dani: if the u.k. government's aim is growth, that mortgage headache seems counterproductive to this aim of growth with debt servicing costs moving to the highest on record. it is something we were talking about yesterday, it means the boe and government need to get on the same line. it might sound like a challenge to their independence. vasileios: i don't think it's a challenge to their independence. right now we are more in a challenge of 101 thinking. what i mean by that is we have either worry, or we are hedging towards inflation and we have a high inflation rate. we need to expand the supply side of the economy. at the same time, protecting the most vulnerable. the fiscal part should not increase risk premiums, and should put downside pressure on inflation. we are not getting that from the current policy. this is where you have the boe and treasury working in the opposite direction. dani: just to be clear, you say it does not help put downside pressure on inflation. what about the supply-side aim

how high to u.k. yields need to get for foreign investors to jump in a market where a quarter of it is held by foreign investors? >> they would need to get significantly higher especially when you look at what is going on around the globe. yield keep rising. you get some signs of strong demand. demand at treasury auctions has held up extremely well even amid what bank of america was describing is the worst year since 1949 for government bonds. that is something investors are willing to buy and to hold, but yields have been going higher, bonds have been selling off. and when you look at the way that 10-year treasury yield keep even as they go up, gilt yields are about the same level. there is less uncertainty from a policy point of view about the u.s. and a deeper market ultimately. you think about the way you need a premium there on u.k. before you see strong investor flows into the market. dani: thanks so much and thanks also to mark cranfield, both from our mliv team. let's get to the political angl

the idea that it's idiosyncratic to the u.k., the u.k. is seeing the worst of it right now. but this is what happens when you exit a decade or more of ultra easy monetary policies, quantitative easing. bond markets are dysfunctional. and they behave in a dysfunctional manner. what you are seeing isn't increase in risk premium. -- is an increase in risk premiums. with the dollar liquidity going out, the forces of globalization are in retrenchment. non-dollar reserve currencies are running into the limits of their exorbitant privilege. what is sterling, under 5% to global allocated reserves. we're getting close to the limits of what they can do without risk premiums adjusting sharply. this is what we have been talking about all year. the u.k. was overdue for this type of adjustment. it's just been very violent. dani: extremely violent. 200 basis point move in the long end of the u.k. curve in just a month. it's kind of the way that a distressed debt would trade, not aaa government paper. what are the ramifications of this extreme rate of change? >> cross asset did you say? dan

from the u.k.. as you were coming back to the office, the tone of the ground, you have seen earlier with the rain, the black umbrellas and the crowds. from the photos we have been looking at, the gatherings are getting bigger even though it's so late throughout the night, it's growing. what do you feel? what is the tone on the ground? >> i drove in today and i must admit as i came in, i found it very hard not to shed a tear. it felt like a very somber atmosphere and all i could notice was all of the signage and the u.k. had changed to big pictures of the queen. it was marking her remembrance and what we have come to learn today that she is no longer with the country. as we did see and we have seen these pictures right now on tv, so many people are going to buckingham palace to lay the flowers to remember the queen. we have also heard cheers outside of buckingham palace, people singing the national anthem. i don't know if it has quite sunk in yet what we will see over the next few days, but it was de

i clearly think the u.k. has seen over the last -- if you look at these countries, i'm looking back to the last 50 or 70 years. i'm confident that the u.k. will come through this. i cannot tell you what today's rates move our and volatility as i said, but i can also see over time the pound is coming back. >> deutsche bank ceo a little bit earlier on paired we got a bit of an energy crisis or a financial stability crisis. the energy crisis is not gone away and i think that needs to be brought in mind as well. being -- amplified over the last day or so but the damage we've seen done to the nord stream 1 pipeline. germany is afraid this damage could be permanent. it is very hard to say. we also have the issue of what's happening with that and whether or not we continue to see transit there. joining us is rachel morrison. increasingly becoming a blast early on. we are getting into the realm of the incredible now. the pictures are incredible. >> it is very tricky and easy to get carried away with the thoughts of s

the u.k. gas price, not just the euro zone story. we did see that yield responding , also adding in political uncertainty. we've got plenty to talk about when it comes to u.k. politics. u.k.'s next prime minister is set to be announced today at 12:30 london time, it has been over the last couple of months a face off between truss and sunak. lizzy burden joins us now. what are we likely to hear today? >> in less than two and a half hours, the fourth document of number 10 downing street in six years is going to be announced. it is likely to be the third female leader in britain -- british history, liz truss is widely expected to win this contest. she inherits an economic crisis that has no comparison except since the early 1970's, double-digit inflation, a recession on the way. the pound in august had its worst month since the brexit recommend -- referendum. the first order of business will be to go to the queens scottish residence where boris johnson will go separately. she will see the queen a

