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>> this is bloomberg daybreak. i'm dain burger with manus cranny in dubai. these are the stories that set your agenda. manus: stocks high after wall street did not start its best c.p.i. day on record. u.s. inflation cools fueling optimism that the fed has the pace to slow the interest rate hikes. plus, f.x., ftx finder sam bankman fried is facing an investigation by the s.e.c. as authorities in the bahamas freeze the firms' assets in a fight for its survival. dani, warm welcome to the show. we are going to get straight to

juliet saly we've got this d rating on quarantine in china moving markets everywhere. dani: yep, cutting quarantine, scrapping flight bans. quarantine is cut from eight to 10 days. let's get straight to juliette saly. jules? juliet: this is what we have been waiting for, isn't it? certainly that move that it will be eight days. but a huge move in terms of the reopening you have to remember that the reduction is what we saw in hong kong and singapore. it's the first lag to a full reopening. we've got the hen tseng up by 7.6%. you've got the korean wan rising 7%. that's the most since 2008. and a broad rally having their

best day since march of 2020 before we started to see the impact of the covid-19 pandemic and the best weekly gain since march of 2020. let's have a look at some of these these reopening trade. cathay pacific is surging pardon the pun. we're seeing a lot of airlines well and cosmetics. we're looking at a lot of analysts. they're saying that they're cautious on the reopening, cautiously bullish. how investment groups are saying the fact that we start to see some easing from these covid zero warrants to be bullish. we do have to remember that there could be a challenging winter ahead so this reduction in quarantine,

manus coming on the basket that authorities said they were going to target some of these covid zero policies and investors are seeing they're one step forward into the final reopening part. manus? manus: more bullish than perhaps what we thought. we'll keep an eye on that. the dollar is dying and the stocks have a major moves. thank you very much, dani, let's get into the conversation on soft bank. it looks like they posted a $7.2 billion quarterly loss. but the net income comes in at $320 trillion. so this is a pivot in the net income story. but of course, the vision front, dani, you've got the numbers on that. dani: the loss is 1.02 trillion yen. that also comes -- that's the fund itself. its investment loss is 1.3.

we know that soft bank partis painted in funding round. sequoia said yes, you've written the whole thing down but it's minimal. we know the vision fund taking a hit again. it's a loss of over $1 trillion. roughly $7.2 billion. manus: $don't forget we're showing the soft bank, 6, 953. and a lot of this has to do with the buybacks. we're waiting on the latest information on the buybacks it goes to yashimot at goto. he's the finance chief. it's a change at soft bank. but dani, we've got to talk about the overall valuation of

risk. jules has taken us through the entire china sweep. the question is it's a bit like the secret scene from the fed, isn't it? how big a move will they make? how will they recalibrate the opening. dani: another common thing this has with what happened yesterday with c.p.i., it's just been a long buildup of onesided bets. be it china lock downs some of when these items come out there, they're very one-side trade. and you all of a sudden you get this burst to the other side and some huge superlatives to a company then. >> absolutely, if you look across assets. what you've got as to what extent have the birds vanquished. some people want to get out to a pivot party.

i would say fast more of a recalibration party. some of the superlatives are pretty monstrous. you've got cable up 3.3% in terms of yesterday's move. one of the biggest moves since the 1980's and in terms of the rest of the markets, this is what we've got. the dollar con continues to trade on the day and again, you're seeing one of the biggest moves in 20 years, bond futures are open. of course, it's the belly of the curve where you saw perhaps some of the biggest moves on the five-year paper. but we're keeping an eye on your thoughts. you can see the huge move on the yuan. dani: it's the best post c.p.i. on the record. manus, this is just really fueled by the china story. yes, they were already up. they were up massively yesterday. bes day. but what takes them another higher -- it is the story on

china cutting down quarantine. manus: we have the cooling for a moment in inflation data. the chief -- so we have this discussion. and i think mary daily encapsulate it buttely which is it's a recalibration not a pivot. a glimmer of hope on the core c.p.i. >> yeah, that does seem to be where we are. the headline and it came in slower than expected. there was broods. disinflation on food and medical costs. apparently it's been pinned on the price of hotel promise that the u.s. but the takeaway that it does seem to be heading in the right

direction. and that is spurring some of the fed officials. four. making the point that it might give them an opportunity to recalibrate and go for those jimbo hikes and go slower. >> they will have a job's read in determines. you have to say all indicationss are that that it's going where it is. and some of those concerns the discussion will be dominated by slowing head hot cycle. >> i do wonder though in terms of what this will mean for diversity of opinion. i ask this because tom over at r.b.c. puts it thusly that powell has painted a hawkish corner. he can't give up just because he needs to retain his credibility. is there some validity do you think? >> you're absolutely right, dani. this is whole point.

