dani: this is bloomberg

daybreak: europe. happy monday. i'm dani burger in london, with an is cranny in dubai, with the stories that set your agenda. yousef: brazil insurrection, security forces regain control after thousands of of president bolsonaro ransacked government buildings in the capital, brazilia. global stocks jumped after wall street's best day in a month, amid optimism over china's reopening and slower rate. boba fett need to reign in expectations again? sources say goldman sachs will embarq this week on one of the biggest rounds of job cuts, with plans to slash more than 3000 jobs. dani, we are reunited, good to have you back in the studio. i don't know where i have been. but my favorite line on that goldilocks jobs report on friday goes to randy rosner, the

immaculate disinflation report, oh, that is a brave call. especially if you listen to people on twitter. good morning. dani: i don't know where you have been either, but it has been with me. the market taking the note, trading this jobs report, those weak services coming in as if goldilocks herself had found the perfect bowl. but we hear from jay powell tomorrow, will he push back against the stockmarket rally and the dollar at a seven-will low -- seven-month low? manus: look at where the field of dreams came to crash, it was the short end of the curve. two's dropped so aggressively. the biggest demolition derby on the short end of the curve in quite a period of time. this is where the short end reevaluates the peak inflation narrative. and you see 2-year yield's tanking on friday, by the most in almost two months.

that is the personification of a weak services number and a weaker than expected jobs report. dani: let's talk about the other driver of markets and get to the equity market check. it is china's reopening, today is the first day we have borders reopen in china. in the msci asia pacific index is now up 20% from its october low read on the board i have the msci asia without japan. japan is on holiday so no training in that market today. the other driver is china tech. we have policymaker interviews that indicate less regulation. jack ma ceding control of voting rights at alibaba, rallying seven and a half percent. and the goldilocks rally continues today for the s&p 500. manus: this is going to be an interesting one.

what have we got on my board, i didn't actually send one, so here is a moment of truth, what am i going to be able to talk about? roll the dice, we have got bond futures rising and falling, yields carrying three. rough. you are seeing that embolden the goldilocks narrative. the short end of the curve imploded on friday. you have got some pretty mighty calls. this is all bonds, so let's stick with that. all in on the bond market. the question is, will the cpi crush this dovish turn? and this underpricing of terminal rate at 5%? let's look at currencies because the dollar swooned to a seven-month low, if you believe in peak inflation, peach jobs growth and peak fed, then perhaps you are more attuned to a dollars battles over. the aussie dollar trades above a 200-david moving average.

the manufacturing base to see the alpha in euro according to nomura. the renminbi flies higher, goldman says 50% higher on the equity market, for the currency, some stuff sticks. dani: you are putting the producers to a test today. let's get to our top stories from around the world. we get the latest out of brazil, where rioters stormed government buildings. goldman sachs announcing its biggest round of job cuts. and cpi will be out later this week. >> thousands of rioters that support bolsonaro stormed congress another bildings in the brazilian capital. security forces took control and detained 400. bolsonaro says the protests are quote, not within the rules read president lula announced federal

intervention to bring security under control. >> there is no precedent for what these people have done. these people will be punished. we will find answers and they will all pay the force of law for this irresponsible, undemocratic gesture. this gesture of vandals and fascists. manus: phillipe joins us, if we talk about brazil, what is the state of play? the justice minister saying it was almost a coup. >> good morning, manus. what we can tell for now is that the images we saw on sunday in brasilia, things are calm are now. it is the middle of the night in brazil, we have president lula da silva and some of his

ministers saying this is unprecedented. and that the images and events from the day were barbaric. national security forces were called to impose order in the capital. and also, the supreme court ordered the governor of the federal district to be removed from office for the next 90 days, in order for his responsibility within the events to be investigated during that period. also, the supreme court ordered all of the protesters that have been camping outside of military headquarters throughout the country, they have 24 hours to be disbanded. as we wake up in brazil on monday, as we see activity back to normal within the biggest cities and markets, people will be watching the consequences of those actions that were announced at the end of the day on sunday. and how the investigations will proceed. dani: just looking at those

stunning scenes coming out of brazil. thank you so much. bloomberg has learned that goldman sachs is planning to cut about 3200 positions this week. joining us is bloomberg's finance editor in sydney. adam, this is less than we had originally been expecting, isn't it? >> it is, that's maybe a big good news in the title. this is the first news to start the week. it is a fair amount of people that will lose jobs that goldman sachs. we expect the bank to release information sometime this week, it will be around 3200 positions globally. it will come from trading, but also the banking unit. that gives you an indication of the breadth here. they are not just singling out one division, they are going ross the board.

