dani: good morning, this is "bloomberg daybreak: europe," i

am dani burger and linda -- in london. asia stocks extend their rally. resolve, not rancor. top e.u. and u.k. negotiators speak about whether to fix brexit trading arrangements for northern ireland are within reach. plus, back to davos. the world economic forum resumes after pandemic disruptions. as davos goes on, it is a market that is forced to grapple with an upgrade to their once pessimistic outlook for the year. it is china reopening and it continues to fuel and claim market rally. me take you straight into it because the csi 300 has moved above its 200 day moving average for the first time since december 2021.

at the same time, s&p 500 futures, it'll changed at this morning, but hanging around a one month high. even with this optimism, we have a wall street banks reporting on friday and everyone from j.p. morgan to wells fargo, basically everyone we heard of is preparing for a worse economy. it might be a mild recession, so we have to ask to what degree are equity markets pricing in a mild recession? global picture has the same sort of flavor to it, a weaker dollar, lessening expectations of said aggressiveness. the dollar at its weakest level in nine months. we also have a survey on friday showing inflation expectations dropped to the lowest since april 2020 one. a lot of that driven by lower gas prices. that is part of the global narrative of why inflation expectations have eased. one of the drivers of the weaker diver -- dollar, for the second

day, japan's 10 year bonds have reached the upper limit. no one expands them to abandon yield curve control but are they going to widen the band for trading again? the market is testing them. iron ore falling significantly, 4.4%, it did rally 6.5% yesterday. connie's officials meeting with some of the top metals players warning them that they will be more restrictive on the market. that has dented sentiment. let's get back some of the top stories and our reporters. we will preview the boj decision and the market buildup we have seen. charlie wells is here to discuss the state of the sector, and we will discuss bitcoin with joanna osundairo. benchmark yields rose over the ceiling for a second day with investors betting, is it going to be more tightening in the

market? simon, if we go back to december, kuroda said over and over again this is a tweak to help market functioning, it is not because there is more inflation and we are tightening markets. but it seems like the market itself still doesn't buy that. simon: yes, i think nobody believes him anymore. traders are getting very excited about this review of policy, they are assuming the policy review, which can be concluded on wednesday, will say look, this is unsustainable. we will be hawkish and justify further policy change. as you suggested at the top, very few analysts believe they will abandon the yield curve control entirely. in fact, what i personally believe is when the boj issues this review, they will conclude at least publicly that the

policy is still working. yes, there were side effects, but that's why we shifted policy in december. we still haven't met our cpi targets, so don't expect us to change policy again. that would be quite a dovish event for the market on wednesday. dani: i really love, citi put out the snow on friday saying they expect them to abandon yield curve control. one of the reasons they listed is they think it would be better for kuroda to sustain the reputation you'll -- reputational damage than his successor. simon, we have much more to cover with you so you will be back later. to the other big market story, u.s. bank earning season underway. let's get to charlie wells, who has the details. friday, a huge day for banks, what did we learn? charlie: we have two differing stories. from wall street we saw that

news isn't so great, but main street divisions, there are mixed signals. on the wall street side, we know investment banking fees have been so low, when you look at j.p. morgan and citigroup, their fees were down 60%. on the main street side, net interest income up nearly 50% at j.p. morgan and wells fargo. what is interesting is when you hone in on credit card balances. those in the fourth quarter hit pre-pandemic levels at j.p. morgan. other large banks are seeing a lot of recovery. it seems like consumers are willing to spend, continuing to spend, even as economic conditions look shaky going forward. dani: i was going to say, we heard from wells fargo, saying they are preparing for a downturn, basically everybody preparing for a downturn. speaking of downturns, this is less macro and more individual, but credit suisse, some reporting over the weekend, more cuts? charlie: oh my yes. about 10% of european investment bankers could be attentively

