wise of the ecb acting more like the fed.f the reasons is it is such a complex puzzle she needs to put together. guy: -- kailey: she honestly has a bit of a messaging quandary in the markets have gone bearish and what they think the ecb will do. it she able to forcefully push back on that? alessandra: she has been trying, but the message she has been repeating is gradual. we saw her very nervous in february when she was giving her message. she has since spoken to the european parliament. she was giving that message again, whatever we do will be gradual. economists and more hawkish members of the ecb have single rates will go up in october and december in the fourth quarter. it is a very difficult job. she is doing the best she can under the circumstances. guy: you mentioned the possibility of war in europe. how does christine lagarde address this as an issue? if we were to see conflict, does that take precedence over the inflation fight? the mandate is fairly straightforward in terms of what the ecb is meant to be delivering.

the ecb is all about sequencing. they have said it is not going to be that they are going to deliver rate hikes only after they have included asset purchases. that significantly speeds up the timeline. and they could be cornered into indicating something as early as the next couple of months. francine: what is your take on what we heard from the ecb? we see credit spreads widening. there was a debate about the on or that the -- about the unorthodox way that we could see the sequencing. is this the right benchmark? esty: it is a different question for the euro zone. they have had trouble getting inflation higher and they have had trouble getting growth higher. growth in the euro zone, 1%-one .5%. if they are looking further out, they do not want to over tighten . they also has specific priorities. there is a sovereign question. they don't want issues with -- they don't want spreads to widen too much with italy and greece and others. they are also focused on energy transition. and they need to keep borrowing costs low

how high do be to be yields have to go before the ecb really rates -- ecb reiterates a cautious approach up on the front end in italy by 12 basis points. tom: this is more than just a compare contrast of the economy in texas. italy really fits in with the core of europe, something martin feldstein used to talk about all the time. you wonder how the core is going to react to this new world. jonathan: the size of the debt market in italy is just huge. to see the market up another 12 basis points, it is just the rate of change that is quick. lisa: at the same time, if the ecb can't say they are worried about inflation without a freak out, than they are held hostage. what sign does that send to markets if they basically say our job is to compress spreads in the euro region and the peripheral region? how much does that create a policy that is really negative? jonathan: that is the multitrillion dollar question for 2022. how durable is the fed put? can they back off with inflation where it is, in the fives in europe and the sevens in the u.s.? lisa: how much do they try to jawbone this back at

the ecb will make up a bit in march.ss talking about the fact the ecb will have to be careful if it wants to contain these market moves. a big move not only in italy but also in greece. how much support will there be for some of these highly indented economies. brent crude up another 2.5%. we are now trading with a $93 handle. there is expectation we could track higher from here. let's break it down from the center point of view. going into the beginning of the week we have that climb, and then we have rolled over. it is been the week of two habs. on the week of the -- the real beneficiary have been the banks in europe. you're certainly saying that being reflected. is there more to come? energy doing well on the back of that move in the crude market. retail is down, chemicals are down, we are also seeing the grocery stocks down. let's talk about some of the individual stock names. i will start in the middle. sanofi interesting. the top line was little bit of a miss. the outlook was something investors did focus on today.

. >> the focus really will be on the ecb. how far can the ecb go? >> i know it is a very popular narrative that the ecb has to act. >> all christine lagarde can do is to slow down the process. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. jonathan: from new york city, for our audience worldwide, good morning. this is "bloomberg surveillance ," live on tv and radio. alongside tom keene and lisa abramowicz, i'm jonathan ferro. facebook getting absolutely hammered in the premarket, taking down the nasdaq by more than 2%. we need to talk about the bank of england. they hike 25. some people want to even more than that. tom: for those in america, this is really important. it is across the atlantic, but this links right into the fed meeting in march. jonathan: some voting for a 50 basis point hike. i am not sure many expected that this morning. lisa: there's a hawkish tone on beginning the unwind of quantitative easing. danny blanchflower saying they should not do that, of course. we are seeing a move that is pret

the ecb thursday, the bank of england thursday.e need to talk about the inflation data, particularly coming out of the euro zone right now, and how that relates to the ecb. the market is pricing 25 basis point of hikes out of the ecb this year. that does not fit with the forward guidance we are getting from that central bank. the inflation data is really worth paying attention to. european inflation growth hi, but easing, but not easing fast enough, and certainly above expert asians. have add spanish data, french data, german data. spain, 6.1%. germany, 5.1%. france, 3.3%. let me take you over here. you can see these numbers are certainly starting to come down, but they are not coming down as fast as anticipated. is that going to be a problem for the ecb? let's find out. katharina utermoehl, allianz senior european economist, joining us for her take. are you surprised how sticky they are turning out to be? katharina: i think everybody has been a little bit surprised about inflation in december as well as january. we have had some c

