♪ dani: this is bloomberg daybreak: europe. i'm dani burger in london with

manus cranny in dubai and these are the stories that set your agenda. manus: japanese two year yields rise above zero for the first time since 2015. the yen slips following yesterday's monster move. elon musk confirms he's searching for a successor as the twitter ceo after being voted out on an online poll. plus a house committee votes to release donald trump's tax returns, capping a three year legal tussle over the former president's finances. good morning. it was a smart move according to mohamed el-erian going for a wider bandwidth on the yield. the debate is whether it will be an orderly exit from yield curve control or will the bond traders

test the .5 and push the bank of japan to have to move again. good morning. dani: good morning manus. governor kuroda says it's not an exithe widow maker trade is still alive and well but you've got to have deep pockets to run those monster shorts at this level. we will debate that with our guests throughout the next hour. dani: in the meantime, we are seeing the ever so slight hint of some risk buying. don't let the headline figures fool you. s&p 500 is on track for its second-worst december on record.

continued to see losses in the nikkei. the banks getting a boost from higher yields. manus: the irony is they might have abandoned the cap but they have done more qe. 10 year government bond yields in the u.s. fall for a fourth day in a row. dollar-yen. monster move yesterday. will it endure? dani: let's unpack the market fallout from the boj surprise policy decision. michelle joins from our bloomberg news team on the latest policy changes. our field reynolds will also help us walk through the bond market impact.

manus: we have them all there. they really are just hiding for the moment. it's one of the worst years for bonds in a generation. there is the move over the two days. strength of nearly 3.5 percent. what is it that evolves the next move for yen? >> the next move for yen i think -- people will wait to see what policymakers have to say. i'm surprised we haven't corrected more of yesterday's move with governor still pushing back harder at the idea that he's done more than anything but the operation of the market. more short yen positions being taken off is another way of looking at it. i think we're going to make move

through hundred 30 before we are much older. and then big question for me is when does the bond market stabilize. the less there is a worldwide knock on in terms of pushback of high yields, the sooner dollar-yen will make it to hundred 25. dani: we are certainly not getting any younger. chief effect strategist at socgen will join us in a few moments time. michelle is with us on the economic implications of this. it is day two. it was a shock. what is now the fallout as we look at this 24 hours of shock and in the market? >> it ruined christmas for some, it made christmas for others.

i think two surprises from the macro central banking angle, we talked yesterday about the market shot -- shock heard around the world. two things stood out. in that press conference, he has been talking about how widening of the policy band does not equal raising of interest rates. he wanted to downplay that yesterday. he reverse that and said it isn't the same thing. the second thing that was a bit of a surprise from that standpoint is that he told our own reporter at the last meeting that the yield curve was an appropriate shape. something changed in order to spur yesterday's surprise. i think a lot of people are taking shots at the credibility of the boj.

certainly a lot of skepticism in the markets. manus: they've got the medal of honor when it comes to shock and all. they raise rates on christmas day when everyone was at home talking into their high. it was badly communicated yesterday. it's very different from the fed, they spoonfeed us. the bank of england practically trails us -- cradles us. not the bank of japan. do you think it's his last swan song to be written up in history as the gunslinger of 2022? >> we've been speculating about the botched communication and many people's view and what it means for his future he only has a few months left in his turn. we have been knowing kuroda as

the guy who stood up to the bond bullies. it does say something about credibility. we have heard from many other central banks in this tightening cycle ways in advance what they are going to do. at least knowing the direction. this was a surprise of phenomenal volume. we really did see it in the markets still reverberating. skeptical that this is the end of the y cc moves. manus: thank you very much. you've got the fx market call from kit dukes. garfield reynolds has been tracking it all. in terms of the nuance for me,

it's all about the additional qe seems to have gone unwritten about. >> part of the difficulty a lot of investors have in working out it's going to happen next is not just the weird communication issues but how do you approach this. is this as kuroda used to say to do with a move towards tightening, would letting yields in general go higher. how much of it is improving market function and potentially providing flexibility for the boj if he is forecast about how inflation at the current levels aren't going to be sustainable because they no longer have to focus just on the 10 year. they've already bought most of it.

