>> good morning this is

bloomberg "daybreak: europe." i'm dani burger in london with the story says that your agenda. stocks extend gains with optimism's that thursdays inflation data will show moderation. homegrown tech, apple will start using its own chips next year in another effort to manufacture in-house. and next week, protesting manual mike rounds plans to raise the minimum retirement age. powell didn't push back and declined to say much more on inflation. some folks interpreted that as him essentially giving his check mark to what we've seen in financial easing over the past week, or perhaps he just didn't want to catch himself on the back foot ahead of tomorrow's cpi data. either way, the result is risk

assets have been allowed to rally with the terminal rate not yet pricing 5%. let me take you to the board over here. msci asia-pacific index of .7%, perhaps capturing some of that china reopening story as well. when it comes to the cross asset picture, or looking at bond yields coming back in below 3.6%. they have moved above the figure yesterday. jupiter asset management said deals could fault to 2% for ten-year treasuries because they see a recession coming. they say there's enough evidence already in the data that the fed could pause, certainly not what fed officials are saying. it has crossed decisively through the 200 day moving average, if you like the technicals it does seem to indicate that a new downward trend is starting. the aussie versus the dollar,

retail sales that he come strong in australia. nymex crude is down nearly 1% based on inventory data out of the u.s. yesterday that showed higher stockpiles. let's get to our top stories and start off with the challenge facing jerome powell. we will have that look ahead to tomorrow cpi data here from jamie dimon who said the fed may need to hike beyond interest rates to 5%. let's bring in in the current for this. -- enda curran. is there an essential message, is there a consensus behind these executives? enda: if you take what mr. gunn locke said, orchids are pricing

rate cuts by the end of this year, after the cooling wage gains in the u.s.. that means the fed will have to pivot at some point later this year. ahead of what fed officials are saying, we had the point that the fed is trying to pull off the equivalent of a moon landing. if they get that right it will be very positive for stocks but it's more likely they'll have to -- jamie dimon making a point that rate still have a way to go, probably more than 5%. listening to all of these executives, it shows you how much of a moving phase we are still in. the market obviously wants to drive the pivot narrative. we will get inflation data on thursday. i think that will be critical for determining the mood and sentiment heading into the fed meeting at the end of this month. dani: it does feel that the mood

music continues to be negative for the global economy. and a new outlook for the world bank, how does that feed into it? enda: looking for growth of 1.4% this year, half of what they were predicting in june. and of course the pandemic slump. russia's invasion of ukraine, inflation, high interest rates, week sentiment around the world, all adding up to a fairly difficult year. at the same time there's a mechanical aspect to this because some say even since the start of the year, the warmer weather in europe and the energy price slump, all of that might put a floor under global growth. but none of the less, there is a risk of global recession and that's why we've downgraded our forecast away that we have. dani: the new look at goldman on

the other hand, removing the recession call for europe yesterday and a brighter outlook for the u.s., so certainly no agreement yet. the collapse of ftx has impacted a handful of celebrities come with court filing showing that football superstar tom brady and his former wife, supermodel gisele bundchen, among the biggest losers. joanna, as soon as we had brady losing a bunch of money in a bloomberg headline, you know that was clicked on by every single person who saw it. what was in the documents, what did we learn from those documents that broke this news? >> this was pretty interesting, it tells us who some of the shareholders are. of course shareholders are unlikely to get very much if anything from a bankruptcy in the u.s. because they are at the bottom of the list of people who look at money. you had entities affiliated with

people like robert kraft, the owner of the new england patriots football team. one thing i found interesting is that both tom brady and gisele bundchen are listed there, but brady had about 1.1 million shares, and she had something like 680,000. so he had almost twice as many as she did in there. dani: talking about the fallout, it is still happening, it's not just the wipeout from ftx that happened. coinbase is laying off 20% of their employees. how much longer are these companies bracing for a downturn? joanna: it's a tough scenario right now. bitcoin is not really getting out of its slump. we still have a long way to go to figure out exactly what is happening and where some of this money is. there is this feud between gemini and genesis about 900

