dani: good morning, happy new year. this is "bloomberg daybreak: europe". i'm dani burger in london with the stories that set your agenda. asian stocks are mixed as

traders gauge the health of china's economy. the imf warns one third of the world will fall into recession this year. xi jinping warns that challenges remain in china's battle against the virus, but signs emerge infections may have pete. plus, coming up short. tesla's quota late deliveries missed expectations despite offering brighter incentives in the u.s. and china. it might be a new year, but the problems markets and economies are facing are the same. it is the fears of recession and inflation. georgieva from the imf warning recession will come. but this market is not ready to bet that yet. anything that hinges on demand is doing slightly worse to unchanged, nymex crude for

example, was down to start the day but now is just $80.50 a barrel. not huge gains despite china reopening, there is fears how much covid will impact the global economy. gold is at the highest since june. it had an awful year last year considering the strength of the dollar, but recession is to come, so that is perhaps something folks will be buying. the yen is at its strongest since june. this is perhaps traders betting that the boj is going to tighten more. they widened the trading band, but the boj just spent a record amount defending the 10-year yield, about $131 billion last month. finally, gas is down 8% in new york, milder weather as well as in europe. the rally continues to be building throughout the asian session. let me show you what equities

are doing, the hang seng is moving higher buoyed by mccalla stocks. jp morgan says they will move fire considering the china reopening. s&p futures on the front foot. european stocks down .5% this morning. let's get to our top stories around the world, from president xi jinping breaking weeks of silence following the reversal of covid zero. you had tesla deliveries disappointing while bonds are expected to make a comeback as a hedge against risk this year. starting in china, where xi jinping has warned that pandemic could continue to pose challenges, speaking for the first time since the pivot away from zero covid, xi acknowledged some of the resulting divisions in society. >> with extraordinary efforts, china has prevailed over unprecedented difficulties and challenges. it has not been an easy journey for anyone. we have now entered a new phase for covid response where tough

challenges remain. dani: let's get to senior editor at allen wan, who joins us from shanghai for more, what is the main take away from xi's message? allen: ever since week left covid zero about a month ago, there has been a lot of silence. i think the most interesting thing was he described the policy shift as a way to adapt to an evolving virus, which has high transmissibility and a lower fertility rate. he acknowledged the difficulties a lot of people have faced the last three years because of this multitude of restrictions. we're not directly referring to the protests, but he said it is only natural a country of 1.4 billion people will have differences of opinion. he also talked about the economy, saying -- that may not

necessarily be true based on the last few days. dani: can i get into that data? the pmi data, manufacturing was bad, services were the second worst on record if i'm not mistaken. how long before the economy starts to normalize and reap the benefit from restrictions being lifted? allen: the pmi confirmed what the official data showed, it will continue to worsen in december. also, we looked at the china beige book, and it was even worse. they're suggesting that the economy contracted in the fourth quarter, and probably group to present last year which is more than what a lot of forecasts are forecasting. we are expecting a bump up in consumer demand, and that has not played out especially during the january new year.

basically travel hasn't really picked up whatsoever. that said, based on the survey, businesses are probably more optimistic now than they have been in a long time. confidence in the 12-month outlook based on the survey jumped to a 10-month high. bloomberg intelligence reporting the gauge of expected future output jumped to the highest since february 2022, which signals the end of covid zero is boosting business sentiment. citigroup says the worst has probably happened in december, and recovery is in the cards the next several months. dani: so there is a light at the end of the tunnel, that is bloomberg senior editor in shanghai, allen wan. tesla delivered fewer vehicles than expected last quarter, despite offering heavy

incentives in two of its biggest markets, the u.s. and china. joining us for more is our global business reporter in seoul, can you tell us more about these disappointing delivery numbers? >> tesla delivered about 405,000 vehicles in the last three months. that was fewer than analyst estimates, about 420,000 vehicles. the company missed its own targets for the last year. it promised to deliver 50% increase in deliveries, but may just 40% last year. this all fueling worries about the world's biggest tv brand. everyone is asking what is going on with tesla, it seems to be struggling especially in china because elon offered incentives. he also cut the prices in china but everyone is saying tesla is