they already own a lot of bonds in that space. it's part of why the yield move went up and stabilized. so they can instead look to other bonds and almost need to look to other bonds. they interestingly came out yesterday and bought short and medium-term because they didn't want yields to get too far out of hand because they don't set up -- set off a risk shock. dani: goldman sachs has given them the vote of confidence. thank you for joining us this morning. it's take a look at some of the things we are going to be watching out for today. we will see the release of the u.k. public-sector net borrowing numbers. manus: 7:00 a.m. german consumer confidence data and then mortgage applications in the

u.k.. got that extension coming through yesterday announced that -- that's going to be interesting in 2033. we get the u.k. cpi from canada. 3:00 p.m. existing home sales and consumer confidence will be out in the united states of america. really important data points in terms of how has the consumer softened. dani: kit dukes is going to come back. more on his call after the boj governor kuroda gave us one more surprise before christmas. this is bloomberg. ♪

>> there is no doubt in my mind

that this is the step towards normalization. the good news for them as i think they can control the process. that's good news for global markets because it doesn't force selling by japanese institutions. however, over time, even this approach becomes unsustainable. manus: mohamed el-erian saying the boj's approach is unsustainable. our guest who kicked off the show saying we are going to break towards 130. it is kit dukes. the debate is this. if i look back at the start of the year, the fed was practically on zero and they got to 4.5% like that. if you look at the move the boj delivered yesterday, what is the risk in 2023 that i'm underpricing real reappraisal of japanese rates in 2023, something they all got wrong in

20 for the u.s.? >> it's a good question. it seems unlikely. moving toward something people were expecting in april to make the market be more orderly. i think if you get a lot more tightening it's because the japanese economy starts looking better because the inflation data remain high and it's a conventional now we can start exiting things because the world is back in place. it doesn't feel as if we are there quite yet. i'm tempted to say that is more a 2024 than a 2023 story. we are back to really genuinely trying to normalize monetary policy. this was an important step from markets. it's not intended to be an important step for the economy i don't think. dani: one reason it seems that there has been a lot of pushback

that this was just not a change in policy, it's the fact that japanese inflation has been coming in above 2% since about march. it is a country seeing more inflation not to mention the impulses likely coming from china as they stepped oil from covid zero policy. my question is does kuroda actually have credibility when he says it's not about the economy. >> in a sense you are right that lots of things have happened with covid. one thing that is good is it feeds through into higher inflation expectations and japan fit starts getting the economy out of the place it's been in for so long, than it opens the door for more normalization if we get to that point, it's a huge change in the way to policy

can operate in japan. i still suspect we are more than a year away from the point where that happens. some of the base effects will start changing things over the next six months or so. all of us would hope this helps japan escape from where they have them. let's be fair, governor kuroda has done a good job of saying here's my opportunity to let inflation get into the country, keep yields and rates anchored to the floor, be very stubborn with the policy have been running and maybe it will work. the fact that he's been so stubborn is of course why even a small change is terribly important to us all. because it is a change and it does signal something about an exit. i think it's going to be quite a long drawn out process. manus: you got to say pretty appalling communication strategy compared to his peers that

practically spoonfeed us every time they open the door. i know you have been use to a few shocks from central bank in your time. so have i. the question is this. what happens next? do we settle into lazy days trading range, is that the trade until the next shoe drops or would you be a bigger protagonist of the widow maker trade aggressively shorting jgb's? >> the market will push them because once you contain pressure that much, you have to work hard to put the pressure back on again when you've released it, so it's not easy. the yen his the piece that's allowed to move and that's why it's got further to move i suspect we will put yields of to the top of the new band. but they will work hard and probably do it because that's what they before.

because we know the long-term direction of travel, that is why i expect to be surprised by how far the yen can strengthen over the next six to 12 months. dani: i have seen some pushback on the idea of foreign bond liquidation by japanese investors as a result of this. goldman sachs saying that a more powerful driver is higher rates globally and that's really going to be the prevailing story for 2023. it's not going to be widening the band. does that make sense to you? >> i don't know how much higher bond yields we are going to get overall. simply because we have had such a big selloff this year. we repriced rates because the global economic cycle is turning. we have seen the peak in u.s. yields.

do they sell foreign bonds, i don't know. the first thing people need to do in japan is get back short yet positions, hedge exposure from the foreign assets they hold. some will liquidate because the cost of hatching is onerous right now given the yield curve. i don't think that on its own necessarily cascades into a really big bond market correction globally beyond what can do for a few days over christmas. i still think the u.s. treasury market is going to be driven by the strength of the u.s. economy . manus: in 30 seconds, what does the real shock look like? what does it look like to you if there is a far shock?