moving dollars in the gemini earn program. there is still a ways to go before we can even figure out who actually will have the money and then recover from that. you can see some outlooks where if inflation goes down, you get the fed possibly moderating some of its interest rates. something like that, it could brighten the outlook for crypto in the year ahead, but that looks a long way off right now so there is still a lot of fallout continuing right now. dani: joanna, thank you for helping us cover all of that fallout. now to other tech news, apple is planning to start using its own custom displays in mobile devices as early as 2024. it's an effort to reduce its reliance on the likes of samsung and lg. bloomberg has learned the company plans to begin with apple watches by the end of next year. it's an effort to replace apple suppliers with parts designed

in-house. not necessarily too much reaction from those stocks listed in korea, but let's talk about the impact. if you look at splc on your bloomberg terminal, these are the suppliers of apple. we learned that apple was moving away from outside ships, moving that in-house so the likes of qualcomm and broadcom. apologies if you can't quite see that, but qualcomm gets 22% of their revenue from apple as of the last filing. lg display is 36%. so these companies get a lot of revenue from apple. if apple makes more effort to move in-house, the nearly 700 suppliers that are listed on your bloomberg terminal, are they under threat? not much movement in the equity market so far. let's look at some of the other key things we will be watching out for today. 9:30 a.m. u.k. time, the bank of

italy will release its monthly statistics on banks and money. ecb governing council members will speak indiana at the conference. later, kb home reports earnings. coming up on the show, the challenges facing the fed, it's like attempting a perfect moon landing. of course we have achieved a moon landing before, so could the fed repeat history and deliver a soft landing? we will discuss that next. this is bloomberg. ♪

>> the old slogan going, i don't think there's any harm done and waiting 3-6 months to see the decision around the world, reduction of wages, etc. i'm on the side where it may not be enough. dani: jp morgan ceo jamie dimon on the flip -- on the fed's inflation fight. do you think it will go above 5%? julian, great to have you in the

studio. good morning to you. there's been a lot of differing opinions, but one of the ones that struck me was gun lock saying listen to the market, don't listen to the fed. they think they will cut. who are you listening to? >> first, i think the difference between the market and the fed is not that huge. the market is pricing just below five. fed officials seem to suggest 5.25. so we are not miles apart, that's the first thing. we think that five is a good threshold. we will feel a bit more comfortable if the market was pricing slightly above five, but the reality is, the difference is not huge in terms of the peak rate. what matters more is when we reach that peak. dani: is it right to be pricing that in? julien: that to me is the

biggest question, whether it's five or 5.25. the question is, do you want to price in the cuts as early as today. in our central scenario, we expect a very mild recession in 2023. for us to be optimistic, to be pricing in those cuts already, they may happen, but it's too optimistic to already discount that. i think the fed has done a lot of hard work getting to 5%, hopefully. it will take a lot for them to stop cutting. they would prefer to stay at five for a long time rather than immediately cut. we think it is too early to price that in. dani: this is the other thing i been thinking about, if we are pricing in cuts, presumably that's more than a soft landing or mild recession. that is something bad that the fed would need to cut. can equities really outperform

if that says scenario were pricing in -- if that is the scenario we are pricing in? julien: clearly there's a contradiction between how the equity market has behaved, although it's early in the year, and what the bond market is telling us about the future. the bond market is telling us the fed is going to cut. therefore you would question how sustainable the rally in equity is. our view is the economy slowdown is not going to be as bad we don't believe the fed is going to cut as aggressively as the market is going to be. it should be an ok year for equity markets. dani: are you buying into the consensus that the first half is rough and the second half you get the equity rebound? julien: typically what happens is not happening in real life.