struggling in china, where local brands such as bid are doing great jobs. dani: tesla investors have so much to worry about, falling 65% last year. and there is the impact on tesla's suppliers. what is it mean for those two groups? >> whenever i talk to investors they are already irritated by elon musk buying twitter. they are asking, what is he doing with the social media platform? he should be at the ev factory, not just analyzing twitter records. also, ev sales are giving a signals to the global economy. the slowdown in tesla sales is indicating that global demand for the automobile in general is slowing down. we have rising interest rates and also, fears of recession.

so, everyone is closely watching tesla sales. and whenever i talk to tesla suppliers, battery companies and lithium miners, they are always asking what is going on with tesla? ev demand seems to be slowing down, so tesla is taking its entire supply chain. dani: heejin, thanks so much for joining us. after the biggest lost for 60/40 portfolio since the global financial crisis, most respondents to the mliv survey still see bonds resuming the role as a hedge risk in 2023. let's bring in mliv's mark greenfield, it seems like the analyst community is so sour on

stocks, especially for the first quarter. what would it take for stocks to up form bonds in 2023? mark: a couple of possibilities, what is china, if the rebound in growth exceeds people's expectations, that would certainly be a boost for the world. he would see sentiment improve dramatically as people adjust to the fact that china has come back and and consumers are reengaged with the world, he could drive economic growth everywhere. getting a better than expected start of the year for china growth could be a big impact. and some people will be helping several banks, particularly in the g10 space, don't type policy -- tighten policy as much as they have been threatening to do. whether the fed cuts this year is a low probability, but maybe they can pause earlier than people expect if inflation

numbers come down a bit. between the central banks in china, they are the biggest hope for equity people looking for a rebound this year. dani: speaking of g10 central banks not hiking as much as expected, i look at europe, saying they will need to do more to make sure inflation expectations are entrenched. that is similar to what we heard from madame lagarde. european bonds had a stellar start to 20 yesterday with -- to 2023 yesterday with yields tumbling. mark: most markets around the world were closed. probably most european traders went back anyway. gas prices are falling, the future market is lower, people are seeing warmer weather, so demand is not as high as people have been expecting. on a day when the markets are a bit thin, and you are bound to

get large reactions, it will be hard to sustain the yield dropped he saw across europe yesterday, 30 basis points in markets is not going to be sustainable with treasuries reopening today in london and new york. and more ecb's figures the days ahead. one thing to remember is the time central banks were called out by the inflation staying high, they will not be on the wrong side of it this year. if anything, they will be much more cautious and will not say inflation has peaked too early. so chances are they will hike more than they need to. dani: bloomberg mliv's mark cranfield giving us an outlook for the year, and fantastic job for the team compiling the year ahead, highly recommend you read the latest mliv survey. let's take a look at things will be watching out for today.

today in the u.k., rail workers will stage a walked out, the first by public-sector workers this year. of course, only the third day of this year. at some of what a and we get december cpi figures -- at 10:00 a.m. u.k. time we get december cpi figures for turkey. finally, 3:00 p.m. we get u.s. construction data. the imf and michael burry are issuing stark warnings for the global economy and stocks. we will discuss further next. this is bloomberg. ♪

>> we expect one third of the world economy to be in recession for most of the world economy, this is going to be a tough year. to than the year we leave behind. why, because the three big economies, u.s., eu, china, are all slowing down simultaneously. dani: the imf director addressing the opposite of what i am today, also gave a dire forecast for this will economy this year. at the same time, michael burry also gave a start forecast, saying inflation may have pete.