u.k. government hopes to build confidence in its economic program a day after the bank of england's dramatic intervention. the pound resumes decline amid over at liz truss's plan. defies market gloom as it gears up for the biggest ipo in a decade with shares priced at the top of the range. what a dramatic week. the action by the boe to stop the shocked causes another shock to the system but it was bearish bets that got decimated. this is the chart we brought to you yesterday morning. it exemplifies the wildness of this market. 30-year yelled in the u.k. started the month at 2%, gets all the way above 5%. that caused concerns about mass liquidation and causes the boe to step in. so yesterday,, this massive 100 basis point rally, we are now just under 4%. that had an effect on not just u.k. gilts but the entire market reverses. anything predicated on stronger dollar, all of those bets shut out. this is all the main etf's of treasuries, credit and stocks. commodities also a big rally. the bes

the u.k. government steps up efforts to build confidence after its mini-budget, the pound rebounds. porsche defies market gloom as it revs up for the biggest european market ipo in a decade. we had some hot regional german inflation, that made us concentrate on the higher inflation and lower risk story. futures are down .3% for the dax. markets are just opening, some of those reversals from yesterday starting to fade. a lot of it was stop-losses to the bearish side. that allowed things like commodities to do better yesterday. today we don't have that catalyst of the boe stepping in and buying long end bonds. u.k. markets down .6%. to that point, we are getting breaking figures on prelim cpi for spain, it is 9.3%, the estimate had been 10%. hotter in germany but not as hot in spain. but the direction is risk off yet again. france opening up down .4%. it is the dollar strength story that is coming back. we had dollar weakness yesterday and that allowed this monumental rally. the s&p and treasuri

in the u.k. how does the rest of the world deal with king dollar at a time when the economy globally is deteriorating and energy bills are crimping the growth of nations worldwide and the federal reserve is dead set on raising rates. jonathan: i've refresh the year to date moves. sterling down 20% against the u.s. dollar this year. japanese yen down 20%. the swedish currency down almost 20%, the norwegian currency down 17%. the swiss franc is the relative winner, down about 7%. these moves are massive. lisa: and they are destabilizing. and we are starting to see the destabilizing aspects of this. the reason people are concerned about a currency crisis. it is good you mentioned the yen and the yuan. there is increasing concern they will not be able to control these moves without more drastic action. tom: let's explain quickly. you take the sterling, beleaguered, and run it against something that is equally beleaguered. i took sterling against the korean yuan, it is almost four standard deviation s

without the stimulus, the u.k. would be heading toward an economic scenario that the bank of england has played out in their inventories forecast. this system is important, but it means that later down the line you could be looking at something like a crisis. at the moment, you could see that snap up in sterling as it moves less negative than expected, but unfortunately, a year or two down the line, we could see renewed weakness. francine: are we talking about a crisis on the scale that deutsche bank said in their notes that would involve the entire area? seema: it is possible that it would spread when umbra of countries. we are going to have to have -- spread to a number of countries. we are going to have governments managing budgets that might spread to households. we could get close to a situation where the u.k. does increase or at least look at it and attractive economy in global markets, but that could be a year or so away. we get the estimate growth and you are left with the bill that has to be paid out by ho

u.k. and its society. throughout her changing nature of the u.k., the changing nature of britain's role in the world, she was a cornerstone for britain. she was basically the key foundation on which modern britain was built. paul: what happens now? what is the chain of events for the next few days? guy: like australia, we will see large parts of government coming to a halt. we will have 10 days building up to a funeral. those 10 days start tomorrow. her body will come down from scotland over the next day or so . probably not tomorrow, it will happen on saturday. king charles iii will come down from scotland. he will have a discussion including with the new prime minister, liz truss. the review a series of very well choreographed, very well-planned state events that ultimately will build up to the funeral that will take place in 10 days. this has been a long time coming along time in the planning. u.k. authorities, bits of state have been getting ready for this did now, we will see that pla

the u.k. 30 year. we see a surge in the last week or so. on the 30 year, we have bonds surging in the market off of this headline. sterling is rallying. the bank of england is carrying out temporary purchases of long dated u.k. bonds. we were waiting for killed sales from the bank of england. they deleted -- delayed the starts. >> that works great, john. this is brilliant. the afterthought is going as liz truss. >> if you're just tuning in, the bank of england carries out temporary purchases of long dated u.k. bonds. it is down on a 30 year by 22 basis points on the back of it. bonds are searching. sterling is sort of doing ok, but lisa, what are we talking about? they went through some form of qt. it can't do a rolloff because the average maturity in the bond market is 15 years. they're not absolutely abandoning that, but they're delaying that. that is in october, and i wonder what is next. >> just from a market response, the pound has given any gains up immediately after that announcement. o