the ecb and the boe definitely keeping traders on their toes. let us talk about tech valuations and tech stocks. maybe it was too deep and too strong simply because you have tech companies that do well and others where they are not going to have users because people do not want to be on that platform. matt: the sentiment shifts very quickly and there were declines from meta this week about the impact of tiktok and the apple change and add tracking. that has led into a sharp slowdown around their q1 revenues. they see 7% growth down 20% from q4. a big mismatch in terms of the expectations. the technology industry meeting that at a rapid pace. you have mentioned short video and they have introduced reels on instagram. it is getting traction but it is not there yet. it has still got some way to go to reach the impact from tiktok. tom: what stood out for me in terms of medical and the businesses, the strength of amazon with aws and prime coming through to raise those rates. of course the e-commerce business lagged a bit versus meta, where they seat

pricing for the ecb.he ecb is in a tricky situation because a large component of inflation in the euro zone is driven by energy prices, whereas in the u.s., there's other parts of the inpatient basket that are driving the inflation pressures we have there. so the ecb is kind of stuck in this situation where they are deciding whether to inflate -- whether to fade the inflation stock or not. they want to open up the possibility of a hike, but i don't think the necessary want to do anything to dramatic. they are also constrained by the sequencing come over they have said they will do qe, they will do, they will reduce the adp program, and that reduces the chance of dramatic hikes this year. kriti: you talk about the ripple effect for the 50 basis point hike. talk about the ripple effects for the ecb, the boj, the boe, for some turbines around the world that perhaps might be taking the fence, too. bilal: i think for other central banks, it varies region to region. certainly, to some extent, what has happened

was that a pivot from the ecb? kathy: it certainly sounds like it.hink you've had negative rates there for so long, and it is looking like they're going to have to make a change. we see rate hikes all over the world for the last year. em, particularly in latin america, and now the u.s. and the bank of england. i think it's going to be hard for the ecb to sit there with the depot rates so low with the rest of the world is seeing these rate hikes. jonathan: michael kushner, never mind germany, which is getting all the headlines. there's some fragility here. the italian two-year, yesterday at 20 basis points, up another 16 basis points today. my colleague, lisa abramowicz, called this the taper tantrum. is that what you see emerging here, michael? michael: it's going to be a challenge. one of the issues europe faced, back in 2011, 2012, they were in the midst of a sovereign debt crisis. europe was the leader in that issue. a lot of the quantitative programs, the buying of peripheral debt in europe has been to support those economies, make sure the flow

it is now the ecb on the euro zone debt market as well. that is something we have got to think about in a way we have not been able to for a long time because the ecb set out the less rate hiking cycle. tom: all of that is correct, but i would do a behavioral overlay of the percentage of people involved in the game who have never experienced this. i think that is highly unusual coming off before the volcker era and along the great moderation as well. tom: i remember -- jonathan: i remember sitting down with ubs before the last rate hiking cycle and asking the average age of the trading floor and how many have actually seen fed rate hikes. at the same question of any trading floor in europe right now. it was july 2011. president draghi, eight years on the job come no rate hikes. there are a lot of people who have never seen this, to your point. this is bloomberg. ♪ ritika: with the first word news, i'm ritika gupta. russia's vladimir putin and france's emmanuel macron meet today in moscow. it does not expect a breakthrough. russia has repea

among the ecb be pushing as well? the whole team bringing to the for the key themes that are shaping the markets and assets across the space here. thank you, manus cranny, lizzy burden, and kristine aquino. francine: a full earnings outlook. coming up, shell beats fourth-quarter estimates and we speak with the chief executive. one of our main questions is how he can maintain returns when capex is still low? that is next. this is bloomberg. ♪ francine: welcome back to the open. 14 minutes into european trading day. you can see pressure on the european stoxx 600. that is after we -- what we saw from tech. for stock pickers, the situation is more complicated. we also have the central banks in mind. does the inflation that we had yesterday from the ecb mean that christine lagarde cannot be as dovish as she what? and we heard that will andrew bailey be as hawkish as the fed given that inflation will be adjusted? tom: energy prices are a key component. there 20% in the euro cpi. oil and shall has expanded its first share bu

support and ecb suppressing volatility in markets.he speed with which the ecb has changed its mind has been very rapid, so there's been very little time for a lot of investors to reposition their portfolios. guy: just in terms of what we should expect from inflation going forward, this is the debate everyone is having at the moment in europe and in the united states. inflation may peak when we get the prints out of the united states. it may fade from there. but where it fades to is significant, and what that tells us about where the terminal rate in this cycle is going to be, where investors should look in terms of some protection against that inflation. where do you think inflation is going to settle out at? is it going to be circa 2%? if it is circa 2% like elizabeth schnabel is saying at the ecb right now, what does that imply for bond investors in terms of the yield they should be demanding? myles: the key central banks have clearly signaled that they want to raise rates to make sure that inflation does settle towards their target