that the u.s. is already in recession and there may be another inflation spike this year. joining us now is viraj patel, fx macro strategist at vanda research. let me read the whole tweet to you, "inflation peaked, we are likely to see cpi lower, possibly negative in the second half of 2023, and the u.s. is in recession by any definition. the fed will cut, government stimulate, and we will have another inflation spike, it's not hard." viraj, what do you make of that? viraj: it is becoming a growing consensus. most of the circuit breakers going back to the 70's and 80's have been a sharp slowdown in economic activity and/or crisis. to some extent, i don't disagree, we will get slowdown at some point the first half of

this year, and therefore sentiment for the fed to start cutting rates will build. we are seeing positions for that already in the yield curve. if the path for bond yields is lower, why is the same true for equities, and why do investors think the path is lower? could there be a window in the first quarter where equities move higher, especially given how bearish sentiment is? all of this is an interesting view. it is contrarian to some extent because most of the consensus is on the view that recession will be fairly mild, inflation will be sticky, and central banks will tighten. i still think that consensus is narrow and should be challenged this year. dani: we are about to get a

bunch job data this week, adp claims, it is a tight labor market, i know you said markets are positioning for it, but what is likely the reality of the fed pivoting when jobs market tightness is still extremely sticky. and they have said they will hold rates restrictive? viraj: we go back to history. i did a lot of work on this in recent months. that narrative change really quickly. you can get a couple of job of everything flips on its head. this really depends on time horizons, but one of my highest convictions is that volatility will persist both in terms of narrative and price action. investors will need to be extremely nimble this year. i think the winds will blow pretty quickly.

being nimble and tactical, reading those data themes and getting ahead of narratives quickly is super important. maybe it is a month or two too early to thing about price cuts, but that narrative could change quickly in a short space of time. dani: can i ask you about the tactical opportunity in stocks? there is a possibility there really on of the first quarter, so would you buy right now? viraj: investors should be on high alert for a short squeeze in equities. we've got bond markets trading on recession fears, something the fed will do more. equity markets are in this really pessimistic sentiment state. i wonder whether we get into this goldilocks environment where we get inflation lower, economic activity holds up, not

an a way that we get reflation, but in a way that pushes out earnings forecasts, that is certainly not priced in. so, the path of least resistance as we get a short squeeze before we see another leg lower. investors should be worried that if sentiment is at extreme lows, people could be caught offsides as equities move higher. dani: i want to ask about japan given your extensive knowledge of fx, yen at the highest since june despite kuroda saying we are not tightening, we need easy policy. he is saying one thing, the markets are saying another, would you want to write this rally in the yen and short jgb's? viraj: we had a note that japan could be one of the biggest

surprises, from an inflationary perspective, this is a 30-40 year phenomenon, plus with cyclical activity. japan has the potential to be a positive macro surprise of the year. against what we heard from the imf chief, where you have evidence of growth slowing down. it has exhibited both safe haven and cyclical properties. we had bearish sentiment last year, it could be one of the biggest bullish trades this year. adjustments can be pretty sharp. we have had a big move already from 150 to 130, i wouldn't rule out 120 or below in a environment with recession plus

that cyclical japan story. dani: viraj patel, fx strategist at vanda research, looking forward to the rest of the conversation for 2023. we will have the latest on the u.s.-china semiconductor spat. this is bloomberg. ♪

>> these critical rates of -- bits of technology may be the tiniest but most exacting products ever manufactured. because they are so costly to produce, there is a worldwide reliance on just a handful of companies. access to chips has become a geopolitical weapon, with the u.s. stepping up curbs on exports to china. it also asks tough questions of u.s. allies. south korea, home to powerhouse

chipmaker samsung, has increasingly found itself caught between its top security ally and biggest trading partner. the country passed its own version of the u.s. chips act, which was be are headed -- which was spearheaded by yang hyang-ja, >> i believe holding technological supremacy is a way our country can take the lead on any security agendas, such as diplomatic and defense issues without being swayed by other nations. that is our legacy we should hand down to further generations. >> in october, the biden white house imposed tighter export controls on some chips and chipmaking equipment. the move is part of a longer-term strategy to prevent china from dominating the industry and developing an advanced military, while securing its tech supply chain by enticing chipmakers to set up shop in the u.s. >> we are turning things around in a very big way.

