do we see in ecb that moves in snail pace because a lot of this is transitory, or do we see the ecb in force because this is record inflation? hugh: there is something that is going to force the ecb's hand this year, i thicket will come from the labor market because that is where the ecb stands differently from the fed or the bank of england today. it was really the pressure in the labor market and seeing wages rising that i think has changed the tone from the fed and the boe, and really forced them to abandon this idea that inflation is transitory and forced them to move to a tighter pace of tightening policy as we go through this year. for me, growth in the euro zone is the key metric to watch. guy: it is quite a structural process in much of europe. when do we start to understand what that wage demand looks like? the big german unions, other unions obviously negotiate for a huge number of people. when do we start to get clarity on what is happening in the labor market in 2022? hugh: that is a really important point. we will start to get some signals in the spring where we have, for

that is something where there may be reasons for the ecb to do that. i see some functioning from the markets just to get the rates back to normal, something we hear later in the year. tom: gareth whitcomb, we will be getting back to you slowly. kristine aquino, thank you for breaking down the themes for us. coming up, could the u.k. be set to see the first bank rate hike in the 17 years? we will look more at what is happening, and implications for the boe next. we will get some of garrett's calls as futures stateside turn. a solid gains in italy on the back of the presidential results. stay with us. this is bloomberg. ♪ tom: welcome back. we are 14 minutes into the european trading day. 0.9% gains across the benchmark stoxx 600. another wild day per u.s. equities. currently the u.s. futures s&p easily a point range bound after being in the green. the nasdaq futures, 0.2%. your sectors in europe, it is technology out of the gate quite strong, up 2.3%. let's get some of the individual corporate stories that dani burger is watching. what is in focus for

that is what the ecb wants if the ecb wants to get rid of the negative interest rate policy, it has to hold fire now or resist the temptation that a we have seen a couple of times when the ecb raised rates driven by higher energy prices. they have been easing policy more aggressively. the ecb needs to hold the line the data justified them doing so i think it is critical that the ecb path is different from the fed because of the underlying state of inflation is different. >> neville, one feature that i see here in the pmi that has come through is the manufacturing pmi has risen to a five-month high of 59. subj suggesting the supply strain has eased. you read from china that the omicron variant is causing renewed concern and more lockdowns and port closerures ad delays in china. to what extent is the europe economy is at risk given what is happening in china and the path forward for china? >> i think that is a really important question i think in the short-term, up until january, what we have been seeing is a modern seizing of the supply chain problem things are getting better. they are

and you know i had to ask about the fed and the ecb. i found it interesting that he thinks the ecb is going to move before the year end. manus: the accusation that there's too much belief in returning to the 2% level. let's -- great interview, by the way. good to hear his views. we will get more ceos through the door over the next couple of days. europe down over 3%. what can europe deal with if you're going to get a? the market is pricing in that we could get even the risk of seven rate hikes in the united states of america, so you're just seeing this bloodletting on the equity market. blackrock, it's still not time for them to step in and buy the dip, not at this moment. dani: let's continue in the banking conversation as we monitor these markets continue to selloff. joining us is the head of european bank research at morgan stanley. it's wonderful to speak with you. we spoke with james of deutsche bank earlier. cost continue to come up for the industry as a whole. of course the macro outlook for banks is a positive one, given what ma

can they take comfort in that two .6% core rate at the ecb? jim: europe is much less of a dynamic, broadly speaking, dynamic economy. in the u.s., you can get tremendous amounts of wage growth. if the economy turns down, wages can go down. it is harder to turn wages down in europe because of the structural natures of their markets and politics. higher inflation, even if it is 2.6% at the core level, and that doesn't rise that much, people are still paying for food and energy. the real wages will be still low. many are on fixed incomes, pension funds, pension plans. the real wage growth becomes very challenged, and that hurts consumption, which hurts gdp. once you start to have weakness in growth, that creates these credit issues you are talking about. this is a delicate balance for europe. jonathan: they are in a tough spot. when you think about what would lead the federal reserve to back off, troy, we touched on this briefly. the durability of the fed put. what it would take to back away is different this time around. can you talk more about

dani: is it also too early to talk about a hawkish shift for the ecb? what underpins your call for the euro-dollar? james: in the short run we have a 1.10 target for the euro-dollar. we are expecting dollar-yen 1.18 , but a little more dollar strength. by the end of the year the market may think about when the ecb will be ending this app program. at the moment they have suggested it will be winding down in the fourth quarter of this year. maybe they will end it early in 2023, but we think there will be a rate hike in 2023 from the ecb as well. this year growth will be very strong in europe, maybe 4.5%. by european standards, that is exceptional. i thing for chance by the end of the year you get a little bit of a shift in the european narrative, and as we discussed, the fed, the full extent of the fed cycle might be priced over the next couple of months given how frontloaded the fed is delivering everything at the moment. manus: good to have you with us. you know you put your head on the block, we will get you back on a regular basis. she is very cruel a