cut. it looks like plans will be finalized later in the month. credit suisse has about 17,000 investment bankers, largely divided between new york and london. there are european outposts that are smaller and it looks like in some of the smaller banks, about one third of investment bankers could be cut. this is significant and in large part it is because of credit suisse's woes. they had a terrible 2022, 12% of assets withdrawn in october. but it's also part of the larger global slump. dani: i saw the ubs chairman talking to a swiss paper saying we are not going to buy them, so no saviors yet. charlie, thank you. that is charlie wells, keeping us up-to-date with the banking story. bitcoin has been on a tear. above $20,000 and then 21,000

dollars over the weekend, the level it hasn't seen for at least two months. joining us is joanna, our crypto reporter. bitcoin sentiment and crypto more generally, had been so dented when -- by ftx. have we moved past that? joanna: it doesn't look like at least for now we have moved past it. we had a few days in a row at the end of last week where shorts got liquidated. we are sitting on a 12 day winning streak for bitcoin, it increased 12 straight days. today is a little uncertain. we had the weekend and it shot above that 20,000 level. it looks like at least for now we might be getting a little more optimism. crypto is very momentum based so we could see a little more. of course, some of the ftx issues appear to be in the rearview mirror. issues like digital currency

group troubles are not resolved, but people are looking at the 21,400 or 21,500 level. it is a technical level, some of the october/november highs. we see areas near here that could provide resistance and that will be key to see whether it can stay above 20,000, maybe go up from here and even possibly to 25,000 if it can get that momentum. dani: the past few hours we saw it go back above 21,000, it is now up one and a third percent for the day. in corporate crypto news, over the week and we found out that anthony scaramucci had invested in a company set up by the former of ftx u.s. that will certainly raise some eyebrows even what is happening with ftx. what is this about? joanna: anthony scaramucci told me he's using his personal money for this investment with brett

harrison's company. bloomberg reported last month harrison have been raising money for this crypto trading firm and anthony scaramucci things it is worthwhile to be investing in him. he has also gone on twitter and said he wants to support people at a time like this. obviously people who have ftx in their history might be getting some questions that they might not have been getting before. harrison was there for 17 months as the president of ftx u.s. and it is interesting to see what he will do next, what a lot of these other people from ftx will do next. scaramucci says he believes in harrison and he's putting his money on the line. dani: still believers out there. joanna, thank you. let's take a look ahead because it is the world economic forum's annual meeting in davos, it will kick off today, back to the winter format for the first time in three years. a lot of covid disruption. we will have comprehensive

coverage from the event, a strong lineup of guest through the week, including the bank of american ceo, the wto director general, and the south african president. first, coming up on this show, inflation expectations of drop to the lowest level in nearly two years. has the story changed for this year? we will talk with skyler montgomery from ts lombard. this is bloomberg. ♪

>> they are attractive on a

global basis. >> it's probably more difficult for central banks in europe to stay as hawkish as the federal reserve. we think volatility in the u.k. will likely outperform the u.s. >> [indiscernible] in trying to take down this record amount of supply. >> there is a bit more of a positive run to go for europe, both on the credit side, fx, and -- >> the bigger picture is what the last nine months have been about is ridding the euro zone of the psychology of negative interest rates. >> the vulnerability the euro has is not going away. dani: investors responding to this week's mliv survey on european debt and if it could outperform treasuries. just a reminder, cash treasuries not trading this morning since the u.s. is off for the mlk holiday.

i want to talk about another big driver for the market, inflation expectations, if not the driver. here is a survey from friday, it showed one year forward inflation expectations have dropped to the lowest since april 2021. this is largely driven by the neck as story, -- the gas story, but also consumer sentiment rose to a nine-month high. do we need to revisit our growth expectations for the year? joining me now is skylar montgomery from ts lombard. have you changed your outlook for this year given the positive start to 2023? skylar: i think a few months ago when we had the first very positive inflation print in terms of inflation coming down, lots of it driven by energy, we've had three positive inflation prints in a row and that has changed the outlook because we've always thought

