>> good morning.

this is bloomberg daybreak: europe. i am dani burger. these are the stories that set your agenda. fed officials pour cold water on markets seeing rates rise above 5% and staying there for a wild. that hawkish message snaps the rally in stocks. let the chips fall. apple is said to be preparing to drop semi conductors made by broadcom and all comp as the iphone maker uses more in-house designs. plus, bungled debut. u.k. rocket launched by virgin orbit failed to support satellite cargo sending shares of the richard branson company plunging. bostick and daly have come to ruin your hopes and dreams of a risk market rally. they confirm that we will continue to hear from the fed and they want to go 5% or higher and stay there to bring wage growth down. we will hear from jay powell today as well. he is likely to reinforce that message.

we get a pause in this equity market rally. u.s. stocks, futures are falling after a drop in the cash market today down by about 1/10 of 1%. morgan stanley says the 3900 looks i can easy sell. jp morgan also throwing cold water on the european rally. they say that after a 20% rally in european stocks it is time to take profit that the positive kalus be at peak bond yields are energy prices or china reopening has already played out. now it is about negative earnings. ms ci asia-pacific is basically unchanged. we have morgan stanley turning more bullish on china there that story is playing out. i want to show you really quickly what played out strongly in yesterday's session, tesla. while most stocks fell yesterday, tentative better specifically tesla which rallied nearly 5%. i think i might have that board for you. it rallied nearly 6%. even though tesla had woes and cut pricing in china and

singapore, taking discounts they are, still a sizable rally on the hopes of china reopening. cross asset it is a very quiet even boring day. we are waiting for jay powell to speak so perhaps not too much action. the dollar hovers near a seven month. u.s. 10 year yield is at 3.5284. brent crude down half a percent under $80 a barrel. bitcoin very small moves but i want to flag it is up for a seven consecutive day. that is the longest winning streak since february 2022. each day those moves have been very small. it has been rallying for seven days but it is around 1700 and moving too much from that level. to top fed officials are continuing to pound the drone -- drum for raising the key rate above 5% and holding it there even as a both open the door to a 25 basis point hike at their next meeting. let's bring in bloomberg's chief economic correspondent.

is this a new message from these officials or is it anything different from what we have been hearing? >> i think it's a new year reality check, dani. both officials bostick making a point that rates will go above 5% and stay there for some time. bostick was particularly quite hawkish and said that he came up with the phrase said it would stay there for a long time. he is not a pivot guy so is not really trying to pause the rate hike at the moment. nonetheless there's a lotta play for the fed over the coming days. the jerome powell speech today will be important. then we get inflation data later this week. if the inflation number slows down a bit given that we have a slowdown in wage growth that we had last week with jobs that might suggest the fed will start debating more of a 25 basis point move than a 50 basis point move when they end -- meet at the end of this month. the core message from these two officials is that rates are going up and it will probably be

a debate of by how much and at what pace? dani: this market does not believe 5%. currently terminal rates just under their. i've heard the argument before of folks who are pricing under 5% say yes, perhaps the fed is speaking truthfully or rightly when they look at today's data, but data in the second half of the year won't hold up. does this all mean that the markets are underestimating the fed or just seeing something the fed isn't? edna: it is a much better tone around it as you know with the winter being mild in europe and china's reopening and the u.s. continuing to hold up pretty well on the jobsite of things. people are saying maybe there is a prospect of the soft landing after all. that means central banks will have to push a mortgage rates the way they are expecting. the fed have to make the point that they are nowhere near done when it comes to fighting inflation. they came out with minutes earlier this month delivering