removed from the ecb. the market has to wake up to that and what happens when the market does? manus: i think she said it is disney world, head in the sand, and they do have a credibility factor. i talked about existential threats or existential angst and moments of great relief. that's what you saw on the nasdaq. it is giving that back. s&p 500 slipped by .8%. the dollar did not track step-by-step. paying in the bond market -- pain in the bond market is not delivered all in one full swoop. other minium is closed. they have their own exit stencil threat from a power outage. people are talking about much higher levels with the aluminum futures and not the cash. talking about $3000 on the lme cash. dani: let's turn back to tech stocks because the battering might not be over yet. that's what some options on the most popular etf's are showing. interest is near the highest on record as the rate hike conviction comes head-to-head with skyhigh valuations. joining us now is howie li. thanks for joining us. good mo

next week is about the ecb. the market is pricing and now that we get a hike from the bank of england. goldman sachs thinks we are going to get back to back hikes. the ecb is now price for a hike as well. what do you think about the latter idea? the german gdp data may be pouring a little bit of cold water on that concept. sarah: i think it is a reminder that omicron is very much the dampening impact of the moment. we still see very high normalization rates, less in germany, france, spain, and italy. that is having a negative impact on growth currently. that think looking forward, some of the german survey data has been positive, so we saw the purchasing managers index improving in january before expectations picking up, and policy maintenance are looking for this current period of penned them in related weakness. if we look at what philip lane has said, his view is that the recovery is in place, that the economy is more resilient than previous waves of the pandemic, so i think we should not be too downbeat abou

the forward guidance for the ecb is pretty clear. the fed said q. week would continue until -- qe would continue until at least october 2022. at a stretch they could hike this year. i do not think it is the likely scenario. even the hawks are more interested in getting rid of qe, that is clearly the number one focus. the interest rate story is different. what i think the ecb is doing is giving itself nine to 10 months to decide what the pay for monetization would be. my guess is given their current forecast, they do not expect inflation back to 2% at the end of their forecast. it is not the kind of message you sent if you want to convince the market a rate hike is imminent. i do not think it is in 2022. jonathan: how divided is this committee? as divided as it has been, more divided? gilles: it is true the committee , the governing council is quite divided. if you look at the points of focus of the debate it is about qe. this is where you would find the fiercest debates because qe is at the border between monetary and fiscal policy. it is been a pro

i believe that the ecb has been held accountable _ do agree. i believe that the ecb has been held accountable and - do agree. i believe that the ecb has| been held accountable and yorkshire county cricket, and in orderfor there to be positive change in the future we need to ensure they are... scrutiny is being applied over the next couple of years. as we have seen throughout history, change does not happen overnight, it takes time. as lord patel said, he has gone right into the full of it to ensure that they are being held accountable and that there is some positive change. it and that there is some positive chan . e. , , and that there is some positive chance. , , , , change. it is interesting because the report. _ change. it is interesting because the report, effectively, - change. it is interesting because the report, effectively, suggests change. it is interesting because l the report, effectively, suggests it does not trust the england and wales cricket board, the ecb, it said it wants them to report to the committee every few months to up

the ecb would be the big cyclical. jari: the two big economies are in different stages in the cycle. we are seeing it happen everywhere in balanced economies, including the euro area, but we look at wage growth still running somewhere below pre-covid levels. we do think the inflation that we see here will confirm more gradually on an underlying basis. we saw the peak in inflation in the euro area in december. we had special factors dropping out in january, and inflation will fall below 2% by the end of the year in the euro area. that contrasts with what we expect in the u.s. and the u.k., where we have inflation at 2.5%. that's drives a sharp divide between monetary policy in europe and monetary policy in the u.s. tom: was that outlook on inflation in -- with that outlook in the euro zone, that inflation for the years on, does that leave you comfortable with the ecb pledging to not raise rates in 2022? jari: yes. the likelihood that policymakers go up in 2022 is unlikely. the way to think about this is the governing co

with the ecb staying muted this year, with the ecb starting to reduce quantitative easing, we should see a steepening of the curve first, and this is quite positive for european financials. guy: it will be interesting to see whether the fed allows this flat curve to persist. roland, stick around. roland kaloyan of socgen sticking with us. i want to talk about what is happening with the auto sector. we had some very dismal data once again from the auto sector in europe. we will discuss with roland next. this is bloomberg. ♪ guy: auto sales in europe plunging 22% last month. let's talk about what is really happening. craig trudell, bloomberg global car reporter, joining us now to discuss this. when i look at volumes, the numbers are horrible. there was a real issue in terms of the availability of new cars, particularly at the volume end of the market. from a car manufacturing point of view, this is great news. they are spending all their money focusing of the market, and that is where you make cash. craig: exactly. a complete like volkswagen, brands like porsche and audi, had a decen

that is going to be something where the ecb to think about. kailey: inflation some thing for the fed to think about as well. he repricing of fed expectations is really what has driven the market action over the month of january. it has been a brutal month for u.s. equities. the are ending on a more positive note. the nasdaq 100 right now at session highs, up 2%, but still heading for its worst start to a year on record, so keep that in mind. it has a long way to go to a race the losses it has seen so far this year. a lot of the movement has been on the short end of the curve as we see a ratcheting of expert patients. just south of 1.20% is where we sit. i want to point to oil as well. it has been a very bad january for tech stocks in particular. it has been a great one for the commodity complex, specifically oil, heading for its best month going back 30 years. the best january going back 30 years, up about 16% on the month. right now, wti trading at $86.17 -- at $87.17 a barrel. guy: prime minister boris johnson still in the house, answering q