i think the opposite could actually happen, simply because they're so many people expecting the first half to be bad. the first few days of 2023 seems to think the same. we are not so much into one half versus the other. i think it's going to be very choppy year along the way. it's not necessarily that the first half will be better than the second. if the bond market is right, it should be the opposite. dani: what is the best strategy in equities, do you want to stay fully invested, or is it about being tactical about your position? julien: in the equity space it is about being tactical. from an asset allocation perspective, it's probably the asset class we would favor, relatively speaking, in the first half. from an equity perspective, we want to focus on tactical

trades, or you just want to step back from all of that because it's going to be very choppy. you probably stick with the higher quality names throughout the cycle. dani: macro has been the story, it has been hard to escape it. our markets reporter pointed out that financial conditions have just floated back into easy territory. fed chair powell didn't seem to push back against this. do wonder if her going to get into the scenario that every time we have a rally, be it in the bond market, lower dollar, strong equity market, that we will see a federal reserve who wants to back that down because they don't want conditions to be easy like they are at this moment. julien: the fed has done a tremendous amount of hard work in getting where they are. they are not going to give the market this narrative of a pivot early on.

they are going to hammer home the message that they are in for the long run and they want to keep the rate elevated for a while, until they don't. it's likely they will keep pushing back against market expectation until they start to price out some of those 2023 cuts. dani: so you like fixed income at the moment. jupiter asset thinks treasury yields could fall to 2%. could you ceos going to 2%? julien: if we experience a much more severe recession, that is definitely a possibility. is not a zero probability, it's something that is in the realm of possible. it's more for the yield potential for a diversified portfolio. our key message has been to lock in yields.

you just buy bonds and hold them to maturity. it's not so much a trading code around fixed income. it's like getting income finally from your fixed income which you haven't had in the last 10 years or so. dani: what about in terms of the credit market and high yields? how much of the risk is priced in their? julien: when you see the headline yield you can get, the reality is spreads. they are a bit more interesting in europe versus the u.s., but we don't necessarily feel you're getting compensated for the risk you take, especially in europe, which had a warm winter, but that could change next week. if you have an energy crisis for the economic situation in europe deteriorates, you don't necessarily get compensated as

much in the high-yield space. dani: so quality all around. we will have to leave it there. thank you so much for joining us this morning. coming up, airbus and boeing lift off with the latest sales figures out. we will take a look at who took the top crown. this is bloomberg. ♪

dani: welcome back to bloomberg "daybreak: europe." airbus and boeing, airbus remained ahead of boeing for both orders and deliver last year. let's get into the story, with us is our europe transport senior reporter, did the

delivery figures come in as expected? >> there's a little bit of surprise, everyone was looking to see what the final tally for the year in terms of delivery would be. that was well short come in december they talked about how they would not meet their guidance for 2022. i think that was the major look for airbus. they booked some large orders in december, in terms of sales in december, but overall it was the biggest sale total since the pandemic began. dani: the other element we need to wait that is affecting every

international opening is -- talk about airbus. >> in the short-term there maybe some chaos and supply chains as china reopens. it might be slightly chaotic and that might impact supply. but longer-term, is actually a good thing because it will push up demand as travel comes back. dani: who could then be set to benefit from the proposed increases in european defense spending? >> it's an interesting question. i think both airbus and boeing have extensive defense operations as well. they have been investing in japan and europe, so both manufacturers will see dani: changes. thanks for that update, taken us

through the airbus and boeing story. let's get to some of our other top stories with the first word news from simone foxman in doha. >> french unions have called for a day of strikes next week as an initial response to a government plan that would gradually raise the minimum retirement age from 60 to 264 by the year 2030. president emmanuel macron argues the changes needed to boost low employment rates among older people and to keep a cap on rising costs for the government. ambulance workers in the u.k. are holding a second strike today as part of an ongoing row overpay and the rising cost of living. yesterday the government tabled anti-strike legislation in parliament as it seeks to minimize destruction -- disruption across multiple

sectors. jay powell has set a limit for the federal in promoting a greener economy, bowing it would not be a climate regulator. speaking in stockholm, the fed chair says the u.s. central bank will stick to its mandate of maintaining price stability. powell says without explicit legislation, it would be inappropriate for the central bank to be a climate policymaker. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. dani: thanks so much, simone foxman, they're in doha. a quick check on the markets as we head to the half-hour. and australian dollar is moving stronger, could this potentially be a signal of what is to come? ? for u.s. cpi inflation come in and stronger as did retail data in australia, the aussie dollar