>> china has criticized expanded u.s. restrictions, saying they will hurt the interests of u.s. companies and harm supply chains. japan and the netherlands have agreed in principle to join washington in tightening export controls to china. in response, china launched a complaint with the wto, accusing the u.s. of protectionism and calling south korea a key u.s. ally. chip production in south korea fell in november by the most since the global financial crisis, pointing to a further cooling of overseas demand. >> the biggest worry is that companies could eventually move their major bases to america. following recent requests from the u.s. companies make positions in their own best interest, and prefer moving to countries where there are big markets, better conditions and benefits. then that many people would follow, then how could our country survive? i would say there could be a new technological colonialism.

>> yang also says taiwan plays a crucial role in u.s.-china tensions. and if it's leading chipmaker tsmc suffers from global chain disruptions samsung may be , well-placed to fill the gap. dani: the geopolitics of global chip access, from adrian. coming up, we will talk about nat gas

dani: good morning. this is bloomberg daybreak: europe europe. i am dani burger was stories that set your agenda.

asian stocks are mixed as traders gauge the health of china's economy. one third of the world will fall into recession this year. covid struggle. xi jinping warns tough challenges remain in china's battle with the virus. they may have peaked in some major cities. plus, coming up short, tesla missed expectations despite offering rare incentives in the u.s. and china. are the recession warnings that seem to have captured the attention of the market today? gold at a june high after it failed for the entirety of 2022. oil is doing better, but it has really struggled to post any gains despite the fact that china is reopening. there is concern that demand won't be there if flights from china are being restricted, if covid means that supply chains will have issues. we are looking at an oil price that is just at $80 a barrel for

imax crude. that is trading at a june high. really we are watching traders who want to bet that japan will tighten policy even further. faraj patel was just with us and he said that we will follow the straight and it will be one of the big movers of 2023 of the boj reverses course. when it comes to equities, japan is closed this morning. cash treasuries are closed as well. the real standout is macau stocks, casino stocks. that is hoisting the hang seng by 2%. they expect casino stocks in macau to really rally this year. s&p 500 futures up a third of a percent. european stocks down .5% on consolidation after a strong rally yesterday. sounds have been extremely light. u.k. on holiday yesterday. take that with a grain of salt as you look at these moves. when it comes to nap gas, we have to pay attention to that asset.

the mild weather forecast has led to a dip in natural gas futures. at the same time, natural gas futures have come up the pre-ukraine more lows. so the u.s. falling to new lows. joining us now is stephen. the fears of the worst happening, the fears of a cold snap or over at this moment. can this continue for the rest of the winter? >> is what we don't really know. we are looking at forecast for mild weather for the next two weeks. we are not looking for months. it is difficult to know exactly what is going to happen with whether if we were to look a month or two out. those things can change and they are not always very reliable. when you look at the winter, every day that you have a warm day, that is one more day that you do not have to use as much gas. that helps to get through the winter. we have gotten this far with mild weather we're looking at

more weeks of mild weather and that puts us at a much better situation especially when you consider that europe has very high inventories. north asia as well. japan has high inventories. that will help them. that is why you are seeing gas prices fall to the lowest level since before the war in ukraine last february. going forward, how much would that demand destruction continue and how much will we be able to keep that consumption lower? dani: i was just about to go there, stephen. the fears over the russia induced supply crunch for the need to put a demand restriction, are those now fading given as you say it, every warm day makes us more optimistic? stephen: you have the governments coming out and saying please continue saving. we are at that level where we are at saving 15%, 20% compared to last year. that is not just because households are turning on the thermostat but industries are shuttered because they can't afford the gas. overall, the governments are continuing to urge and you had germany say this over the new