inflation has been volatile and you might get upson downs and a large part of that can be attributed to the fact that energy prices have come down faster than many people were expecting, but that's what the fed was looking for they were looking for three positive inflation prints in a row. i we still have a hot labor market they are worried about, we are certainly on the right path. i think the downshift we got in december, we will get another downshift in the next meeting at the beginning of february. that has changed our view in terms of we don't think we will get as high in terms of terminal, but because they are not getting as high in terms of terminal, there is increasing risk they haven't defeated inflation and it could re-accelerate into the end of the year. dani: have you -- how do you adjust a portfolio given that outstanding risk, but a better outlook at this moment? skylar: we expect a global recession in 2023, including a

mild recession in the u.s. that will force the fed cut in the second half of the year. that is our base case. the implications for that are very hard. in 2022, we saw a falling equity market largely because of monetary policy tightening. it is tempting to say we will get the opposite in 2023 if we expect cuts, or that a recession will cause further derating. i think in 2022 get the capitulation. that's typical of what you need to see at the end of a bear market, but i think also it is important to remember that history isn't necessarily a good guide this time around because the recession very widely anticipated. previous recessions were more of a surprise, the market price them at a later stage than the cycle. a lot of indicators of a recession are probably already priced in. that said, we are still cautious on risk, it's highly unlikely it is 100% priced in a month the recession. we are staying close to our

benchmark and we have a preference for fixed income over equities. dani: i was struck on it along the same note, of history isn't a great corollary in what has changed since last year. david cosman from goldman road over the weekend that the painful investment lesson from 2022 is to hope for the best but it is profitable to invest for the worse. i wonder what scars in terms of sentiment will carry on from 2022 just given what a poor year it was, not just for equities, but cross asset. or the inverse, does that make folks optimistic that we will get back to a normal environment, whatever that is? skylar: we are seeing those kinds of headlines where historically you've not had multiple years of equity down years. i think it is happened twice, the last time in the 1970's. for fixed income, it is

unprecedented to have two years. it depends on what you are looking at, a lot to putting on the central bank outlook, the inflation outlook and uncertainties we will not know until we are pretty well into the year. i think for fixed income specifically, it is easier to be more positive because you've got two parts of fixed income in both went against you in 2022 and so you have the duration component, which as the fed tightened and raised rates, that really hurt you, and it is unlikely we get that kind of scale again, but also just the income. we started last year with negative real rates, in most countries, not very positive, so there was no income in fixed income. so we are starting this year with decent yield. it would be hard i think to repeat the negative returns in fixed income this year we saw last year. dani: and right before you came on, we showed that video of different bloomberg guests talking about europe, fixed income versus the u.s.

the score on the board so far has been positive for europe. i look at ig, since september it has outperformed the u.s., really all european assets, be at the euro itself or european equities. doesn't 2023 look like the revenge year for europe after lagging for so long behind the u.s.? skylar: yeah, we've had this kind of concoction the last few months where every upside surprise or risk we sought to european growth came in. you have the china reopening and they are doing a progrowth pivot as well as being more positive politically. you've also had this very mild autumn. energy demand has been reduced in europe and economic surprises have turned positive. they are increasingly positive. that has turned into a very good environment for european assets, especially when you consider european equities still being

much cheaper than their u.s. counterparts. you look under the hood some more and we also have move more positive on european equities not only because of upside surprises we have gotten that made us upgrade our growth. we still expect a recession but it is less negative. they are also exposed to more idiosyncratic things, so you think italian stocks in luxury worsted by the china reopening, that will feed positively intellectually stocks, for example. dani: obvious they we've been talking the whole time about the improving picture, the better weather, the fed slowing down, starting to ease off the gas a bit. what do you think is the biggest risk for 2023 that this positive story faces a major roadblock? skylar: i think -- it is probably what i said in the binning in terms of inflation re-accelerating. inflation has been the issue for

the last year in terms of that's why you've gotten this big central-bank response. our view is as soon as the fed can pivot, they will in terms of as inflation comes down, they will pivot and do more cuts on the fact that unemployment is rising. the risk of that is that consumption is still strong, the labor market is still very tight, and we have seen it in other areas in terms of when one bit of inflation gives, another comes back. in europe, you had the energy story become more positive, it has meant more consumption and the central banks are more worried about wages rising and consumption coming back because people are not spending as much energy. i think the risk is we get this re-acceleration of inflation and central banks are forced to come back and tighten more. dani: it is so interesting and i am just now remembering earlier in the year we also heard michael burry say the same thing, the fed will cut, government will stimulate and we will get more inflation.