u.k.-dprk relations and the general issue of relations with the dprk, but i thought i would start by looking back at a little bit of history, and if you will excuse me, i will go back to two of the conferences of leaders that took place during the second world war. the first one i want to refer to is the cairo conference, which took place in november 1943 between roosevelt, churchill, and chang kai-shek. it is a reminder that even the commonest party of china wasn't present at the creek communist party of china wasn't present at the creation of the postwar institutions, the republic of china was and there was chinese involvement. when i want to draw from that conference is the statement in the cairo declaration that in due course, korea shall become free and independent. you find it there an acknowledgment that korea will not immediately become free and independent at the end of the war. i think you could say looking at that that while this may be just a recognition of practicalities, to s

the u.k. which also means the bank of england postponed its decision until next week. european stocks gaining6/10 of 1%. shares overall are climbing. investors are waiting on the prospect of europe following federal reserve with more outsized interest rate hikes. we are also looking out for -- this is why it is so great to have the gmm. this is after bundesbank bundesbank the -- this is after the bundesbank signaled support for gaines in europe. we have quite a lot of political stories in the u.k., may be under the radar because of the passing of the monarch and the fact that king charles will address the two houses in parliament at westminster hall. the footsie opening up for tenths of a percent higher. this is a global story, story of inflation and what central banks will do. the u.s. 10 year yield -- we will have data later on tomorrow from the fed were from the u.s. that will impact what the fed is thinking. ukraine forces continuing a rapid advance exploiting an extraordinary collapse in

u.k., we've got to factor in liz truss and her spending plan and how that will impact the market and the bank of england. all of that is going to be made clear the next 24 to 48 hours. we've got a lot to think about, is this the right move? what are market indications? we are not at 3%, guild. alix: ism services coming in better than estimated. it continues the story from friday, data is good, fed can move harder than we thought. they were lower, s&p is up .1%. health care, utilities, to year yield up by 10 basis points. lots of selling across the curve. bloomberg dollar index at another record high, 20 year highs from the dollar versus major g10 currencies. taking a knife through its peers . something is going to break because of the strong dollar, we do not know what or when. guy: a big speech coming up from powell this thursday, we will be watching that. let's talk about what is happening with u.k. politics. uk prime minister, liz truss said to speak this hour. it will be her first offi

we will speak with a former u.k. chancellor at about 8:30 a.m. u.k. time. european governments are hoping to stave off energy catastrophe this winter. germany hoping to keep two of its nuclear energy plants on standby. there will be a call for demand reduction. meanwhile, the french president is backing an eu-wide windfall tax on energy companies. let's get more from our energy reporter. what is germany doing to get through this crisis now that nord stream appears to longer be an option for them? stephen: it will be very challenging for germany to hit their 95% goal for gas inventories by november. they are looking at keeping two nuclear reactors online of the three they plan to shut in december. that's a big turnaround for government that had committed to shutting those facilities. you can see they are thinking outside the box trying to get the situation fixed. dani: that is germany. what about other european nations? stephen: we have macron and france saying we want to windfall tax for companies making a lot of money off of raw materials. they want to use

the u.k. stepping into that bond market, will we get to where central banks will have to step in when credibility is really at risk in this climate? >> the u.s. is a fairway away from that both within the market and in the mind of the federal reserve. they are very interested in pursuing extreme tightening and taking accommodation out. i think the last thing they want to do is what the boe has had to do. boe was about to start selling bonds, and it had to turn around and start buying them again. by the way, we will sell them again once we can. that's not a great look for a central bank. dani: if they will sell again, what will the bond vigilantes continuing to test them? garfield helping navigate through the volatility and then liquidity. -- thin liquidity. the number of americans filing for initial unemployment dropped unexpectedly under 20,000 last week, we are back below 200,000. that suggests despite economic uncertainty there is still robust demand for workers. the fed says markets now un

a huge shift in terms of the u.k. and its perception of itself pet over the next few days there will be a sense of reflection. what will now come into force will be a protocol that has been long in the planning. she will that her body will lie and rest. he will then come by train to london and met by the prime minister at saint pancras. she will then go to buckingham palace. in 10 days, there will be a funeral. this will meet a time of reflection for the u.k. living will also be a time of looking forward. he has been the bedrock on which british society has been built for a long time -- she has been the bedrock we will hear from king charles. we wait to see what name he will take. he will try and create some degree of continuity before he steps out on a tour of the country to reinforce that continuity. a huge blow for the u.k., the passing of queen elizabeth. romaine: guy johnson, our main anchor in london, the nearest of the passing of queen elizabeth, confirmed by the royal family. this call must spent a great deal