the ecb did nothing. do you think the ecb can set out this fed rate hiking cycle -- sit out this fed rate hiking cycle this time around? bob. >> i don't know. [laughter] >> it is the perfect question. >> yes, i do. jonathan: kelsey? >> no, they can't set up the cycle and they may raise rates as soon as december. jonathan: wow, interesting call. thank you all. from new york city, this was "bloomberg real yield." this is bloomberg. tv -- this is bloomberg tv. ♪ and there you have it. woah. wireless on the most reliable network nationwide. wow. big deal. we get unlimited for just 30 bucks. sweet, but mine has 5g included. relax people. my wireless is crushing it. that's because you all have xfinity mobile with your internet. it's wireless so good, it keeps one-upping itself. take the savings challenge at xfinitymobile.com/mysavings or visit an xfinity store to learn how our switch squad makes it easy to switch and save hundreds. >> i'm mark crumpton with first word news. -- protection against both the delt

is the ecb's biggest headache the rising energy prices? josie: i think definitely that can be considered one of the biggest headaches because the ecb is trying to control inflation in the euro zone. by far one of the biggest factors driving up inflation is energy prices. that is the main factor putting a squeeze on households. the other key factor affecting supply chain our bottlenecks, driving up costs for producers over the latter part of last year. they are expecting to continue into this year. tom: what is the timeframe for the down tick for inflationary pressures? josie: that is the question a lot of central banks want the answer to. everyone said this will be transitory but we are thinking it will not be. central banks are starting to think how they will tackle them. the supply chain bottlenecks should improve. a lot of people are hopeful that it might happen soon. it depends on the continued pressures that manufacturers face from lockdowns in some parts of the world, and surging demand from easing lockdowns and other parts of the wo

you have ecb, boe policy rate decisions. that will be one to watch even that the boe may not be able to follow through on as hawkish a policy as many expected. friday, vladimir putin in beijing to attend the opening ceremony of the winter olympics and a plan summit with president jean ping. let's stick on that -- president xi jinping. let's stick on that topic. manufacturing slipped in january. in the challenge to covid zero policy, cases are jumping five days ahead of the winter olympics. with those economic concerns, we are seeing iron or get slammed. it is currently on tracker to biggest slides in september 20. china pushing less output from a lot of these manufacturers. china has clear skies for the beijing olympics. we have enda curran. the pmi's, what does that tell us about the economy slowdown? reporter: the slowdown is continuing. it is quite broad-based now. it is a policy official, both pointing to activity. smaller businesses seem to be h there is more evidence of prices increasing. that suggests that pbi pressur

and in the ecb is probably just less qe, frankly. it is lightly to impact equities and credit spreads. for me, it is not the end of the bull market, but we are still overdue a correction. it could be very short-lived. dani: one more asset to throw into the mix with that divergence, how does the euro perform when you have an ecb holding more steady than the fed? i know you do see some euro strength playing through. alan: yes, i do. it is hard to come to terms with that. but it is not all about interest rate differentials. if it was, the turkish lira would be the strongest currency in the world with its super high interest rates it has had for years and years, and what i am averring to into his current accounts. so the eurozone does have this natural positive of a large current-account surplus. it is only because of the crazily low negative interest rates that the euro is so weak to start with. but i think it is safe to say that falling interest rates, things are hard enough at the best of times, but from a long-term perspective, swiss

sarah: the risk is the ecb tightens sooner than we think. we are not expecting the deposit rate to be raised until the second half of next year. we know we will see a step down in inflation when the january numbers are released. the good news from the european perspective is that there still is labor market slide. we are not seeing wage activity in the same way that we see in the u.s. accelerating wages and that suggests the ecb's view which is inflation will move back below target by next year, that seems to hold and there you have it. woah. wireless on the most reliable network nationwide. wow. big deal. we get unlimited for just 30 bucks. sweet, but mine has 5g included. relax people. my wireless is crushing it. that's because you all have xfinity mobile with your internet. it's wireless so good, it keeps one-upping itself. take the savings challenge at xfinitymobile.com/mysavings or visit an xfinity store to learn how our switch squad makes it easy to switch and save hundreds. dani: good morning. we have just gone 6:30 in the city of lon

we have not seen that in the ecb. the ecb's policy is different from the fed. they also have to think about liquidity in the credit spreads in the system. that is something we learned once again during the pandemic shock. the spreads matter first finance show -- for financial stability. visit -- the ecb cannot become as hawkish as the fed can. it's a big issue in the background. manus: we certainly learned that during the pandemic. you can for central banks into buying junk [laughter] . [laughter] spreads matter. we will talk about that in just a moment. don't hang up the soon -- zoom. dani and i will discuss chinese tech with our guest. is he brave enough to have a little bit of tech for the weekend? this is bloomberg. ♪ >> the ability to live with the virus which is extremely easily transmissible, that isn't as fatal is the exact opposite of china's policy of zero covid. >> we are seeing border controls being tightened. >> we may see more shutdowns of large cities. that could cause economic weakness. >> there's going to be questions about the sustainability