>> this is for the ecb to decide.nt of the ep -- of the ecb has repeated this in recent weeks. the ecb attitude will be flexible based on the evolution and based on data and gradual. the decisions are taken autonomously by the ecb. tom: we know there is a heated debate about whether russian banks and financial systems work off the swift system. what would the trigger be to make that move? >> we were tough. the commission and the ecb we look to this issue and understand the ability and the possibility to have this tool is a tool that is affecting the target we want to affect more than backfiring for our economies. i would say we are already targeting almost three quarters of russian banks, we are considering the possibility use this tool but this needs a little bit more looking at. this is what the commission and the ecb are doing in two days. kailey: thank you so much for giving us some of your time. this is bloomberg. ♪ kailey: president biden will make his pick for the supreme court. she will be the first black woma

the ecb is in an equally tough spot compared to the fed. i think this slows the ecb down.his will be a negative for the eurozone. for the u.s., more of a near-term inflationary shock. if you are the fed, what this has changed, we were in this cycle where everyone was one upping each other how many times the fed will hike. i think we have broken that cycle now. we have got to a point where everything is priced in, the market is ready for it. i don't think you'll have people coming out with 10 hikes, but that takes the tail risk off the table. finally a point where we can say may be worst has been priced in here. the ecb, even the thought of them hiking rates late in 2022 spooked the market, but that is off the table now. jonathan: that is your point, that they have to do quicker, do more. srikanth: specifically on the part of the ecb, the balancing act will be more difficult. they are a bit behind the fed with respect to where they are in the policy cycle. what is also interesting is the response that the bund spreads had on wednesday and thursday. that is where the respons

. >> how far can the ecb go? >> all they can do a slow down the process. >> this is bloomberg surveillance. jonathan: facebook getting absolutely hammered. good morning, this is bloomberg surveillance live on tv and radio. your nasdaq is down 2%. tom: it's a surprise and i think there has been careful consideration on facebook. my work on facebook three years ago, they are not as visible as the used the and i take seriously what mr. zuckerberg said about facebook losing shares to tiktok. it's a serious issue and the arrogance of silicon valley does not signal the challenges they have. jonathan: the stock is down 20%. tom: it's not a surprise because these are executives with the different rulebook than other executives. if the senior executives of john deere did this, they would have their head handed to them. lisa: it surprise the markets. the idea of a nearly 24% plunge equals about $200 billion in market cap which is netflix getting eradicated from the nasdaq. it came as a surprise because just because you so

does the ecb have to make a move this year?imon: i don't think it does, but certainly the bond market and yourself both alluding to the movement at the front end. the market testing christine lagarde's communications. i think both the statement we will get tomorrow and the broader messaging that will come out of the next few days will really have to lean back against bond market movements that in my view have got ahead of themselves given the message so far from the ecb governing council. guy: let's say christine lagarde pushes back against the market pricing, and then finds herself in a situation when in march, for instance, the staff projections come out and basically allude to the fact that inflation is not going to fall in anyway let the ecb planned. she has a real communication problem at that point. simon: she does. the communications from central banks is not easy this year. it is not without risk. ultimately, i don't think, given the scale, she can sit through to those march projections. i think she has to affirm the po

what could we see from the ecb? dr.ch: in terms of the european situation, and i think we have heard that from christine lagarde last weekend yesterday, it is important to distinguish versus the situation in the u.s. in europe, it is the supply-side issues, especially on the energy side that are more pressing than strong demand fueled by fiscal policy. we also see in europe very muted wage increases, and we still have inflation expectations that are anchored below the ecb's inflation target. all of that is different, and an important difference with the u.s. that means the ecb is likely looking at a situation where inflation is looming on its inflation target. if and when that approach will materialize, it is difficult to assess, because there are lots of pandemic effects, geopolitical stresses that play a role, but crucially the fact that supply-side effects dominate our a game changer on the question of how central banks should react to this. it is a material difference if inflation phenomena are driven by supply-side

is that the ecb pushing back a bit? >> the ecb clearly signaled that a shift is coming, right? the question is how big the shift is. we have to put into perspective we have not had ecb tightening since 2011. the ecb is heading to proper tightening this year, it is a historical thing. we can discuss whether they would be ready to raise rates, with the specific timing is, but the bottom line is this will be a year big change for the ecb and the tweaks in communication are tactical around that. jonathan: do think it could be year of euro outperformance? what will drive that? jens: when the ecb went into negative and 2014 and they did their first ever qe in 2015, we had very pronounced euro weakness. 20% against the dollar. also very significant moves against other global currencies. the euro has been on almost a long-term hangover from those policies since then. therefore, if there is a reversal it could be very very important. tom: i look at where we are, let's go to denmark which has to deal with the big countries like germany, and i will nail this, where is the neutral rate? we