language that trailing markets cannot underestimate what we are doing. bostick and daly are not voting members this year but they certainly doubled down on the message that the fed has a long way to go. inflation this week will be key. those numbers that are due this week will be key in determining whether the fed is going to go 50 or maybe 25. dani: yep those numbers coming out on thursday. thank you very much. that is bloomberg's edna curran. tsmc fourth-quarter sales missed analyst estimates signaling the global decline in electronics demand is starting to catch up with a taiwanese giant. for more on this let's go to opinion columnists tim. a miss from tsmc. tells more about it. >> we just saw half an hour ago the numbers from tsmc for december. we are very lucky in taiwan that companies were were on a month to month aces so we get a tiktok of how the year is going. only 24% rise year on year would sound like a great number. 24% growth for any company is

very good. this is a company that brought in 75 billion in revenue last year but we need to remember is that the start of the year was coming out at 50% growth year on year. it was a mess as you pointed out in fact the largest ms. in over 10 years almost 11 years if you go to the bloomberg terminal you will see the -- that data out there. it was a very good year to start but it quite a bad here and weaker year towards the end and that is what we need to be concerned about going into 2023. dani: broadening the outlook because we have also heard from apple looking to move to production in-house, what does 2023 look like for the chip sector? tim: this is going to be a year of changing consolidation. tsmc is not going to be falling next year or shrinking next year. it will still grow. there is a sense right now that may be q1 it will be maybe the bottom. this is what analysts are looking at and investors. is q1 going to be the bottom or

will drag out to q2? will we see a big second half of the year? that is what it's really all about right now. there's a bit of inventory in the pipeline. that is expected. we know the macroeconomic economy is struggling right now and that will impact chips of course. the concern now is how are we going -- are we going to see a short bottom or will drag out for 3, 4, 6 or 12 months? that is what investors are trying to guess right now. tomorrow we will be having a chance to hear from tsmc at their quarterly conference tomorrow afternoon. people will be watching very closely for any outlook and guidance there. dani: tim, thank you very much. we will be paying attention to that and i'm sure we will have you back to talk about it. tim cole and from our bloomberg opinion team. bloomberg has learned that several dealmakers in asia investment bank is reacting to a slump in fees. for more let's talk to lulu chen.

breakdown these moves before us. what does it tell us about nomura as they try to navigate this year? >> several senior bankers have departed and those include two managing directors based in hong kong. nomura has shuttered its small investment banking operation in middle asia. the investment bank has fees and business operations from investment banking material deteriorate last year which led to some headcount reductions. also, sources have told us most of these cuts were made in areas where the bank did not have scale. going forward, i think tomorrow will focus on its core businesses even though the bank does want to diversify revenue streams. part of this is due to a downturn in deal flow particularly in china were regulatory crackdowns have cut off access to capital markets. the global economy downturn did

not help with that. dani: i want to get more to that overall environments because we learned yesterday that jeffries reported a big miss, especially with that deal slump not just in asia but globally. how does that reflect as we head into earnings season for the wall street giants? lulu: that 52% drop in revenue for this. really offers a snapshot for jeffries earnings going forward and also wall street banks performances in general going forward. i think like i said before, the layoffs that we are seeing runs across border from goldman to morgan stanley to credit suisse and also wall street is looking at a pretty grim quarter for earnings season. dani: lulu, thank you so much. that is bloomberg lulu chen. let's get you set up for the day and a few things we will watch out for. we will have wholesale inventory readings from the u.s. at 3 p.m. eastern. today will we have been talking

about, a star-studded central-bank panelist. jerome powell, andrew bailey, and isabel schnabel will be among the speakers at the international symposium at risk bank in stockholm. will the hawkish speak continue? it later today the world bank will be releasing their global economic prospects report for 2022. first coming up on this program, those two fed officials yes, they might be nonvoting but they confirmed u.s. rates need to go above 5% before pausing and holding for some time. we will discuss fed speak and the equity market next. this is bluebird. ♪

>> the starting point is the sep putting it between 5.25 and 5.5 if memory serves. that is a reasonable place to start but we will need to go in and imagine as a data role in, do we need to go higher or can we stop a little earlier? i think something above five is absolutely in my judgment owing to be right but when i say absolutely going to be likely, i still have uncertainty around that but that's why i'm putting that. dani: san francisco president mary daly at going bostic on rates above 5%.