the problems and u.k. are between deficit problem, and until those fears are slashed, they will get worse. if the pound is not significant enough -- we can significantly enough to attract buyers, there will continue to be upward pressure on yields. and there is speculation the back of a lid might do an emergency rate hike, which will fuel fears of people selling their guilt positions out. tom: i market pricing 150 basis points of hikes from the boe by november. that is marked bringing you up to speed with the price action across gilts. the two-year at 4.18, a jump of 22 basis points. 16 basis points the five-year, 4.24. the 10 year 4.06, comfortably at 4%, a move of 24 basis points. 30-years at 4.27. just about 49 bips above u.k. 10 years on the italian 10-year despite geopolitical risk. these u.k. 10-year above 4%. francine: i'm here covering a pretty big election, the first female prime minister. every guest asks, is the u.k. ok? joining us is the head of fx at barclays. garfield, if we see one dollar to

look, the u.k. has fundamentals that are out of whack in which the market does not believe that they have a sustainable path of macroeconomic policy that, over time, no matter what interventions you do, spells very difficult times for their long-term bonds or currency or rate of inflation and ultimately for their economy. taylor: larry summers there of course, former u.s. treasury secretary talking about cross asset volatility but the cross global volatilities we see as well. of course you can watch more of larry summers tomorrow, wall street week, happening at six clock p.m. eastern time. up next, rate hikes are coming back and serious. we dive into how market prices are rapidly trying to revalue assets, that reevaluation underway today, two year yields climbing six basis points on the day. this is bloomberg. ♪ >> welcome, i am mark crumpton with first word news. ian is set to regain hurricane strength over the limit after a 150 mile path of discretion across central florida. leaving road homes,

the u.k. market is showing us the u.k. has these problems. alix: this is where you feel like the rubber meets the road, if the u.k. markets are broken, then, at some point, breaking is going to spread. if i am an asset manager and was not short the cable rate, i am in so much pain, what else am i selling? that is where i wonder how much it spreads. simon: this is not the gfp. the markets are functioning fairly well right now. i do not anticipate contagion at this moment from the u.k. people are starting to reassess certain things they took for granted. you cannot just ran -- run deficits without problems. you've got the bank of england raising rates into this environment with high inflation, these are a series of problematic events happening at the same time. guy: does this make the u.s. more attractive? is this a self-perpetuating problem? our currency, your problem, feels relevant today sitting in the u.k. kriti: in theory, that would make sense. they have been making the argument for the start of the year, you haven't seen fund flows flow

the u.k. sees gains of 0.2%. we are weighing up what happened yesterday stateside as well, talking about history making bond moves. you also saw some significant selling of u.s. treasuries at one point. it was almost a 20 basis point move on the benchmark. that was reversed somewhat in the session today. 385 on the 10 year. futures stateside pointing to gains of zero point 9%. the pound continues to take our focus. again of about 0.8% and within the context of this selling we have seen for the past option markets, some areas point to a 40% chance of getting to parity or below on the u.s. dollar. francine: we have a great story looking at the view of the exchanges, especially from the center of london. watch out where you change your money. overall, there is positive news and these are the sectors on the move. all gaining some stability. we look at some of these longer-term notes for what the equities could do in the future and basic resources, technology, on the up, and utility and health care being denied on the

in the u.k. davide: it will be a pension crisis because when you have a regular force a pension to receive fixed rates, a trillion pounds is lost for pensioners. forget tax cuts, this should be the headline. what i think will happen is thank of england will have to hike rates faster than the u.s. dollar. by the way, which is what any other emerging-market in the country has already done. for the first time ever, i have seen what is supposed to be a developed market acting in bond and currency markets like an emerging market. i just want to like it. -- flag it. francine: it is also not that radical, is that the timing or the policies? davide: it's a commendation of factors. first, you have a big policy mistake ignoring inflation signals. whether it is nutella, wood or iron. secondly, every government that was accelerating aid whether it was the biden furlough scheme, the same happened in europe. it became like the monetary's. at the beginning of the pandemic that might make sense, i think people c

we find that in the u.k.. you have the u.k. market having the bifurcation where you of the ftse 100 with the international exposure and a very strong domestic. it's trading at about nine times earning. it has a strong exposure to some of the more defensive value plays in energy and the health care sector at the think that offers a lot of value over the long term. we will definitely look at the u.k., continental europe. in europe we would look given the fact we just had quite an important policy being put forward on energy with their five-point plan. even in that you can see an opportunity. the u.s. energy sector versus the european energy sector you can see a significant amount of investment that does need to go into the u.s. energy sector to fill that gap europe is facing. i think there's tremendous opportunity. sonali: how much of a reliable trade is that given the dispersion you are seeing in yields in terms of whether oil is headed up or down. >> that is a big trade for the next quarter as well. seeing this popping up on oc