i think the ecb is the bigger surprise. and it is resulting in some monster moves in the bond market. we are seeing monster moves in the equity market in the u.s.. meta platforms absolutely tanking, down 24% at this point, taking other social media stocks along with it. the likes of snap, which reports after the bell today, down as well. it is brutal here in the u.s. we will have more next. this is bloomberg. guy: european equities are down, but that is not where the action is. after the bank of england and the ecb, all of the action firmly in the bond market. we will dissect it. we will figure out where we go from here. the countdown to the close starts right now. >> the countdown is on in europe. this is "bloomberg markets: european close," with guy johnson and alix steel. ♪ guy: 30 minutes to the close. let's talk about the price action. equities are down, but i think the equity story is over in the states. here in europe, the action is in foreign-exchange and in the bond markets. let's talk about euro sterling. in some

jonathan: a test of the ecb strategy this year.hey sit out 2022 without an interest rate hike? headline inflation, higher energy prices already kicking in. will that persist for the rest of this year? tom: a smart note out of germany saying the bund terminal value continues to signal negative interest rates. jonathan: they have a softer economy too. the numbers out of germany have not been great. tom: in washington we are join,d washington correspondent. we have the president coming to new york to see the mayor and they will talk domestic issues, but he seems to be completely taken by ukraine. give us the amount of energy that they are putting into the study of ukraine. >> the president will be in new york tomorrow and i will be there with him. when it comes to the crisis now regarding russia-ukraine you can see the movement we've seen from the administration across the different institutions. you have the white house, the state department, democratic and republican senators. you can see how everyone in washington has had to shift

i don't understand why the ecb is putting itself into this position.f that is what the models are saying, then why is she putting herself in this position? why did she not come out today and say and place in is going to be back below target by the end of the year, that is what we are focusing on? erik: that is what she should have said. they have no new forecasts. they just have one data point, two data points. yes, you can see the forecasts have not been stellar. none of us have forecasted correctly. but this happens. but you look at these forecasts and you include what we know today. could it be that the end of the year will be 2% instead of 1.8%, 1.7%? yes, it is a possibility. but it is only the beginning of the policy forecasting period. you have to look into next year for it really starts to impact whatever they do now, and they'll know what to do something in march, april, june, which means we would have to look to 2023, 20 to four. at that stage, on almost any progress i can think about, you still have the inflation numbers below 2%, close to 2

the ecb must maintain flex ability and optionality. we will remain attentive to the incoming data and carefully assess the implications for the medium-term inflation outlook. any adjustments, any adjustment to our policy she says will be gradual. our guest has been listening in, he is the founder and chief investment officer at long tech alpha. what have you had to make of what christine lagarde had to say? it felt more scripted. she was trying to reduce the temperature in some of the bond markets and some of the action we have seen over the last couple of sessions. in terms of the effectiveness of what she delivered, what do you make of what she said? >> it's not going to work. we have spoken twice on this show. they have been buying a lot of bombs, -- bonds, which has been keeping the bond market up. they are at this point where the fed has pivoted. the ecb has pivoted and spreads are widening out. they are trying to do damage control. the next thing that will happen is inflation will become the main problem. the national stability c

christine lagarde insists any adjustment to the ecb will be gradual. president biden says chancellor schulz says nord stream 2 pipeline would be stopped if moscow invades ukraine. earnings bonanza. bnp, softbank, and bp all hit the tape. 2.3 one billion, a third of a billion higher than market would have expected. we penciled in 2.0 5 billion. they pay up ratio of 60%. the payout ratio will be raised to 60% from 50%. this potentially music to the market sears. we know that buybacks and dividends were the alpha of response mechanism for the bank last week. good morning. dani: good morning. it is a race to higher payouts. thank after bank reporting they are attempting to lift their payout. a key measure of profitability, up more than 11% in four years time. we also spoke to the cfo who spoke with bloomberg in paris. >> [indiscernible] if you do this, you will see that bnp paribas has increased revenues in 2021 versus 2020. >> you are raising your dividends to 60% payout ratio. that mean you are confident this kind of performance will continue? >> listen,

this is the ecb playbook in a lot of ways. punching message at the rate decision and press conference and see how that plays through markets and adjust the message and provide new ones and opportunities to speak eventually, following the meeting. kailey: the message from christine lagarde in the past has been it is not her and the ecb's job to close spreads. how much more could we see spreads why did not before they get uncomfortable? kristine: in the context of the covid era, we are still below those levels. we haven't taken out the march 2020 highs in terms of the italy and greek yields risks, compared with germany. that is the first margaret there. beyond that, -- first marker there. beyond that, we are nowhere near the key crisis points in europe around 2017, 2018 and 2015 and 2016. it is far from where we are now versus how far we got during those key crisis periods. with the ecb potentially embarking on this regime change and if they do in fact deliver a rate hike this year, which would be very different from the messagi