it that may slow the pace of the rate hikes. but they're still going to be raising interest rates. let's say they go by 50 bases points in december. as one economist told me if you're told, you'd shocked. that is still a big move. i never expected to perhaps keep moving as we get into 2023. so the fed hike story isn't over. perhaps they can slow the pace. if that does come through, that's a big release for the rest who have been struggling from a strong dollar in response. could it be quite a term prince and the global economy? >> thank you very much enda going over the c.p.i. numbers that fueled a massive risk on rally. we saw a rally on crypto. it does appear to be continuing

today. bryces are sinking yet again -- prices are sinking yet againer. for more let's bring in senior crypto reporter. so some reprieve in crypto crieses thanks to that c.p.i. report. but in terms of this question of con tagement, are we getting any signs of that? >> hey, dani, we're definitely getting that. they would need to freeze withdraws because they don't know -- they don't have clarity because of the f.t.x. situation. and we are starting to see other play places saying ok, what's next, you know, the s.e.c. and the u.s. securities and exchange commission is investigating bankman-fried. and we have the bahamas freezing ftx also.

and we are starting to see the contagious within the crypto space and that is keeping everyone pretty nervous. manus: we don't have substance whether it was something to do with h transfer funds. what is this going to mean for regulation? >> well, ma new, i think it's going to mean that regulators are going to be a lot manufacture interested. we have legislatorrings, regulators who say we need to be looking that hearter. we need to be looking at these zones where they're operating outside the bounds. because they've been in this international context with a new asset class. they have been able to operate outside of the traditional structures of regulation. and i think regulators are going to be looking a lot more at what they can do to bring some of those forms into the regulated space at this point. manus: joanna austin, thank you

so much let's see what happens as we go to the close of treated. crypto is opened all weekend. coming up, we'll talk more about the c.p.i. how welcome is this relief? what will it mean? this is bloomberg

♪ dani: manus, it is all about the china story. that liftoff we got from c.p.i. and risk markets getting another

leg higher thanks to china cutting quarantine rules -- easing them i should say. it is now less for inbound travelers. i want to kick things off to what's happening to commodity. any blocks -- black box there makes means a standard deviation move. look at iron other. look at copper. look at steel. it's all taken off, manus. manus: you've got the softer c.p.i. story which is driving the huge rally in bond market. but that softer c.p.i. is supersede by the news of a reduction in quarantine for close contacts, a reduction for inbound traffic. and that sees a big move in terms of the yuan and in terms of rates. we are keeping a close eye on that. kristen is global head of research of julius bear.

as we go to to this capitalist, could it change your view and the global view on risk on china? >> not in the long run. there are too many open questions if you look at the short-term in terms of problems, difficulties, you know, there might be immediate relief. and it's certainly contrarian calls. i think it's worth for a tactical position but it has to be off at some stage. >> i love how you write this in your research. china is reopening as a trade not an investment. i mean, what more do you want to hear from initials from the china story for it to become an investment and not just simply a tactical trade? >> well, the polsters have to read what's going on in terms of the long-term prospect where is

the foreign capital is welcome. and welcome it means treated fairly and also allowed to leave at some stage. for the time being i think it's pretty to make that what's the stance there. and a lot of these questions have to be explained by the leadership and also experience has to give investors some grip on how they're treated in china. this wish that it would become chinese assets owns this and equity. it think until both investors know what they're dealing with manus: you look at the biggest one-day drop on five-year government bonds on a tighter core c.p. inch. let's listen to some of the voice on if first wave of reaction. >> this is an extremely welcome

piece of news that we've been waiting for. >> this is a good number. there's, you know, some evidence that we are moving from peak inflation down lower. >> you're starting to seafood prices not rise that much. you're starting to see durable goods starring to decline a little bit. >> you can see the incredible move in the markets right now. it does support -- i think what is the fed's leaning wanting to downshift in december. >> i know they focus on the debate in december, and whether they're going to move 50 or 75,000. i don't think the fed is going to stop because of this one number that we see. >> the real question is will this persist? >> this is the start of lower readings that we have seen for the most of last year. >> the likelihood of soft