guy: just looking at the u.k. and thinking about the u.k. data, you studied the u.k. for a long time. if inflation is the threat, the fiscal policy -- could fiscal policy become counterproductive if it supports inflationary impulsivity in the economy? chris: yeah. we are increasingly worried about the u.k., from a near-term economic data we are seeing from the pmi, the speed of which the demand side and the outlook numbers are coming down, and the persistence of the elevated inflationary signals in the u.k. big contrast to the u.s. combined with this political gap between fiscal and monetary policy, everything that we have heard today is going to stoke out more of their interest rate hikes in the inc. of england. they are going to have to work hard over the next year if this fiscal policy does not lift demand. it is surely going to lead to high interest rates. that is why we got market pricing and more rate hikes from the bank of england. alix: brutal, brutal. chris, thank you for joining us. coming up, a food shortage crisis and what it takes to move crops around the

guy: how big of risk is the u.k. government running. xavier blas -- effectively the u.k. government is running a naked short on european global gas prices. if those gas prices skyrocket, it is on the hook for a considerable amount of money. how are you thinking about that risk? >> gas prices can move in both directions but there is that risk of what the government is taking into account. this is a fiscal response coming close to the scale of what we had in the pandemic, only the conditions are completely different. in the pandemic the bank of england cut rates .1% and was buying bonds as quickly as the government could issue them. in this situation there hiking rates and about to start selling bonds. it is quite experimental and it is risky. on the other hand, the government had to do something. the cost-of-living crisis and the cost of doing business crisis that would have otherwise occurred would also have been incredibly damaging for the economy. they did have to do something. it is the conditions make it somewhat risky. alix: in some ways getting the extra week for th

you know the u.k. has a problem. jon: really, really helpful context, guy. bloomberg's guy johnson joining us paired let's keep this conversation. erik nelson with us now. guy just outlined some of the pieces of this complicated puzzle. i guess i will go straight to the bank of england and what we are going to be watching from your vantage point. what do you see are the options right now? >> it's a series of bad options. so far, they have chosen optionee, which is to do nothing. frankly, i understand that. hiking extremely aggressively upfront, and emergency rate hike. you risk signaling panic and certainly also pushing the economy even further into a recession. i think at this point, continuing to watch things. we have seen some stabilization in the fx market. they have recovered pretty meaningfully from the lows. to me, the deal we will continue to watch how markets evolve over the next few weeks, see how, if at all, the u.k. government once to reassess its plans, potentially. but to me, this is not a currency crisis. this is a very unfortunate and negativ

still with us is samuel tombs, chief u.k. of economist. putting aside the u.k. specific dynamics, we are looking at an ecb where expectations are coalescing at 75 basis points. you have a fed expected to deliver rate hikes. what pressure does this put on the ncb and the types of hikes we will see? samuel: it has taken away the flexibility. they were trying to keep a 25 basis point hike on the table. other central banks are making it clear they will have to pay the next few months and domestic data as well which suggests inflation expectations. those developments need to keep and i on the sterling in current levels. they need to press ahead. dani: i wanted to jump in on that point in terms of a week sterling. is there any degree to which a weak currency helps them given the huge deficit at which the u.k. is running? samuel: the strain we are seeing in the market at the moment does not reflect concerns about the u.k. financing. regardless of what government policy initiatives -- around 8% of gdp in q4 and q1 of this year when energy prices are at their peak that m

the blockage is the u.k. and it is the u.k. parliament. they have primacy on it and they have not devolved it. >> thank you. i wanted to ask both representative higgins and representative bowman, if the schedule commits. i would like to take mr. thomas -- thompson's opening statement. >> i would like to if i could. >> i'm from new york. i was listening very carefully to what alan wright had said about the good -- mcbride had said about the good friday agreement. i think we have a tendency to underestimate the power and the significance of that achievement. the good friday agreement was one of the greatest blue medic achievements in the later part -- diplomatic achievements in the later part of the 20th century. it dealt with the issue of identity. if you live in northern ireland, you have a birthright to identify as irish, as british, or both. and brexit can change that. i think brexit was the right answer to the wrong question. if you look at the political analysis of the good friday or of brexit, it was a demonstration of english nationa