interesting to see that narrative gain some credence. really wonderful to have you on the program this morning. skylar montgomery koning from ts lombard. coming up, we break down the big themes you need to be watching out for at davos this year. this is bloomberg. ♪

francine: the world's elite will dissent on dabo's for the world economic forum's first winter meeting since 2020. -- descend on davos for the world economic forum's first winter meeting since 2020. number one, this will be all about inflation. post-covid recovery crashed headfirst into surging cpi in 2022. supply chains stretched to

breaking point and prices soared. the fed in central banks around the world responded with aggressive rate hikes, taking the possibility of a recession in their stride. but where they behind the curve? number two, shifting geopolitical landscape. russia's invasion of ukraine forced many nations to choose sides and shore up energy supplies. russia was absent from the forums us other -- summer are gathering in may and won't be there this year either. china is looking to come back bigger than ever at its first gathering since the pandemic, but will they receive a warm welcome? number three, crypto and regulation. a late addition to our top three inks to the implosion of sam bankman-fried's ftx empire in november. his arrest and extradition to the u.s. have given regulators more ammunition in their drive to rein in the crypto industry. are we already past peak crypto? those things aside, the big the

gathering itself, with questions about its relevance, can this year's davos produce more than talk? dani: that was francine lacqua with a look at what to expect this week at davos. she is in davos and will be kicking off our week of high-profile live interviews at the world economic forum, including an exclusive conserve -- conversation with the qatar investment authority chief executive. let's get our first word news with simone foxman in doha. simone: china has announced almost 60,000 covid deaths over the latest five week period, doing calls for more information about the latest wave of infections. the who says it is analyzing the data while urging beijing to share more details, including on subvariants. several studies suggest the number of fatalities in china could be much higher than the official count.

nepalese authorities say at least 68 people were killed when a yeti airlines flight crashed on sunday. the twin engine atr 72 turboprop took off from kathmandu in came down close to its destination. the aviation authorities say the weather was clear and there was no distress call before the crash. 15 foreigners were on board. 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. ♪ 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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dani: good morning, this is "bloomberg daybreak: europe," i

am dani burger in london. dollar doldrums. the greenback kicks off the week lower as china shares a jump. gdp yields here's the boj ceiling again before wednesdays policy decision. resolve, not rancor. top eu and you can negotiators speak today to decide whether a fixed post-brexit trading arrangement for northern ireland are within reach. plus, back to davos. the world economic forum resumes in its alpine setting after two years of pandemic disruption. don't miss our marquee interviews all week. over the weekend, goldman sachs have put in stark terms that the lesson of 2022 is it is ok to be optimistic you should prepare for the worst. it seems like a market that is preparing for the best. it is preparing for a soft landing given the gas prices have falling -- have fallen, the china reopening narrative has enforced a better outlook and lower inflation expectations.

at least the one year gauge in the latest survey fell to its lowest level for several months. the s&p 500 cash markets move past the moving average. this morning, slightly weaker, don't expect much trading even it is the mlk holiday. cash markets will be open in the u.s. and columns likely will be lighter. european stocks and futures moving higher this morning. skylar montgomery koning was just telling us it might be the year of europe. the dollar trading around a nine month low. the yen's gains also taking a bit of a breather. you are looking at a stronger dollar versus the yen. it had been surging earlier today given that jgb yields, the 10 year yield did breach for a second day the have a percent bound by the boj.

