dani: this is "bloomberg daybreak: europe". i'm dani burger in london. manus cranny is in dubai with the stories that set your agenda. manus: asia stocks fade earlier gains, as traders weigh prospects for a soft landing versus higher interest rates. the dollar edges higher. prime minister rishi sunak must sell his brexit deal to skeptical northern irish politicians after striking a breakthrough agreement with the eu. plus, back on top, elon musk reclaims the title as the world's richest person, propelled by a 70% surge in tesla stocks. dani, who do you believe, the longer the equity market? there is a chorus of growing disbelief from mike wilson, an entire generation saying by the dip, and then a lot of its warns

bonds never looked so sweet since the gst. dani: but not at 4% for the 10-year. i know we are perhaps overly obsessed with round numbers, but let me be obsessed just a moment. we are only a few basis points from that beautiful round number of 4%, when it might be more attractive to jump in and get to see yields. what will it take to get there? it's quite weak, we might not get to 4%. manus: you have to debate whether you believe inflation is becoming unanchored. full stop. dani: in that spirit, let's show you what equities are doing that morning. not a ton. the hang seng was posting gains, after hong kong dropped its mask mandate. our producer will probably tell you 945 days since they have had that mandate. it is now gone, but gains have

dissipated, the equity markets ever write. goldman says japan and europe is where to be right now. the u.s. is less attractive given investor flows that are likely to come in the european and asia regions. s&p basically unchanged. a little outperformance from nasdaq, giving back some gains. one of the reasons it is outperforming is one, the pandemic a lot of the stock has a really good earnings forecast yesterday, rallying 7.5% post-market, and they said they are having ai in their strategy. that sent them up another 2%. i am days away from saying i have ai to get a raise or something, everybody seems to love it. manus: just make sure they don't create your hologram just yet. you have just come back from japan. you didn't bring me anything home. the other aspect is zoom. you have to pay to stay on zoom after 10 minutes. that is called monetization of

your free airtime. let's trot quickly across the asset classes. torsten warning that credit and equity markets are underestimating. cable goes bump, sterling up 1% on the back of the windsor accord, what a wonderful name. will it fly? or will it be a turkey. we have come back 1.1 percent this morning. t-bills keep flying higher and sucking up money. money plowing into the short-term etf and six-month bills, two point $5 billion went in last week. and dollar-yen, a whole host of people on the yen narrative this morning, a dovish ueda fails to derail a bullish yen. the citigroup indicator flips to a bullish call. we can debate that later. dani burger is the aficionado on

all things yen. dani: it certainly is. it is a market of pops and potentially turkeys. let's get to our reporters from around the world. we will talk about the brexit agreement, hsbc ending private offices to elon musk regaining his spot as the world's richest person. manus: the u.k. and e.u. finally sealed the deal, the northern ireland post-brexit trading relationship potentially ending a standoff that has poisoned london and brussels relation since the u.k. left the union. joining us is lizzy burden, what is different about this deal sunak has secured relative to his predecessors? >> it seems like rishi sunak has done the impossible. it will all hinge on the unionists in northern ireland. rishi sunak claims his windsor framework fundamentally rewrites the northern ireland protocol.

for example, by allowing london rather than brussels to set vat rates in northern ireland. that is the thing brussels had said previously could not be done. it also reduces the red tape on goods flowing between great britain and northern ireland by establishing a green and red lane. the green lane being for goods only going to the region, red for goods that are going to go on to the european union. sunak's rabbit out of the hat moment yesterday was the so-called stormont brake, which gives the northern ireland assembly the power to delay and potentially stop new eu laws coming into application in northern ireland. it was always going to be the case that the european court of justice remains the ultimate arbiter on the application of eu laws. and the deal only reduces rather than removes fully the number of eu laws that take effect in

northern ireland. so, it is so, it is still going to have tensions carrying on until we have a vote on the deal. and until power-sharing is restored in stormont. and seeds. us the latest on that new agreement. we will hear what the dup does. senior bankers at hsbc in hong kong could lose their private offices as the firm's move towards an open plan desk for the financial hub. manuel, whst with hsbc? some folks perhaps going to be upset about losing their private offices. >> definitely, dani. it is a part of a broader plan

that the bank is implement and globally. now in hong kong there is a big office here in downtown. the discussions are around private offices and whether some senior leaders some senior leaders could jeopardize confidentiality when it comes to discussing deals with clients, debate about whether it is beneficial to the bank and their business to get rid entirely of private office space. or perhaps maintaining some of that for meetings doesn't seem to be the case. manus meetings doesn't seem to be the case. manus: they can always take a meeting room if they have got something really big to discuss. to me about goldman sachs, type in solomon -- david solomon is under pressure. investor days coming up. >> yes, big day, make or break.

