>> this is bloomberg daybreak:

asia europe. happy monday. these are the stories that set your agenda. >> a salvage operation, the u.s. looks to retrieve what he believes to be spy equipment from a downed chinese balloon. pages as it reserves the right to respond as tensions flare. stocks and futures fall as the chinese drop report sparked fears of an ongoing fed rate hike. the end weakens on a nikki report. a possible boj recession. an earthquake filled 110 people. it was felt as far away as lebanon, israel and egypt.

>> i did want to bring us a quick one that you're getting through that. a blast has now been reported at a gas pipeline in south turkey. that is according to a local outlet there. we have been monitoring this as we look at more casualties. the latest is a blast at a pipeline in south turkey. >> this earthquake has claimed the lives of 111 people. the scale is quiet considerable up in the sevens. as we get more details, we will bring that to our audience. good to be reunited with you back in the same place. the same time but a different narrative. what a roasting hot jobs market with palpable inflation.

the question is if we need to reassess our view of where the rate is from the fed. can it be higher? >> it is amazing how much 24 hours can change something. if we talk about all the narratives this morning, whether it be adept at the helm of the boj, the strong and of peace, a geopolitical tension story, it is all strong dollars. the latest nfp has left weak dollar dazed and confused. >> a favor like us -- bank of america of course. they talk about the brutality of reality. a beautiful january for investors. it was nothing more than a mirage. pink goldilocks in february and this is what you're going to get. a renewed bear market. disinflation is transitory.

the apocalypse finally here. i want to get into it because we're looking at asian stocks falling considerably this morning. it is likely a follow-through of what we saw on friday. an ugly session in the u.s.. we start to think about repressing things. we are looking at some of the u.s. listed tech. that is the hong kong listing for alibaba. this could just be tech getting crushed. we need to price and a higher terminal rate. it stands to reason that they are also moving lower in this morning session. >> the road to hell is paved with good intentions. that is what i was full of. a small rise in yields extending that explosion higher on yields on friday of over 20 basis points.

you are seeing the catch of trade in dollar yuan, you are seeing a rise in the dollar, a drop of over 1.6%. he is the architect. chris we have rebecca choong wilkins, we will talk boj and the yen and they will bring us the latest. she is currently at india's energy week as well. quick to china telling the u.s. not to escalate a tense situation. is that what they are telling us? that is after the shooting down

of an alleged chinese surveillance balloon. let's bring in our government and politics correspondent. it is such a delicate situation. we expect an escalation from china. >> china at one point to put out this threat of retaliation by the international narrative does seem to be seeking a what -- a somewhat calmer tone. urgent for cooler heads to prevail. certainly from the chinese point of view, particularly when we consider how hard they worked to create a constructive backdrop to that antony blinken visit.

a lot of that is going to depend on now. this is what they allege is surveillance tracking. the balloon was found above the continental u.s.. they have been very confident in asserting this is by were technology. we will be looking at that hard evidence. this is less sophisticated, less advanced. this does give different angles, different viewpoints. critically, it is much cheaper than the settlor technology.

we could see blinken rezoning -- resuming their visit. >> the yen has been falling after the nikki reported that the governor has been approached to become the central bank's next chief. >> i think it is very hard to say.

these were the only realistic people who were going to get a job. they have been issues in the past with this particular post about unhappiness. it is sometimes drawn from the bank of japan. it is very difficult to say -- we are likely to see some more issues with this.

>> thank you. he is the architect of all of the policy since october of 2016. let's see who is right. to india, the policymakers calmed the investors nerves. they are playing host to the first ever major g20 event under a g20 presidency. great to see you this morning. the question is high politics. what is the relationship in the family crisis?

>> they both hail from the state here. they are talking sustainability and global cooperation. those are the issues on the agenda here. the week that prime minister modi is inaugurated even as we speak right now. >> you and the team have been speaking to quit if you energy leaders on the ground. it sounds like a very busy meeting. >> that is the top of the agenda. energy supply and energy transition.

also, the impact of those price caps on russia product and how that could distort supply chains. putting some countries like india at an advantage. >> thank you very much. that is the bloomberg news editor. coming up next, u.s. payrolls, what a number. what could it mean for the fed fight against inflation? >> we will check in on the oil markets.