iron ore falling 5% or just about, china's economic planner saying in a statement it has met with top companies and they are warning against publishing false information about the metals market. let's continue with the china story. china's key economic data this week will likely show a market weakening in the growth at the end of last year after the covid zero policy was abruptly ended, although attention is quickly shifting into a strong rebound in 2023. all of this has huge impact not just for the world but specifically the luxury sector, where we are looking ahead to some of the key earnings coming this week. that includes -- if i can find my notes -- richemont and burberry. our guest joins us now.

now i have had my brain fart for the morning, we can power on. how much of the china reopening story is baked into the luxury goods? good morning. >> good morning. yes, if we go back to 2019, the chinese consumer made about one third of the revenue in the luxury sector. the past two years that has progressively come down. some of that is because the u.s. consumer has been so strong but chinese consumers, it is down about 35%, part of that is because chinese nationals have not really been able to travel abroad where the bulk of the luxury purchases were being made. the other part is the cumulative impact of rolling lockdowns in china itself. i think although the stocks have started to price in a demand recovery, they are still trading at a significant discount to their 10 year average and the china recovery story should have

legs and we expect it to given the excess savings in china could mean the shares have further to go. dani: they are already up 13% this year, 30% since october. swetha: if we look at 2022, the shares derated substantially. the sector on average down about 25% has derated by about 25% because earnings kept going up but share prices kept going down, so pes kept going down. if we look at valuation, it's possible we could see 15 to 20% upside from here. dani: pretty solid. there is this strange irony where because the market has moved higher, all of a sudden you have analyst expectations, sort of the mean level is now below where the market is. do you think a lot of your peers are too pessimistic or do they just need to play catch up with where the market is headed? swetha: i think it's more of a

question of catch up. if we think back to the lockdowns in china, the worst of them were in q2 last year. which means it will be about q3 or q4 until we start to see -- the end of q2 come up china becomes meaningful. obviously the market, investors are looking ahead, but they need some time to catch up regarding the recovery. dani: i know it's often easy to talk about luxury as a monolith but i know it is not. we have some of the more affordable if you will, luxury and fashion goods, you have leather goods. how are you parsing through the individual companies and sectors within luxury for how they will perform in this environment? swetha: absolutely, and i think we've seen a trend, for example, in the last year, a shift toward experiences from goods that clearly sectors like travel and

luxury hotels, a sector that has done extremely well. not to take away from people still flocking to innovative products and goods. this is where the wheat is separated from the chaff. companies with strong pricing power i think will win this year because in a slower western demand environment as we see a slowdown in the u.s. and europe, it is the companies that continue to put through pricing that will continue to benefit in 2020 three alongside china's demand recovery. dani: can the retail space do that in general? over the weekend i was walking through carnaby street and i swear, every clothing shop, regardless of whether it was shoes or jumpers, everything seemed to still be having a sale going on. how do we look at the health of european retail as a whole at the moment if we set aside the

potential pricing power for luxury? swetha: i think retail is in a quite different environment in that the pricing power is not there, the inventory situation is different. any companies don't have a full control of their distribution. in some cases, challenges remain. there are specific challenges to the retail environment. the more mass-market consumer is more impacted by the cost of living crisis in the way the well-heeled consumer of luxury goods isn't. i think that's where retail is distinct from the luxury sector. dani: when the u.k., europe, u.s. started to open from post-covid, we talked about revenge spending phenomenon. does that sort of phenomenon hold true for china as well? will we also see that revenge spending pop? is it that aggressive of a difference once people are traveling again? swetha: it is interesting that

revenge spending started in china, if we look back through 2020, which practically seems prehistoric now, they were the first market to exit lockdown and that's where we saw the chinese consumers go back to stores with a vengeance, and gauge -- and gave us revenge spending. the last two years, china has had multiple lockdowns. it's reasonable to assume pace on the western experience in china's initial experience we will see a further bout of revenge spending. this is supported by accumulated excess savings and chinese households. they are running well above trend, excess savings estimated to be between 3 trillion renminbi to 8 trillion renminbi, which could be 7% or 8% of china gdp. the key is where the savings are distributed in estimates suggest