year, you have done a good job. keep doing it. because they can't let up. if there is a sudden cold blast or spike in demand, those gas inventories can drain rather quickly paired you could see gas prices rise back up what he could see shortages. will there be are -- will there be restrictions and governments saying you can't use your gas in your house? we are looking at the worst case scenario is unlikely this winter. but we are not out of the winter yet and there still a lot of things to watch. dani: really good point, stephen. thank you for joining us this morning. bloomberg's energy reporter stephen. let's get to this conversation and joining us now is fiona. thank you for joining us happy new year to you. stephen giving us the lay of the land when it comes to european mother. has it europe avoided the worst case scenario when it comes to this winter, or is the worst yet to come? >> happy new year to you also dani.

anyone that planned a european ski holiday over the holiday. would have seen just how mild it has been in europe. that really has been a savior, as your colleague said, we cannot rely on weather forecast going forward to be the same. i think what we see now is the story even though we are only at the start of january, the story actually shifts to next winter and cannot europe maintain its supplies of gas? can it further increase its ability to bring in lng or new wind or solar that will come online over the next 12 months? can we really be prepared for what we might see winter? it is not a one and done it scenario. this is a long-term issue that needs to be addressed. dani: is so funny you talk about skiing. i had a friend who was skiing in the alps for new year's and was complaining that it was all ice or slush.

to that, you say it is better than the alternative which is an energy crisis in europe. fiona, if the concern is next winter, what does that mean for europe's plan? what did they need to do to conserve supply, to make sure that that doesn't happen next winter, that there isn't a huge impact from russia being off-line? fiona: i think it is going to be a challenge to get consumers to continue to behave the way they have behaved over this winter, which has been to save energy, to turn down the thermostat, to buy new equipment, to put solar panels on their house or whatever that might be. but we really need to find ways to encourage that. in terms of industrial demand, it is a similar story. how do we ensure that the industrial uses of energy are responding correctly to price signals but are always trying to

get more efficient with their energy use? it is going to be tough for regulators and governments to keep consumers and industrial users on this path. dani: fiona, what happens when china demand comes back? when they get through the worst of the covid spike? the lng market is very competitive and perhaps the saving grace of europe has been that supply could go there because you did not have as much coming from asia. what happens when that demand returns? fiona: it is really interesting area the last few years has really seen the globalization of the gas market. traditionally, we talked about the henry hub in the u.s. and we talked about the tff market in europe. they were quite separate because you did not have that trade in lng. that has really changed. a tinker of lng could now essentially go anywhere. many of the asian companies,

particularly china have a long history of being a big consumers of lng. the competition is likely to hold up as you said, as china comes back to the market, assuming that their plan to cut covid restrictions and really go all in on opening up works. then you would likely see that demand for lng will accelerate over the year. dani: fiona, we are showing a chart to you of iron ore which has been falling. part of the concern here, again, the same one we are talking about is that china has an covid restrictions are being lifted by covid cases are higher. there are concerns about demand. wonder when this will be a story to trade when strengthening higher metal prices with china coming back online. when you expect that to be the story that dominates iron ore prices and dominates other metal prices and perhaps even oil?

fiona: pain -- iron ore has long been seen as a proxy for chinese industrial demand and i don't think that will change anytime soon. last year, it really struggled for the first eight or 10 months of the year and had a bit of an uptick coming into the end of the year when we saw some signs of chinese stimulus. then the news of a bigger reopening. so, i think it is a watch this space scenario. you would be looking at news around additional stimulus in the industrial sectors in china, and the real estate sector, but are broadly, i think looking at sentiment in china as well to really drive the price of something like iron ore. similarly for commodities like copper or nickel. dani: to the oil side of that story, is it strange that oil has not gotten that bid because