solomon had taken the bank to around 49,000 people by the end of september. so, if you think of these cuts and the size of their workforce, this is not as many as some were expecting but it is a significant number. manus: it's going to be wide, and perhaps, as you said, 30% is going to come from core trading and banking units. so everybody is under the gun. what does it say about the broader industry? because goldman, some would say, bloated post gfc, but there have been other quiet, below the radar cuts, some of the french banks, etc., is 2023 the year of job cuts in finance? >> it's fair to assume there are going to be an ongoing wave of

reductions across the finance industry. as the global economic slowdown takes force, and as the u.s. debates about when we go into recession, it is clear people are positioning and companies are positioning for a significantly tighter environment. the point i'm making is they want to get ahead of that, that is what we are seeing with goldman. we have seen it for a number of other u.s. banks. indications about the size of their headcount reductions. and european lenders hinting or saying they will do similar moves. it speaks to the nervousness and flirt agility -- and fragility of the global economy as we start the year. we don't know how much things will slow down, but clearly, firms want to be a have that. they want to his vision for the

downside and be nimble in the right areas for when activity picks up again. manus: well, that is the push and shove within banking. buyer beware. our finance minister in sydney, thank you for joining dani and myself. the fed are pondering this stronger than forecasted jobs report we just had. the unexpected cooling in wages, what does that do for the january rate hike? let's bring in our senior economics reporter, michelle jamrisko, good to have you with us. the latest data, does it alleviate the fed? if they step back from 50, i think they lose all credibility, but who cares what i think? >> i don't know if they lose all credibility, a pause or pivot at this point might do that if they move swiftly. a number of data points we have to dissect. we have two big reports out friday, the so-called goldilocks jobs report. we got stable jobs gains despite

all the massive layoff news we're hearing in other parts of finance, tech and real estate. we saw wage growth hopefully moderating. we want that at a more sustainable pace, as the fed has said. one thing that is important, the labor force participation rate ticked up, so that is helpful to see loosening in this very tight labor market. that is helpful for the fed, but then we got this quirky services report that is hard to dissect because we see the contraction in the topline number for the first time since early covid days. and the prices gauge isn, maybe markets would like to strike that out but it is still very high. that is the point in this rorschach test-like the economy where the fed is to say what it will about contextualizing the data, versus what markets are saying. they are at odds at each other, focusing on different things, but the fed says inflation is

still too high. we had three fed speakers say that after the two reports, that is the message we will continue to hear from them, even as we get cpi numbers later this week. dani: we also had the fed, speaking of, jerome powell is in stockholm tomorrow, why does the market keep pricing in cuts? manus, coming up, we are going to be talking about markets. the world settling in to the reality of higher interest rates, more geopolitical tensions, uncertainties. but will we have a soft landing after all that data we got on friday? we will be discussing that next. this is bloomberg. ♪

>> i suspect tumult.

this will be remembered as the year when we recognized that we are heading into a different kind of financial era, with different kinds of interest rate patterns. manus: the former u.s. treasury secretary larry summers on the fed's fight against inflation. equity markets are higher this morning the question is, is it misplaced exuberance on what everyone is calling a goldilocks jobs report? esther reichelt is our guest this morning, epic strategist at commerzbank. -- fx strategist at commerzbank. larry summers says we will have a very different financial landscape. let's start with a step back. what does a tumultuous year of volatility mean for fx markets?