landing is going up a little bit. manus: is the jubilation a bit too soon to say that the bars are vanquished? are we talking about a recalibration from the fed rather than a pivot party? >> that's probably good enough, you know, to have a recalibration. it's been -- actually something to cheer about simply for the fact that there was a first time in what feels like fortress that we have a longer than expected expectations of inflation. and even at somewhat faster pace. this is one data point. this is up two revisions. we have to spot that. the real important thing is really that the fears were there that the fed would break something while being on this incredible tightening path. and break something means

something in the system will go terribly wrong. sometimes going belly up. i think that's is actually decrease as we speak. >> let me play devils advocate. >> what we're seeing now is just naturally inflation come down. we haven't seen the bite of policy and the fed is still hiking all be it not by 75 bases points. is that a sign that the fed could go to for and overdo it? >> yes, exactly. this is -- this is the main concern and as you say, there are huge lags. i think we'll see a lot of these policies materializing in 2024. so they're suddenly a case. the bigger the risk that we're going into something that is very uncomfortable and this risk has diminished.

you like high grade credit. we were looking at the black rock e.t.f., the biggest one-day move into in two years. we saw this slows move in credit. when do you buy high yield? >> high yield is the assets you buy when you think the worst is over in terms of cooldown, slow down in the economy. this is something which might happen in the first half or maybe in the first quarter of next year. so we're still a bit torn there. given what you get elsewhere many risk return and better qualities and have a break down in the economy. i think it's worth to be on the better quality on the safer said. dani: thank you for joining us. coming up, u.s. equities had their best reaction to a c.p.i.

return in decades. we'll get the latest on the market reaction next. this is bloomberg.

♪ manus: manus cranny with dani burger. quarantines are coming and deep close contacts are also being reduced. the transformation in the equity story the c.s.i. at 300. and of course these chinese equity markets are rising. they're having their best month since april of 1999. you are seeing a very strong performance. some big names are extending their rally by 16%. country garden up 14%.

so this is hang seng the best day since march when it closed with 19%. dani: at the moment this is a tactical trade for him and it is not yet a long-term story. but one other story that is taken a backseat is dollar strength. manus, this narrative adds more strength the yuan. this means at the moment, the on shore is up 2.1% versus the dollar. that is the biggest move since 1984, manus. manus: that is a pretty huge move what does this mean for the flow of money? we started this week talking about the flow of money. could this turn that narrative around and shift the gears with a softer c.p.i. that rolls the dollar down as well. dani? dani: manus, let's get to some of our other stop stories. the first news is simone.

simone: good morning, dani, world leader are gathering in cambodia for the first of three back-to-back meetings in asia. president biden at the association of southeast asian summit will push an alternative vision designed to counter beijing's growing influence. this is ahead with the chained leader -- china leader. uk assets plunge in value. he's blamed liz truss for going too far and too fast with her economic reforms. in an interview with top tv, he says he warned the prime minister it would lead to her downfall. truss was forced to quit after seven weeks in downing street. amazon chairs have jump and on the news that c.j. is jumping on

cutting efforts. and bloomberg has learned that elon musk has told twitter staff that bankruptcy is a possibility if the country doesn't start generating more cash. twitter has a significant debt burden from the acquisition. some funds will be offering to buy paper for as little as 60 cents on the dollar, a price typically referred to companies in financial distress. bloomberg powered with more than 2700 journalist and analysts in more than 120 countries. adam: serving in afghanistan, i was hit by sniper fire and i was given a 5% chance to live. today, i visit classrooms and share my story. i tell kids that with a little help and a lot of work, that you can overcome any challenge. announcer: dav helps veterans like adam

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manus: it is "bloomberg daybreak: europe." i am manus cranny in dubai with dani burger in london. we have the stories that set your agenda. dani: china uses quarantine roles, propelling socks higher. -- propelling stocks higher. the fed has room to slow the pace of rate hikes. this following the surprise reading. an investigation by the ftc as they freeze the ftx firm assets. happy friday. another edition of friday karaoke here. tell the folks, what was top of the charts in 1993? manus: it was whitney houston with -- what was it?

dani: i will always love you. manus: i will always love you. this is very left field. god bless dolly parton. let's talk about this morning. we are desperate for any good news. we are pressed in terms of being daring to take a risk. we explode higher. dani: need even started this morning this is cross asset, big differences this morning. manus: the dollar continues its trajectory lower.