>> it looks of dollar going through 120 while i'm trying to work out what happens next, and i hope it's unlikely. dani: pithy as always, thank you for joining us. coming up, muska out. the billionaire confirms that he will step down as ceo of twitter but only once he finds someone foolish enough to take the job. we will unpack the twitter drama next. this is bloomberg. ♪

>> i'm simone foxman. federal authorities are set to

whisk sam bankman-fried to the u.s. on wednesday to face a range of criminal charges related to the collapse of the ftx crypto exchange. he will sign documents in a bahamas courthouse finalizing his waiver of rights to fight extraditions. after that he will be accompanied by fbi agent's on a noncommercial aircraft back to the u.s. ukrainian president volodymyr zelenskyy is expected to travel to washington on wednesday to meet with president biden and address congress. sources say biden will host him at the white house. ratcheting up u.s. support. the u.s. house committee has voted to publicly release donald trump's personal and business tax returns from 2015 to 2020. it caps a three-year legal saga

initiated by democrats to obtain the president's closely held financial documents. the vote comes in the waning days of the house democratic majority and follows trump's referral to criminal prosecution by another house panel. unions have made a final plea for the prime minister to discuss higher pay settlements for workers in the uk's national health service as ambulance staff follow nurses by going on strike. nurses say they will announce further strike dates for january by the end of this week unless talks to place overpay. ministers say they are happy to discuss other factors besides compensation. the saudi oil minister says opec given volatility in markets. the approach has prevented more widespread chaos after extreme shocks this year. crude has surged on russia's

invasion of train. open plus plans to cut reduction on expectations of oversupply angering the u.s. an estimated 4 million people packed the streets of buenos aires. so many people turned out that the stars were forced to fly overhead in helicopters rather than travel through the crowd and open top bus. the president's office confirmed the players were flying over the crowds with roads clogged due to what it called an explosion of happiness. global news 24 hours a day on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. love those images of argentina. manus: absolutely. riotous applause. some fx traders are happy. we've got to talk about dollar-yen.

this is not of our shock. -- a far shock. so how much metal are retesting here? dani: the yen has moved more than 3.5%. 10 year yields are up and up against the new 50 basis point then. they are still doing qe, still buying bonds, still trying to inject stability into this market. manus: this is the point that garfield reynolds made. the ability to buy more bonds beyond the 10 year notes is incredibly important. and that is about delivering stability and liquidity be on the 10-year note. dani: should we take a quick minute to recap some of the twitter stuff? elon musk has tweeted that he is indeed searching for a ceo after

that paul, but only if he finds someone foolish enough to take the job. i'm not sure he will replace himself. manus: relinquishing a title does not mean you are relinquishing control. this is the tweet. 20 million voters, 10 million followers voted for him. 57% voting for him to step down. he is still going to run the engineering and other teams. hi, i'm jason and i've lost 202 pounds on golo. so the first time i ever seen a golo advertisement, i said, "yeah, whatever. there's no way this works like this." and threw it to the side. a couple weeks later, i seen it again after getting not so pleasant news from my physician. i was 424 pounds, and my doctor was recommending weight loss surgery. to avoid the surgery, i had to make a change. so i decided to go with golo and it's changed my life.

when i first started golo and taking release, my cravings, they went away. and i was so surprised. you feel that your body is working and functioning the way it should be and you feel energized. golo has improved my life in so many ways. i'm able to stand and actually make dinner. i'm able to clean my house. i'm able to do just simple tasks that a lot of people call simple, but when you're extremely heavy they're not so simple. golo is real and when you take release and follow the plan, it works. well, we fell in love through gaming. but now the internet lags and it throws the whole thing off. when did you first discover this lag? i signed us up for t-mobile home internet. ugh! but, we found other interests. i guess we have. [both] finch! let's go! oh yeah! it's not the same. what could you do to solve the problem? we could get xfinity? that's actually super adult of you to suggest. i can't wait to squad up.

i love it when you talk nerdy to me. guy, guys, guys, we're still in session. and i don't know what the heck you're talking about. manus: this is "bloomberg

daybreak: europe." i am manus cranny in dubai with dani burger in london. dani: the s&p snaps a decline. above zero for the first time since 2015. this follows yesterday's surge. elon musk is searching for a successor as twitter ceo after being voted out in an online poll. donald trump's tax returns are being released. we were just seeing the yen going to 4.30. we are not there yet, but close. manus: we are close. this may be a smart move from the bank of japan. this is not a shock, just a light sprinkling of risk adjustment.