i think that led to the ecb.though the ecb has not been that aggressive and they have backtracked, they are basically moving to treasuries. if you see a risk off, that is how i would see bond trading. manus: ok, i hope whoever it was at the front door comes back. [laughter] i tell you what, we don't need anymore panic, you are right. pooja kumra, stay the course. we will see you soon, best of luck. let's get to the first word news -- issue with us or is she going to run away? juliette saly. juliette: no doorbell ringing here. after a five-day protest, the border between the u.s. and canada is reopened. they worked to remove barriers at the site. the protests held up goods worth almost $14 million per hour. blackstone has stopped a pursuit of crown resorts after crown accepted the u.s. private equity giant's takeover offer. the deal ends a sorry chapter in crowns history after was found unsuitable to run its sydney casino and found of wrongdoing at its operation. global news 24 hours a day on air and on bloomberg

how will traders price bank of england, ecb divergence? give us a sense of what directions they may be pulled in. >> first, i think the markets are priced in a lot from the bank of england and the ecb. as you know, there will be a lot of divergence. where in that camp with most people expecting back-to-back hikes. the ecb, we think it will not hike until sometime later next year. the market is already pricing in basis point said it likes. that will be a tough ask for the president that already told us -- already downplayed inflation and hike expectations. it will be interesting to see how lagarde manages to push back against tightening expectations that others say are ramping up. also, coming off the back of a high inflation reading yesterday, it is going to be a tough job. i think that will be a hard call for ecb to stay on goal with asset purchases that will continue for the next few months. lease now before comes down where is the bank of england, that is an easier story. growth is recovering, omicron is declining, inflation will be sus

saed: the ecb, the last time the fed normalized come at ecb was running 6-8 months behind.t is still at minus in terms of rates. their problem is normalizing in the face of a slowing economy. that is a trick. dani: what about the boe? will the bank of england be able to be as hawkish as the fed? saed: i expect the bank of england to have a very straightforward policy in terms of their plan. the big issue is not whether they will hike or not, they want to hike and they want to aggressively hike. if they are too aggressive, the market will sell off. what they have to do is slowly hike in the face of rising inflation. it is a balancing act between the bank of england, the fed and the ecb. no one wants to be blamed. they also need to normalize as soon as possible in the face of rising inflation. dani: u.k. markets have gotten very hawkish. saed, you are going to stick around with us. coming up after a volatile start to the year, the s&p 500 tends january -- ends january on a high note. this is bloomberg. ♪ dani: welcome back to "bloomberg daybreak: europe." january was a very v

that will be a challenge to the ecb but it is very much part of what we will seat reemerge as the ecbs forced to pull back on this tremendous era of policy accommodation. tom: jeffrey rosenberg, thank you so much. lisa abramowicz and tom keene. an extraordinary set of days. the ecb and bank of england with their shop, and today the mother of all shocks i have ever seen. gina martin adams scheduled to be with us on equities, ira jersey in moments. i want to go to mike mckee on wage inflation. i just did a fancy bloomberg's study. average hourly earnings 5.7%, i did a thing called a log extrapolation and it is supposed to be 3.9%. we have a gap of what wage inflation is supposed to be versus where it is now. is that enough for the fed to really think about march or even a before march meeting? michael: i would have to say no at this point. at the risk of boring everybody. the reason being they will have to take apart these numbers. i've been looking at the revisions. we had that 709,000 jobs from the revisions to november and december. you go back and you look at what they have revised

what do you make of the ecb move?t was just a week ago, many thought that the ecb would not hike this year. issue job owning or issue prepared to do it? padhraic: thanks for having me. there has been a significant change in central banks over the course of 2022. boe hiked today, that that is gearing up. the ecb -- look, negative rates are not natural. if there was ever to be a period where there was an opportunity to move rates away from negative, it is now. the economy is doing well, growing strongly, inflation around 5%. i think from her perspective she had to move from where she was in december, which was nothing to see here in terms of rate hikes, to a march meeting where there is a recalibration. that means things can change her mind. we think she is certainly queuing this up for a hike this year. matt: they are at -50 basis points right now. it is not unknown for the ecb to move in small increments, 10 or 15 basis points. is that what we are looking for? padhraic: two parts to this. the default rate is -50. that

the bond market is where we are seeing the reflection of the ecb and boe, both hawkish, ecb raising rates for the second time in a row, sounding more hawkish. take a look at the yields higher across the board. japan should be catching up later. hong kong is back from a three-day hollow lake --holiday. tech rising in line with what we saw on the nasdaq. five percent higher since the last time the hang seng traded. currently up one .8%. quickly looking at commodities. it is about oil. wti crude, above that $90 level. this will play out in terms of inflation, inflation concerns among central planks -- banks. >> yeah. it was about tech on the street of dreams. meta, you change one letter and it becomes mega and it becomes a mega-selloff, never to this extent before p the worst one-day crash for a company in history --before. the first one-day crash --worst one-day crash in history. falling 26% on the back of woeful earnings numbers. after the bell, amazon proved to be the savior of big tech with its earnings, seeing huge growth. that prime subscription has gone up in price, cheered on by inve