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>> it was a hot dollar-yen market.

they have had discussions about his succession over kuroda. the dollar yen is all lit up. because authorities in japan have denied that report. it is not stopping people from selling the end this morning. alexander, thank you for joining us. i know you initiated a short dollar-yen trade some months ago. does the possibility of a boj at the helm change that view at all? >> thank you for having me on. that is predicated on part -- in part on the boj. it is not only predicated on the boj. even if you took the boj out of the equation, we would argue we

would see a stronger yen. we think bonds will outperform equities this year. in that environment, the yen tends to do best. japanese investors have been repatriating. >> many people are sending in those to danny and i. it is just delayed, not denied. the bond market will force his hand. >> we think so.

when we look at longer-term valuations, they are above 130. this was a faster pace than the market was anticipating. u.s. raise volatility which kept the dollar elevated last year is now falling. the trend is low in the dollar. >> does it not threaten that narrative question mark course we don't think so. it provides near-term support for the dollar but ultimately the trend is for the dollar to decline. partly because of payrolls and probably because we're looking at a u.s. earnings possession. >> i am salivating. i want to know if it is the ecb that gets me to 130 or is it a

procession denied? that manifests itself in two ways. last year, the trade balance was one of the reasons we felt the euro was so weak. then we were seeing a rotation into eurozone assets. both in the debt and equity space. it is all about energy and not so much about rates. quick stepping back and looking at the big picture, we know that you write an unsustainable

everything rally. maybe it is more and equity land. do you think investors are too sanguine about what happened in january? >> inflation fixings in the u.s. adjust market inflation will come up just about 2% in the middle of this year. what does it mean for the dollar? it means the trend depreciation is unlikely to be straight-line depreciation.

alexander can do it all. chrysler squeeze one more i am always curious to know -- you cry correctly corrected me. they trying to look for the data. is it a double flesh wound for the pond? >> we struggle to come up with a ribose case for the pound. a lot of bad news is in the past. the pound will be susceptible to short squeezes.

we think the current account is an important element. it tends to be financed with foreign investor influence. those inflows require a week pound. >> i have to ended here. 120 on cable right now. where does it go? >> it is unlikely that you will see this rise. >> let's leave it there, short and sustained. the lead story this morning is it is a pre-tough time for turkey. these are the images coming to us. a powerful tremor across the board.

over a hundred people have been confirmed dead. we get the latest from turkey on the ground, that is next. ♪

>>

>> it is one of the most powerful earthquake stated the middle east in many years. killing scores of people in turkey and syria, dropping hundreds more and looking at live pictures coming from one of the turkish cities most affected -- most affected with the rescue effort.

>> it was a very powerful earthquake. this was the area around the border with syria. it is definitely the largest earthquake since 1999. judging by the terrifying image, it is almost certain that the devil will rise very dramatically. rescue efforts are underway. authorities are still trying to figure out the full extent of the damages. that is what has been made in the area. the quake affected more than 10 cities. it is still early to say how badly although cities were affected.

an increasing deadfall from this disaster. >> this is a region considering where it is that hosts so many refugees, syrian refugees. what has the international response been like so far? >> in terms of the international response, the example has been an offer by the u.s.. jake sullivan offered assistance to turkish authorities. turkey is open to international assistance. there have been other offers coming into turkey as well.

there was five hours since. >> it is probably one of the biggest risks to assemble things on the ground. the explosions seem to be somewhat minor. they did cause disruptions to natural gas flows. ♪ i screwed up. mhm. i got us t-mobile home internet. now cell phone users have priority over us. and your marriage survived that? you can almost feel the drag when people walk by with their phones. oh i can't hear you... you're froze-- ladies, please! you put it on airplane mode when you pass our house.

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>> this is bloomberg daybreak:

europe. on the story setting your agenda. >> salvage operation, u.s. looks to retrieve what he believes to be spy equipment from a downed chinese berlin. beijing says it reserves the right to respond as tensions flare. risk upended stocks and futures fall as friday is jobs report sparked fears of ongoing fed rate hikes. an earthquake kills more than 250 people in turkey and syria. they felt as far away as lebanon and egypt. >> a lot of difficult stories. just taking a pause for a moment to look at these markets. all after that red-hot figure for the jobs number.

we were just talking to alexander? who said everything rallied in january and it is unsustainable. >> they are pretty apocalyptic. this is what they had to say. it is an apocalypse delayed. you will get this inflation narrative that will drop away. you will see the second half of the year with a lot more pressure. the dollar flexed its muscles on friday. that rippled all the way across assets. >> it really did. does that continue considering the boj narrative? request the dollar is barred by half of 1%. they talk about the china reopening. that is an after flow. a narrative post that red-hot jobs report.

you see a continuation and read weigel of the short and what the fed might need to do in terms of rates. the short end of the curve rises again. we put on 20 basis points on friday. that bond market, larry summers still thinks we have a risk of a wily coyote moment. >> that sentiment is very much reflected in equity markets. don't you love it when there are finally bonds and equities singing the same tune? they were sold off after an ugly session on friday. geophysical tensions are also on the floor. could that be why alibaba is weakening more than the rest of the market? i should say that tech is doing poorly. this with her in the tech story and tech narrative. nasdaq futures are underperforming. they are having a rough go of it this monday morning.