that picture mixed with earnings is why mike wilson when the most vocal bears on wall street talked about why the consensus might not be bad enough. i know yesterday he wrote consensus again a bad perhaps could be -- a bad first half could be right directionally but wrong in terms of magnitude. he said the surprise might not -- the surprise might be how much lower stocks could trade if a recession arrives. let's bring in our guest for this half hour beata manthey. thanks so much for joining. what do you make of this? there has been pushed back that the consensus has been a bearish market so perhaps it won't be that bad but might listen here saying that actually consensus is wrong in that it's not bad enough. beata: good morning and makes for having me. i would agree with mike actually. i do share the same view that consensus earnings estimates at the moment are still too high.

they are coming down so for europe, analysts expect flat eps growth but commodities where we see weaknesses share it's only still plus 6%. my top-down number for europe is -10% so 10% gap therebetween analysts in my top dollar forecast. that is one thing for the consensus to be overly bullish in terms of the earnings estimates, and they had the reasons for that. another issue is what the market is actually pricing in. my models are suggesting that for europe, actually more than my 10% contraction so around 15% contraction is already priced in by the european equity markets. dani: interesting, so where do

you see european stocks going? will it be a repeat of 2022? will they decline or is there of site if a lot of that is priced in? beata: let's put it this way. last year was a bad year for the markets, and quite ok actually remarkably resilient era for the economic perspective and from the earnings perspective for the corporate sector as well. i think perhaps this year as we see recession hitting europe and later on in the second half of the year in the u.s., it might be a worse year for the economy and for the equity fundamentals, but perhaps not as bad year for the markets overall from the current levels i have around 7% upside for the european equities . u.s. strategy is less for the u.s. perhaps because of what you quoted. but really for the time being, i

think there is still quite a lot of uncertainty. so i think the markets will be [indiscernible] for a few more months. european markets there is more happening for these potentially falling earnings as my models suggest later in the year when inflation is peaking and the central banks do the last hike. dani: can we dig into some of the sectors they are? i have banking on the mind because we were talking with our reporter about 10 minutes ago, not european banks but nowhere -- nomura struggling with dealmaking. would you make of the european banking sector at the moment? beata: in terms of the banks overall, of course the slowdown in the economy is really making an almost completely shutting down last year, these are not

helpful factors for the banks. however, there is one new thing, and additional factors structural change i would call it that we have not seen in the previous recessions or slow down environment. that of course is central banks hiking. this is helping the overall banking sector i think. when i look at the analyst forecasts revisions for the years, this is one sector that keeps being upgraded and the forecast for eps keeps being pushed higher. of course, banks have many, many different businesses and investments. dani: obviously, they are very idiosyncratic differences therefore citigroup -- not citigroup. i am looking at your bio and getting myself confused. quite it -- credit suisse. how are you currently putting

into your models the swing factor of a china reopening? to what extent is that priced in? where might it manifest itself on the upside if it's not already? beata: course the reopening what we call it a v-shaped reopening happened very fast in the markets started to price in very fast as well. european markets are the one that benefited the most. of course a lot of business and revenues, from the u.s.. that will go into the recession in the latter part of the year. quite a big concentration in a few sectors and that comes from china as well. as a tailwind we are getting headwinds from other parts of the world. dani: just finally here, i want to bring up something that bank of america observed in their flows data that we are entering

this. for 2023 where the rest of the world of the u.s. in places like europe might perform. you mentioned this idea of u.s. versus europe. what are you hearing from clients? is there a bigger appetite to look outside the u.s. this year? beata: this is how i view my latest global outlook for the year. we have upgraded europe to, continental europe to over wait for quite some time and we downgraded the u.s. to underweight to reflect what you have just said. however, when a look at investors positioning, this shift has not happened yet. so, european equities have suffered huge outflows last year looking at the data. european equities have seen seven or 8% of assets under