a little bit of fair trade rather than the euro. dani: we are seeing a bit of a reprieve of some losses. we are still looking at the s&p 500 index on track for a more than 6% decline in december, it's second-worst december. the banks, they are still moving higher. this is following began moving higher as well as yields. manus: talking about oil, you have equity in question. i think the best news overnight was nike, nike up 12% after hours. huge sales in the u.s.. the top line did quite nicely in

greater china as well. dani: fedex also talked estimates. this is due to higher prices and cost-cutting. let's talk about the oil story. saudi minister says opec-plus and their allies have stayed proactive. the approach has prevented wide stream chaos after shocks this year. joining us is the head of commodity strategy, only hansen. --ole hansen. commodities will lead this market next year, do you think there is more to come? ole: i believe there is. i think we will have a 2020 three bear market. the inks that we are seeing

across the markets may not materialize as we are seeing. this is with the china story and the saudi minister basically saying that it is preventing any aggressive spending. manus: i think this is interesting that he got sent to assault late yesterday evening. whatsapp with the latest news flow from their proactive mandate. what do you think that translates into risk 2023. do think that will have an emergency meeting in vienna? the china story, is getting worse. ole: it is getting worse in certain areas.

it took months before it hit the peak and another few months before it started to materialize. i think a lot of that weakness has been priced in already. i don't think the market conditions will take those levels at this point. dani: mentioning china, it is getting worse, not better at this moment. how long and at what point do think it will turn into a demand story of higher oil prices because china is back on the map and there is more activity? ole: i think we will see another

sign at the other end of the chinese new year. it has been laid out by the government, they are commodity extensive. the whole transferee -- transformation is offsetting from the government. manus: patience is the thing. the dollar, we have been patiently trying to call the peak in the dollar and it delivered. you have to think about the fx component in the big commodity trade as you go forward. how linked is dollar to how you position overall in commodities? ole: it is a power story for gold and silver next year.

we have seen the dollar movement as having a bigger impact on certain levels than the yields. we have also seen those move higher. goldman didn't seem to take much notice. it will have a profound impact across the board. dani: when we look into 2023, you mentioned that money managers have been voting up on metals when the dollar hit a fresh cycle low. is there some degree where positioning is stretched as things move to the other side of the trade? ole: actually, no. if you look at commodities, there has been a lot of selling throughout the year and the last six months. from that perspective, if you are a money manager looking for

breakouts, we might see a significant amount of buying. positioning is relatively light, the lowest in years. there is a little bit of concern , especially in oil where it is uncomfortably high. manus: on this show, there is always a flashing red light. you need context, you have to know where i found the file -- found the fact. russia oil exports dropped by 54% in the first week in the new set of sanctions. 1.6 million barrels at a drop of nearly 2 million barrels a day,

it might not move the dial but that since a real warning sign to me, not just about the oil market but what happens next in february with the next rounds of sanctions which hit products, diesel thing -- diesel being the most important. how important do think that is for russian exports? ole: it is important. they can only focus on one thing at a time. there been focusing on the demand side. especially with what is happening in china. they are potentially being challenged by the supply side and adding some support to the environment. we may see higher prices even if the economy is still down. dani: how you are -- how are you feeling about europe in general

right now. last week they were saying that europe has survived and done well, the lights have stayed on despite the fear mongering. of course, some of that may be due to more mild weather in europe. how concerned are you about 2023's winter for europe? ole: for now we are through the worst. maybe i have to be a little bit of a devil advocate. if we see a peace agreement, which is outlook possible at this point [indiscernible] never to the extent we saw before but that could be the reason why we may avoid a crisis that winter. i think we made it out of this

winter and may have return levels high enough for the refilling process next year. manus: i don't thing anybody anticipated that the russia/ukraine war would run through this length of time and have the skill of global impact. thank you very much. we wish you a good holiday season and year in 2023. that was saxo bank head of commodity strategy, ole hansen. let's get a business flash. >> nike's quarterly sales and gross margin exceeded wall street estimates. global sales at the world's largest company -- sportswear company beat estimates of $12.6 billion. nike credited expanding

leadership. fedex's second-quarter earnings also be estimates. $3.18 a share, compared to an average projection of $2.80. investors pared their expectations after fedex pulled their annual forecast and pledge to cut costs. european union has approved germany's nationalization of unipart. -- uniper. they signed off on a large rescue package. the government has to reduce its shareholding to 25% by the year 2028 in order to satisfy conditions. blue because learn that deutsche

bank is considering giving some of its key markets and elevated salary increase to help offset surging inflation. sources say it may run as high as 4% on average. they plan on cutting bonuses for investment bankers who have seen weaker performances. two more morgan stanley bankers have exited over u.s. investigation. their exit has opened a rift at the new york basis firm over their cooperation with the inquiry. there were no -- it was never said why the were placed on leave and the u.n. has not accused anyone of wrongdoing. that is your bloomberg business flash. dani: thank you so much, simone foxman. this earnings season has been so interesting. i spoke with socgen of last week

and they said they are not cutting staff. they are at a better place than u.s. banks. manus: it depends on who you are owning in. if you're owning in on credit suisse it would be, yes and what would you like for those? what is the power of your bargaining chip? this is the question that needs to be asked. there will be a lot more questions for by ends and it depends on the value that you have in your hand. dani: very vastly different tradition -- different positions. me up, we talk about russia, a pipeline blast and ukraine's war