good morning. esther: well i would expect we would need to see volatility going up. we had quite high levels throughout the latter half of 2022. right now, it does not yet look like this, because the market is quite confident. even though the fed tries to bring in more on the fed side, so far, they have resisted. dani: the market is sending the dollar to a seven-month low. do you also want to sell the dollar at this point? do you follow on to that narrative that there will be a soft landing, or that the fed can pause, potentially pivot? esther: the latter one in particular. although this might be due to, for triggered by, recession,

which will trigger the fed to cut rates later this year. the risk is if you go for software dollar right now, there is divergence in fed and market views. as long as this persists, there is always the risk that if data comes more in line with the fed, but the market quite suddenly moves to the fed side. and that we would see at least in the intermediate a spur in u.s. dollar. the latest jobs market report stresses that risk, there was something everybody. for the fed, but effectively, for the market. manus: it just depends whether you really think the fed can deliver a soft landing. make your call, roll the dice, how hard -- which is what the fed needs -- or how soft can

this landing be in 2023? esther: right now everything points to a soft-ish landing. we do not expect a very deep recession. however, we ultimately believe it will be sufficient to bring down inflation so that the fed is more comfortable with cutting rates. because they know if the risk of over tightening, they will not have the room to move higher with rates. dani: one phenomenon that unfortunately feels like it is becoming more commonplace is trying to estimate political instability. this morning, it is brazil, with supporters of bolsonaro storming government buildings. how do you model political instability? esther: that's quite an interesting point this morning. typically, particularly in emerging markets like brazil,

are against the respective currency. and we expect the brazilian rialto move considerably as markets open. however, what we are seeing particularly for brazil the last year, was that the central banks to play an important role there. in regards to political stability when there was an october election, the brazilian real did quite well. against the dollar, it was one of the few currencies that held up against the dollar last year. that was because of monetary policy. they built a strong setting, and we will see this morning. yes, the real will lose bad. we have to remember the central bank is an anchor for this market. manus: certainly more than

perhaps some other economies. as there, where you follow the euro debate? i was listening to tom keene and n -- nomura, they are in the camp that a less aggressive slowdown will embolden the dollar. the warns that price pressures in the euro area remain elevated. do i need to recalibrate what the ecb will do this year in terms of rate hikes, or is it a softer landing in europe that drives the euro? esther: it will be this softer landing in euro, in europe, that will strengthen the euro. but only against the background that the ecb will not get deficit too soon. -- dovish to soon. they will keep rates at a high level, and this will support the currency, but only thanks to --

for the ecb, we do not consider them to get back so easily as the fed. only for the reason that the fed w -- ecb was not as aggressive as the fed. the ecb seems to have a more clever strategy going more cautious. dani: what would be the ceiling if we see some of that dollar strength come through? esther: we have a target of 1.10 later this year but we have to stress that there are significant risks. in particular, this divergent proofing fed and market view that could bring euro-dollar down again. temporarily. dani: so wonderful to speak with you this morning, esther reichelt, fx strategist at

commerzbank. scenes out of brazil have a distinct echo of the pro-trump u.s. capitol insurrection two years ago. we will bring you the latest. this is bloomberg. ♪

manus: it's your monday addition of daybreak europe. let's get across to delhi for the first word news. -- to doha for the first word news. >> thousands of supporters of ex-president of ex-president the brazil gyre bolsonaro have stormed congress, a week after president lula da silva took office. protesters ransacked congress before security officers regained control of a capital. bolsonaro says the storming of government buildings by supporters is quote, not within

the rules of democracy. president and let da silva called the incident unprecedented in brazil. kevin mccarthy became u.s. house speaker on saturday after 15 votes. he is rallying republicans with pledges to strengthen the borders. the house votes on monday for new rules, including allowing a single member to force a motion to vacate the speakership. ukraine is sending reinforcements to defend two frontline towns that he called among the bloodiest in the fight against russia's invasion. on sunday, kyiv rejected russia's claim that 600 ukrainian soldiers were killed overnight. the rocket attack was said to be retaliation for an attack on new year's day by ukraine that killed nearly 90 russian troops. goldman sachs is embarking on one of its biggest round of job

cuts ever, as it goes deeper than rivals in shedding staff. the process will start midweek with up to 3200 positions affected. global news, 24 hours a day, on air, and on bloomberg quicktake. powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. dani: simone foxman in doha. some lines from the swiss national bank, making clear the damage they have sustained in last year's markets, 2022 loss of 132 billion swiss francs, 130 one billion loss on their fx portfolio. manus: that has implication for the count ons, they won't make an annual payout to the swiss state and to the count ons.