moving up .4% versus the dollar. it has moved below its 200 day moving average. if you care about these technicals, it does indicate the dollar seems to be forming a new trend, that trend being one of moving lower. copper rising, shanghai pricing up more than 2%. nearing $9,000. coming up, 2022 was a rough year comin(announcer)was a rough year enough with the calorie counting, carb cutting, diet fatigue, and stress. just taking one golo release capsule with three balanced meals a day has been clinically proven to repair metabolism, optimize insulin levels, and balance the hormones that make weight loss easy. release works with your body, not against it,

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dani: good morning, this is

bloomberg "daybreak: europe." gold on the front foot, stock 16 games amid optimism for continued moderation. homegrown tech, apple will start using its own screens for next year in another move to manufacture more in-house components. plus french labor unions call for strike starting next week to protest emmanuel macron's plan to raise the minimum retirement age. fixed income is the best opportunity, we were just discussing this call from jupiter asset management that yields could drop for the u.s. 10-year yield to 2%. he said it is possible, but feels the market is overdoing it when it comes to cuts. we heard from jay powell yesterday but he did not push back against easier financial conditions. so we get an equity market that continues to rally.

no pushback on that. asian stocks are moving higher by about .7%. not too much action in the s&p 500. perhaps europe is the region that outperforms versus the world in 2023. looking across markets, we are having those managers just backing up the truck, loading up on bonds. jupiter is one of them. we been hearing from pimco that the yield you're getting is attractive. 10-year yield's are dropping by about three basis points. the bloomberg dollar spot continues to trade down around a seven month low. it does look to be forming a new trend of lower. is the market overdoing what they think is going to be a fed pause or pivot? the aussie dollar is picking up,

there are more rate cuts being added on their in australia because we had stronger inflation data today. nymex crude dropping lower by about .7%. elsewhere we are seeing metals rally strongly, perhaps it is pre-cpi positioning. we are about to get these massive data points tomorrow. let's get to our top corporate stories with simone foxman indo hop. -- in doha. >> warning that any new shocks could lead to global recession. the lender estimates world gdp will grow 1.7% in 2023. that's about half the pace it projected back in june. that would be the third worst performance in the last 30 years

, after the contractions of 2009 and 2020. bloomberg has learned that apple is planning to start using its own custom displays and mobile devices as early as next year. is part of a sweeping effort to reduce its reliance on firms including samsung and lg and bring more of its components in-house. sources say it aims to begin by swapping out the display in the highest end apple watches by the end of 20 24. a white house official has said the white house has asked treasury secretary janet yellen to stay in her post. we are told she accepted in december. the move ensures stability ahead of another upcoming fight in congress over raising the debt ceiling. that is your bloomberg business flash. dani: let's talk about activist

investing. our next guest managed to gain 46% last year for his fund, and he did this by placing concentrated bets on stocks. let's talk to the man himself. james, what a pleasure to have you on the show this morning. last year we heard a refrain we've been hearing for the last decade, it is a stock pickers market and you want to be active. but last year it was actually true. can that strategy, can being active, how do you get that to repeat the same success in 2023? james: i don't know, but probably by doing what we have done. we look for companies and growing industries we buy these companies when their valuations are extraordinarily low.

the one thing we do differently that has served us really well, we have an advisory board made up of some of the leading ceos and operator some industries we invest in who help us figure out why these great companies have such low valuations. what the problems are, and how to solve these problems. that usually coincides with a period of positive performance. even though we are long-term investors, it's a slightly unusual alignment of stars that i expect will continue to be helpful in generating returns. dani: one of the strategies that served you well was looking for those companies that were likely to be bought by private equity. i've spoken to a lot of private equity managers who said we are struggling to get any sort of financing, be it from the

banking side or even from direct lenders. they have gotten more picky. you made a huge gain on home serve, do you worry there will be less of these this year as some of that leverage financing dries up? james: for sure, there will have to be less. interest rates have gone up and credit is less available. believe it or not, we have taken a stance against a lot of private equity bids for our invested companies. we buy wonderful companies that in our estimation are seriously undervalued. when we buy a company for $100 a share, almost a consensus of investors taps into that.