one, china and two, russia banning the sale of oil to folks who have put a price cap on them? it seems like the market keeps getting more tight, but it really is failing to receive a bid. fiona: is not surprising. the s&p energy index was up 40-ish percent last year. the best performing sector, but well off its highs. as you said earlier, wti now trading back below what we saw pre-russia's invasion into ukraine. a couple of things going on here. i don't necessarily think that the price cap nor russia's response to it which was to say that we are not going to sell to those countries, really will have much of an impact. it is a bit like rearranging the deck chairs on the titanic. that oil will still flow to other countries and the price cap where it sits today is not going to have an enormous

impact. i think there is going to be genuine concern about economic growth and that direct impact or flow through to oil demand. the unknown is, i think, the response of opec. we could see that they decide to cut production to try to lift those prices. that is the bigger line item of the first few months of this year. dani: fiona, thanks so much for joining us. head out commodities and real assets at s&p doubt jones industries. coming up, the imf managing director says get ready for a tough year ahead for the global economy. that story is next read this is bloomberg. ♪

dani: 2023 has started much the

way 2022 ended with a pessimistic note. imf is warning that it expects one third of the world to fall into recession this year. for more, let's bring in bloomberg's chief north asia correspondent. we knew there was a lot of pessimistic ought there. why is a significant from the this morning? >> i suppose it is a reminder that this year we will see the brunt of last years issues really come to the fort. remember through last year we had central bank rate hikes. they take some time before they flow through to people's bank accounts and mortgage repayment because. there will be pressure on households and consumers through the year from the cost of money. we know that when you look at the three big blocks around the world, the european economy of course suffering from spillover from the russian war in ukraine. the china story as well with not just covid zero there but also weakening demand for exports.

the u.s. economy you can argue whether or not it is a soft landing, but the point is it will have that this year. taken altogether, this year some of the pain that was building up in the global economy over last year or so finally comes to the fort. we are expecting to see slower growth. we should see recovery starts take off and the second half of the year especially if china stabilizes. dani: while we have you, i have to ask you about the bank of japan because we just finished up a december where they spent the most ever defending the 10 year yield. i'm looking at a yen this morning short, off of the highest, but just under 130. it is stronger versus the dollar. how do we square with the boj is doing and saying with what this market is doing? enda: there are a lot of variables in the japanese story at the moment. liquidity's is probably part of what is going on in terms of

trading the currency. japan is on holiday. member last year the whole story was japan losing at safe haven. strategists were saying hang on, japan is in a bind. the big question is where's the bank of japan going? we had that move on december 20 with the widening of the yield curve band. some people interpreted that as meaning they are starting to move away from the old truck dovish policy and setting the groundwork to move away from it. others are saying it wasn't really a tightening of policy but reflecting dysfunctional bond market that japan has given the bank of japan and governance. regardless, we have a new bank of japan governor this year and will be facing different circumstances as inflation is thicker than people thought there there will be a lot of scrutiny on whether the bank of japan will ease up on some massive dovish measures that they have that woodland support -- would lend support to the

yen. dani: leanne is so much weaker than the dollar that any tea leaf that seems like japan might tighten, folks are willing to buy. thanks so much. coming up, a new year, new strike action in britain. we will bring you the latest. this is bloomberg. ♪

>> if i had to choose one market to invest in, it would be the u.k. over the next year. the u.k. economy and 2022 has probably done better than almost all of its peers. >> and the u.k. we have some phenomenal turnaround. we really do. >> i regard the outlook for the u.k. as being better than most

commentators would suggest next year. >> this year has shown us in the business community they love stability. >> the cost of doing brexit is baked into everybody's thought process. >> we will get through and settle inflation down. it will take some time, but all of that is within our control. >> we will do better than the euro by quite a margin and possibly better than the u.s.. dani: some prominent investors there is speaking to me on the u.k. and what opportunities and hazards they see in 2023. speaking of hazards, certainly when we are trying to figure out for this year is what strikes will do to the economy. british railworkers walk up the job much of this week paralyzing transport and adding to the troubles piling up for prime minister rishi sunak's government. let's bring in lizzy burden. how is the government hand willing -- handling this round of strikes? >> we heard from ben wallace