the last six or seven years, the u.k. has been looking like an increasingly, economically-incoherent outfit, starting from brexit and then through negotiations which resulted in about the hardest brexit of the wto shark, which is still something that is desired by the intellectuals, as it were, behind the tory party. through now, a series of events which have, you know, undercut the bank of england's inflation-fighting efforts. we know from experience in the 1970's and early 1980's, that long-term, inflation is very destructive of a country's well-being. so it is kind of strange that you have got a chancellor who has a phd which was on the u.k. 's sterling crisis in the 17th century, who has found himself, in his first actions, arguably precipitating a sterling crisis. it has to be remembered that most of the u.k. government might think sterling is not really the world's reserve currency, that is the dollar, and while it is highly desired and highly demanded and held as a reserve asset, liquid reserves by the bank of engl

warnings around the risk appetite for u.k. at the -- u.k. assets. how are markets thinking about the political risks and the concerns around liz truss's fiscal spending? >> definitely a lot of questions about what the new uk prime minister will do on the fiscal front, and questions about what it means for the bank of england. that was one of her campaign promises was to re-examine the bank of england and its mandate, especially with regard to inflation. that will be key for markets, what that is going to look like under a new prime minister, if it is indeed truss. and what that means for the bank of england's process going forward. they have a limited window to deliver those rate hikes that the economy very much needs but still grappling with the very real possibility that we could be staring down a recession. possibly early next year, maybe toward the end of this year. a very challenging time for then you uk prime minister and as far as markets are concerned, a negative welcome for whoever will be coming forward. tom: seeing dislocation in the poun

any agreements the u.k. has signed were just rolling over existing agreements the u.k. enjoyed as a member of the european union. and those new trade agreements were far from beneficiary for the u.k. itself. her record is poor and if she is to continue down this path, the intellectual dishonesty of the position that a global future exists far away from its closest neighbor and trading partner, i do not expect success. the key is in re-engaging with the european union constructively, building a closer relationship because our challenges are common and only joint solutions can get us out of the situation we are in. folly: what about the so-called special relationship with the u.s.? president biden has been critical of the northern ireland protocol issue. where do you see the relationship headed? rod: continuity primarily. boris johnson always pursued that, i'm sure liz truss is going to do the same. in part it signals a break with europe, an alternative. i think you are right. i don't think it is going to be reciprocated to the same extent from the u.s.. at least not on t

tom: we have reports that the u.k. is going to be scrapping the caps on banker bonuses, have we had more reaction from the industry? >> u.k. bankers are looking forward to that one. we are in a cycle where bonuses probably wouldn't be rising that much anyway because of the market dropped of deals. -- drought of deals. i anticipate european banks will be saying [indiscernible] tom: bloomberg nicholas comfort, from the comfort of his own home , rubbing that in a little bit, on the job cuts in finance and what it means in terms of the talent war across that sector. stocks sink and the dollar bounces its peers. we have plenty to discuss next. this is bloomberg. ♪ - [announcer] imagine having fuller, thicker, more voluminous hair instantly. all it takes is just one session at hairclub. introducing xtrands. xtrands adds hundreds or even thousands of hair strands to your existing hair at the root. they're personalized to match your own natural hair color and texture, so they'll blend right in for a natural, effortless look.

claudia: i think u.k., a lot of people are wondering why we are on u.k. stocks, it is one of the most inflationary markets, a weaker pound is clearly a positive, i'm not speaking about 4258, from other currencies, it is all related to internal consumption. we locked the stocks for different reasons -- like the stocks for different regions. reasons. energy stocks are on the top of our allocation, the u.k. market clearly, the breakdown in the sector fully reflects what we like across sectors globally. and the consumer staples of energy. the evaluation is extremely cheap, trading at 40% now, in the country where we don't like -- i know the swiss currency could be an issue, but with an edge. anna: that is the explanation for why the ftse, and real estate, whether it is europe or the u.k. or more broadly, what do you think about real estate? another -- a number of banks were cutting on real estate. claudia: clearly it is only 2% on the index, it is not the direct investment, it is negative on europe, because of the rising rates, also the more the global labor

same for the u.k., with quite the negativity. the redline is chinese growth, economists expect to come in at the same rate as the u.k., not the narrative you hear about but it's important to emphasize the energy crisis will have an impact. let's shift this forward to 2023. we get a complete shift in the order. the redline is china, economists have not slashed their forecasts for next year. is that waiting for the her to move -- the herd to move? maybe. the rest of the world slowing down with the exception of japan, expecting 1.6% growth higher than expected a year ago. the rest of the world really slumping, the one at the bottom is the u.k., 0% growth for next year and i think it will be downgraded even further. . europe is .8%, likely to be downgraded, u.s. at 1%, i think all those forecasts will be further downgraded. the narrative is it is very tough for the energy is this in u.k. and europe, but much more will come next year. francine: i know you are a great watcher of the yen, how much lower could ago? mark: i think dollar-y

the u.k.'s labour party surges to the biggest polling in over two decades in the wake of liz truss' mini budget. eu energy ministers are set to have an emergency convention on gas caps. francine: we have made it to friday, which means a volatility and some of the wild swings we have seen. the pound now back to the levels pre-kwasi kwarteng budget on friday. ftse 100 features are flat. tom: james bullard also saying that the markets are getting it. not having higher rates without having more pain, but that was essentially the message from the fed officials. the ftse 100 currently down 0.1%. the estimates have been around 6.6% and that is slightly softer inflation out of spain, but the inflation print out of germany was distinct around 10%, the highest and nation out of germany. the cac currently getting 0.6%. we await more details on the energy plans from the banisters -- ministers in europe. tech once again in focus with apple fighting a rare downgrade. that has dragged the nasdaq down lower. t

