans to repurchase one billion euros of stock by december next year after operating profit rose to 3.5 billion euros in the current quarter. the cfo joins us now. great to have you with us. let's get to this. that is a great recap. one billion buyback. your guiding profits were 12.4 to 14.4 going forward. what needs to happen to get to 14.4? good morning. >> thank you. a very strong quarter. we had a very strong quarter after having a very strong second quarter. as you say we are set for 2022

end toward the upper end, we should see stability in the market right now. we are posting great results despite the challenges we see on the capital markets and clearly these challenges will go away. we will see even more lift in our operating profit. for the time being based on the conditions we see right now i am confident we are going to end up in the upper half of the range. dani: i have to jump in. to the point, if pain in the capital markets stops when do you think it will stop specifically? some of the outflows we have seen from asset management in pimco, does that look to be abating? if not when do you expect it to? giulio: the outflows are going

to stop once there is more certainty about the rate environment. as long as there is uncertainty about what central banks are going to do by raising rates to fight inflation, as long as the insurance rate volatility is going to be so high, you are going to see outflows. we strongly believe we are well-positioned not only to -- but this could be a great opportunity as we look down the road because the value proposition of the fixed income asset managers is going to be much stronger in an environment. we look at pimco and we look at operating performance of pimco for the nine months, that is the level of last year with our 1.8 billion operating profit. we are starting from here in a difficult environment and we are very confident volatility is going to subdue and we are going to see flows coming back.

we are going to see demand stronger compared to what we had in the past. this is our position. manus: this is the debate in the market. you say you need stability in rates before the outflows stop. i have larry summers saying 6% on the terminal rate. if you go through another 150 basis points these outflows are not going to stop. is that what i need to assume? where is the terminal rate for you? what are you working off? giulio: i believe we are not going to see much more increase coming from here mostly because rates are going to have to balance between increasing rates further and not creating conditions for a deep recession. rates can go up, i don't expect they are going to go up significantly. it is a matter of timing because if rates go up, we can continue

to put pressure on flows and macro -- eventually rates are going to stop going up. dani: where did they stop? what is the level you think they will go to? you say rates have hit x, they stay steady? giulio: if you ask me i believe as we go into 2023 you are going to start seeing the change, the stabilization. we are going to start seeing the flows coming back. we need to wait until the beginning of next year, the summer of next year. i think it is better to be on the prudent side. mark: -- manus: we will see where the terminal rates go. as i see the buyback across the screen this morning, this is 10 billion euros in buybacks since

2017, which is good news for shareholders. are you at peak growth? giulio: no we are not, in the sense of growth of the business. we definitely see we are continuing to grow. we have a rate of 9% now. the rate of buyback, clearly we are going to continue to deploy capital. we think to invest in our stocks is always a very good idea. at the same time, we are investing. we always try to strike the right balance between our matchmaking but to our shareholders -- between how much we are investing in our shareholders and how much we are investing. we completed acquisition both in asia and that is about

allocating capital on internal growth, external growth, and the same time giving capital back to our shareholders. the underlying point is that we have enough underlying operating profit generation to allow us to do this kind of deployment. dani: in terms of potential opportunities, things to scoop up, we have seen an exit of clients out of credit suisse especially for some of their wealth management business. have you been able to capture any of that audience looking for a new home? giulio: specifically to your question, as you know, we are looking at that opportunity. otherwise we continue to look at what is out there which could be reinsurance. at this point in time we really focus on a buyback because we believe buying our stock at this point in time is a good choice. i would continue clearly to look for opportunities if this comes

our way. mark: -- manus: have pimco got an open checkbook to buy these assets? are you behind them saying get these assets? giulio: absolutely. we are constantly in talks with pimco. i have been a client of pimco back when i was in america, providing service. from their point of view it is not just a good company for us, contributing a nice operating profit, but contribute a lot to the size of elian's -- the size of allianz. dani: one of the main themes of what we are looking at in this market are fears of contagion from another crypto exchange going under facing an $8 billion hole. from the behavior of your clients, what you are seeing, are you fearing a wider contagion in these financial markets?