the extra goes into the private equity firms pocket spirits are really don't think that private equity not standing up these undervalued companies takes away from our returns. it makes for more absolute returns for us to create. there's a lot of them in europe. dani: speaking of those undervalued assets in europe, about a year ago you took and active stake in vodafone. since then has been rough going. they had a 25 year low and they are looking for a new ceo at the moment. do you still have a stake in vodafone and what does the company need to do to see that value? james: we bought vodafone about a year and a month ago and we

were quite enthusiastic about the changes, the gateway to communication. when you wake up in the morning, the first thing most of us do is check our phones. it's what keeps us connected and has become as ubiquitous in terms of needs as water or air. meantime they haven't managed to find a sustainably attractive business model and earn a return on capital. they have given away the cow and the milk to everyone since a company was founded. they don't control the distribution of apps over their own platform. it's just a sign that the company has given up, and we basically decided shortly after buying our stake that maybe the company's challenges are greater than we realized.

we are thankful we got out, but even if we had generated a loss, the original thesis proved to be correct. there are some wonderful people at the helm of that company, but there's a number of issues that i would have solved in a very different way. dani: where do you have conviction at the moment? what have you snapped up that you think is undervalued, and has that return potential for this year? james: i'm going to be really annoying in answering that question. we are allocating more capital to our investments. we are not talking about them publicly. i will mention one thing if i may, about europe in general. i think for people who are willing to, europe is rife with opportunities.

thomas edison said people fail to recognize opportunity because it comes around disguised as hard work. the number of european equity companies has gone up by 100%. one of the worst and most useless and ill thought of pieces of regulation i've ever encountered in my life next to brexit. research dollars allocated to -- it has declined by about 70%. there is then ocean of underinvested companies. those are the companies that have made great money for investors.

it's like we are buying some of the leading waste management operators in western europe. these companies have better growth than their peers which traded lower. in the u.s. they traded 20 times ebitda with good cash flows and what have you. we are buying the best companies in that sector. dani: sentiment is just so negative in europe. you will be invited back on because we don't have enough time for us to talk about what you think is worse than brexit. i do want to leave it here, bloomberg has a copy of your investor letter in one sentence really stood out to me. you said diversification in our experience only leads to mediocre and at best mimicking

returns. when you look at your peers investment management, has the past decade just been too easy for them? is something fundamentally broken about their model of diversification and benchmark hugging? james: i do have to say i have a lot of respect for my peers and industry. the truth is, i don't think there's ever been a year where the average fund manager hasn't fretted about their positions or what comes next and how to position themselves for it. i think it would be terribly unfair of me to deride my peers performance or their efforts. but i do think at the end of the day, we are constitutionally incapable of doing really detailed operational due diligence on 50 companies with a view to understand them better than existing management and the

board. where one does create actual returns is where one takes a different view from the market. the market usually reflects what management is saying. we love to buy companies think can do a lot better than they are doing currently under current management. it takes a lot of work to get there. you just cannot do it without investor confidence. dani: james, i'm afraid we will have to leave it there, but please come and join us again. coming up, we will have the latest on president macron's plans to increase the retirement age in france. this is bloomberg.