second ever investment day for goldman. we all know the bank was challenged they need to find ways to reassure investors, and also its own partners. get them in line with the ceo. and can restart growth. the wealth asset management business has growth potential. it will be important to reassure to reassure and regain confidence from investors. manus: manuel they are in hongag kong. let's see what comes of that investor day for goldman sachs. we will catch up with the president and chief operating officer of goldman's at 5:00

p.m. don't miss that conversation. dani, would you notice if you were $50 billion richer in the space of a month? i hope i would. i would certainly notice if i lost $200 billion, which elon musk was the first person to do. but redemption for mr. musk. manus: it takes the underlying stock, tesla is up 100%. it's ms. dea -- its nadir was january 6. nadir was january 6. he has now got 187 billion dollars, he has a wonderful bump. he is back on top. dani: so thin. he is at 187 billion, arneault is at 185, can musk hold onto the crown? wecan musk hold onto the crown? we will talk more about equity markets and bond yields, 4%, but cash is back. manus:erste

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dani: welcome back to "bloomberg daybreak: europe". dani and manus reunited. maybe cash is into trash. there is too much uncertainty to pass up on a 5% yield for playing it safe, or you can get 6% for the least risky corporate debt. i spo i spoke with him yesterday. take a listen. >> instead of chasing yourself around every other day, it does make some sense if you are in position to take profits to be sit in that shorter dated investment grade paper. it's funny, i'm talking to

equity folks that are 25 or 50% of their portfolios in investment grade credit right nowt now. which goes to show you, you are being paid to sleep at night which is an attractive proposition when the narrative changes on a weekly basis. manus: changes on a weekly basis. manus: the turbulent equity markets and lofty bond yields means cash is back in demand. cash like ishares short chart free bond e 2.5 billion bucks this week, the biggest hall since the pandemic. henrietta pacquement is senior portfolio manager for the aspri. here is your moment, do you pay to play in short dated ig, or are you full of fear? and you wantnt some six-month t-bills in the bag? your call. henrietta: i think it is right.

you don't need to be a hero. and investment grade is really havme under the sun. you've got interesting yield, you don't have to push the boat out in terms of riskiness. and we are seeing that interest come through in investment opportunities at the moment. in investment opportunities at the moment. very much in agreement. it is one of the nice places to be. you've got income, what are the? as mcelligott was saying, you have equity folks playing tourist in the ig market. henrietta: you have a mixture of investors that have not been there in a while. you have to remember that two years ago, two years ago, yields on the investment-grade markets in europe were 12 basis points. so, having an investor base

coming back into certai of the investment-grade market, euro ig in particular, make sense at this point. we are now over 4%. i do think a reallocation into that asset class has got some sense. some of that money may stay. but at this point, an extra allocation makes sense. manus: i've got to say, that is the best one yet. equity tourists in a bond market. we should be careful, those bond vigila will have them for breakfast, one faith? -- won't they? then we will see who is reall iy strong. why are you neutral on rates? why are you not more bearish is the question that goes through my mind. everybody else is. henrietta: else is. henrietta: we had a pretty decent move the last few weeks.

and more of the matching of minds between what central banks are saying, on the one hand, and what the market is pricing at this point. so, we are having two to three hikes on the curves priced in. anymore stability later into the year, which we think makes sense atmakes sense at this point. now you were hearing from one of the central bank spokesmen they will be looking to see what comes in. we have had information on the labor market in the u.s. that is still strong. that is going to keep central banks active. and we have had some numbers on the inflation side that have been stickier. moves we have seen more recently make sense. we are at more of a balanced

point. dani: you have too this up perfectly, because guy johnson yesterday spoke to the croatian central bank governor, whoernors also on the ecb governing council, about his view of where the right pathos from here -- goes from here. >> as long proceed at the levels we are talking about. and rates are significantly higher than where our target is, we should persevere. and we should really bring it down to the levels where we needed to be medium-term. dani: henrietta, you talked about this repricing, but are we we still have ecb policymakers talking about the need to persevere? why not go short european rates? henrietta: well, europe is also behold beholden to what the u.s. is doing.