giulio: i do not see that. the difference between what is happening right now and previous clients, we are not in a crisis situation but clearly we are in a situation. the main difference is there is time to prepare. also the inflation side, we have seen inflation, so there was time to prepare. a recession is something we can consider so we can take action to be positioned for that. this makes a big difference compared to unexpected challenges. from that point of view i believe a lot of corporations will quit to sustain some shock, to create a crisis that could be bigger than what it should be. manus: what is the biggest tail risk? your job is to manage risk.

we spend hours on tv talking about risks. grey swans and black swans. what is the biggest tail risk for 2023? giulio: it is always a combination of things that happen at the same time. if you have a significant spike of rates, maybe the equity market going down, this kind of situation can always create pressure in the system. usually it is not a single item. it is when you seen many things happening at the same time. dani: thank you for joining manus and me this morning. giulio terzariol of allianz. a breaking line to give you, delivery hero reporting gross merchandise value at the low end.

44.7 billion euros to 46.9 billion, the same range they had before but they are now guiding toward the low end. are we seeing more cracks in the consumer possibly? manus: we know there are cracks all over the tech face, that is for sure. what was it he said? zuckerberg said? i got it wrong. it is not often you hear a ceo saying that. that is a hefty crack. as you said, delivery hero as well. we keep an eye on the stocks at start of trade in germany. more on crypto, finance backs up on bitcoin. it bounces back. but crypto contagion risks remain in liquidity rather than systemic risk. we discuss next on bloomberg. ♪

manus: it is your daily dose of daybreak "middle east." daybreak europe. i know where i am. three hours of me talking is too much even for myself. the crypto roller coaster. what is bitcoin doing? ftx said it is worried about bankruptcy. an $8 billion hole. let's look at the shorter-term chart, but we are higher this morning, bitcoin lifting the complex. i had a guest earlier. up 6% at the moment, $16,680 in terms of the market. let's get to our executive editor for asian markets, paul dobson. my guest in the last hour said he had run the analytics on bitcoin and in his mind it was worthless. on a cash flow basis it could be

negative. it is game over for ftx. >> it is certainly looking precarious. they need a rescue to keep going. they have pointed to the fact there are billions of dollars they need in order to be sustainable. so looking pretty bad. overnight of course finance -- binance walked away from a possibility as well at a buyout. some people had hopes for a rescue. that caused a bigger downdraft in the crypto complex. up until this morning, when we saw a little bit of a turnaround. the numbers you are seeing looking a little more positive right now. some dip buying coming back in. it is a pretty big blow again for the industry though. it will be interesting to watch the next 48 hours, how that washes through and whether there

are other skeletons about to emerge from closets. dani: something here looks beyond dip buying. i am looking at binance coin, the crypto tied to cz's exchange. at first looking at buying out ftx and decides not to, it has doubled in price of 99% at the moment. this chart looks insane. it crashed 15% yesterday. now it is back at a january hi. what in the world is going on here? is this just everybody moving to perhaps what they think is a safer exchange, a safer coin? >> it seems the most obvious explanation. if you are moving assets into something that looks like it is robust, but is doing due diligence, being careful about where it is going, looks like it is going to come out with a bigger market share, those are things binance has going for it

in this week's blowups come supported by the fact there has been that floor across the broader complex. the fact it can move so much in one day tells you it is extremely volatile and risky. you need a certain amount of tolerance to be able to trade those sorts of assets. a little like manus was referring to just now, especially if the view from some of the market is there is not a value to be attached to those cryptocurrencies. manus: that is just one view on the market, paul. if you come out and you sell the ftx token, which is what binance did, you pull out of the deal to save them, you have to look at this from a lot of different angles in terms of the chronology of that. it is for other people to look at that apart from me. the one thing we need to talk