management outflows. these are very, very big numbers and while the u.s. at the same time has seen inflows or flat outflows. a big gap there to be closed. when sentiment shifts more towards europe, this could potentially give european equities another boost. dani: a little sentiment boost for 2023. thank you so much for joining us this morning. beata manthey head of european equity strategies at citigroup. coming up, the world cup is over but the impacts are lasting. qatar looking to spend more on the beautiful game and could potentially be the owner of your favorite premier league team. we will discuss that next. this is bluebird. ♪ -- this is bloomberg. ♪

dani: fresher from hosting the

most expensive world cup ever, qatar is looking to spend more on global football. bloomberg has learned that qatar sports investment is actively winning bids for either manchester united, liverpool or tottenham in the uk's primarily. a spokesperson denied a meeting took place but the other clubs and q i.s. also declined to comment on the matter. for more we are joined by bloomberg's simone foxman in del hot. first off what is the investment case? why would qatar want to invest in one of these clubs? simone: for qsi which is the sport investment arm of the sovereign, there is certainly some impetus to try and turn what was an incredibly expensive world cup into something lasting long term. they want to leave a legacy of sports investment for qatar, and qatar is already invested in certain leagues across europe, in particular, but not all of

them necessarily make a ton of revenue. look at portugal it specifically. there is the idea of the legacy piece but also it could prove a hedge against some of those investments that may not be as valuable because valuations in the premier league are enormous, dani. dani: to that point, if it happens it would be the latest in a string of golf investments in european football. does that raise any issues for the league? simone: absolutely. first we have this idea of the sports washing. qatar has been accused of that and saudi arabia and the uae human rights issues covering them up. the idea is by getting everyone excited about sports. but aside from that, as i mentioned, qatar already owns tsg. the rules limit an owner of two teens that are outright owned by the same owner from entering into these massive european

tournaments. that may be why some of these teams are the ones that qatar is considering, especially because the owners have indicated that they might willing to selloff a piece of the team, not necessarily the whole team. minority investments my allowable teams to enter into these massive sporting events, which of course bring a lot of revenue. dani: let's talk about those investments. let's talk about the dollar signs. give us a scale of these potential investments. rbc, qatar already spent a whole lot when it came to hosting the world cup. that is their spend. what does qatar get in return for that? simone: yeah, we were talking some 300 billion dollars plus of infrastructure investments around the tournament. yes some of them will be done anyway, but really expensive. looking at these teams, these are three of this makes most valuable premier league teams according to sport a co-and that news organization calculates

that liverpool and mann were both worth more than four billion dollars. we are talking sponsorships, tv rights and the like. tottenham also pretty valuable. some $2.8 billion. maybe that that -- maybe that is the better investment play. all teams widely known and respected and have massive audiences. they have big dollar signs. dani: media rights are hugely, hugely valuable. that is bloomberg's simone foxman. coming up, brazil's x resident falls ill just as the current leader accuses him of fanning the flames of insurrection. we will have more on the next. this is bloomberg. ♪

dani: good morning. this is "bloomberg daybreak: europe." fed officials pour cold water on markets as they see rates rising above 5% and staying there for a while. the hawkish message snaps the rally in u.s. stocks. apple is said to be preparing semi conductors made by broadcom and qualcomm. the iphone maker uses more in-house designs. plus a u.k. rocket launch bite virgin orbit fails to deliver its cargo. we were just talking over tar guest at citi that says it is the year of europe over the u.s. it will be rough going until then. you have jay powell who will be speaking later today after a

