dani: good morning. "bloomberg daybreak: europe." this is"bloomberg daybreak: europe." i am dani burger in london. he inflation, softer than inspected -- softer -- he inflation, softer than expected. bonus cut surprise. we are told to expect cuts to bonuses from goldman sachs. let's start with that goldman sachs story. the bonus cut is expected to hit the firm's traders. context for how surprising this is, traders are bringing in

profit for goldman sachs, one of the best performing divisions. the compensation pool for them will be slashed by a low double-digit percentage. this is for a trading division on track to see their biggest revenue hall in more than a decade. profitability concerns across entire business, considering how much they spent on the consumer division. it is being pulled back. other areas are also expecting a bonus cut. they told staffers that bonus season will be difficult. this is after we saw this huge

bid for bonds. 10 year yield at one point yesterday hitting its lowest level since september. we do have a speech from chair powell yesterday, we had pc coming out. that is the fed's preferred measure of inflation. plus, jobs later today. not only has it set -- sent investors into bonds, pre-equity is lower today. why would you want to take on any risk at the moment considering we have a best -- big risk environment upcoming. i sterling at yield is up. we'll talk about the details in a bit.

rent is coming up a little bit after it tumbled over uncertainty in the market. hopes of reopening in china have sent the rally higher. we do have a meeting in opec this week. they are expected to hold or cut productions from around the world. we have jobs data preview. there's an update on the political situation in africa. markets as a whole, they are a tight this morning. we are looking to the u.s. jobs report for clues on the policy steps. ahead of that, november

manufacturing data and the inflation gauge waiting to solid u.s. data. let's try to unpack all of this. is it fair that the data recently has been pointing to a weaker america economy? >> that is fair appeared -- that is fair. you heard jay powell's week encourage people. to think that the soft landing scenario -- i think you'll take a shock to not -- to knock it by 50 basis points. it may follow weeks -- even

months since they floated the idea of hiking deliberately as opposed to with haste. it will have to be -- dani: what is at stake considering wages continue to see stronger-than-expected numbers? daniel: stronger than for sure. looking for a downshift in the labor market. this is happening gradually. as long as it can still be framed as a slowing labor market, regardless of the numbers.

dani: off to south africa, the president is mulling over a resignation. joining us now, let's welcome bloomberg's south africa managing editor. just a few days ago, he was in the -- >> it is not very new.

it did not happen yesterday. this has been going on for a few months. there have been investigations which were released earlier this year. how is this stashed at home? what changed dramatically was on wednesday they came up with the report. why they did not say that he should be peach, they did have a question on ethical behavior. that is what started this call for him to resign. that is the whole sequence of events. dani: when he came in, he came

in as the pick for reform. should be see him resign or be impeached? what does it mean for more stability in south africa? >> when he came in, there was a wave of euphoria. he has made the right noises and said that he has opened up private sectors for investment. there are still lots of problems. the economy cannot add jobs. there is a law of doom and grew -- doom and gloom around. what they are looking for is if they will be able to end

corruption and what we see on a daily basis? that is what investors will be looking for. it has recovered. it will depend. dani: from africa to asia, stocks are sagging for the week. but get an update. this week has given us twists and turns. potential euphoria over opening, where do we stand to end the week? >> a lot for investors to get

through. top of the mind is a jobs report. we are discussing it and it is being reflected in trading lines. essentially, calls that we need to see for training. in terms of the trading session in asia, we are being led by more tech sensitive, right sensitive index. as you can see, it is holding onto that strength that we have seen in recent days. they are calling for a review and policy settings. we are watching chinese stocks. who did have one positive sentiment indicator, beijing allowing home quarantine for

some patients. of course, this index has seen a huge rally over the past month, driven by policy support, a lot of unfinished issues so they can stave off instability. the big question, where will demand come for homes when the economy is looking so weak? dani: fantastic question. go home, get some rest, you deserve it. let's take a look at some of the other key things we will be watching out for. kicking it off, ppi for october. we will start data for the u.s., including the jobs report. hopefully you had your coffee by then.