it was interesting in the more dovish camp of the ecb. with doves moving more toward that, saying we might have more inflation in europe, certainly the risks have been that we get more hawkish ecb reaction. dani: unfortunately we are just about out of time. we are going to have to have you back on. thanks so much for joining us. ella hoxha, senior investment manager at pictet. dani: good morning from bloomberg's european orders. i'm dani burger alongside manus cranny live from dubai. this is "bloomberg daybreak: europe." the chorus for fed hikes grows. equities slide aztec tanks -- slide as tech tanks. goldman commodity traders post their best year in a decade. jp morgan, citi, and wells fargo kickoff earnings. does the fed have the stamina to tackle inflation to the degree they need to? dr. doom himself who of course was very vocal during the 1970's, henry kaufman says no. he says to turn the market around to a more non-inflationary attitude, you have to shock markets. you cannot raise interest rates bit by bit. manus: but did we make it

the ecb has to be do something. having been caught in policy areas in previous years, they will move forward very slowly. manus: we would like to set up the risk story at the start of the year. politics is front and center. the kazakhstan government -- you've got a resignation on the back of energy crisis. that is very pressing. when you look at global geopolitical risk, markets tent to get their way through these, but which are the hot button, top risks on the politics that could unseat markets in 2022? randeep: obviously, russia on the ukraine border is well known. i think nato are preparing for that. especially when it comes to energy and gas coming into europe, that could be huge quite frankly. we have seen who can shut off the gas supplies. we have seen energy prices in europe. that continues to be a concern. taiwan has constantly said this is a domestic issue. the u.s. does not see it that way. china is so important to global growth any tension there, even if it just results in economic sanctions, will have hu

rate hikes from the ecb this year, yes or no? do we get any? gershon: no. tony: no way. subadra: no. jonathan: credit spreads, wider or narrower from where they are by years end? tony: modestly wider. gershon: unchanged. subadra: wider. jonathan: final question. you know what it will be because i keep coming back to it. if you put all my shows together over the past three months, these numbers keep going up. how many rate hikes this year from this federal reserve? subadra: three. tony: four. gershon: my very sophisticated models is an average of 5.38. jonathan: thank you. i need to get my team out of here before the snow starts coming down in new york city. see you next week, same time, same place. this is bloomberg. ♪ mark: welcome to the bnn bloomberg audience. i'm mark crumpton with bloomberg first word news. ukrainian president volodymyr zelensky says russia's posture on the border has not escalated since last spring and that the media is making the situation appear worse than it is. >> he image that mass media creates is that we have troops on the roads, mobilizat

right, and that is why i think currency markets are shifting from what the fed is doing versus the ecb, it is going back to economic growth drivers. europe is not a leader of economic growth. the rest of the world has to do well from a growth standpoint, and they kind of dragged the euro and europe higher from that standpoint. but i think when you look at the valuations, euro has certainly lagged. things are lining up where we could start to see more euro strength. we are underweight the euro. we are long the swedish krona, the higher beta plays in that european currency space. guy: russian foreign policy, how does it fit into those last three you mentioned there? we just heard from nato secretary-general talking about the risks. the polls have spoken this morning. they are really concerned about war in eastern europe. how would that fit in? jack: it is never easy. i'm going to be very simplistic in our conversation today, but it is always a challenge to manage portfolios for geopolitical risks. you have to be aware of them, but i think it is more rhetoric right now generally. things c

how far can you push that, and for how long can this ecb said it out. -- ecb sit it out? on the session we are down by 0.1%. no drama. for five straight days, we have been in negative territory for euro-dollar. the federal reserve keeps pushing it. the market keeps pricing it in. for the ecb, and our survey that we conducted, they don't think the ecb makes a move until 18 months further down the road. jonathan: -- lisa: it makes sense if you look at the comic data, where germany is on the cusp of recession, and we are seeing negative growth. the ecb is chasing a very different economic picture, and that is really driving this divergent story. jonathan: have we gotten to the point of max divergence? have we reached peak caucasus? -- peak hawkish in us -- peak hawkishness? everyone always wants to call that. lisa: it is hard to do because we don't have the economic data. you get 10 people in the room, you get tendered opinions on inflation, 10 different opinions on which data point is most important. jonathan: and 10 different opinions on how far the fed can push interest r

the strong relationship with the hike and the ecb at the moment. initially when you have the fed hike, the reality is that historically, 12 months down the road, you find that people art down by that sector. you might see some normalization, and that is what we see in global equities. we might see more of that. francine: that is the headline. tom: you look at the german ten-year their continue to rise. that seems like it is certainly the path in the next few weeks and months. what is the read across the -- across in the rest of europe? elise: it is usually going to reshape a little bit on the markets. we are in the been a getting of an economic cycle. it is all economic there, and we are in the states now where the gep -- gdp growth has not completely played out. the key question for european equities statistically is not just the hikes, it is actually the deterioration of earnings and how fast we might see that into 2022. if you compare that with the impact of rates, you cannot declare a one from then other. it went up 7% in 2021 to the forecast o