-u.k. ties, and the poll found 64% of americans between 18 and 34 think for the next generation, the monarchy will be as important or even more important than it is now. and that is a testament to her legacy. she has watched western european monarchs fall and lose significance her entire reign and to see that the special relationship is that strong that we know that the monarchy will be important to our alliance and our friendship, it's just remarkable. >> john: shannon, we are just getting a response from former president obama and michelle obama, coronation, the first one televised to this moment, her majesty, queen elizabeth has captivated the world. today michelle and i join so many others celebrating her life and mourning her passing. it is rather extraordinary whether you think of the violent history that this nation had with the british monarchy so many years ago, how beloved a british monarch actually became. >> absolutely. i was thinking when you were speaking with steve about sing

an innocent the u.k.'s changing -- in a sense u.k. is changing. after the war it was unitary state governed by westminster. now with the evolution of the past 20 years and has shown over the pandemic, that is not the case anymore. we increasingly have a union of 4 nations with its own political center. it is going to have to have a presence in each of the 4 nations. we have an indication already that charles and william and catherine the princess of wales on the first day of his reign. it shows that he is aware of it and the need to balance the competing elements. alix: with the scenario you laid out, craig, will the monarchy be able to state a political -- stay apolitical? craig: yes, that is very much its role. if you slimmed-down you will be focused more on the ceremonial matters, rather than getting engaged in political causes or getting too close to politics. there is clearly a role for a ceremonial head of state, supported by other members of the royal family. it is away from politics and still able to provide a point of unity that the queen

first, u.k. has low levels of real rates. that is a problem for the u.k. considering the u.k. is reliant on foreign financing. with the low real rates and significant supply, it poses concern as to how u.k. can find its current account deficit. those rates will remain at low levels, that may pose challenges from a financing perspective. dani: finish your thought. parisha: at the end of the day, we have big geopolitical events that are weighing on pound. and a lot of u.k. 80 a syncretic risk with the amount of government borrowing, as well as political risks. ongoing negotiations with europe on the northern island protocol. a government introducing a lot of fiscal policies to change sentiment. polls suggesting the labor could come into power if we had an election today. that should keep uncertainty in the u.k. high, so we think the pound will continue on a weakening trend. dani: that is parisha saimbi, g10 rates strategist at bnp paribas. we will return to francine lacqua in rome for the latest. this is bloomberg. ♪ juliette: you are watching daybreak europe. jonathan haskell

the effect we are seeing from the u.k. is rippling into the u.k. equities. you see a number of different things. alix: one of those is ryanair. the ceo michael o'leary spoke. he said the airlines were reasonably insulated on the pound. >> are basis is heads to the middle of 2023. we hedge the oil as well. that's about $64 a barrel. we can be very well hedged, our competitors -- aircraft fuel is in dollars. it's a very difficult time. alix: i guess the question is, what is the impact of the volatility and the massive move we've seen in the currency market going to affect earnings on a material basis? how will we price that? >> i think we are already seeing it, the value destruction and the immense expense of that. that's really been spectacular. it's been very widespread, impacting assets from stocks and bonds to credit. hundreds of millions of pounds lost over that time span because of the reaction to the physical response. -- response. from companies in the u.k., i think that something we will continue to flow through over the next earnings seasons. as we s

this will be a u.k. government that has to get very quickly back to the day-to-day business of government after the funeral is done with. dani: certainly, it is an unprecedented time for a prime minister to take up the top mantle of the office. lizzy, wind is the day-to-day business of the government resume -- when does the day-to-day is this of the government resume? lizzy: it is a moment of crisis to be taking that up, liz truss had just taken up the prime minister ship when the queen died. this week and will follow up on a energy bailout for consumers, or is expected to, with an energy bailout for his misses. we are expecting the boe decision on thursday, and on friday, a mini budget, the main focus the tax cut pledges that liz truss made throughout her campaign. she said she would make them from day one. also we are expecting an announcement of a growth target of 2.5% gdp per year. really the questions following on from both of those is how much borrowing will this necessitate and how much inflation