1:30 p.m., canada that will release their november unemployment figures. we will also hear from the vice president speaking in madrid. weighing economic data and, fed speak as they look ahead to the jobs report. we will get into the and what it means for job markets. plus, we speak exclusively to the credit suisse chairman. stay with us for that. this is bloomberg. ♪

>> we need to signal to the public that in all scenarios, inflation will return to our target. dani: as organized for the bank of thailand and settlements. really, what we have been focusing on is a potential limit driven by u.s. data. here is a look at what happens in data this week. more than 1%, despite the fact

that we had a whole lot of hawkish fed speak. the idea that cc has been weaker and we have had jobs, all of that with a bond market with yields. at one point, hitting their lowest level since september. chief economist at van lanschot kempen, anneka treon joins us. is this, the rally something you want to follow? anneka: there are two major drivers, the rates at which interest rate hikes are starting to slow down, that is what has been can -- confirm to us and number two, price pressure starting to slow down. that is what markets are excited about.

markets are bouncing off sentiment. we do need to bring it back to the drawing board. equity prices and pricing things in. dani: this is exactly what i wanted to take to you. have i gone too far and pricing in terminal rates? our rate investors folly for believing that the fed -- [inaudible] anneka: let's say market start to pivot, equity markets are at

the same level that they were through year. anyone that is in on that one on one -- it is so dependent on policy rates. there at 50 basis points. there is simply a mismatch. a company -- if you look at -- look at a company and say, i used to be willing to pay 5% are now only winning -- willing to play shared equity and then add leverage, that is a much bigger impact. we are not seen that affect

priced into the market and not seeing a proper translation of higher interest rates into equity markets. that is a big concern. dani: if you were to have that, how much weaker should equity markets fee -- markets be? anneka: a lot of companies are looking at multiple degrading, quite a lot. also for margins, this is something we feel strongly about. yes, europe gets the currency benefits but they are still too high. you have earnings estimates to have to go down, valuations

which are not extremely low and next to that, the mechanism i just cited. making sense of what those numbers should be is complex. it certainly warrants caution, especially after the rally we have seen. dani: this is something that mike wilson has said. kalon of itch -- all of a sudden saying he sees lows at the end of the first order. is it too easy to say that stocks will fall? is that almost becoming consensus? anneka: one always have to look

at over consensus. early october, -- it was paramount. then you have moments where i think, within today's time, stocks and indices were up 25%. that is the effect of over consensual thinking. the only way is to go extremely specific and fundamental. the interest rates, the leverage, the earnings, etc. the are surprised opportunities there are attractive. turn opportunities that are very

complex. dani: what are those opportunities you are seeing? anneka: we will not go into specific company names but it is going back to the basic stuff, the warren buffett of the world. companies with strong industrial notes, strong capital disciplined and allocation. you get some allusions which are maybe not sustainable. it is just going really nitty-gritty into what the business is. dani: thank you for joining us this morning. anneka treon, chief economist at van lanschot kempen. coming up, the french president has a bone to pick with u.s. president biden. this is bloomberg. ♪

dani: emmanuel macron has warned that the u.s. risks fragmenting the west to the detriment of european industries. president biden will not apologize he may be open to tweaking the glitches. pres. biden: there are going to be glitches. we to reconcile changes. there is a provision that says there is an exception for anyone with a free-trade agreement with us. their tweaks we can make. dani: for more, let's bring in our correspondent carolyn. -- caroline. was president akron able to --

president macron able to change anything? >> you heard joe biden talking about possible tweaks which is a package that the president -- the french president has spoken about. 2.5 hours, twice as long as planned. joe biden used this kind of rhetoric, tweaks, glitches, adjustments. event spoke about possible exceptions for europe. one provision in the inflation ask -- acts with countries that have free-trade agreements,

meaning allies. whether or not that leads to concrete tweaks in the package -- as one reporter put it -- it is not about love, it is about proof of love. dani: very well said. why not cheese and more by gets to -- and more bagguettes too? coming up, we talk about blackstone real estate fund and their redemption. we will also talk to credit suisse chairman in the

dani: good evening. this is "bloomberg daybreak: europe." ahead of key data later today, u.s. jobs look softer than expected. south african president weighs resignation amongst allegations. goldman sachs executives were told to expect cuts to their bonuses for trading, despite the giant expecting to have record returns on the year. as we await jobs data, a lot of jobs there yesterday -- job stated yesterday. also, it did show the signs that

perhaps from very high levels are slowing down. it does mean that things hit their lowest since september. the same time, stocks were rallying, taking a bit of a break. global equities, this is simply a bear market rally. being driven by unfounded optimism. the 10 year yields, lower than nine basis points. also in south africa, amidst fears for the south african president quitting or being impeached -- oil is down today but it is up significantly.