just opening the actual report, they have as you say, 131 billion of loss in swiss francs. but also a valuation gain of 4 billion on their reported gold holdings. dani: ubs has last year's results cannot be viewed in isolation and will have spillover effects into this year, so perhaps there is continued disruption to their payouts. manus: absolutely. china tops the agenda on the bloomberg terminal, the great reopening, and the outlook. that's up next, right here on bloomberg. ♪ as a business owner, your bottom line is always top of mind. so start saving by switching to the mobile service designed for small business: comcast business mobile. flexible data plans mean you can get unlimited data or pay by the gig. all on the most reliable 5g network. with no line activation fees or term contracts. saving you up to 60% a year.

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>> on the stories that your

agenda. >> global stocks jump amid optimism and slower rate i spirit will the fed need to reign in expectations again? the result is direction -- they ransacked governments in the capital busily. sources, highs will embarq this week on one of the biggest rows of job cuts ever. the plans to/about 3200 jobs. happy monday. the euro can get to 110 versus the dollar. hedge funds gorging on dollar shorts. they are the most bearish since august of 2021. >> you just have to think to yourself about whether that momentum does. this could be the crushing moment for the dollar across the

assets. that their political roadblocks jobs report. that is where they have really translated themselves across the board. the biggest drop in yields in two months. we saw that on the bond market on friday. we have futures flat at the moment. you are looking at the aussie breaking through a 200 day moving average. we have jp morgan saying the reopen in china emboldens the currency. crude dovetailing. this is about adding three-4 million barrels of oil demand in 2023 if china reopens fully. >> as that risk on market continues into the equity market

, starting with china stocks, i will get more into this in just a minute. i will not linger over it too much but japan is closed. some of those gains being thrust forward by alibaba. in hopes there will be less of a tech crackdown plus jack ma ceded control of here. plus they push higher this morning. let me get into the china conversation. i want to show you chart of the pacific index. it is january 8, ninth rather. it is the ninth, the first time we are seeing china's borders reopened. with that we are looking at in msci asia pacific up 20% from an october low. i guess a technical bull market. it has a long way to go to get back to where it was. executives also publish their

forecast on china's gdp growth, following the nation's reopening after the abrupt exit of covid zero. >> we exceeded zero covid. i think the power back will become that. that is because of this massive migration of people and low productivity during the chinese new year festivities. real growth will come in maybe starting quarter two. speaking to bloomberg on the economic impact of china's reopens. thank you for joining us this morning. just showing that chart. the asia-pacific is up 20% on

the bottom. do you want to buy this rally? >> yes. we started putting in the china stocks last year because we saw the clear signal that china was already to reopen. we put on the base case for reopening after the chinese new year more likely marched when the winter was older -- over and went the facilities were done already. we look back in november and we saw a pretty dramatic partisan change that give us more confidence. right now, you can see your inflection levels hit the ratio in major cities like beijing and shanghai. this is already above 80%.

this with the rest of the cities at 40%. >> let's see whether this actually comes to bear. that is the health system actually holding up to the reopening. i don't think anybody is talking enough about it. which policy pivot is the most important? >> two of them, just mentioned earlier that in november, that is a pivot. i think this is crucial. i think a lot of people already participate. i don't have to reemphasize another pivot because of property. if you're looking into 22 and 21, the major policy drag and the drag through the year, not only gdp but it is pretty much very conservative policies on the property.