that hawkish turn has led investors to invest on ecb actions with -- to invest on ecb actions.nson's top aides have quit. johnson's chief of staff, director of communications, and principal private secretary resigned late thursday over the so-called partygate. most damaging was the departure of a long-standing online. she quit in protest over what she called scurrilous remarks johnson made about an opposition rival. the u.s. is warning of a plot by russia to release a fake video to justify invasion of ukraine. intelligence officials say the contents will reportedly show a ukrainian attack on russia or russian-speaking people that would warrant sending troops across the border. officials describe russian intelligence as closely involved in the plans for a staged video. the kremlin has denied plans to attack ukraine. 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 vonnie quinn. this is bloomberg. shery: coming up next, the winter olympics' most political moment will take place in the

ecb, boe, hawkish language.r members of the boe saying they wanted a 50 basis point hike in the previous meeting. manus: they are unlikely to get that far and go with a hike at every meeting. if you think of the two huge pivots we have had in the past 40 eight hours, it's action from the bank of england and intonation and tonality from the ecb. one is action and one is preparedness for action and there is a gulf between the two. in terms of where you end up in the boe and where you are in the ecb. lagarde did a great job at that press conference yesterday but she would not be drawn on where lift off would be. dani: the market wants soothing words from christine lagarde. everything will be fine. she would not say that line she said in previous meetings that it is very unlikely we would have rate hikes this year. she did not go there. manus: the situation has changed. when i make statements, it is with conditionality. the risks are to the upside. we are up 40 basis points now for this year. the market things you w

the ecb last year but 70 -- bought 79 billion net in credit.ates to about 96 billion, nearly 100 billion gross. this year, if you assume that the pandemic qe is going to end in q1, as they have already announced, the standard qe runs for the year, you're going to get about 36 billion that they are going to buy, assuming an 8% share of credit. if the ecb has to hike rates because of the rapid inflation we see in europe, they will have to stop qe before that, which means you are not going to get the 36 billion on the chart. it's probably going to be a lot less than that, probably 20 to 24 billion which means there's more to go in the credit selloff. dani: thank you very much for joining us. that is our chief european credit strategist. let's get back to antoine bouvet , senior rates strategist at ing. when you look at what's happening with credit spreads starting to widen, is this the first sign of perhaps a debt major event occurring in europe? antoine: my answer is really [ indiscernible] i am actually just as concerned about what's happening i

the ecb president does.he bank of england hiking, the federal reserve is ready to go, the ecb seems to be putting that down the road. we can go over, germany as they hand over to president christine lagarde on the path forward for the european economy and monetary policy. pres. legarde: good afternoon. the vice president and i welcome you to our press conference. the euro area economy is continuing to recover and the labor market is improving further, helped by ample policy support. growth is likely to remain subdued in the first quarter as the current pandemic wave is still weighing on economic activity. shortages of materials, equipment, and labor continue to hold back output in some industries. high energy costs are hurting incomes, and are likely to dampen spending. however, the economy is affected less and less by each wave of the pandemic, and the factors restraining production and consumption should gradually ease, allowing the economy to pick up again strongly in the course of the year. inflation has

the ecb's klaas ot

of the ecb.e the periphery in general and it is widened. francine: how much will they widen and if the ecb grows uncomfortable with that, will they then walked back the markets? althea: yes, we think so. we think that the ecb will prepare and they will spread the rates over 200 basis points. that is to the area, but it is one it is more than 250 basis points, that is when the ecb will start to be worried and concerned and will start to slow down. in order to fight inflation. francine: talk to me about u.k. guilt. what is there take -- what is your take on them right now and is there a move to the markets right now? what happens in the second half of the year? althea: we believe that with the jobs data, it is clear that the labor market is tighter than even the real terms. salaries are around negative and they are still contributing to more inflation in the u.k.. it is fair to expect that they plan to hike rates in march. the question is by how much. we are seeing that four members out of the nine

that creates tension for the ecb.ing that fragmentation in the euro zone has been key to a strong recovery at a time of global disruption. yet, the ecb is coming to the end of the cycle. this is obviously what the ecb wants to a two. -- wants to do. dani: we will have to end it there. lena, chief economics that g+ economics. coming up, crude steady near a seven-year high. we will discuss the state of the world market 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 nationwide network. with no line activation fees or term contracts... saving you up to $500 a year. and it's only available to comcast business internet customers. so boost your bottom line by switching today. comcast business. powering possibilities.™ ♪ dani: good morning from bloomberg's european headquarters. i'm dani burger alongside manus cran