that is going to be a driver. europe has been more resilient en more resilient than many expected. you could see a number of factors, including the weather over the winter, so but we are t pressure on the european side. we are seeing investment in terms of moving down, chopping around by consumers. we are seeing more energy impact on companies as well. there are risks on the horizon. and also, we have had big rate hikes over the last few months.r through. it takes 12 to 18 months to really see the impact of that. that takes us into the middle of this year.

i think we have got a clearert r path in terms of the hikes coming our way the next few months, but one has to be conscious of the economic picture later in the year. it may be more difficult. manus: you can send that in a memo to the equity tourists that are stopping in your playground. they will get frightened if long variable lag turns up. variable lag turns up. what dani started, i will probably try and finish. these are n--- bund yields at multi-year highs. how much of this can lagarde and her cohort of 3.5% terminal rate is already in the bund? at a 30-year high, exhaustion in the vertigo in german rates?

henrietta: these are much more interesting rates then we have seen in a while. ing rates then we have seen in a while. that is really what is attracting investors. i do think it is a reflection of what we're seeing in the short that prolonging of the rate cycle going forward. but if you look at longer-term er-term inflation expectations, for the moment, be it in europe or the u.s., these are contained. the curve, on the u.s. or on the european side. the moves we have seen reflect thhe sentiment that central banks are doing what it takes to keep inflation under control in the medium to longer

term. dani: we thank you very much for and not being a bond tourist. henrietta pacquement, senior portfolio manager and head of the global fixed income team at allspring global investments. manus, i feel like you will run with that for a while. manus: i will get mileage out of that. an equity tourist in a bond tourist in a bond market. you want to be careful, the vigilantes are coming for you. dani: as long as the vigilantes don't come for me. coming up, singapore is as long as the vigilant

dani: welcome back to "bloomberg daybreak: europe". the rebound from covid has been a hot topic, if not the topic at the aviation festival in singapore. hong kong is lifting its mask mandate from wednesday. the ceo of hk expressed told bloomberg it was welcome news. running as is asia transport reporter dani lee at the festival. in terms of hong kong lifting the mask mandate, where do we stand? what does this mean for tourism in the region?

>> good morning, dani. we heard hong kong hours ago announced the end of one of the longest mask mandates after 945 days. that will end wednesday. it comes as the chief executive of hong kong john lee declared complete normalcy with the asian financial hub returning to normal. this could be very important for hong kong as it has a range of cultural and sporting festivals taking place over march and april. so this is a good time. it made its announcement on monday. and hong kong has been flying around the world saying, hong kong is back, but we see hong kong making clear actions opening back up to the world after a largely punishing three years of strict covid rules. manus: short shot, topline, was

the biggest highlight so far? >> at the aviation festival in singapore, we have heard a lot about china reopening, high airfares. some of the ceos we have spoken to say high airfares are unsustainable. good news for our audiences. ceos expect airfares to come down later this year. deeper flights, maybe more travel. but the china reopening which is a critical part of what people are following, we are seeing a mixed picture in terms of signals on -- strong demand, yes but not everyone can get a passport to leave china at the moment. some demand but not all airlines are benefiting at the moment. manus: we've just got to get used to flights being 25% more expensive. for anybody wondering why i have been on my own toiling at this end of the bus, while she has

been in japan enjoying the cherry blossoms, tell me, i have never been, how was it? dani: i can see white inflation is picking up. i paid the equivalent of five quid for the best running in my life. i would've paid my first-born child for that bowl of soup. manus: you have gone full brit. five quid, you will be saying it with an accent next. by the way, sterling-yen rallied 5%, hold on to your accent, dani. we will talk everything's changing so quickly. before the xfinity 10g network, we didn't have internet that let us play all at once. every device? in every room? why are you up here? when i was your age, we couldn't stream a movie when the power went out. you're only a year older than me. you have no idea how good you've got it.