they are strongly tribute it unevenly, as with the west of the world, and skewed toward higher income households, who are also luxury consumers. dani: i want to leave it here, because as i struggled to remember just before we started talking, we will have richemont and burberry earnings this week. what are you looking out for? swetha: i think in some ways these results will be backward looking because they cover the fourth quarter of the year, which in china was weak. everybody will be looking at the expectations. what will be interesting to monitor is how u.s. consumer spending has fared in the all-important holiday quarter, because that will be quite a good foretelling of what we can expect from the u.s. consumer in 2023, still a very important consumer even as china recovers. dani: such a pleasure to have you on the program, especially when we can talk about your

expertise in luxury. let's move on to the u.s., where the latest discovery of classified material at joe biden's home in delaware highlights the growing political risk to the u.s. president from the rapidly unfolding investigation. joining us for more is bruce einhorn, our business correspondent. what is the latest surrounding the controversy with biden and the documents? bruce: one problem is there has been a steady drip of announcements and so president biden had said he would be fully transparent and now republicans are looking at these announcements that come out, there have been more documents found, and say there is some secrecy we need to get to the bottom of. the chairman of the house oversight committee has said just that, accused biden

administration of keeping too much secret. he is demanding the records of visitors to biden's homes, he wants the visitor logs. there will be clearly more investigations, not only from the house oversight committee, potentially other republicans in congress, and of course the other is a special counsel appointed last week by attorney general merrick garland. robert herr is his name. as a special counsel, he has more autonomy to take the investigation wherever he wants to go without having to go through the standard structure of the justice department. all in all, it does lead to a lot of risks for the biden administration. dani: speaking of risks in the u.s., i was quite taken by some of the language we heard from gop representatives around the

debt ceiling over the weekend, the judgment from texas saying expect eight knife fight -- expect a knife fight on the debt ceiling. what comes next? bruce: good question. we've been through this before, there have been many debt ceiling showdowns over the years. the latest one will probably not take place for a while still. janet yellen has said the u.s. will come up against the ceiling sometime soon, sometime this month. however, that sets things in motion for the treasury department to take extraordinary measures, probably not even extraordinary, just special measures that extend the deadline. most analysts expect we will really have the showdown until the second half of the year. as you said, republicans have been talking tough, saying they have no intention of negotiating over the debt ceiling.

we've had debt ceiling confrontations in the past, they have all worked out. perhaps this one will as well or maybe it will be different. we still have a long time to go before we see how this gets resolved. dani: more time for us to worry. bruce, thank you so much. coming up, we will talk more politics, but in this part of the world. the u.k. in europe set to speak today on brexit trade arrangements. this is bloomberg. ♪

dani: u.k. and eu negotiators set to speak today as they close in on a resolution to their long-running post-brexit trade dispute. joining us is our u.k.

correspondent and european correspondent. thank you both for joining. lizzy, i want to kick it off with you, what are we expecting? lizzy: you will see the u.k. foreign secretary meeting with -- meeting with the u.k. -- the eu. they are trying to take stock about whether they should enter the secret negotiating tunnel of talks, intensive talks. the outcome would be a political declaration rather than an internationally binding agreement. that would then have to be signed off by rishi sunak and the european commission president, ursula von der leyen. everyone is got their hopes up because last week we saw a tentative technical breakthrough in terms of a trade database, a real-time database to track goods going between great written and northern ireland and that could -- gb and northern

ireland and that could open the door for a greater deal. there are still sticky bits to fix, including the role of the european court of justice, state aid and agricultural products. fundamentally, britain says its concerns are real on the ground and it says the eu's issues are theoretical and have let to materialize. i am sure maria sources would tell you otherwise. dani: quickly, before we pivot, how important would it be? what with the significance be to actually finally, after all of this wrangling, reach a deal? lizzy: massive. there have been icy relations since the brexit divorce, and before that, the referendum, the campaign. northern ireland has been in a political stalemate that could end here. the timeframe for this, the natural deadline is seen as the 25th anniversary as the good