>> are not south africa story, calls are mounting for the south african president to resign. he may have broken anticorruption laws. the fear may derail more than just the presidency. the president has denied wrongdoing and is considering how to respond to the report. european union is closing in on a deal to cap the price crude oil -- russian crude oil at $60 a barrel. they continue to push to harden the sanction package before calling off on the price talk.

president biden says that european leaders fairly subsidize companies. this comes at missed a visit by the french president. opec has slashed oil output by the most since 2020, fulfilling a new agreement stabilizing markets. there are 23 nation -- the 20 three nation alliance angered the united states and announced a significant cut in output. 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.

dani: thank you very much. one of our top stories this morning. less than an hour ago, one of our executives says that goldman on its way to being with deck at high returns but will have bonus cuts for traders. on monday there are rising traits and inflation fears. now at 1.3 -- our guest, robin doumar from

park square capital. thank you for joining us. let's start on the dislocation. how unusual is this dislocation we are seeing at the moment? robin: i think it is significant. across credit markets we are seeing it effectively shut for new transaction activity. that means that the people who need to step into the void are direct lenders. i think it is a very significant trap. dani: at the same time, it is a painful moment for private equity. can private equity deal flow continue at the same place? robin: it has held up well.

the larger deal flow has definitely slowed up. the large syndicated market continues to be dislocated. that will be the challenge for private equity as we head into higher interest rates and supply chain concerns. dani: is there an increased flow as folks to -- folks look to your industry to pick up the slack? robin: phones are ringing off the hook. this is the most interesting credit environment i have seen. are you concerned about the risk? part of them pulling back is about the risks. what makes you confident about taking on? robin: selectivity and discipline are the keywords i would use. if you built the portfolio carefully like health care,

software, business services, you will be fine. dani: private credit, if we are talking about equity counterparts, is a much more conservative industry. are there folks that took undue risk that are going to be exposed? robin: absolutely. one of my predictions is the massive differentiation. credit picking skills and those with less so. there will be differentiation across-the-board. dani: how big is a pocket that will be to the downside? robin: there are lots of people that deploy capital across the market that are effectively buying data.

i think in the credit markets, that is a prescription for disaster. you need to be very selective. i think if you had been disappointed in selection, you will be disappointed here. rates are rising. that is a big headwind for private equity and a massive tailwind for private debt. if we can arrive 12%-50% -- 12%-15%, that will be effective. i think it will compare favorably. dani: this is a little different than what you are describing. i know this is not your world,

but with blackstone and behemoth companies, whether it be real estate are private credit, do you think some of these equity funds have grown too big, too fast? robin: i will not mention any particular firm. they are a great firm and do a lot of things well. in general, when you are dealing with liquid situations, long-term capital is a good thing to have. for private credit, one of the things it can navigate the market we are in so effectively is the mass -- vast majority have capital. they are set up to be shock absorbers in the system. dani: what you expect the default cycle? robin: i expected to be bad.

i expect -- i've heard say -- i've heard people say that we could see defaults rise and recovery rates will be lower. documentation over the last several years have slipped badly. i will expect rates to be in the 50% range. dani: what you to be driving that? higher rates and floating nodes or economical deterioration? robin: interest rates are a huge component. if you think about where we are today, in europe, rate have risen 350 basis points. in the u.s., it is more pronounced. the vast majority of the structures are floating. the headwind that creates is big.