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manus: this is "bloomberg

daybreak: europe". i'm manus cranny in dubai, dani burger in london hk with the stories that set your agenda. dani: asia stocks fade earlier gains, as traders weigh prospects for a soft landing versus higher interest rates. the dollar edges higher. prime minister rishi sunak must sell his brexit deal to skeptical northern irish politicians, after striking a breakthrough agreement with the eu. he's back. elon musk reclaims the title of the world's richest person, propelled by a 70% surge in tesla shares this year. earnings coming through, breaking season is not over yet. manus: bayer coming through, 2023 guidance this year is 12.5 to 30, it is higher than the 13 and an eight. roundup is on your screen, you

have got household products and chemicals. think of all the chemical costs that go into producing their products. they have an activist investor on the board. that is something always to bear in mind. margins, 25%, it is a beat. and i just broke sabic, the biggest chemicals company out of the world a short time ago, and they were light on margins. so bayer is beating on the margin but i would say, like on the guidance. dani: higher end of 13 billion euros, the estimate was 13.2. manus: let's take a quick shot through the asset classes, are you parking at the short end? are there equity tourist traveling through the short end of the yield curve? money is plowing into the six-month etfs, in america, and now it is down to the unionists

to fill or kill on a brexit deal. sterling gives back, nymex is up 1.5%, it has been four months of losses in the oil market. bank of america is at $88. russell hardy can say whatever he wants. he is still $90 bid, 100 offered is a real possibility for him. bank of america, 88, vitol $100 a barrel on the oil market. dani: i was saved by ueda, who did not cause the yen to strengthened by basically saying nothing because that would've been a downer to have more expensive yen on my trip. i am about to wear out the phrase equity tourist, but they have gone over to the bond market to that juicy yield. not a lot of action, we are weaker on the hang seng.

the chart watchers at jp morgan say beware, we are pumping against the 200 day moving average. if we preach it, more room to the downside. manus: those naughty quants have got a whole different agenda, don't they? let's talk about the u.k. and eu, they have finally sealed a theoretical deal on northern ireland's post brexit trading relationship, potentially ending a standout that has poisoned relationships between london and brussels. the u.k. hailed the agreement as a solution to the impasse over northern ireland. >> today's agreement delivers smooth flowing trade within the whole of the united kingdom. products northern ireland's place in our union. and safeguards sovereignty for the people of northern ireland. manus: we're joined now by lizzy burden, who has been tracking the windsor accord, as it is

known. sunak, if he gets this across the wire, he will have achieved something quite historical. what did he get that is materially different and palatable for the unionists? >> manus, if you are watching that press conference yesterday, anyone who has been following the brexit saga as i know you have would've note the change in tone from ursula von der leyen, the european comiission president. she actually address him as "dear rishi." >> this will allow us to begin a new chapter. it provides long-lasting solutions both of us are confident will work for all people and businesses in northern ireland. solutions that respond directly to the concerns they have raised. >> what he's able to say is that

he is fundamentally rewritten the northern ireland protocol. say it, at least. that is what he is going to sell in belfast on his visit this week. the reason is partly the tone you heard, von delay in saying sunak had been more understanding of her position compared to his predecessors. but it is also a change of substance. he has dropped northern ireland's protocol bill which would've allowed the u.k. to unilaterally override parts of the brexit bill. secondly, it has given access to customs databases. the change in tone and these two concessions made the big change in this deal. dani: it is all good to be friendly between von der leyen and sunak, but he still faces

the northern ireland union and his own party's brexiteers. >> there are two hurdles, first of all, voting in parliament, and secondly, power-sharing in stormont. it looks like sunak and get this through parliament because labour has said it will lend the votes to get the deal through. what matters is that sunak can heal his party, get tori br exiters on site, and they look to follow the democratic unionists. when it comes to power-sharing, sunak is in belfast to sell the deal. the point was to remove and this happens tests set by the dup were exactly what sunak told negotiators this deal had to pass as soon as he became prime minister. in a positive signal, we have heard from the dup leader jeffrey donaldson expressing his gratitude to rishi sunak. and taking credit that they have pushed so hard, brussels has