last week who said the government would not be held to ransom by the unions as it was in the 1970's. the risk is that rishi sunak no met -- no matter how much he tries to emulate thatcher, he is in a situation where u.k. is paralyzed by the strikes is exactly what happened in the 70's and brought margaret thatcher to power. we are expecting to have five tales -- days of rail strikes starting this week. retailers will not be able to maximize january sales and more people to work from home. i understand that working from home is a huge concern for the chancellor throughout 2023 because it holds back economic growth. the overriding concern among the treasury ministers is that if they capitulate to the unions now, more pay demand from public sector will follow because of course inflation is expected to remain high in 2023. dani: clearly that is a big concern for rishi sunak and 2023. what else will be on his agenda,

to do list of the year? lizzy: the macro themes will be the same as last year and other countries. inflation and recession. the question of whether you can tame inflation without stoking the recession that the bank of england says the u.k. is already in. the u.k. is the only g7 economy that has not returned to its pre-pandemic levels yet here there was a survey by the financial times of 101 economists found that the uk's recession is going to be worst and longer than any other g7 country. the words they were using were grim, miserable the outlook of u.k.. very different tone to the optimism of the ceos that you spoke to, dna. this is going to dominate the political agenda for rishi sunak. we know they had to call an election by generate 2025 at the moment, labor has a huge lead in the polls, 26 points by one pole. rishi sunak needs to prove now

that after 12 years in government, his conservatives are not tired, that they've got the talent, ideas, and unity to win another term. two big opportunities for that will come in the form of the march budget on march 15 to show they are serious about growth and also in april the 25th anniversary of the good friday agreement to show they cannot deliver a compromise on brexit and show that they understand the need for stability among businesses. dani: that is a 2023 outlook for the government. 2022 was a interesting year for the b.o.e.. what is the outlook for them this year? lizzy: they need to thread the needle. they need to make sure that they don't add to the recession without -- and the way that they are reducing inflation. there is such division among the committee, as we saw at the last decision between the hawks and the doves. people like solana extremely

concerned about going to hard. they say that they are worried about the military policy transmission lag of 18 months. if we are too aggressive now, the hikes are going to bite just at the wrong moment. i have to say speaking to mpc members past and present, silvana has a very strong voice on the committee because of her academic background. when she presents these arguments, it might not change the boat -- vote. you may not get more doves but it may anchor the committee to the dovish side. dani: in the fed few people are willing to say something like that. lizzy burden, thank you so much. i want to give us a quick look at what the yen is doing. at one point this morning versus the dollar it was up nearly 1%. some of those gains have come back in. i want to flag volumes are likely lower.

it is a trading holiday in japan so course the fx park is up and open but things like japanese bonds and equities are not trading. even so, the yen is at its strongest level versus the dollar since june. this is now despite a boj and governor kuroda who says we're going to keep policies easier and we are concerned about the economy. inflation is not yet near targets and to cap it off, three unscheduled bond buying operations last week to end the week with the most a bond buying on record to defend the 10 year yield, with $131 billion or so. yet traders are willing to bet that they are going to start backing off, that they will indeed start to tighten policy given that governor kuroda's term will be ending in just the next few months. we are talking to raj patel earlier in the program who said that he thinks that japan could be one the biggest macro

surprises of the first quarter. our conviction is growing every day. he said that yes, he would continue to buy the yen versus the dollar. yes, he would continue to short jgbs. that is a direction. it seems like it is becoming more consensus that indeed the bank of japan will start to tighten. of course, elsewhere in markets it is the concern of inflation. the warning from mark -- michael burry from the imf. we'll have an interview with the bank of israel governor in the next hour. this is bloomberg.

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>> good morning welcome to bloomberg markets europe. i am anna edwards live in london. mark edwards join