perhaps the ecb even more so.ow much are people talking about that this morning at a time when, if the fed holds off on rate hikes, they might miss the boat if some of the worst case scenarios come to fruition? michael: it is not so much about being out of ammunition. it is about having the right tools. they can use quantitative easing, which only inflates markets and leads to more inflation at this point, or they can raise interest rates or lower interest rates, and neither one of those is going to afflict -- going to affect vladimir putin. so until they have an idea of what is going on, it is not going to be the central banks who can make a big difference. we know that the president of the european central bank esteem lagarde is coming out tomorrow. she has already scheduled a news conference. i think what that may tell us is that there will be a banking aspect to this. that is where the central banks come in because they will have to enforce some of this, and if there is a problem with the system, they will ann

so we've heard from a hawkish ecb, that sounds dovish, and a dovish ecb member that sounds somewhat hawkish. as far as mary daly is concerned, we need to tighten policy. lisa: and it is not clear that the geopolitical situation alters that. not only her, but raphael bostic coming out pretty much at the same time and saying that the fed needs to return to a more normalized stance, so very much a similar kind of commentary as we heard from mary daly. it really highlights what we have been talking about all morning, the divergent fate of both the u.s. and european economies at a time a very different vulnerabilities and strengths in the recovery from the pandemic. does the fed continue to go ahead, and can u.s. markets diverge significantly in terms of vulnerability? jonathan: these are the fundamentals. it is the emotion of the moment as well. to hear the president of russia say we want to demilitarize the country and replace its leaders, that is where we are at this morning. it is now about regime change. tom: it is real simple, the story is changing at the new speed of imagery, the new spee

the ecb's pivot.oes the fed have to be more aggressive now what investors should expect plus new ceo of royal caribbean. the company plans to be cash flow positive in a few months. can it hi the new target we'll ask the new man in the hot seat when "power lunch" continues. >>> welcome back to "power lunch. i'm dominic chu. shares of bill.com up 36% today. the business oriented fintech firm has full year guidance to top estimates putting that stock on pace for its best day since going public back in late 2019 now the results prompted analysts at key bank to raise the target price on the stock from $225 to $250 and an overweight rating. oppenheimer reiterating the outperform rating. bill.com 36%, a volatile and a sea of volatile. back to you. >> thank you >>> a stronger than expected jobs report sent treasury yields higher pointly to a potentially more aggressive fed. 10-year going toward 2%. this following the ecb hawkish pivot yesterday. here to talk about the interest rates is former ecb president je

i am thing about the ecb. -- thinking about ecb. the market refuses to accept we are under a monetary regime. an intuition or part of inflation needs to go on. the only way we deal with inflation going forward is to tighten monetary conditions. one aspect everyone is always in wait and see mode, and we are waiting for the next to come through ultimately end up in the same position. everything being equal, we will have to deal with a higher inflation rate for longer and in terms of energy sourcing and energy security we have to think of an additional spread on top of what we do as a consumer in order to be part of the solution of reducing the overall burden on society. that in itself creates this bump up in valuation of green transformation and other companies. it is not a simple equation. it is complicated. kailey: we were just speaking to the ceo of devon energy about this higher energy prices. he says he does not see demand obstruction kicking in until oil is around $120 a barrel. that is just one factor in economies across the wo

i think there is a lot of good reasons for if the ecb wanted, it would be more dovish. i think it is interesting. central banks and a lot of the regions like the flexibility and trying to keep their options open i think there is a certain option-ality if you are hawkish now, you can change your mind down the road if the data is weaker. if the data is stronger, you prepare the market to do something more significant you mentioned at the top of the show the weakness in sovereign bond spreads that is important because behind all of this is a big question of where is fair value for european sovereign spreads and in an environment with the ecb the market is trying to figure this out with the weakness the last couple weeks. >> and perhaps the sudden move in german. i think the high growth tightening policy era. i noticed you are underweight on government bonds and overweight in cash. is that something you are sticking to? >> we are. we are in an environment with the central banks are suggesting a change in direction. valuations on government bonds are expensive. momentum is g

the ecb did not hike interest rates but that's the closest they have come. this is the only indication in more than 10 years. tom: you and i saw it in real time with different properties but the markets reacted with a consistent force as christine lagarde spoke at a germanic -- at a dramatic angle. jonathan: you mentioned deutsche bank and what they have to say about it. the effective fx markets has been driven by the fomc stop they close out the euro-dollar short and they go along but we look at the big adjustment in the rates market. lisa: how much does this affect the bets when people were going overweight europe? i wonder how many massive shifts in strategy in conviction happens in the next couple of trading sessions. jonathan: we have not even mentioned crude. tom: this is an unspoken story, it's really on the move. jonathan: it is grinding higher. we are on this payrolls friday. we will talk about the story this morning, futures dipping into negative territory, down 1 /10 this is bloomberg. ♪ ritika: amazon is giving the market back some of what the me