moved, but still says he needs time to digest the bill. after he came out, not one tori spoke out against the deal, including boris johnson and liz truss. dani: i wonder how burned they are from not knowing the text in advance. great coverage. go get a warm cup of tea. lizzy burden with the latest on the u.k. the adani investor roadshow has arrived in hong kong. this is the indian conglomerate continuing his charm offensive with investors to ease concerns about its financial health. in an exclusive interview, the cfo says adani group is not seeking to refinance debt or inject capital. annabelle, you spoke to the adani cfo, what were your takeaways? >> that's right. just to give you some context, adani group is taking a roadshow this week. they have been in singapore on

monday, hong kong today and tomorrow. essentially, the key message is that the group is meeting with investors from different banks. today was posted in barclays, so we spoke with robbie singh, this is the group cfo. i asked him what is his message that he is bringing to the sit-downs, given there is somebody concerns around corporate governance and financial health of the enterprise. take a listen. >> we have an obligation and duty to face an environment like this. to actually meet and answer the questions in person. >> and the reception so far you have got? >> we will meet our core investors. we will answer questions.

>> that was an exclusive interview with robbie si ngh, essentially pushing back on fears in the markets. we heard from market participants, the company was seeking to emphasize its ability to honor debt obligations and also to generate cash. whether the group is looking to outside financing or to refinance existing loans, he told me no, they are not. he also said the group would be able to rehabilitate its image. he said reputation is only good as their business, and he says their business is india's best. manus: before we let you go. you doorstepped him. well done. how was his demeanor? he looked relaxed on camera, how long did you check to him? -- chat to him?

>> it was 10 minutes of his time. which i am surprised by the be honest. it was interesting that he chose to speak for that amount of time. he was not concerned when we approached him, and he took the questions quite generously. one of the biggest things that came out with this was that he was very disappointed with the overall coverage that has come from the hindenberg research report. he strongly refuted of the allegations. he talked about the underlying fundamentals of the company as well. manus: well done. they will put her face up now in every corporate comms office in hong kong. you will have to trump that. i will send somebody for dani to doorstep in her office. simone has got your first word news. simone: after 940 five days,

hong kong is scrapping one of the world's longest mask mandates. from tomorrow, face coverings will no longer be needed outdoors, indoors or on public transport. the move comes as hong kong seeks to attract tourist and overseas workers to revitalize the city. had governor philip jefferson's warning against changing the u.s. central bank's 2% inflation target. he believes altering it could destabilize what he describes as well and cared inflation expectations. and called into question the fed's commitment to his goals. >> i am committed to lowering inflation to our 2% target. changing the fomc's longer run inflation objective however would introduce an additional risk by calling into question the fomc's commitment to stabilizing inflation at any level.

because it might lead people to suspect that the target could be changed opportunistically in the future. simone: 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. i'm simone foxman, this is bloomberg. dani: they very much. coming up, erste bank's cfo will speak to us on earnings at the austrian lender. we will also discuss exposure to russia, eastern europe, and much more. that interview is next, on bloomberg. ♪

dani: some breaking news coming through on santander for their investor day. they are implementing a 921 million euros share buyback. they are having a final dividend

of just under six euros, 5.95, after very strong earnings. we will speak with santander chairman ana botin at about 3:00 p.m. u.k. time. manus: let's stick with those themes on buybacks. erste bank beat the estimates, shares have rallied 15% since the end of the third quarter. the credit risk for eastern european markets for now seems to be not too bad. let's get to the cfo for erste bank. it is stefan doerfler. let's kick off with buybacks, santander are doing a monster one. you are doing 300 million this year, is that a conservative start to what buyback program? is that confident? stefan: good morning from vienna.

we are talking about the utilization of our capital. it is always very important to stress that business growth comes first. then we have a constant commitment to our dividend policy. then as an icing on the cake, if there is room on our capital position, share buybacks are an option, and this is what we will talk about in today's earnings call. dani: just to confirm, where does that 300 million euro number sit in the range you are targeting? stefan: that is the opportune number we will discuss with analysts today. this still remains to be approved by the regulator. but given our capital position, we are confident. but again, the utilization of capital always takes priority. business growth, dividend redistribution and then share buyback as the surge priority. manus: i look at your cost of

risk, it is below a third of 1%. again, given your geographic footprint in eastern europe, the war in ukraine and the ripple effect on economics. is this a very conservative view on the cost of risk? or is it based on the view, europe is more or less going to avoid reflation. why such a bullish cost of risk projection? stefan: the cost of risk in the last three years was the pandemic first, and now with the horrible war. ukraine has been the center of discussion. our asset quality remains excellent. therefore, we could build -- [indiscernible] the macro environment is not too positive. it has improved a little bit since the energy crisis has been coming down. but still, the macro environment is challenging, therefore we're

well prepared. our risk position is a strong one. dani: one of the other risks is the morton market. -- mortgage market. austria and the czech republic are two important markets for you and have started to see mortgage demand dropped, at least for the third quarter. what are your expectations for this year? how have you see mortgage housing demand evolve so far? stefan: let me start with the last couple of years. mortgage lending growth has been enormous. of course, with higher rates on one side, and some regulation kicking in, there was a significant slowdown in the second half of 2022. going into 2023 with higher rates and a certain stabilization on the interest-rate outlook, we expect on a lower level, mortgage lending production to stabilize. and that we will see in the course of the year how this will go further.

but, the record years in terms of growth in mortgage lending are behind us. manus: growth in nims for this year, i am trying to judge where that is because everybody is trying to guess where the ecb will land? where is your best guess on the ecb terminal rate? and is that a conservative guidance on nims? >> let's talk about our nii. we have been growing net interest income 2022 over 2021 by nearly 20%. this has to take into account the outlook for 2023. we are guiding for 10% further nii increase, which with further volume growth may not be that dynamic anymore. we regard this as appropriate at

this time. however should the euro zone rate development keep very strongly on the upwards end, there is room for improvement. this is what we will discuss in today's analyst call. dani: we have seen across regions from europe to asia to the u.s., growing criticism of banks when it comes to net interest income because lending rates have not -- setting rates rather -- saving rates rather. what do you say to policymakers who are criticizing banks for not getting back to consumers as much as they are charging for lending? stefan: we have a pragmatic approach to that. the example of czech republic shows how things are developing. the first move comes from the key rate of the central banks, then the asset side re-prices this, a natural and quick adjustment. then the so called beta kicks in. if you look at the czech

republic, it is a fair reward to customers. since we are very much a client focused bank, we are always focusing on the good of our customers first. that is a natural development in a very sharply moving interest-rate environment. but not a big concern for us. manus: where do you want to be bigger? stefan: what do you mean bigger and better? manus: which part of that business do you want to grow the most? stefan: in terms of businesses. i think we have been growing substantially on the corporate side the last two years. traditionally, we have a very healthy mix nowadays. a very well diversified and broad-based loan growth only the last couple of years. this is showing the strength of our business model. across the region, across

businesses, that is what we are aiming for in the foreseeable future. in a very difficult environment, it remains to be seen how much we can achieve. dani: given how good everything is end of prophets, what about bonuses? unicredit up the bonus after a record quarter for them, are you handing out more bonuses this year? stefan: we have a standardized bonus system to comply with all regulation. i think bonuses will be satisfying excellent performance of our colleagues. but nothing that goes anywhere close to the big players on the european and global scale. it is a very ordinary way of rewarding the excellent work of our colleagues, no more, no less. dani: stefan, i don't think anyone wants their bonus to be ordinary but point taken. stefan doerfler, erste bank cfo.

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dani: more breaking news from the spanish lenders santander, along with their 920 million euros share buyback, they will be boosting shareholder return to 50% of profits. last year, the total was 40%. they also are targeting return on tangible equity of 15 to 17% through 2025. they are hoping the efficiency ratio will be 40% by 2025. manus: we will catch up with ana botin at 3:00 u.k. time. in the meantime, let's get you barcelona at the mwc.

the highlight from barcelona? >> this is a challenging environment. erickson cutting jobs and smartphone sales down 11% last year and expected to soften again this year. adjusting to that environment, input prices and inflation costs is front and center. a couple of key topix, this was all about mobile phones a couple years ago. now it is all about enterprise, getting the big companies on to 5g. we will speak to the ceo of lockheed later today about how the military defense industry will be adapting. this is bloomberg. ♪

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