indent rally in the morning. i love a bond trade. one day drop in yield since 2009. the probability of that has gone to zero. it will not be as cheap to me to go to the united kingdom. i can see retirement coming towards me. the rally in sterling. dani: how did you fit retirement, whitney houston and dolly parton all in the market check? manus: only on the show. [laughter] dani: impressive. i do have a big monster rally in asia equities. asia-pacific is up.

on track for the best month in years. futures are on the highs and comes to features s&p. best post-cpi reaction on record. the one not playing along is bitcoin. the crisis feels like it is continuing today. we're trying to digest the effects from the downfall. those effects for like they keep coming. assets have been frozen and are being investigated for potential violations. the one-time wonder kid also has warned of bank of c. a very different picture to what they have painted in recent months. >> we have a few billion on our

balance sheet right now. we are profitable. we are in a fairly strong plan. without making money part, we have raised a few couple hundred dollars. we are a profitable business. there is $70 million that we have put in. we have not used majority of the cash. we want to be in a position where we are moving forward at what we can be doing and where we can be most helpful. i am really excited about the leadership. dani: there is some optimism there. let's get straight to charlie morris from bytetree. there was a lot of trust in ftx. now that that has more or less been obliterated, has this

changed things for crypto? is this a change for the asset class itself? charlie: good morning. i think we are used to this kind of thing. let's suffer get, bitcoin did nothing wrong. this is not a bitcoin crisis. this is in the space, a big shock. they have little credibility. manus: good to see you this morning. we have both lived through much. you say this is not a canary in the typical coal mine of risk. with that in mind, are you concerned -- it is amazing how we go from the agony of crypto with the ecstasy. are you concerned about liquidity in any way? charlie: absolutely. i think that there are big pressures there.

normally when crypto goes wrong, it is a warning. it is the opposite this time. what happened yesterday was a big back wave. asia, china went up a lot. it went down yesterday. it is an extraordinary reaction. we still have seven point something. it is still a big number, a long way to go. it ought to put the floor on markets, at least for a few weeks and possibly a couple months. dani: has it fundamentally changed your thinking? is what you are describing a short-term tactical rally? charlie: it is hard to imagine

that. you have seen a very small change in rate features, bond yields have really not come down much compared to the rise they have had over the last three years. what will pull down cpi? you can say commodity prices are falling but it will not take much for that to change. that is normally very bad news. the inflation would be back again. we expect this kind of behavior and bear markets. there is ton of value out there. playing of time to be getting involved in some of those things. that is what i see. bitcoin is fine, crypto has

more? speared there is lots of value. manus: with the china reopening narrative, it is interesting that oil was relatively step to. -- relatively step give -- step give -- skeptic. with the china narrative evolving, does that $100 workout? charlie: you are absolutely on the money. this time, we are still coming in at 100. it depends on how you see it. it would not take much for this inflation to pick back up again. services are still very much there.

people want a pay raise and they will get one. ideally, you can take 7.7 all the way back down to 2. it is not happening, not with expectations at 2.1, 2.5. it is lower than eight, higher than two. i would not think that would be like that in any stretch. dani: i wonder what leads the market. it sounds like you cannot go back to the same playbook. inflation would still be higher. if i can put a circle on this conversation, bring it back to the start, can you really assumed that we will see the types of rallying in crypto? if we are not going back to that

easy money environment? charlie: i'm sure it can. we are first to say that there are 20,000 and we have been saying that for a long time. there are a few projects that deserve to be valuable because they are building technologies. i think it will be more rational in the future. we have bitcoin in 2024. will that be a big deal? possibly not as much as a has-been been in the past. it will certainly do something. we are bullish for the long run. fair value methodology put set in the region of $20,000.

we can sit on that for several months now. if it recovers, that would reiterate the risk asset. the big picture, it is a credible, longer-term idea, the alternative asset which makes a lot of sense. the top 20 countries that use a bitcoin are emerging markets. that is one of these ideas that this is a megatrend. manus: let's see where that takes us. as you say, bitcoin is not broken. our guest this morning, on the markets. coming up, china eases the quarantine rules.

decisive measures to control covid-19 as cases surge. we have the detail. this is bloomberg. ♪

dani: welcome back to "bloomberg daybreak: europe." i am dani burger in london with manus cranny in dubai. we have some of the biggest easing measures with china thus far. look at what is happening with the yuan. it is on track for its biggest today strengthening since 1984. you could see that head to the 7.0 spot in the near term. manus: the dollar is continuing to climb. let's see whether that continues and demolishes the dollar further.