the ecb must be data and state-dependent. no question the ecb will act when conditions are satisfied. no doubt when we get to the end of the year, we will believe those conditions are satisfied. tom: there is such a cultural overlay here. i agree, the eu calculus is so different from what we are seeing. but what it comes down to, it is amazing just in the last 48 hours with the data that madame lagarde mentions how things have changed. jonathan: i think a lot of people, you and i talked about this going into the end of last year, many people are waiting for the end of this first quarter because the bar just starts to get higher, and there is this hope inflation fades. so can you forecast policy after march? probably. can you forecast that help seeing the inflation numbers in the summer? that is a little more difficult. tom: you sound like a professor. it sounds like economic mumbo-jumbo. our audience is going to feel it that way. already on -- our audience says, don't give me this 12 month overlay. they are like, wow, prices

expectations keep climbing relative to the ecb. that conversation for me is only just getting started. tom: the first thing that i look at on the terminal when i come in every morning is you triangulate dynamics and you are right as you put your hand up on radio, doing the framing with his hands here of how they are the in a tight range and they don't signal a decision by the markets on what we are going to see here. jonathan: the range of things, this is one of the most fascinating starts to the year and a long time. seriously, and a long time. excluding the pandemic for obvious reasons, this one for me, finally some real central bank diverging. china bringing rates down, the fed taking rates up. the ecb, let's see if they can sit this one out. tom: we will see. right now, and this is a joy as we move to the banking season, gerard joins us. what i know is when you've got a $10,000 raise in 1988 when you joined tucker anthony, it meant something in the paycheck. let's do the math right now for the jr. bankers today. a $10,000 lift.

my newspaper reports that ecb has asked a lot of— newspaper reports that ecb has asked a lot of the _ newspaper reports that ecb has asked a lot of the banks, to see where their— a lot of the banks, to see where their exposures might be if the most draconian— their exposures might be if the most draconian financial sanctions are taken, _ draconian financial sanctions are taken, for— draconian financial sanctions are taken, for example, cutting russia out of— taken, for example, cutting russia out of the — taken, for example, cutting russia out of the swift payment system. the front page _ out of the swift payment system. the front page of my newspaper, a couple f—16s. _ front page of my newspaper, a couple f—16s, polish f—16s over lithuania — there's— f—16s, polish f—16s over lithuania — there's clearly a very concerted effort _ there's clearly a very concerted effort to — there's clearly a very concerted effort to very publicly lay down to putin the — effort to very publicly lay down to putin the cost of action in ukraine. and the _ putin the cost of act

does any of this change the calculation for the ecb? when we talk about the economic impacts on europe, if we get the worst case scenario, if we get a russian invasion followed by severe sanctions, what is the economic impact across the euro zone and does it change the calculus for madame lagarde? >> that is a very good question. these additional shocks you just mentioned would come on the back of a very significant supply shock, which is the driving force behind the changing messages we have got from central banks. if we were to see a significant additional hit to energy prices and therefore upset pressures to inflation, all of that is probably going to do is further divide those who argue that would justify the beginning of a policy normalization and those that argue this is a significant shock to household income and therefore could generate downside risk to inflation further down the line if it is not followed through by higher wages. it would certainly make madame lagarde's job considerably more difficult. relative to what is curre

are there risks that the ecb is behind on this? sylvie: we have been fighting to push inflation up for years, and it was not easy. we still have all of the structural elements. you may remember some years ago that this is what was considered an important element, so we observed the huge magnitude of inflation going up. we will take all necessary measures for christine lagarde to respect our mandates. the target is around 2%. we will do what is necessary. i am not in charge of monetary policy. that is my governor. she will have more to say on that. francine: going back to the structural problems you mentioned, we talk about debt with climate change. is there worry that markets and bond vigilantes will latch onto this? sylvie: i will not deny that we need investment. i insist it is a change that concerns everyone from companies to households, changes in our behaviors. the good news from glasgow, the cop 26 in november is that there is greater awareness among financing institutions, a lot of advanced initiatives of the private sector

the ecb has accounts. we are seeing commentary. they are painting a picture of a significant difference between what is happening in the united states and what is happening in the euro. she expected inflation to stabilize. she expected it to his significantly sloped down in the back half of 2022. it was on french radio earlier on. >> we would consider that during 2022, inflation will gradually decline over the. that is less than the economy on the yet -- planet. it will go down. inflation continues to decline in 2023 and 24. energy prices will not increase. speaking on french radio, there were some interesting elements within the accounts, talking about the idea that some of the governing council are a little bit cautious and a little worried. maybe, we do see inflation being a little bit sticky. certainly, we anticipated this with the more dovish elements within the governing council. if you have a listen to what they had to say. we can appreciate how dovish that quarter is. european economist with the bank of america are joining