whole host of hawkish fed speakers. bostic and daly are not voting members, but the message is loud and clear. they want to go above 5%. if they want a soft landing, why would they cut rates? asia stocks are dropping about 0.1%. we also had tsmc earnings that missed estimates, difficult time for chipmakers, especially those who are apple suppliers. cross asset, it is a wait and see of what we will get from that riksbank panel where we have various beagles from powell to the boj to the boe -- speakers from powell to the boj to the boe. brent crude is dropping by 0.2 percent, failing to get a bid this morning from the china reopening story. finally, bitcoin is back around $17,000 and it dipped around the

turmoil, up the first time for its seventh straight day. what those wins have been small so not too much movement over those seven days. let's turn our attention to emerging markets, specifically brazil where jair bolsonaro has been admitted to a hospital due to abdominal pain. this is hours after his supporters rioted the inauguration of president lula da silva. the current leader accused his predecessor of encouraging the unrest. joining us now is philippe a pacheco. what are the repercussions of bolsonaro's health in brazil? >> we know that bolsonaro is still at this hospital in florida in the orlando area and that he checked in after those protests happened in brazil on

sunday. while we know that he stays there, what we do not know is the kind of treatment he is going through. have reporting from our colleagues in brasilia saying that he was going through treatment for intestinal obstruction. we have seen bolsonaro in the hospital several times since the 18 because he was stabbed in his back during the processional campaign here. throughout his presidency that ended last year, we have seen similar images to the ones that he actually posted a picture on his twitter since he entered this hospital in orlando. this has happened before, but the timing of this -- his visit to this hospital is quite curious, to say the least. dani: and to some degree it involves the u.s. further into

this, so what happens next on the u.s. side and brazil's side? >> as business comes back in brazil today and the u.s., the biggest question is, is busily are going to ask washington to actually extradite bolsonaro -- is brasilia going to ask washington to actually extradite bolsonaro. lula has been alleging that bolsonaro back to those demonstrations that became violent over the weekend and we also know that president biden and president lula spoke yesterday. the american president even invited lula to go to the u.s. and guatemala accepted the invitation -- lula accepted the invitation. whether the u.s. actually has been talking behind the stage with the brazilian government about this is not clear.

there has been no evidence about that and whether brasilia is going to take the step and ask bolsonaro to come back. this is probably the biggest question for tuesday. dani: we will see how that plays out. thank you very much. that is bloomberg's filipe pacheco. joining us now to talk more about this is esther law, senior investment manager of e.m. debt at amundi. i wonder how you price in political turmoil into these markets. esther: good morning. i fully agree with filipe on his original assessment, all of this is not easy to do. as a fund manager, it would be best to look at the numbers as much as possible. even these protests were a bit unexpected. i thought it would come a bit earlier right after the election

in november and just thought nothing happened, so it serves as a good reminder of ultimately we should be allowing some of these political risks to be around and do not be too complacent. having said that, looking at the asset evaluation, especially if you look at the local curve, still plenty of premiums priced in and these are the areas where i am more confident about saying that there is still value and a good risk reward in brazilian assets. dani: do you worry at all that beyond the risk itself that it translates into lula having difficulty getting through some of his financial reforms that he wants to end what will be the impact of that on sovereign debt in the country? esther: this is a great question.

when the first headline came out, i was worried because everyone was trying to compare that situation with what we had in november. i have not seen how quickly it was controlled lula -- controlled as well as lula could and stepping behind lula with orderly plays. the protests are adding to political headlines in the coming months potentially, but i do not expect it to be escalating to the extent that we have seen recently in the u.s. election. dani: taking a wider step back for latin america, they were ahead of the curve when it came to hiking interest rates. their hiking cycle started sooner than some of the other

developed markets. as we look at developed markets who are slowing their pace of hikes, how does that dynamic pay -- play out in 2023 for latin america? esther: we should all remember that emerging markets hiked much earlier and much more then there developed here's the -- than their developed peers in the cycle, so it is evident that it is under the control of the emerging markets in a better place than the developed world to first of all with low hiking. in the case of brazil, we will see if the protests remain under control. we have been thinking that brazil is in a position to ease later on this year. dani: i do wonder when you look

at a lot of these countries and emerging markets, do any look especially vulnerable in a post-covid economy where rates are rising globally and there has been a lot of spending? do any of these debt loads look unsustainable at the moment? esther: yes, i think the ones that are more vulnerable will be those who have -- who had a weaker matrix to begin with. so the countries i have in mind is, for example, some of the countries in south saharan africa, and we have seen a few distressed stories in the past few months, basically ongoing in the past year. the stress point will remain. however, having said that, i think those stories are fairly well priced in.