from the market impact, michelle cortez is in hong kong. ", flight, tell us the big headlines that will matter the most. >> the biggest thing is that china will ease up on covid zero which is what everyone has been waiting for. china is the only place in the entire world that has been trying to get covid wiped out. everyone has been screaming for years that is not want to work. china seems to be throwing in the towel, bitcoin is here to stay. they're trying to figure out a way to come forward. that is a mammoth shift for china.

it will shape everything going forward. at this point, very early days. there easing quarantine, cutting flight bands. they're telling local officials on the ground to not be as aggressive. most importantly, they are acknowledging the fact that there will be changes going forward. dani: how do we square this narrative with the fact that covid cases are picking up in china? are we headed towards a world where it is things like hospitalizations that matter more and not the individual cases? >> right. what a great question. is what everyone is expecting at this point. there may be some kind of change towards that. the numbers are over 10,000 in china. it seems like a low number to the rest of the world. it has not been this high in

months. not since all of shanghai was locked down. it is that bad again. we are getting to that level. winter is just starting. the fact that they are doing this easing now indicates that they will be looking to something different in the future. a great question. at some point if we start seeing 20,000, 30,000 cases a day, will they change their mind? we do not know. we did get a list of the measures they are looking for and some of those include adding hospital rooms and stock piling medicine. they are expecting things to get real. manus: it is interesting that the language that the use is that the covid policy will be fine-tuned in terms of eliminating cases. of course, this is the key.

i know he said the risk is that they could explode. from an economic point of view, if this is a small fine tuning, we could see a great deal more happen. this would involve a lot more with vaccination. >> absolutely. the policy, they did great at the beginning. their vaccines are less potent than others. it has been more than a year since they have been vaccinated. we know that that wanes over time so the amount of protection they will get is not really clear. we do note that they will be more strict when it comes to targeted measures. they do want officials to lot -- to act more quickly and take aggressive action in smaller measures in hopes of wider damage. how it will exactly play out, we

do not know. dani: thank you very much. michelle, in hong kong. we will take a closer look at the winners and clues -- and losers as we near a close. more on that, next. this is bloomberg. ♪

dani: welcome back to "bloomberg daybreak: europe." happy friday. i am dani burger in london with manus cranny in dubai. numbers this morning, another monster report from a luxury sector. a reported record first half earnings. inflation, cost of living, consumer sentiment. what about the rest of her earnings? let's go to tim craig.

thank you so much. a lot of variation. how do we measure what we have heard so far from companies? >> i would have thought we would have seen a number of disappointments. rising costs, etc.. almost 60% of companies have beat expectation. the average run rate across the market for earnings growth, a minor 29%. it has been an outstanding report. there have been misses and disappointments. it has been unambiguously good. manus: that sounds like they did better than the u.s. or are

there more headwinds to come? where does it stack up relative to the u.s.? >> it is interesting. you showed that little exhibit moments ago. what we have seen so far is that earnings expectations are rolling over in the u.s.. we are now down on the year on year. if you look at estimates for europe, we are still up. they have started to peek out a little bit but we are better in europe than in the states. there are several reasons for this. you think about composition. the u.s. has 25% of the market in technology with internet on top of that. that is what we have seen some of the pressure. in europe we are heavier in

energy and materials. weak european currencies are a tailwind and is the opposite in the u.s. dani: if there are more cyclical companies with less tech, are we more clear? >> it is the 64,000 pound, dollar, euro, whatever question. women earning specific perspective, the shoe has yet to fall. currency has been positive. we have seen what happens with the dollar. if this starts to shift in terms of narrative, we will see that euro weak pound week crutch disappear. oil has been an inflation hedge. it does not matter if they are cheap.

on the one hand, we can see earnings disappoint in all those rising costs start to play through. on the other hand, it might not matter. we have been in this tug-of-war all year long with earnings being better than expected. if we start to feel like the inflation story, interest rates are peeking out. you see earnings disappoint evaluation left. interesting dynamics in the market. manus: a variety of peaks that could come into play. thank you very much for putting that context around the earnings season. there is only one story this morning. it has really been refueled by china. that is pervasive across the

global market. bond yields rising. you are seeing the commodity complex. iron or is up. if they get a reopening, it will be pervasive across the assets. is this a catalyst to a big shift? dani: it feels like a catharsis. the cpi with an assist, now the china assist. it is remarkable to see the standard deviation. they may be on track for the biggest gain in years. a lot of changes coming to these markets. we will stay on top of it for you. happy friday, everyone.

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