friday agreement in april, which could coincide with a visit from joe biden. the opposition later leader -- labor leader has said he would back it, the difficulty could lie with the conservatives own mps and unionists in northern ireland. politics are toxic, but there are hopes there is some trust left in the prime minister, because she battled, she said she would abandon unilaterally parts of the protocol if a deal was not reached. rishi sunak and the northern ireland secretary are seen as more pragmatic. dani: that is the u.k. insight. what is the general view from the eu on these talks? maria: it seems the tunnel is working. these are the talks that no longer just lead to more talks but could potentially get a compromise and they seem to be working. have the irish media today reporting perhaps by the end of

the day there could be a joint declaration with a framework, potentially with solutions to the many issues you know they have been really well reported in document it. lizzy went through all of them, we've talked about this almost a year. two things to keep in mind when you look at this from the european perspective, one is the european union will never agree to anything they irish cannot agree with. secondly, the european union will never agree to anything that compromises the integrity of the single market. that is their moneymaker and they are very sure on that. beyond that, you talked about the significance of this, from the europeans it is we tick this box and we can move on. but you have to see it from a different prism, from the europeans, there is a war going on in europe. you have bigger talking points, we talked about the inflation

act, china reopening, the mindset is on different priorities. dani: i've got to be completely honest, part of the way i get my news from the continent is the emails you send every day and i've noticed lately you have been flagging a lot of economists who see an improvement in the european economy. i know you are looking at the eu finance ministers who are having their meeting, the euro group meeting in brussels today. has the tone for them and proved? maria: i love that you ask me that question because this is really the theme for me, this is what i am excited about. the finance ministers said we will gather today in brussels, the first euro group of the year. the zeitgeist is changing. it started with a note from goldman sachs, no recession for the euro area this year. and on friday, you had deutsche bank suggesting no winter recession for germany, the biggest economy.

and, there will be basically zero growth for 2023 in germany overall but there will not be a contraction. so the zeitgeist seems to be changing and th out the finance ministers today is simply, is the worst over from the economic perspective? dani: really looking forward to that, and also those of you who are not employees at bloomberg and don't get maria's emails, she puts those on twitter. maria: i love it. dani: thank you for joining us. they all have good twitters. i tweet every now and then. now that the shameless self-promotion is over, we are going to talk about japan. has the boj opened pandora's box? investors on alert for another hawkish pivot. this is bloomberg. ♪

dani: investors are on high alert for wednesday, for further policy tweaks from the bank of japan. they had a surprise decision in december to raise the bar on yield movements but that failed to significantly improve liquidity in the market and the boj move, kuroda said it was due to market issues, trying to ease some of the pressure. ruth carson is in singapore on this story. buying the dollar was one of the hottest macro trades of 20 but it seems like the yen strength has overtaken the dollar story, which has been turned on its head. what do you make of the direction this year? ruth: it is as much about the dollar as it is about the yen. fund managers can't seem to get enough shorting the dollar when less than five months ago it was at an all-time high. it comes down to the narrative

and how high interest rates in the u.s. will go. fund rate expectations at about 4.9%. it is really weighing on the dollar. meantime, you got china's reopening, the boj, super exciting in this part of the world in particular. actually showing tracks in their resolve. what does this mean for the dollar? it means we will see further gains in currencies like the yen, the aussie, the kiwi, the pound, all versus the dollar. it means currencies in emerging markets will all start getting snapped up by macro funds. what would stop the trend? probably a height -- a hot recession. dani: it seems like this market is not preparing for that. growth, great to get your thoughts, i am afraid we are out

of time, but really excited to see your coverage through the week, especially on wednesday. ruth carson in singapore. as a reminder, we are back at the world economic forum's winter session in davos. we will kick off a week of high-profile, live interviews, starting with an exclusive conversation with the qatar investment authority's chief executive. that is it for daybreak this morning. bloomberg markets: europe is next, with so for a positive tone to the week despite wall street giants reporting in earnings they are warning of a mild recession to come. this is bloomberg. ♪

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