if they are very special already, people are aware of that. the markets are pricing in very widespread, if anything in the past month especially since december, coming back to an thousand 800 levels is definitely a lot. countries are given more breathing space, especially the bottom line ones which were closer to 1000 basis points spreads. dani: rights to get your thoughts this morning. esther law, senior investment manager of e.m. debt at amundi. coming up, we have more on emmanuel macron's plans to raise the age of retirement. this is bloomberg. ♪

dani: a virgin orbit rocket failed to launch after it suffered an unknown anomaly. it did not deploy its nine satellites as planned in what would have been the first trip to space from u.k. soil. from rocket launchers to u.k. politics, the treasury has announced it is cutting support to businesses and bringing a smaller program from april. your to walk us through it is bloomberg's lizzy burden -- here to walk us through it is bloomberg's lizzy burden. gas prices have been falling off. what does it mean for business? lizzy: they have fallen significantly but they are still triple the level of precrisis time. it is a significant reduction in terms of support from the

government. we heard from the treasury minister yesterday in the house of commons, to put them side-by-side, previously you had a six-month program worth 18 billion pounds. now you have got a 12 month program with 5.5 billion pounds. he says it is because you cannot is a government go on permanently shielding businesses from the energy price shock of the war in ukraine. it is simply not sustainable, but what the government will do is give more support to energy intensive firms and those that pay more for gas and electricity. however, you have had a massive backlash, first of all from u.k. steel, saying that there manufacturers are getting less support than their counterparts in germany and from the federation of small businesses who say that the government is going to have to put more cash if they will save small businesses from folding. dani: we cannot have you in without getting an update on strikes.

i do not want to be. part of that negotiation. . how have the negotiations been with the unions? lizzy: you are seeing a softening of the stance on both sides they by day. -- day by day. over the weekend, it was whether the government is willing to negotiate on pay. what you are seeing is the health secretary in his talks yesterday with health union bosses, we hear behind the scenes opening the doors to potentially backdating pay, so meeting somewhere in the middle between the two years. the other sign of a softening is the financial times actually reports the government is open to a one-off payment. it is a private sector style miss, but it would help workers with the cost crisis now. people who were briefed on the meeting now told our reporters that they brushed off the idea. as you say, this goes on and on.

both sides wants to find a resolution. it seems to be about choreographing a win for both sides at this point. dani: we will have you on throughout the week to talk more about this. that is bloomberg's lizzy burden. let's talk about emmanuel macron's plan to increase the retirement age expected to be announced by prime minister elizabeth orne today. joining us with the story is caroline connan. why is the retirement reform taking place now and what will the details of it likely be? caroline: for emmanuel macron, there is no time to procrastinate anymore because this was supposed to happen before covid but then was suspended because of the pandemic. then he wanted to announce it before christmas but the government wanted to avoid the christmas strike, so it was delayed until january. but macron promised it would be

another retirement reform during the second monday, so today the prime minister, elisabeth borne, will unveil some of the details. she could be raising the retirement age from 60 to today to 64. another possibility would be to extend the number of years he would have to pay to get a pension to 43 years. and there could also be a minimum pension of 1200 euros a month. this is for the lowest incomes, for those who did not contribute enough to the system to get a full pension. this is the balanced budget the pension system by 2030 because as you can imagine, the pension system in france is at 14% of economic output, one quarter of government spending, and the budget meeting officials have said that if nothing is done, it