>> they are indeed. it was a beautiful january according to bank of america. it was just a mirage, a bit like my pension fund. the turkish market will be open at 7:00 a.m.. we are told there is a temporary suspension on eight of the main shares, have -- as we get more information on the reaction function from the international assistance, danny and i will bring that to you. let's come back to that. the focus on the european banking sector. a number of major lenders reporting this week. followed very quickly by credit suisse on thursday. let's get to vicki from global financials analysts. thank you for being with us. last week it was buybacks of the

world united ubs. then it was a bit of a disappointment they did not go harder and heavier on buybacks. it set the stage in terms of the buyback and dividend narrative. where is the musculature in that narrative for you? request good morning, thank you for having me. the capital return story will be a key thing for the european financials this year. expect dividends and buybacks to get above 20% of the market cap return. it will be a key driver for the sector. those companies, the management teams will be able to deliver on that topic. there will be the ones that perform. we see names like deutsche bank, they are waiting for the markets to clear before they give us more of that narrative. there is excess capital in the sector right now. it is all about the management teams delivering that.

>> it is all about elevated operability. does your face a different challenge to them? >> european financials are a different stage. they have come into the game quietly. the u.s. financials have already been there. they have a high payout ratio. around 70%. european financials are catching up to that. that is what we see driving the share prices this year. >> one of the things that came out last week when i was traveling across europe was the net interest income. a great deal of that may already be in the u.s. pricing. to what extent is that still not fully priced in the european banks? we have more hikes to come on dollar rates. is there more price reaction function to come from nims? >> fisher. we saw the q1 results that that

interest continues to the upside. we are getting upgrades to consensus numbers. interest rate hikes have only come in through july. we had almost a decade of negative rates. this is going to change the profitability of them. hopefully you drive some re-rating for the sectors. we are waiting to see that enter q1 results and hopefully we will have more to come and the rest of the year. >> we will have credit raids earnings in the next few days. the question is all about rebuild and what that looks like. what do investors want to hear from management? request we want to see that the franchise is beginning to stabilize. they lost market share, they lost -- we want to see some stabilization. we want to see them reaching. they have a good plan.

they have changed the management board. there was more focused on risk management. now we want to see that some of that comes through. it is early days, we will not get a whole lot but we want to see the first signs of that execution. >> the one thing that went through my mind was the 73 million market cap. deutsche bank was the problem child. europe has a $23 billion market cap. is the takeover take a story history or is there still an open risk that they are a takeover target? >> right now, they are introducing new strategy of how they can improve the profitability. we are waiting to see how that is being executed before we can have a plan b. it is about seeing how that

works out. if it does not work, we have to look at our options. it is all about executing that strategy. crexendo this is a question asked of many executives but when we look at outflows from credit suisse, who is on the others? who stands to benefit from dragon those? we saw that they had significant increases. they are definitely stepping into that. growth is more than just grabbing shares from credit suisse. the loss of market share has been a negative for them. >> it is hard to decide in terms

of exiting credit suisse. that was difficult to work out. the other dynamic is how does ubs -- this is such a huge cost income ratio in the united states. >> they are using technology. it is the highest cost income ratio. they can really help the shares we rate. the earnings are investing heavily on that to help improve the productivity in the u.s.. >> that is all we have time for. please mark your calendar for the next corner of the earnings season.

let's get to the first word news. >> one of the most powerful earthquakes to hit the middle east in years has killed at least 350 people in southeast turkey and syria, other officials in the syrian capital of damascus reported that 237 people have died. while hundreds more were reported injured in both countries. the 7.7 magnitude earthquake struck at dawn. the yen fell on a report that the boj deputy governor has been approached to become the central bank past next year. the nikkei says the government and ruling coalition how discussions on the succeeding governor kuroda whose term ends in april. japan's jeopardy governor spokesman has refuted the report.