tom: with the upside forecast for inflation, does that box in the ecb? can they hold the line on the commitment they have made to not raise rates this year? anna: that is in line with our call at the moment. the call was given -- a relatively hawkish outlook for the meeting. we now expect the ecb to wind down its purchase program and the first quarter of 2023 and then we expect they are likely to start hiking the deposit rate in mid 2023. it is in line with no hikes this year. francine: we have a lot of political risks that could come to fruition -- the french elections and a number of other things. will that hurt economic growth? anna: at the moment, the main downside to growth remains the outbreak of the omicron variant and restrictions. on the back of that, we have lowered our growth expectations for the fourth quarter of last year and the first quarter of this year. we expect the mobility restrictions will be significantly eased by the end of january which should open the way for economic rebound towards the end of q1 and more significantly in the en

it means the ecb is going to rate hikes sooner than they have let on. the ecb meets on thursday. they are likely to push hard against that. the bank of england also meets thursday. they are likely to not only raise interest rates, but a second time, but they indicate when they get to their base rate, their key short-term rate, when they get it up to 50 basis points like what happened this week, they will be allowing their balance sheet strength. while the federal reserve is not going to let the balance sheet shrink until the middle of the year, the bank of ireland -- will do of england -- the bank of england will do it earlier, likely around march. matt: marc chandler, thank yo. -- thank you. coming up, we will hear about that tense geopolitical situation on the border with ukraine. that's next. this is bloomberg. ♪ >> this is "bloomberg markets." let's get back to the breaking story, sony is buying bungee -- the u.s. videogame developer behind halo. for $3.6 billion. let's bring in jason schreier, who covers video games for bloomberg. this to me is absolutely fascinating, beca

dani: could we see surprise moves from the ecb? >> are economist on monday called for the first move to be before the end of the year on the positive rate, which is ahead of where the market is by far. their judgment is a recognition of the likely persistence of inflation, although it will moderate this year we think relative to 2021, the conditions are still high somewhat. the fact that inflation has lasted longer, it gives the ecb the opportunity to begin to normalize the market policy environment. that is certainly something that would benefit our business. we also think it is healthy for an economy to end what has been a relatively long-standing condition of negative interest rates. we all see that as an unnatural condition. tom: dani burger's conversation with deutsche bank ceo. we are going to get the details around this with the ceo, christian sewing, come march. the market levels remain high. francine: we are on the fact that they are struggling to get upfront. how long deutsche bank has come in the last 12 to 14 months. th

we do not know what the ecb will do. many are talking about the idea we could see a ship there. where are the risks in europe? ben: is perhaps about an accelerated reduction of financial support for the economy. will we see a tightening of monetary policy? i think it is more about the growth. that is the area where europe has been the achilles heel. china has been week, emerging markets have been week. if we see that that is likely the area. kailey: is china the biggest risk factor because of its covid zero policy? ben: i think china is a big driver for european equities and european corporate. significant weakness be relatively unhelpful for europe compared to the united states. that is definitely a risk. i'm not sure if the zero covid policy is the thing. i suspect we will see that these over time -- see that ease over time. i would say emerging markets are risk to the european story but china is doing ok and corporate's are not doing too badly. guy: i we think about russia in the context of what you just said? a bunch of italian ceos from largely industrial companies had a co

the conversation that they ecb is whether they hike at all. we got a survey last week. our survey of economists 18 months out, middle of next year, the first move of the stb -- ecb. tom: right now joshua sharfstein with us. dr. sharfstein, it is good news whether it is the thousands assembled in kansas city for football or in the walkup, i live in, in the lobby there are polarities. we see hospitalizations rolling. we are waiting for deaths deaths to rollover. >> public policy is changing in areas where the cases are coming down now. i think the national mood will change as deaths come further down. this is approaching the moment where we are going to see covid fade a little more into the background. i don't think we will have nearly as much disruption in our lives in 2022, barring the emergence of something we haven't predicted. tom: how critical is it to double the vaccination rate to 68%? dr. sharfstein: with every increase in vaccination we will get fewer hospitalizations and fewer deaths. we have tools to protect ourselves and we have to keep going. just because it

kailey: is 2023 going to be the year of ecb moves? it is a question christine lagarde has repeatedly said that inflation is just transitory. as we look onto 2022, we are also looking at a year that brings the u.s. midterms, so let's take stock of politics in the u.s. ian bremmer of eurasia group joining us on the top risks of 2022, and also joining us is -- and former member of congress. we talk about the one-year anniversary of january 6, are we more divided now than we were a year ago. ian: yeah, we have learned literally zero lessons from the election of 2020. that is a serious problem. this was the most dysfunctional and delegitimized election of our lifetime in the united states, and we have done nothing to fix the underlying problems. the republican party is more controlled by president trump today and more republicans believe that the election was stolen today than did on january 6, and the likelihood is overwhelmingly that the republicans are going to take the house. they may take the senate. they will take it with an underlyi