if you started the year with free float coverage, you are probably ending the year at whatever capital structure with no margin for error. that means you will have to work really hard to make ends meet with some of these companies. dani: one last question about the u.k. which probably feels weird. in terms of big financial stories this year, u.k. and the turmoil has been a huge one. a lot of people snapping those up. to think that turmoil is over or there are still opportunities in this market of those types of dislocations? robin: i think they are still there. pension funds are still rebalancing. we have had buyers with very attractive returns. i think the dislocation, as of

yesterday is still there and will continue for some time. dani: thank you for joining us. robin doumar, managing partner and founder of parks square. coming up, we will have more on the south africa scandal and economy with colin coleman. this is bloomberg. ♪

dani: the south africa president said to be mulling over resignation and missed a scandal. hanging in the balance are majority and lawmakers are considering impeaching him. we are joined now by colin

coleman. thank you for joining us. let's are on a headline level. are you expecting him to resign and what are the risks if he does? colin: there is a widespread expectation that he is likely to resign. the question is, what should the markets worry about what should they not? i think markets should be worried with a potential succession of the presidency. a former killer of an activist released payroll, which is very controversial. they are being instructed --

when the fortnite, -- within the fortnite, there could be instability. i worry about stability in south africa. bringing the scandal into the picture. why do not worry about is if the president is succeeded by anyone. i don't worry that the policy will change. why do worry about is that the reality -- because corruption is one of the main issues that he was trying to tackle. this puts a question mark over how it will continue. dani: that question, mark, will

it be so bad to bring us that far down? colin: it could be. you don't bet on things that risk manage the environment. i think the good news is that the business is very resilient. there is high liquidity in the equity markets and you see how this markets are reacting to the news. i don't think a resignation is fully baked in. essentially, there is a possibility that we will progress and any potential removal of the president is not good for anticorruption and

pro-government reforms that were taking place. and the premarket performance that was being guided by him. dani: if it is not fully baked in, what does that look like? we have seen the dollar versus ran going to 17.5, seeing its biggest decline since march of 2020. how much worse does it get to fully price this likelihood in? colin: the global markets, the dollar has been weak. the ram has benefited up until this point. it is stronger in the last week. i think it will go somewhere closer to the 1850 mark. dani: that is certainly some

more weakness. in terms of south african leadership, i know you said you are less worried about policy, but how big of a leadership gap would be left for south africa as a whole? colin: that is the major question. what are south africans facing? are we going to have a multitude of crises? south africa is full of highly experienced people. in fact, they have had much more severe problems in the past. i think good south africans will have to stand up, businesses will have to stand up and stabilize the structure. particularly in the next fortnight.

business leaders, government leaders, former activists will have to help manage the crisis. dani: not just domestically, it was not that long ago that he was around. he was at cop 27. what does that mean for south africa standing in the global community? colin: he was a very respected individual globally. i would say, south africa is full of leaders. should something arise, these are very competent people. i'm not concerned that we will suddenly find south africa

immune in the world. but, he was a special leader and official type. it is not certain that he will resign. we will have to see today what they decide. is i say, i think is important in south africa. dani: we will have to leave it there. inc. you for joining us. colin coleman, former ceo of goldman sachs for sub-saharan africa. coming up, don't miss our interview for the south africa finance minister. plus, oil traders expressing cautious optimism. this is ahead of an opec-plus meeting over the weekend. that is next. this is bloomberg.

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dani: welcome back to "bloomberg daybreak: europe." opec-plus has cut crude production. this, all coming ahead of a opec-plus meeting. it will be virtual. let's get more from bloomberg's energy reporter. we have that meeting this weekend. are we expecting another potential opec-plus cut in production? >> hello. it seems like we are not expecting a change in terms of production this time. opec-plus is expected to keep things unchanged.

for november, this had reduced supplies by about one million barrels a day. the biggest curb is saudi arabia. these are added to the cuts for the last month. dani: talk to me about the impact of a potential china reopening. it could bring more demand, will that be on the mind of opec-plus? >> initially, they did mole over a deeper cut.

the oil market -- we are seeing a gradual reopening. some things in beijing are being eased. they did expect about 7 million barrels a day. this will be next year. i do think there is some optimism. dani: thank you so much. that is it for us at "bloomberg daybreak: europe." in the next hour, we will speak to the credit suisse chairman. this is bloomberg. ♪

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