dani: the french prime minister has unveil emmanuel macron's latest pension reform, government plans to gradually increase the minimum term in age from 60 to to 64. what are the details here? >> basically, anyone who was born after 1961 and france will have to work longer in order to get a pension. this is the end of the retirement at 62 years old in france. the retirement age, the minimum will rise to 64. if he actually started working really early at 16 or 18 years old, you will still be able to leave earlier than that because of maximum contribution period

you pay into the system will be 43 years. they have announced the end of most special exemptions in the public sector, and finally a minimum pension of 1200 euros per month for the future but also for current pensioners. that's about 2 million people in france. this is something the republicans really wanted in order to support the reform in parliament. finally there will be something interesting, which is the index of companies who keep on older workers. so you could actually point fingers at those companies who fire people over 50 because the problem with the pensions is not only the age you retire, but also how many people pay and contribute into the system. dani: what could be the consequences of this for akron's government? >> the reaction of the unions

has been instant, although unions call for a general day of strikes and protests on january 19. this is including the union that usually doesn't join these kind of strikes. the far right of marine le pen has proposed reform but hasn't said whether she will be joining or not. of course macron is walking on thin ice because two thirds of the french are opposed to the reform, and this comes on top of inflation and the energy crisis, a lot of the price gaps in france will be adjusted. gas and electricity prices will rise next month in france by about 15%. he knows he cannot run again in 2027, so all this reform is very risky, he actually wants to

leave a legacy. dani: caroline, thank you very much for that from paris. let's stay with paris for a moment, there is a new chair and ceo of louis vuitton. so a new person at the helm of louis vuitton. let's move to the white house now where an official has told bloomberg that janet yellen has agreed to stay on as u.s. treasury secretary. for more on this, let's get over to bruce einhorn. the fact that someone is staying in their job usually is not news. why is this time different? bruce: there has been little turnover in the biden administration, especially compared to the trump administration.

now that the midterms are over, there has been talk about potentially some movement there. this puts to rest any talk about janet yellen leaving, and also strengthens her position going forward, she's got her first meeting with the other finance ministers from the g20 next month, and of course coming up there is a potential big showdown with republicans in congress over the debt ceiling, and knowing that she is staying in her place, that presumably will help janet yellen as she deals with those issues going forward. dani: any retirement or cushy job is still a long way away for the treasury secretary, it seems. coming up, we will talk about our big take, how can you lose $200 billion in a year?

elon musk is the only person in a world who knows how that can happen. we will look at what is in store next for him. this is bloomberg. ♪ oducing the new sleep number climate360 smart bed. only smart bed in the world that actively cools, warms and effortlessly responds to both of you. our smart sleepers get 28 minutes more restful sleep per night. proven quality sleep. only from sleep number.

dani: elon musk was the world's richest man, but he might not be able to reclaim that top spot. the ceo of twitter and tesla founder has not had the best year coming 2022 he became the first person ever to have $200 billion of their own money erased. rejoined by our bloomberg wealth reporter. how did he lose $200 billion in a year? >> 2022 shaped up to be sort of a perfect storm for musk, part of it of his own making.

equities had come off their highs in late 2021, and then the russian invasion of ukraine, turbocharged all kinds of economic problems, including rising inflation, higher interest rates, and that led to a lot of the pandemic height and stocks falling quite sharply. then there was the acquisition of twitter, and that comes with cold, hard financial realities. it cost elon musk a lot of money and tied up his personal finances in a way that had not really been the case in the past. that has taken a lot of time away from his focus on tesla. dani: you have spent much of your career poring over investor documents. talk us through tesla and musk. what did things look like there that made musk the richest person?

>> there are three things that made him the person that he is in terms of wealth. it he received -- he has received three large compensation packages from tesla. they have been great pieces of advertising because they've been so big and so audacious in their nature and size, that they have sort of set the agenda for where the company is headed. it has made tesla stay at the top of the discourse for years. that intern i think you can argue has helped build and solidify his base of really diehard investor fans. that has helped prop up the share price. now when people are more worried about where things stand with the company and how he spends his time with tesla versus twitter, people are not as certain anymore, at least in the

short term. dani: that is certainly a fair statement. thanks for joining us this morning. tesla has taken quite the beating last year. it was down 65%, so it lost a chunky sum in market value last year. as we close out the day, we are looking at equities putting higher. powell doesn't back down any of the financial easing, financial conditions are back into easy territory. bloomberg markets is up next. this is bloomberg. ♪

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anna: good morning and welcome to "bloomberg markets: europe."