you are already seeing the starting point on the refinancing and the moves to the rate cuts. we will potentially move into a lifter the constraint on your home purchase. i think that will at least alleviate the pressure on the gdp growth and more and partly on consumption. >> i feel like i'm stealing a bit from manus. i think he brings up a very important point about all of this. i think it is really important, this point about the health system, about it being able to handle the new surge in covid cases. the reopening, we thought it would be bumpy. >> i think this is a very good question. i think a lot of people ask me about the reopening and more

disruptions from such dramatic policy changes. i would say one is that we are reopening the base case moving forward around the chinese new year. i think if you asked of the equity investors, they definitely would love to see better visibility where the other impact on the reopening. if you talk to your friends and your relatives, it could be a very painful experience. i think for most of the people we are talking to, i think we are really looking beyond disruption in the first quarter and potentially we are looking at more policy in the second quarter and better growth in the set -- in the better part of this year. >> one of the most ravaged sectors, there were many, it was

obvious attack, jack ma stepping back. many people interpreting this as a pivotal moment in the tech constraint and regulation. i just put up a five-year chart of alibaba. i just wonder, 309 was the top of that price on the 28th of october of 2020. that is a 200% rally you would need to get your money back on the big call of 2020. >> i cannot comment on individual stock but if we put on a sector. >> do you see the propensity russian mark step back from the stock. the stock is merely an eye debt. has big tech in china restated my losses? >> i think it is difficult. if we look at the one year time horizon, i think in my view, there would be 50% for the whole

sector. >> it will certainly be difficult. when was the last time we saw anything but bitcoin? what is the likely rally? goldman says 50% on the china stocks for the new year. does that figure seemed right for you? are you more bullish than goldman? question we published the outlook at the beginning of this month, we looked at it 20% growth. not only for, co china but also for the china shares. >> i think that is a very interesting quality you just give us in terms of the internet sector. i stand absolutely corrected on that. sometimes one does have to dissect this. the 50% relative to that and call that they have.

you are a braver man than goldman. you can walk away with that. we are looking at emerging market stocks. we are back in a bull market. let's close this conversation. how do you see -- what is the biggest risk here? this monster rally? >> one thing we can see from here is a of policies. i think getting to q1 or q2 of 2023, that is easy to be a lower basis in 22. there would be the second half of 23. without the relay of the policy, hopefully it focuses on consumption. i think the rally only relies on the reopening. also, policy changes and property sectors.

that could show where we have put this in our base case. i expect that in the march 2 session. we will see a more of a focus on the consumption policy relay to continue to drive the momentum into not only the second half of this year but also of 2024. >> thank you, admin. thank you very much. the head of chinese securities research over at credit suisse, thank you for being with us. danny is going to join in just a second. this goes to the heart of did you read the email that i sent you on the bank of america? >> i may have the more readily available than you. direct me if i'm wrong but is bank of america saying it is about the world, not about the u.s.? ? i read your emails.

then i get into a lot of trouble. there it is. it is just dovetailing what admin said. it is about tech, china, buybacks and on europe as well. i love it. across the usa equity market. i need that. what have we got? >> we all need that a little bit. >> coming up, it is all about brazil. president wu faces his first major test this term in office. we have that story for you next. this is brazil. ♪

>> oil theft and the refining of his spoils is worsening the damage from decades of fossil fuel exploitation, creating one of the roles most severely ecological disasters. >> our homes, how to give oil wells. no one gets much benefit. >> imagine a resident who inhales this set every second seven days a week, 30 days a month and for years now we are dying slowly for shirley. our lifespan is reducing every day.

request there are a lot of questions about what would be the consequence for those protesters camping in front of military headquarters across the

country. the top for those manifestations. there is a lot of political alignment at this moment to show strength and show force at the situation develops. the president was there over the weekend and he flew already to brazil. he is meeting the president of the congress and office -- off the house of representative in the supreme court to show an allied response to all of those events. some of his ministers called the situation unprecedented and they also promised to punish not just the protesters but also those that have been funding since the end of the elections in brazil at the end of october last year. >> that is reminiscent of everything we saw on january 6 in the united states of america.