would have a deficit of 500 billion euros over the next 25 years. dani: what have we been expecting the consequences to be on the other side for this reform? caroline: as you can imagine, the french government is walking on thin ice given the risk of protests, massive strikes in france. like in the u.k., we have not seen these mass strikes in december, so it could be the beginning of winter strikes in france. in fact, the french unions are meeting as soon as tonight after the government's announcement and even the moderate union is taking a pause to raise the retirement age. this is a redline for the unions. it is also a redline for the french. as you can see, more than two thirds of the french are opposed to raising the retirement age.

we could see a wave of protests possibly as soon this month in france because the unions say that the pension reform is the mother of all battles. dani: caroline, thank you. that is bloomberg's caroline connan in paris. coming up, we are going to talk about the big question for 2023. will there be a pause, a pivot? will they keep hiking and hold it there? move -- we will talk about central banks and their battle to tame inflation next. this is bloomberg. ♪

dani: if there is anything we learned over the past 24 hours, it is that central banks are not giving up their inflation fight yet. we heard from bostic and daly

yesterday. the peak in interest rates a still to come for most economies. the question is when it will finally stop. running us now is bloomberg's western economy lead. if we look at the global picture and whether a bank might hold, cut, or pivot, is there a central bank that looks to be leading the end of this hiking cycle? zoe: if we look at the five big central banks, the bank of canada is one that is widely predicted to be cutting towards the end of the year. they are cutting first and then -- hiking first and then cutting. we are also expecting hikes throughout the first half of the year at the european central bank. our bloomberg economists see a possibility of cuts there at the end of the year. if we want to look at a massive pivot, turkey is one you want to be looking at.

as we know, inflation is very high and because of the political reasons, they had to spend most of last year cutting and they are expected to stay there. however, there elections are at midyear and what happens after that, there could be a strong possibility there of them actually pivoting after those elections. dani: i have got to ask because ecb policy have been extremely hawkish. i wonder if there is a risk this year that they are the standout in terms of being more hawkish than their other developed market counterparts. zoe: i do not think so. they just started so much later. if you think about it, most big central banks started hiking in the second quarter. the ecb did not start hiking until july. while there were massive hikes in there, they still have so much to catch up just compared with the fed, so honestly, they

are weaker there. they started later so they still have some way to go. as you and i both know, christine lagarde indicated strongly that there would be a 50 basis point hike at the next meeting in february and at the march meeting, she sounded like the -- it sounded like that was a strong possibility as well. what happens in the second half does also depend on the economy. if the economy is doing poorly, they will struggle to hike. also, they will be starting quantitative tightening, qt. they will start that in march. that is something that could allow them to go a bit slower on hikes. dani: where is my tail risk? do you foresee any potential surprises when it comes to major central banks this year? zoe: we could be seeing that

inflation could go wrong for central banks and could not match what central banks are expecting. all economists were surprised lester with inflation being much stronger -- last year with inflation being much stronger. whether there is a major change in energy, there could be a possibility that inflation suddenly slows much quickly and central banks, and if inflation is slowing again, the central banks might feel foolish and there is no reason for them to hike in a situation like that, so that is a danger. dani: economists and central bankers have such a rough go trying to predict inflation. that is bloomberg's zoe schneeweiss in frankfurt. speaking of central banks, there is more coming up at the riksbank symposium.

it will kick off. among the host of big-name speakers, jay powell and andrew bailey. you can watch it on your terminal. will jay powell continue to back down the doves? the other big driver continues to be the china reopening story. how much of it is priced in? this morning, we are seeing gains in prices of iron ore. on cctv, the beijing acting mayor has said that the capitol has passed the peak infection rates. oil is down by 0.3%. equities are slightly slower but that might just be from that central bank speak. coming up next is "markets: europe". this is bloomberg. ♪

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anna: