it's an amazing thing when you show generosity of spirit to someone. and you want people to be saved and to have a better life, then you don't stop. the idea that we have saved five million people's lives, it's overwhelming. it's everything. host: good morning this is

"bloomberg daybreak: europe." china's central bank surprises investors by keeping a key interest rate on hold. asian stocks rise. u.s. lawmakers unveil a stopgap spending bill averting a partial government shutdown later this month. we will break down what you need to know ahead of the iowa caucuses. taiwan stocks making modest gains after the ruling lost its majority in parliament. we go live to taipei this hour. happy monday and welcome to a new week. 6:00 a.m. in london. it is martin luther king day. let's get you up to speed on price action elsewhere.

you have cooler than expected u.s. producer prices print on the back then hop -- on the back of the hotter than expected --. traders are now pricing in an 80% chance of a march cut. that would kick off 6-7 cuts across the fed's eight meetings meaning the two-year treasury yields on friday dropped to their lowest level since may. despite all the movement it did not do much to boost the s&p 500. looking at the s&p pretty flat. if we flip to the cross asset picture, the dollar study this morning. brent rising on the risk of airstrikes igniting a wider conflict in the middle east. trading just shy of $79 a barrel. gold higher based on that

uncertainty. the action this morning taking place in asia. a roll hong is on -- averill hong is on standby for us. >> the ems are benefiting from expectations boosted about fed rate cuts. if you take a look at fx, the taiwan dollar is underperforming on the back of the outcome election -- election outcome. it is range bound when you look at the currency space. special mention for the japanese 2 year yield. a more policy sensitive tender. for the first time since july it has dipped below zero. expectations going into the boj meeting next week seeing -- investors seeing it

-- the central bank i want to touch on today is that of the pboc. it left its lending facility unchanged. this is against what the market consensus was they were seeing a 10 basis point cut coming through after a raft of week economic data. we did not -- we got a liquidity injection pumping cash into the financial system to the tune of 114 billion dollars. img says it is constrained by the overall weakness in the yen. take a look at the pboc.

i want to show you the offshore currency. it has been moving towards the 7 .18 level. the pboc rate cut has been delayed. perhaps on the speculation that in absence of a mlf cut we may be looking for a rrr cut in the next few months. it is what you are seeing on the chinese assets today. host: stocks taking a hit from the surprise pboc hold. baidu. let's zoom in on that. >> this as a company that has been seen as one of the leaders in the ai race. it is seen as the chinese equivalent or answer to openai's

chatgpt. we see the market responding said just -- responding to a report saying it has been used by a research lab for testing of ai systems. this is a charge that baidu has denied saying it has no affiliation to the academic institution in question. and says if it system was used it is that that is available publicly. we could see though u.s. sanctions against this. baidu's stock has fallen almost 12% today, a loss that is accelerating as the session progresses. really underperforming the market overall. host: thank you for that update. i want to switch focus to u.s.

politics. lawmakers have released a temporary spending bill to avert a partial government shutdown that could come as early as this weekend. could to grouped -- it seems we are constantly trying to avoid these government shutdowns. >> this is a litmus test for mike johnson. trying to avert a repeat of what we saw with kevin mccarthy. the idea that we can have this kicking the can dynamic. the spending bill is adding more funding to the likes of agriculture, energy, transportation only through march 1. what was going to happen is this friday, a partial government shutdown. including plenty of people's pensions and paychecks that would hit a pause. the big picture is the department of defense. host: meanwhile we have the race

for the presidency heating up. it is not the weather for it. it is cold in iowa. >> negative 33 degrees fahrenheit. what is important is there is still plenty of turnout expected. former president donald trump leading the polls at the moment higher by 48%. a 28% lead to nikki haley. the biggest lead if it stays at these numbers that any gop contender would have at the iowa caucus. this is a state that has major exports in things like corn and pork. a lot of the fundamentals of the trade that he negotiated. and they are doing this in the face of terrible weather. host: thank you dime glad that

you weaved in geopolitics. the taiwanese benchmark index is posting modest gains. the ruling dpp has sealed victory in the election on the island. it is at the center of china-u.s. tensions. >> we are telling the international community that between democracy and authoritarianism we will stand on the side of democracy. host: let's go now to our chief north asia reporter, stephen engle. how is china reacting? >> we have just had headlines across the bloomberg terminal saying that the specific island

nation will soon announce or has already announced according to sources on the pacific island us which in its diplomatic relations from taiwan to the people's republic of china, aging which would be another victory for beijing as it tries to internationally isolate taiwan. it would be another blow do taiwan's efforts to get legitimacy internationally. it only has a handful of formal relations with smaller countries including belize, palau in the pacific and paraguay and the vatican. a handful, i think 12 or down to 11. i will have to check on the actual number as it has been dwindling as beijing has made an effort to internationally isolate taiwan. this result does not sit well in beijing.

there had been efforts to try to or allegations to affect the vote in taiwan. it was a three horse race that ended in favor of the more independence minded party of the dpp which has held the presidential office here for a number of years. beijing has tried though this was not the result they wanted but it is getting a diplomatic victory if naru is switching over to beijing. we are hearing from our bloomberg bureau in taipei that the minister of foreign affairs in taiwan will be holding a press meeting to address the issue. host: we will keep an eye on the significant news from naru that is potentially changing the balance of power in the region. taiwan is known as the global hub for chipmaking.

what is the outlook for business in the region and what are the wider implications of this election results? >> the chip industry is critical to taiwan. some have called it the eye lens silica number alert. they make most if not all of the world's advanced chips but it is caught in the middle of export controls the u.s. has on selling advanced chips and chipmaking equipment and quantum computing and the like indochina. many of the big players in this part of the world in taiwan in particular are affected and perhaps having to choose sides. they have been courted by the u.s. and japan to build factories there. they are building a new factory in southern japan. in the 1970's it used to be

known as silica and i lent. it is diversifying its supply chain because of the pressures here. i asked that question to the president-elect on saturday evening. it was the first question we got to him. he said in fairly generic terms other than him needing to take office and needing to protect the semiconductor industry. it is a vital industry to taiwan and the world. he did not say anything specific about what he would do to help mitigate the risks that big chipmakers have but it is something to watch given the global supply chain being so bifurcated by the u.s.-china difficulties. host: really interesting context. stephen engle, thank you. we have a busy week ahead. it starts with davos. it is the gathering of the global you leads in the alpine

-- elites. the theme is rebuilding trust. ukraine hopes to keep the tension -- attention focused on the russian invasion. we will also be tracking the three scheduled appearances from christine lagarde. the scope of what she can say is probably going to narrow as the blackout period starts on thursday ahead of the rate decision on january 25. we will keep you entertained with a roster of a-list interviews. coming up we have philipp hildebrand, the coin-based cfo and the norwegian wealth fund cio. busy news and interviews to come out of davos. away from the alpine luxury, a lot of economic data. tomorrow we got the latest

german cpi ratings. expecting german inflation to hold steady on the monthly and annual basis. on thursday -- wednesday, we got a lot of data out of china. a particular focus on gdp especially after the surprise hold from the pboc. watch out for an upside surprise. that is what is on the docket for the week. for a round up of the stories you need to know to get your day going i suggest you had to the daybreak newsletter. today they lead on the pboc surprise hold they also have baidu plunging the most in more than a year after a china post report linked to its ai platform to chinese military research. for all of that and more terminal subscribers can go to d.a. why bigo. -- dayb go.

stay tuned. this is bloomberg. ♪

host: welcome back to "bloomberg daybreak: europe." the u.s. says it shot down a missile launched from houthi -controlled yemen. i am joined by our managing editor of north africa from istanbul. what more do we know about this latest incident? >> the latest incident took place on sunday when u.s. warplanes shot down a cruise missile launched by houthis in

yemen. it was shot down in the vicinity of the coast according to uscentcom in the middle east. this incident was following just hours after what the houthis said was another strike by the u.s. and the u.k. against its positions in the houthi region of yemen. to recap what is happening, this shows that the back-and-forth events between the u.s. and the u.k. on the one hand and the iran backed diligence -- militant houthis -- that is when the combined military forces struck a huge number of targets belonging to the yemeni houthi rebels in yemen including radar installations and cruise missiles. that was meant to degrade the

group's ability to launch attacks on merchant shipping and the u.s. and u.k. military. it shows the situation in the southern red sea remains extremely precarious and the risk to merchant shipping in the area remains high. host: we heard from the u.k. foreign secretary and former u.k. prime minister david cameron over the weekend confirming rishi sunak will brief parliament on those strikes later today. there has been more disruption to shipping. what are the details on that? >> probably one of the most important developments from the weekend was that qatar, one of the world's largest liquefied natural gas exporters and producers, appears to have paused its shipments of lng tankers through the red sea

because of these risks we just mentioned. right now, five lng tankers seem to have paused. three are now further east of the coast of oman, one is in the red sea. this is extremely important. first of all, qatar has not made an official announcement as to whether it is stopping those shipments. this news is based on shipping tracking data compiled by bloomberg. if the decision persists it may impact european gas markets. qatar is one of the largest global producers having accounted for 13% of western european gas consumption just last year second only to the u.s. in terms of suppliers. most of that gas used to go

through this waterway. if the decision to pause those shipments persists, tankers would have to take a longer route increasing costs or it will result in delayed shipments to europe. in europe right now stocks remain plenty and the industrial demand for gas is somewhat subdued. and the winter has been mild. but there might be an impact on european gas markets from this incident. we have yet to see the trading of the benchmark, the european contract but it increased on friday and we will see the full impact on markets when it starts trading again today. host: looking at brent trading just over $78 a barrel. fairly steady.

china's foreign minister is in africa this week. beijing looks has cement relations with some of the world's fastest-growing economies. let's get news on his agenda from our reporter. what are some of the factors shaping the countries that the minister will be touring? >> security and economy will be the issues at centerstage. look at egypt. it has been playing a peace broker role between israel and palestine. this is crucial in ensuring that the conflict does not spill over. china is looking to cement its position and the red sea. it is important for their belt and rode initiative. and chinese companies have invested $8 billion in this zone. if we moved to west africa, to togo and ivory coast, there have

been several military coups. they will be looking to have conversations on how to forge peace but also development. china has invested aggressively in the infrastructure in the ivory coast. the latest project is a bore -- is a porch. they will look to get into mining. host: bloomberg's reporter in could dolly, t -- in kigali. thank you. plenty more ahead. this is bloomberg. ♪

host: welcome back also making news, major u.s. lenders wrote off more of their commercial property loans as higher rates pummel valuations of office

space. bank of america and wells fargo -- rose during the fourth quarter partly due to office loans. looking at the raft of bank earnings we got on friday, the big picture is they took turns calling an end to this record run. wells fargo predicted a 9% drop in net interest income. citi forecasting a modest drop. jp morgan predicting a drop off this year. you can see for those three banks and bank of america, the actual loan losses are growing. it will be interesting to see who else shifts years. black rock has agreed to buy global infrastructure partners for about $12.5 billion. the move vaults the world's largest money manager into the top ranks of investors.

blackrock will pay 3 billion dollars in cash and $12 million in shares. elsewhere bloomberg has learned that apple is shedding its ai team in san diego. leaving many employees at risk of dismissal. sources say the group has until the end of february to decide if they want to relocate to austin where they would merge with the texas portion of the same team. coming up we will be joined by the israeli minister of economy and industry. stay tuned for that c'mon, we're right there. c'mon baby. it's the only we need. go, go, go, go! ah! touchdown baby! -touchdown! are your neighbors watching the same game? yeah, my 5g home internet delays the game a bit. but you get used to it. try these. they're noise cancelling earmuffs. i stole them from an airport. it's always something with you, man. great! solid! -greek salad?

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host: good morning this is

"bloomberg daybreak: europe." top stories. china's central bank surprises investors by keeping key interest rates on hold. asian stocks rise after traders boost bets on fed rate cuts. u.s. lawmakers avoid a -- the first official contest of the 2024 alexion takes place tonight. we will break down what you need to know ahead of the iowa caucuses. taiwan's stocks make modest gains after the ruling dpp win the hotly contested presidential election there. we go live to taipei this hour. a very good morning. u.s. cash and bond markets are closed for martin luther king day. happy holiday if you are celebrating. let's get you up to speed. european futures pointing to a

higher opening this morning. tomorrow you have u.s. futures pretty flat in the green. think back to friday. you had a cooler than expected u.s. producer price printed on the back of the hotter than expected consumer price print. now you have traders pricing in about an 80% chance of a march cut. that would kick off a raft of cuts, 6-7 is the expectation across the eight meetings. that meant that on friday the two-year treasury yields dropped to their lowest level since may. despite that it did not do much to boost the s&p 500. futures for the u.s. not too excited but pointing to a slightly higher opening. cross asset picture, the dollar is steady right now. brent has had a boost from the

risk of airstrikes by the u.s. and its allies that it will ignite a wider conflict in the middle east. and gold as well getting a boost as investors flock to the safe haven. let's dig in to what is happening in the middle east. the u.s. says it shot down a missile launched from houthi controlled yemen towards one of its navy destroyers. for more i am joined by bloomberg's yousef gamal el-din in dubai. why do we know about this development in the red sea? >> the world is on it. you had an incident that was intercepted. even if some form of protection could be guaranteed, you have some of the biggest shepherds of lng from qatar. -- shippers of lng from qatar.

in terms of where this is coming from at core, the israel-hamas word. it is day 100 of that war. more calls for the ongoing fighting to stop. the eu foreign policy chief was the latest to chip in, he said you have to stop the fighting. i want to get more input. i want to get out to the is really minister of economy and industry. nir, these are troubling times for israelis and palestinians. why is israel defying pressure from the u.s. to de-escalate in

the current environment? min. barkat: it is very simple. october 7 we woke up to atrocities that we have never seen since the holocaust. we are talking about raping women, murdering children, burning them alive. they started a war. killing so many people because they are jews and israelis. they started the war. and we are going to end it by total surrender of hamas. there is no other alternative but to make sure there is total surrender. >> you are reiterating the existing government position and the prime minister has talked about this over the weekend. you will continue to defy u.s. pressure going forward to pursue that goal? >> think about it. we were attacked. 1500 people were murdered

because they are jews. there is no way that we can allow hamas to exist. there is a simple way to end the war. hamas has to totally surrender and immediately we move on. until then, no one in the world expects us not to wipe hamas off the face of the earth. this is not just an israeli challenge. this jihadist movement wants to kill all non-muslims. israel is the small state and the u.s. is the large stage. >> i'm not going to get an answer on the defying of the u.s. so i will move on and try to get visibility on diplomatic efforts. you say that you won't stop until you achieve that objective. what happens on day one after that objective? what kinds of concessions are

israel willing to make? >> i want to remind you that we have 136 hostages. we have testimonies that say the women were raped consistently. their mothers asked yesterday to bring them home. it is crazy what is happening to our hostages. we want our hostages back. safely back home. those that are alive. the red cross has not seen one of the hostages. we have to have total surrender by hamas. we have to have our hostages back. and we have to look at somebody out there that will recognize israel that does not want to slaughter and kill and wipe israel off the map. we know how to strike peace. we have the abraham accords. we have peace of -- with jordan

and we are seeking to have someone willing to accept israel's existence to talk to and negotiate recovery. >> let's get to one of the consequences of the war. red sea navigation and freedom of navigation at risk. u.s. shot down what it says is another houthi missile from yemen. what new measures are you taking to offset the impact of this having on israel's ability to trade with the world? >> it is not just israel's challenge. it is a global challenge. the force led by the u.s. and england and others understands that this is a global challenge. you cannot stop people -- the world economy. everyone is starting to better understand the alignment of people with iran, houthis,

hezbollah in lebanon and hamas in gaza. this challenge, we are all on the same line. israel may be first in line but we have to confront people and finish with it. i believe it will happen soon. we are not going to let off the pressure until we get it resolved and the white flag of hamas. >> i look at cosco, the chinese shipping giant. they decided to stop routing ships towards israel. i want to take you from there to a growing number of people who believe the prime minister's position is becoming precarious. is it just a matter of time before this government rakes down and we slide into a new election as soon as this year? min. barkat: everyone here understands that we are united and focusing on winning the war.

and bringing home our hostages. with respect to the economy, every time israel had a war, there is a dip in the economy at least short-term. but after that, creativity of israel comes out. and you see a huge boost after the war of the economy. people understand our competitive advantage in technology, homeland security and technology -- these are things that israel excels in and you will see immediately after the war that there will be a huge growth. people that understand the business understands what our economy has to offer. >> that is your view, minister, but in terms of whether we will get elections this year, what is

your gut feeling? min. barkat: they say in the middle east it is hard to predict the past. it is difficult to tell. we are focused together on winning the war. we have a unity government. and even those not in the unity government, you see us all together supporting our soldiers on the front lines. we have a big reserve army. some are back home. we are united with that goal. >> i want to get to the budget deficit. people i have been speaking to our getting nervous. numbers are growing faster than expected. how will that get funded? min. barkat: we are doing three things. we are finalizing the budget challenges.

our defense budget will grow. i think it will grow all over the world. governments understand that budgets on defense will grow dramatically and so is ours. we are also focusing on growth. on tech investments and going global on exports. we are really strong on business clusters. we are focusing on how to help our is really entrepreneurs go global faster. we will grow faster because there is interest all over the world and we will expand our investments in defense like all countries in the world and we will do that in a way that our debt to gdp is relatively small. before the war it was 62%. after the war it will go to 67%. still better than many economies

in the world. >> i look at the israeli shekel. are you worried that investors are going to start reacting more negatively this year to any geopolitical escalation after the patience of 2023? min. barkat: israeli technology companies that do a lot of global business never lost a day of delivery. not in any war and specifically not this one. we know how to overcome challenges. smart money is flowing into the country. see a lot of investors. we just closed an intel deal. they invested in their fab here. and their share went up 6%. we talked to them now about additional investments. many large corporate's are

focused on is really technology. this is the time when smart money and vests. and we are talking to a lot of people about expanding investment in israel. >> you continue to be confident about retaining investors in israeli assets. minister, i appreciate your time. i know there is a lot going on there. host: thank you for that interview. interesting to hear the minister reiterating israel's position that it will not surrender until hamas is wiped out. coming up, farmers in germany are entering a second week of nationwide protests against subsidy cuts. we will have more on their fight with the german government next. this is bloomberg. ♪

host: welcome back to "bloomberg daybreak: europe." the ukrainian president is planning to meet with the jp morgan ceo at the world economic forum in davos. he is seeking to replenish the country's coffers for its fight against russia. jp morgan has been advising him on attracting private capital for reconstruction projects and he is also said to make a public address. the theme of this year's davos is rebuilding trust. here is a look at some of the main issues said to dominate meetings. >> it can only be davos. the tiny ski resort in switzerland home to the annual meeting of the world economic

forum. three key topics. number one, a dovish pivot. despite sticky inflation and robust labor markets and investors are pricing an aggressive rate cuts by key central banks following the cost of living crisis and global monetary tightening. reduced our wing costs cannot come soon enough. the next crucial question is whether policymakers can make the pivot to avoid a hard economic landing. rising geopolitical pressure. world leaders were already grappling with the russian invasion of ukraine nearly two years ago. counteroffensive from kyiv has not gone to plan and foreign support is not flowing as freely. there is a second conflict on the global stage. the humanitarian cost has been immense and the war has the potential to spark wider tensions across the middle east.

and number three, aia. investors are obsessed with its potential to art -- and it drove some of the biggest stock market gains last year. pressure is mounting on tech companies to deliver on some of the earnings hopes and the hallways of power and security and ethical concerns remain. the eu struck a landmark agreement to regulate artificial intelligence. davos draws a lot of criticism is being exclusive and out of touch with reality. key politicians and industry titans continue to grow -- go in droves. host: that was bloomberg's francine lacqua who will be reporting for us live from davos this week. here is a reminder of some of the big interviews. kicking off the pulse will be an

interview with the vice chairman of blackrock. 9:10 london time. followed by an interview with june kelly to discuss gender injustice. and we will switch to climate change and hear from al gore at 9:30 a.m. u.k. time. and francine will bring you a live interview with the coin based ceo to discuss the future of crypto. a jampacked show live from davos today. let's go to germany where farmers are entering the second week of protests against diesel subsidy cuts. the disruption is piling -- piling misery on the chancellor's coalition. i am joined by our german correspondence. why is there so much public anger against the scholz government? >> if you are waking up in

berlin today you are waking up to streets in berlin being occupied by farmers. there are tractors that are as far as the eye can see and truckers. and when you talk to people there are also nurses and last week we had the strike of train conductors. olaf scholz had a rough time at the end of last year and it is not getting any easier. this was a response to the hard actions taken to save the budget. there are more subsidies to the agricultural sector. the rubber hits the road quite literally. in germany there is some understanding for this protest. 80% -- the german population are sympathetic. for the coalition of olaf scholz, they are plummeting at the polls and this will be a difficult year where there is a

great deal of discontent. host: valiantly battling over the sounds of the tooting farmers. data could downturn the economic mood even more. what could that signify for europe's largest economy? >> this is fundamentally connected to the economy. we will get the 2023 gdp data and we are expecting a contraction in germany. the only developed nation that will have contraction last year. this year we are only expecting a slight growth. if you ask deutsche bank and commerzbank they are expecting a contraction. this brings into reality some of the things we have been talking about this last year. the energy crisis. look at the industrial sector which has been in contraction

for the last six months because of the energy crisis and labor costs. and some of the structural issues which olaf scholz is trying to address but there is not a lot of support for it. as you feel the economy getting weaker, this is the consequence in a democratic country. host: i hope you can find a coffee shop to get warm in. thank you for that excellent reporting. there is still plenty more ahead. this is bloomberg. ♪

host: welcome back to "bloomberg daybreak: europe." i want to take you through some terminal charts to set you up for your week. we start with china. we had a surprise hold from the

pboc this morning. the reaction in markets has been a knock to shares in hong kong. we have seen a bounce in china's 10-year bound yield. will we see more economic data on wednesday underscoring soft economic conditions more. and will china be able to hit the 5% growth target without fiscal and monetary support? the economy loses momento. staying in asia, we have had the taiwan election results. dpp winning the presidency but losing its legislative majority. what does that mean for markets? the taiwan reaction has been mixed. stocks posting modest gains. the currency weakening on fears of a potential legislative gridlock. and worries that the cross street tensions will increase --

cross strait tensions will increase. try wen yu stocks outperforming most of asia for the last year. u.k. inflation. we got the latest cpi reading. last month we had a downside surprised triggering traders to pileup to rate cut bets. let's see what we get from the u.k. this week. did i mention it was davos? we will be live all week. don't miss this week's interviews. up next, it is markets today. thank you for your company. have a good week. this is bloomberg. ♪

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>> this is bloomberg markets.