beijing shifted from expressing regret to threaten retaliation after the u.s. shot a chinese balloon out of the sky. china says that the device was a civilian climate research vehicle that undisputedly drifted over u.s. territory. beijing has denounced what it calls washington's clear overreaction. calling the balloon and airspace violation. the g7 on russian diesel meant to limit moscow's revenues has taken effect. the g7 statement says the cap applies to petroleum products trading at a premium to crude. the question groups also backed a limit of $45 for those that sell at a discount such as fuel oil and some types. they were also delayed reviewing a $60 cap on russian crew until

march. global news, powered by more than 2700 journi am simone foxms bloomberg. >> thank you very much, simone. despite the rise in demand, he wants to see actual delivery before his shift gears. ♪

>> we could see a moderate

rebound but we expect this year about half of the growth to come from china only. this will put higher upward pressure on the demand side. >> that was the executive director of iea speaking to bloomberg on the demand for oil and gas which we will dig into a lot more detail. we have breaking his on the tech sector. this adds to the list of injuries. >> that is right, the latest job cuts about 6650 jobs at the pc maker. that is about 5% of their total workforce. this is according to a company spokesperson.

it follows with just weakness on the consumer side driving some of these job cuts. this is the latest out of the workforce. dell had the largest decline over that time last year. we will track that story. just remember cisco and ibm. they are up 649%. we will track that story because that will hit at tech when it opens all the way around. keep your eye on the hardware and software companies as well. the energy mr. has reiterated the kingdom will remain cautious.

several prominent analysts are raising their demand outlook that could cause prices to test $100. let's get to paul wallace. his royal highness over the weekend. good afternoon, good morning. i will believe it when i see it and then i will take action. he has been holding the preemptive. not ready to take any actions yet. >> it is a reiteration of what he said before but i think it emphasizes the point, that the saudi's are not for moving until they see from evidence that it has risen significantly in china . what saudi arabia says is often what opec-plus is saying and doing as well. it seems it is very unlikely

that there will be a ramp-up in oil supplies. >> elsewhere in the energy story, the day has finally arrived. have we seen any immediate impact? >> not yet. that is something playing on oil prices at the moment. a lot of traders in the run up to this fine product man was pretty nervous. they were pretty nervous about what would happen to russian exports and what the eu would do with its price cap. if it is like that, it means russian flows will continue. that is exactly what the g7 and

the u.s. wanted. they do not want to see any of its exports dropping. that is quit a hard balance to strike. for now, energy markets don't seem too worried about russian products. >> that is bloomberg paul wallace. staying in the commodities theme, we have a big old deal in the second month of the year. offering to buy australia's new crest. the idea is that it was drinking the u.s. mining powerhouse position in both copper and gold. for more on this, we are joined by james fernie half. >> the deal was broken by a local newspaper before they were ready to talk about it. the status of the deal is very unclear.

they are considering it but it is not a good enough deal for them to come out immediately. newmont wants to get due diligence. i think some analysts are saying they will possibly have to go higher but we will have to stay tuned to see. >> let's see whether the bid heats up and if there is anybody else that comes out of the woods. coming up, executives in london today from alliance. sharing details of their renewed partnership on bloomberg. ♪

>> bloomberg has learned that directors have agreed to a landmark deal to rebalance the carmaker possible to dictate alliance with nissan. executives will unveil details of their revamped partnership. joining us is tom mackenzie who will be at that unveiling. what can we expect to hear today? >> this is about reshaping this 24-year-old alliance. today, it is about rebranding, reshaping the partnership. the capital structure is really important.

28% of that is expected to be put in a trust where the voting rights for those shares will essentially be neutralized. this will that invest in the alleged vehicle business. we are expected to hear more from them. those are some of the details. in terms of execution, that will be key for this alliance. they are planning to boost their market footprint. how will this help them execute in those jurisdictions and around electric vehicles? that is the key question. we know there have been some concerns about whether or not

their technology could be passed on to one of their chinese rivals. we will listen to what they say about how they address those concerns. this is a question of whether this is a renewal of vows between the two partners. we will see what they have to say. >> hopefully it is not a divorce. we are looking forward to the interviews. checking in on european futures. it is the dell news. a downdraft coming from u.s. equities. 6650 jobs are that go. this is a fairly tough time in the tech sector. you are looking at 5% down to take job cuts. a beautiful january, it was a mirage. we are in for a brutal reappraisal. >> as we close at this hour, i

want to return to turkey. we have live pictures coming out of the region after we had that 7.7 magnitude earthquake hit the turkish syrian border. authorities say 76 people in turkey were confirmed dead and 270 in syria. quickly aftershocks are still being felt across the region. the temporary suspension -- suspension. more on that story as we track it here on bloomberg. cross into bloomberg markets europe this monday morning. ♪

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