about is from a macro perspective, this is a liquidity incident rather than a systemic incident. is that a fair first take? >> maybe. judging by market reaction today, buying the balance, but it feels like there's going to be more margin calls coming through the system over the next few days. j.p. morgan has been talking about that. regardless of whether up or down, if volatility is extreme ab that will come into effect. there will be forced liquidation as a result, people needing to raise money to pay margin calls will probably look to more liquid asset stocks. the type of stocks retail investors are invested in and typically the more risky ones, those kinds of things where we see the real pain coming through at the moment, for the broader economy, you know, i suppose you could say crypto is still a very small part of the broader macro universe. the fallout will have limits, but at the same time it is not going to be good for sentiment. we have crucial cpi data coming

from the u.s. in the afternoon today. dani: no calm days left in this world. binance is up by 72%. not 100% anymore. so much for volatility here. thank you for helping us try to wrap our heads around. paul dobson. now speaking of more risk events , we are going to talk cpi data out of the u.s. today. the fed's evans says it is time for the pace of rate hikes to slow. this is bloomberg. ♪

dani: welcome back to "bloomberg daybreak: europe." today we are going to have the latest cpi reading out of the u.s.. let's try to figure out what it

will look like, how the market will react. joining us is enda curran. walk us through the expectations here. >> 7.9% is expected year on year for headline. 6.5% for courier on year. -- core year on year. we are expecting slowdown in goods inflation. some stickiness in prices for food and shelter, rent in particular. it is going to be important to see where the core reading goes. upside would suggest the fed still have more work to do than they thought. we would be back to the 75 basis point story. if we get a confirmation prices are moderating across the board including core, the expectation would be a slowing pace by the fed. maybe towards 50 basis points territory.

as you say, there is a lot riding on how these markets pan out. even tomorrow we have the next peg in the u.s. inflation debate. manus: we have this battle of the exiting arched of charlie evans -- arch dove charlie evans. one saying you are going to break something, one saying we are miles to go before a pipit. -- a pivot. >> what charlie evans is saying is economics 101. they have gone so hard this year logic would say wait and see what is going to happen given the famous lag effective interest rates. observers are getting cautious on the u.s. economy. not necessarily deep recession, but looking at the tech sector, layoffs announced this

week, there are signs of cooling. getting worried about where the rate hikes will land. neel kashkari is -- remember were inflation is, way outside the 2% range. the central bank can not pipit until they are back down to 2% give or take. you have to assume the weight of the debate for the moment is on getting inflation much lower than it currently is. as we head into next year, we probably start to hear more conversation about pausing or waiting to see how the rate hikes are playing out. manus: if we have a tight cpi print jp morgan says bonds could trade under 4%. what is the risk? or is that just dreaming? >> the risk comes from services

and shelter, rent prices. look there if there is a risk of stickiness. manus: we keep an eye on those elements. short and synced. you can come back. enda curran in hong kong on the hot button issue of cpi. let's get dug into crypto. binance coin was only up 72%, now 140%. this is the backlash in bitcoin. whether it is a crypto asphyxiation moment because you are going to possibly see ftx go into an organized bankruptcy, that seems to be the top line, but does that create bigger opportunity for other cryptocurrencies? this is three days of bitcoin down 20% and that has rocked the cross as that concern about liquidity event. dani: let me show you the board that has by finance -- that has binance on it. i lied. this is not binance. this is bitcoin and ether.

both up a lot. up over 100% for binance at the moment, tron another coin is up 600%. i know these are liquid but perhaps it is a market trying to find a home, trying to find what is trustworthy after ftx. there you go. manus: but then binance came in and sold the ftx token over half $1 billion. that trounced that. they backed off from the bid to bail out ftx. and there you go. binance is up 123%. it is a hugely volatile world, but cracking good morning. let's see what cpi is.

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