the political response, the military response is very evident. is there a sense of calm? has it been restored? i know you have deep connections and you are able to people. what are they telling you? >> that is a very good point. we know the elections in brazil were extremely delicate with a very small and narrow margin over bolsonaro. those tests have been having for over two months now. some investors looking at brazilian assets say it is not exactly surprising to see this happening right now but at the same time, the violence and also the fact that a lot of local authorities did not respond to such events as they were expected to. it is not something people would be watching right now. the top port in brazil offered that the government of the federal district should be taken

out of the position for the next 90 days in order for his responsibility within the events -- in order for it to be investigated. it will be important to see how all of the authorities within congress, within the supreme court and the presidency come up with statements and what did they make clear to the public in brazil right now on monday? >> thank you. but see how the brazilian real response when it opens, thank you very much. the republican leader kevin mccarthy has finally become the high speaker overcoming rebellion within his own party. 15 votes on his succession and four days to resolve. babies were cradled and history

was made. it is deeply embarrassing all the way around politically for everybody. 15 votes. why did it take so long? >> like you said, it was an embarrassing moment for the republican party, it really expose how the saucers gets made in washington in a very public way. kevin mccarthy got through that 15th round by promising a lot of things to the hard-core group of five to about a dozen republicans who had been withholding their votes. the biggest issue he agreed to was to allow a single republican member of congress to call for his ouster to have a vote on the speakership if they disagree with the policies he is pursuing. that makes it very hard for mccarthy to get any kind of bipartisan legislation through the congress and it makes particularly risky the debate

over the debt ceiling distillation that will come up at some point late this summer in the united states. if one person can call for your out, it makes it -- it makes it hard to get any kind of agreement with the democrats to work around those republican hardliners. >> it makes it hard. thank you bill. coming up, what are the 50 companies to watch this year? bloomberg intelligence has compiled a list from tech to semiconductors which is a kind of tech and retail companies. we will bring you the details next. this is bloomberg. ♪

>> equities can't do well this year unless tech does less. >> we are looking at earnings contract so negative growth for

the s&p 500. >> forget how cyclical some of these tech stocks are. >> these tech investors have not had to focus on business fundamentals for a long time. they have been writing this low inflation rate cycle rising in stock prices as a result of that. >> a pretty nasty earnings per session. the companies that can deliver on the cost of efficiency are the ones that will continue to perform. >> some people: this as much as 20% lower. bloomberg intelligence has compiled a list of the top 50 companies to watch. the temple here. tim, to get into a few of these overarching themes, everybody is doom and gloom and bust on earnings. how bad will it be? what are the important things? as management changes? talk us through the top line.

>> absolutely. as we get into for q earnings broadly speaking, we see more risk than reward. i was chatting with danny on friday about european markets specifically and we do think if there is a sloppy beginning of the year, there could be the opportunity to look beyond a better second half, a view toward 2024 and recovery and then importantly, this list of 50 companies which are a short part of our overall focus idea of strong views and catalysts i had to change market perceptions in our mind. it is chock-full of companies with triggers for this year, 2023. management change is a big deal. there are a few of these within that context. i did this -- adidas has a new ceo -- he is not solely focused

on asia. they have a ceo coming in in february and disney is probably the biggest -- the biggest management change is with bob iger coming in. >> looking at this, you see that second bullet point there. you have some chip stocks there. how are you thinking about semiconductors and the tax supply chain this year? >> clearly, a lot of technology got pummeled last year. part of that was because of economic fear as some of those comments were made. part of it was evaluation compression as inflation was higher, interest rates were higher. that said, underlying demand for technology continues to grow. if we had any sort of time horizon, there are some really intriguing companies with great

technology leading positions that have really been beaten up. asml is an example. you can't make semiconductors with it. especially as you go smaller. >> thank you very much, tim craig, we will look at all the names. it has been great. a great monday did have you back as we contemplate this potentially goldilocks market. >> yes but i love it. it is misplaced hubris. i am officially 60/40 by 30%. i will be here for a very long time on bloomberg. ♪

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anna: good ng