i am off to the ecb. i hope you have your jacket and scarf and maybe some hand warmers as well. we will be following closely with that coverage. bloomberg markets europe is up next. this is bloomberg. ♪ anna: good morning. welcome to "bloomberg markets: europe." i am anna edwards in london. mark cudmore joins us from singapore to take us through all of the market action this hour. the cash trade is less than one hour away. facebook's parent plunges as user growth stalls for the first time ever. spotify also crumbles after spotty results. the bank of england is set to leave the ecb in the best

what else do we know about what the ecb is looking for banks to detail them? are looking for that exposure, the idea that if the situation does deteriorate, how much of their loan will be on the hook. the general message we have seen so far is the spread is fairly spread out stop there is not just one bank with 90% of the exposure. bringing it into the u.k. we've seen comments from executives at the bank of england saying we do not see the u.k. banking sector exposure to ukraine as being particularly concerning. kailey: have international banks been successful and dialing back their exposure? have we seen those types of moves? not just in years past but recently as tension started to escalate? tom: we are in a lucky position and it pulls back. ukraine has never been a growth area. banks from citigroup to barclays in the u.k. are basically saying we are already quite well-positioned for this. they are not going in any harder. kailey: how do banks get ready to position around potential sanctions and the way it can impact the flow of money transactions they can d

we know the ecb has sort of made a hawkish pivot.hat does inflation in america signal perhaps about what the inflationary trends are in the rest of the world? kristine: central bankers would want to argue we have a different regime, a different economy from the rest of the world, and therefore we are going to be doing monetary policy our way. the swedish central bank earlier today arguing that it is not just going to follow in the footsteps of the ecb, which is arguably a bigger economy or a bigger central bank presiding over a bigger economy. it is going to go its own way because it has a different inflation profile. think it is going to be interesting to watch how these central bankers diverge from each other or converge heading into the next couple of months. markets are mostly uniformly moving towards the expectation that policymakers are going to have to pivot more hawkish, but perhaps we might see a bit of a pushback from certain central bankers in different parts of the world, creating some interesting divergences to trade off

this is what we have seen, the latest ecb pivot.are ruling out 2022 rate hikes for now, not doing that anymore. what we are seeing is a collective central banks in the face of elevated inflationary pressure riven by supply constraints -- driven by supply constraints. the central banks are under pressure and it is tough. we believe we are still in a cycle where the commodities should be more muted compared with previous cycles. if they do carry out more rate hikes through the whole cycle than previously expected, there is yet to be easing. overall, they are moving forward for future rate hikes but not adding to the current rate hikes. that distinction is important when we talk about raising sentiments. tom: does that mean the markets are getting wrong? you see a five basis point rise up in yields for the eurozone when we had significant selloff across greece and italy. is that being overdone and is there level of the ecb that you saw that would be a trigger for concern? wei: we have seen significant spread widening in the peripherals

bank of england, ecb. the pressure being piled on both at the moment. we get a rate hike out of the bank of england, but the pressure on christine lagarde absolutely enormous as today's inflation data out of the euro zone highlights persistently higher inflation than the ecb was planning for. euro sterling continues to track lower. then you get to the bond market. take a look at th

what is your working assumption now to when the ecb will raise rates?i think at the moment, it makes sense to push back the expectation. of course, we need to see how the situation will develop in the next few weeks and months. i know there is a new renewal diplomatic accord to come to a cease-fire we need to hope we come to cease-fire i think it is difficult and the ecb will be more aggressive. >> very clear. thank you for joining us this morning and sharing your views head of financials at federated hermes. >>> still ahead on "street signs. olof scholz agreeing to provide weapons to ukraine marking a sharp u-turn in the german military policy >>> welcome back to "street signs. i'm tatejulianna tatelbaum and e are your headlines ukraine's president announcing details over the conflict. >>> and russia hiking the interest rates to 20% after sanctions isolating moscow from the global financial system by targeting the central bank and the s.w.i.f.t. payment system. >>> european stocks trade lower with banks leading losses as lenders are impacted by the rus

the ecb really changing the game yesterday.hat is continuing to happen in the italian bond market. another 10 basis points higher. greek bonds are moving sharply. you've got a complete revision in the outlook for the euro. european stocks are lower. did lagarde make a mistake yesterday? i think that is the question a lot of people are asking because we did not get any sense from the statement that we were going to get that pivot. peter praet, the former ecb chief economist, we will get his comments next. the close is coming up. this is bloomberg. ♪ ♪ guy: friday the fourth. european stocks tracking lower. auto stocks one of the reasons behind that. as of yesterday, i think the real action is in the bond market. the countdown to the close starts right now. >> the countdown is on in europe. this is "bloomberg markets: european close," with guy johnson and alix steel. ♪ guy: 30 minutes to the close. let's talk about the price action in europe. european stocks down 1.4%. it is the auto sector that is really adding some weight to th