clearly we need to focus on the fed trade but what about the ecb as well? we saw bunds briefly positive earlier on. what signal does that send about direction? janet mui of brewin dolphin will be joining us next. this is bloomberg. ♪ s is bloomberg. ♪ >> we have come so close now, 2/1000 of a percent if you loan your money to germany. guy: that was bloomberg host matt miller six years ago, talking about the fact that we have gone negative on the german tenure. yields are certainly certain to pick up over the last 24, 48 hours in europe. we have been waiting for this to come. we now see it. we have just gone positive again. we did that a little bit earlier on in the session. as yields climb, we are seeing a market reaction. the nasdaq comp within the last couple of seconds has now fallen 10% from its november high, into correction territory. so what we are seeing here, yields rising, stocks falling. the question is, how much further to both of those moves have to go? janet mui, head of market analysis at brewin dolphin, joining us now. you have a positiv

i am not sure if it will at this stage, the ecb i if it will at this stage, the ecb has delivered quite a quick action plan, but we need to see actions, and it is important that we hold them to account throughout. i think them to account throughout. i think the ecb and the county needs to be held to account as the report recommendation said, when they are hitting the pocket, it is something that they stand up and do something about, so hopefully the county game at the ecb are going to take more notice and do something about this big problem that we've got. xffeah. big problem that we've got. yeah, the re tort big problem that we've got. yeah, the report says — big problem that we've got. yeah, the report says that _ big problem that we've got. yeah, the report says that first _ big problem that we've got. yeah, the report says that first from i big problem that we've got. yeah, the report says that first from any | the report says that first from any future public funds to cricket should be dependent on the constant demonstrable process of getting rid of this is a member of the dressi

so if the euro were to go up on the back of that expectation that ecb rates would go up, i don't think it would be very long. i think very soon we realize that that sort of inflation, another pop higher and gas prices would actually create demand to fall, growth to fall, and quite destabilizing. i think we would see lots of people in various different countries in europe really quite unhappy about pushing back on their polity -- about it, pushing back on their politicians. kriti: does that mean they go back to the haven trade of 2021? the bloomberg dollar index is starting to creep back to those 2021 peaks. do you start to see flows going to be dollar, into the yen, into the swissie? jane: i think the dollar of the three right now is probably the favorite just because you are getting paid. you're getting yield on dollars that you would not get elsewhere. the competent poly positions of the swiss and the yen -- competent policy positions of the yes and the yen -- of the swiss and the end are unlikely to change, so i think the dollar would be the safe haven asset of choice. guy: in terms

is now going around _ paper reports, the ecb is now going around its _ paper reports, the ecb is now going around its major banks asking them to stress— around its major banks asking them to stress test and examine whether they would — to stress test and examine whether they would be placed if the most serious _ they would be placed if the most serious sanctions were taken against the russians, where that would leave their banks _ the russians, where that would leave their banks given the level of russian — their banks given the level of russian investment in and around europe _ russian investment in and around europe and — russian investment in and around europe and their own exposure to russian _ europe and their own exposure to russian finances. and that i think is a sign — russian finances. and that i think is a sign that if putin does push the button, washington certainly, and it's— the button, washington certainly, and it's always washington that puts the cursor— and it's always washington that puts the cursor on these financial sections. _ the cursor on these fin

hold of day one of the final ashes test in hobart and financial backing for cricket could be cut — the ecb is told it will be held to account if they "don't demonstrate progress" on eradicating "deep—seated racism" if they fail to be those targets then they should be a stop. also coming up in the programme... we hearfrom the england netball head coach ahead of a series which will see them battle against the best teams in the world... and we meet team gb�*s sole luge representative for the beijing winter olympics — rupert staudinger is the 18th athlete to be selected for next month's games it has been another dramatic day for tennis and the men's world number one, novak djokoivc who has had his australian visa withdrawn for a second time with the three days to go before the 20 time grand slam champion is due to start the defence of his australian open title. djokovic was initially detained after arriving in australia on january the 6th but then released four days later after a judge said the correct proceedure had not been followed. the controversy surrounds his medical exemption pape

it is important to get the ecb to make sure everything is coming into order. i think because there are older positive steps coming forward. —— all the positive steps the labour leader has responded to the allegations of parties at number ten. he responded to the allegations of parties at number ten.- responded to the allegations of parties at number ten. he says an a oloa is parties at number ten. he says an apology is not _ parties at number ten. he says an apology is not the _ parties at number ten. he says an apology is not the only _ parties at number ten. he says an apology is not the only thing i parties at number ten. he says an apology is not the only thing the l apology is not the only thing the prime minister should offer buckingham palace today, the prime minister should do the decent thing and resign. google is spending $1 billion buying and refurbishing its london headquarters— and expanding its office space across the uk — in a sign that working from home's not about to become the norm any time soon. google's uk boss says when government

with the threat of an independent regulator also hanging over the ecb, it said it welcomed the report, adding in a statement... as has yorkshire, after losing sponsors and lucrative international hosting rights over the scandal. but after an overhaul of staffing and proposed governance reforms, it insists that it's a very different club to the one that was embroiled in crisis last year and is hopeful that, come the summer, it will be allowed to host england here at headingley. we've had incredible change. i've literally taken the club and turned it upside—down and given it a good shake. no stone left unturned, actually. but these are still early days, as the game tries to confront discrimination and attempts to build a more inclusive future under mounting pressure. dan roan, bbc news, headingley. a 24—year—old american topped the list of the ten highest paid youtube stars of last year. jimmy donaldson, known as mrbeast, earned nearly £40 million, more than double the top earner in 2020. the list, compiled by the business magazine forbes, also includes two children under the age