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manus: gas flows are continuing by alternative links after a pipeline blast in russia. a lot of questions. let's get to our correspondent, oliver. the impact from this pipeline explosion -- we are showing images of the flaring. oliver: there was an initial spike in pricing. there is a promise that flows will not be disrupted. this feeds the pipeline the grocer ukraine and europe. this is the last pipeline still supplying gas to russia from

europe. for the markets, any kind of supply disruption will have an outsized impact on things. there is an overlay in the market. every time you see something happening like this, you have a magic number. as disruptions happen in the number goes closer to that price gap, the market while -- will pay attention to how that will impact things. dani: there is also a price gap, which is why they have been able to afford at that level. as we look back, what has it cost europe in energy? oliver: this has been extremely disruptive for europe. 300 days since the invasion of ukraine barred by subsidies, eight, increased energy costs. you have etf, uniper.

according to bruegel, it is up to 700 billion euros through november. in terms of just the market pricing and how much this has cost households and companies is $1 trillion. that does not take into account the subsidies that are brought into help cushion the blow. that needs to get paid for either by households, companies or governments. that shows you how quickly these costs can mount for europe and how serious things can get. manus: that is a pretty mock -- monster number. i just came back from the home of gas. i don't know what the trillion looks like. what i do want to look like --

look at is the outlook for gas, who will save europe and gas flow and storage for next year? oliver: this is the main question. the year to watch for is not next year or the year after that, it is 2026. that is why the supplies may become available for the market. lng are the three letters that they are hoping will save things. gas will start flowing from that tomorrow. the question is on where it will come in the short term. will companies estimate that it will increase to 7% next year. that is another player in an intense market. these are all open questions. we also have an overlay of the price gap. the fear is going to balance between keeping prices stable but not endangering the supply.

dani: certainly there are a lot of uncertainties coming ahead. inc. you so much, oliver crook. coming up later, christian lender -- linder. donald trump's taxes may be revealed after years of secrecy. manus: what will we find out in terms of his finances? ♪

"bloomberg daybreak: europe." manus: u.s. house committee has voted to release donald trump's tax returns from 2020.

this is like a drum roll moment. >> something the democrats have been working on. the ways and means committee has voted to release five years of donald trump taxes from 2015-2020. incorporating almost the whole time he was president. there will be some reductions of personal information, but i think we will get a lot more information we have ever seen. the report released by the committee today done by a nonpartisan group of tax lawyers and accountants showed a lot of red flags that normally would require an audit or would cause an audit by the irs to take place. it does not appear to an audit did take place for a lot of those issues.

dani: republicans take over the house in less than two weeks time. the timing here seems a bit rushed, what do you make of it? bill: the committee just got some of these tax returns and information about a month ago. they have been jamming to try to get it out and see what they can publish and do legally. they do have a deadline, the first week of january. they would have stopped this release, they all voted against it in the committee yesterday. democrats are trying to make as much as they can of this kind of lame duck congress before they lose power. dani: thank you very much, bill faries. u.k. union have made a final plea in discussing higher

salaries for workers as ambulance workers go on strike. bloomberg's lizzy burden joins us now. why are they not committing to pay increases? lizzy: we heard their own words yesterday in parliament and he stuck to the same script. for him, inflation is public enemy number one. covid is the top priority. economists agree that giving nurses more money would add to public borrowing. we have the latest data on that from statistics. it would take away from front-line services. they also point out that the more you pay people, the more tax they pay. it would not be a wage spiral, it would be a price wage spiral. the government's other argument

is that simply following the pay review bodies, they are not publicly independent and parameters are set by the government. manus: looks like they mill -- they will back down. it will be intense. the performance in front of parliament yesterday it was a very firm rebuttal. we will see you on the other side. from dani and myself, we will see you in 2023. ♪ it's hard to run a business on your own. with shopify, you have everything you need to setup your online store, to connect with customers, and to bring your dream business to

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dani: good morning. welcome to "bloomberg markets: europe."