meanwhile, former england captain clare connor will lead an ecb review into dressing—room culture in the men and women's game — as part a bid to tackle racism and discrimination. connor is the ecb�*s managing director of women's cricket and the review will begin in february and run across the 2022 season. and just time to bring you the sad news that the former celtic manager wim jansen has died at the age of 75. you can find more on all those stories on the bbc sport website. the prime minister has been talking about the tension on the border with ukraine. a few weeks ago i commissioned an independent enquiry to a series of events and downing street and elsewhere in downing street and elsewhere in downing street and elsewhere that constituted a breach of the covid regulation. i welcome the decision by the metropolitan police to conduct its own investigation because i believe this will help give the public the cloud as it needs and help draw a line under matters. i want to is sure the house mr speaker that the government is focused 100% on dealing with the people's priorities incl

with the threat of an independent regulator also hanging over the ecb, it said it welcomed the report, adding in a statement... as has yorkshire, after losing sponsors and lucrative international hosting rights over the scandal. but after an overhaul of staffing and proposed governance reforms, it insists that it's a very different club to the one that was embroiled in crisis last year and is hopeful that, come the summer, it will be allowed to host england here at headingley. we've had incredible change. i've literally taken the club and turned it upside—down and given it a good shake. no stone left unturned, actually. but these are still early days, as the game tries to confront discrimination and attempts to build a more inclusive future under mounting pressure. dan roan, bbc news, headingley. forbes has announced its annual youtube rich list. together, the 10 best—paid youtubers made a combined income of 300 million dollars in 2021. the winner wasjimmy donaldson, the 23—year—old american better known as mrbeast, who's elaborate stunts have whose elaborate stunts have gener

if you look at the ecb, people are use trading markets. there is a beautiful piece saying, if you are under 40, you have never seen a hawkish fed. steven major there. coming up, the weird and wonderful inventions including a car that changes color. it is pretty cool. this is bloomberg. ♪ >> robert ford was the final speaker at the electronic conference. the company announced a of fire wearables, trying to seize on the pandemic era trend of consumers wind to do more health care at home, more diagnostics at home rather than going into see a doctor in person. the company is also one of the biggest makers of at home or rapid covid tess. they told me in an interview they want to ramp up production for around 70 million test a month to 100 million. a lot of this week was about electric vehicles. general motors unveiled the battery electric silverado pickup. the first edition of the trunk -- truck sold out in minutes. when you think of sony, what you think of? walkman, tv's? they also unveiled a car of their own. they want to move into at busin

that really pivots the conversation over to your neck of the woods, what we will see with the ecb. if we see in ecb that is going to have to move faster, at some point does the pendulum swing back to the u.s. as you have money flowing in? yields staying very firm right now at 1.73%. guy: it feels to me like dollar weakness rather than euro strength today. i know we are north of 1.14 road dollar, but that is the feeling i think we are getting right now. it may switch. we will wait and see. certainly the focus is going to shift to europe this year. this value story we have been tracking so carefully, what a cracking start to the year. the question is, does it have legs? that is the question a lot of people are trying to figure out right now. have we priced in the four hikes the fed is going to deliver? why would devalue trade continue?? does that favor pushing money towards europe, which may accelerate that move on euro-dollar? goldman sachs out with its client survey, giving us an idea where it sees the money maybe starting to flow. certainly the expectation, and this is the survey

the ecb and boj are the two major holdouts when it comes to moving away from record accommodations. if the boj is taking a step along this route, that speaks to the idea that the ecb will be less accommodative. there are strong concerns about inflation in europe. there are reasonable signs about growth even in the face of fairly extreme pandemic numbers. that could send the bond yield positive. then you get the continuing vicious spiral when it comes to the bond market with central banks willing to move away from the easy settings they introduced to help fight the pandemic's impact on the economy. haidi: when you talk about geopolitical tensions, we see more signs of a rising rate environment and look at the value of negative yielding that below $10 trillion -- debt below $10 trillion. take a look at the chart. garfield: that isn't actually chart -- that is an excellent chart. i think it could move under the levels it had gotten to when everything was selling off with the pandemic. honestly, that is what should be happening. if you look at the global economy, geopolitical tensions a

tom: tailwinds from ecb, tailwinds from fiscal support in europe. you see global central banks doubling their rate hikes from last year and you say that is bullish for the markets. house a? -- how so? martin: the rate hikes were dominated by emerging markets over the last six months. actually, 2021 was quite an odd period. there was very limited rate hikes in the first half of last year, but in the second half it accelerated. and the markets have done the work for the fed and the bank of england in the last three months. for instance, at the end of september, two year treasury yields were 0.2. they are now 0.75. we have priced in a lot of what the fed is going to do in 2022, and we expect the fed to kick off rate hikes in mid-march, at their second meeting of the year. and we also expect a hike in june. these are fully priced in. in the second half of the year, we will confirm we have a solid peak out in inflation, which will be good for the fed as they probably will not have to be as aggressive on rate hikes in the second half of the year compared