what is happening -- what is important as they target growth in the u.k. and now we have to absolutely move to delivering match. i think where people are really importantly raising questions is yes we have had large reductions in tax, but that is adding to our fiscal pressures and a two to three years time. i think the government does need to come back and answer some of those questions and answer questions quickly, but i think you've got to say at least two the government prepared on taking bold measures, i think importantly if they had not acted to help to support households deal with very high energy prices that we were about to face in the u.k., i think we also would have seen the markets react to that. i think we will have to see how this plays into the context. guy: i think supporting people through a difficult time, i don't thing anyone would argue with that. thank you very much, rain newton-smith. thank you very much indeed. coming up, proposals to address europe's energy crisis. we will see where spain stands next. the minister of homeland affairs

u.k. assets continue to be decimated, especially the pound after that fresh 37 year low against the dollar. also what the implications are for the buyer markets, especially for any sort of boe action to be called into question. ben: it is a decision on the bank of england last week announced it had -- in terms of innovation and the government came out with a major package, something like 25 billion pounds, so the market is prepared for the pain in the guild market. that is the stress that we are seeing here coming out of the debt region and we still see u.s. markets and asian markets. u.k. policy is going to try to push that back and we will get that division with the majority in more of the house, but on the other hand, the bank of england must be going at some point and the weakening pound is harrowing because this is a potential crisis. we see that this becomes an emerging-market situation, so people are on edge watching the bank of england. the markets will really be watching the pvc.

., the u.k. has had a series of significant political shocks starting with brexit, which cast a lot of economic uncertainty over the outlook. that has actually worsened in the last week or two with the likely shift in economic policy. markets don't like uncertainty, they like the safety of the dollar, so there is a big sentiment against the u.k. guy: could the u.k. economy sustain a 75-basis-point rate hike, and would the benefit of a stronger currency actually alleviate some of the energy crisis that we are dealing with? kallum: no. the economy can easily handle a 75-basis-point rate hike, but i don't see why it would be beneficial. what the bank of england needs to do is do just enough to make sure that the inflation expectations remain reasonably well-anchored. we have a big spike in inflation leading to -- energy prices are high. the thing that will determine household energy prices is fiscal policy, that cap that is being introduced. a marginal increase in sterling would not affect that. wha

liz truss in office, the u.k. new prime minister. the cost-of-living crisis is kicking everyone in the u.k. except the megarich. >> they may have saved taxpayer money by taking the same flight. among her first order of business will be addressing the skyrocketing u.k. energy bills as the war in ukraine sends natural gas prices ever higher. annual household energy expenditures nearly doubleext month with british families facing poverty due to the crisis. she promised to get the economy back on its feet with u.k. media reporting she is preparing a 100 billion pound package to cap wholesale gas prices. analysts worry her plans to spend big well also cutting taxes could spell disaster for the government's finances. the many economic challenges facing the u.k. new prime minister in this report. reporter: with a handshake from the queen, liz truss has been thrust into the center of an economic firestorm. british household are struggling under the weight of energy bills soaring by more than 50% with projections they will increase 80% by oct

i think it's silly bad u.k. asset story. it could do better on a currency edge basis, but pound lower in gilt yields higher the way we think the risks are. >> before i let you go on that conversations. if you get another basket for investing in the u.k., what would that look like on a cross asset basis? andrew: i think the currencies are more vulnerable, if they are low yielding assets, the least attractive thing to be long or the more attractive thing to be so short. and then the momentum of those currencies is quite poor. so again i think you have factors that are working against you. currencies are relatively liquid so that's helpful. i do think an interesting kind of element of this is i think the big uncertainty is around what happened to the banks in the u.k. in europe. the assumption you're going into recession and that will be bad for the banks, usually they are bad for the banks. other banks increase provision substantially for covid so the sitting unhealthy capital positions. this will be the first quarter were the

the u.k. opens a new chapter, a new age, under his majesty, king charles iii. we want this era to be one of hope and progress i'm a one in which we defend values of individual liberty, self-determination, and equality before the law. one in which we ensure the freedom and democracy prevail for all people, and one in which we deliver on the commitment that her late majesty the queen made here 65 years ago. this is about what we doing the united kingdom and what we do as member states of the united nations. so today, i will set out what steps we are taking at home in the u.k. that are proposed blueprints for the new era we are now in. the new partnerships and the new instruments that we need to collectively adopt. our commitment to hope and progress must begin at home, in the lives of each and every citizen that we serve. our strength designation comes from the strong foundations of freedom and democracy. mock receipt gives people the right to choose our own path and it evolves to reflect the as

so trying to keep u.k. capital in the u.k. is a problem, let alone trying to attract foreign capital into the u.k.. but the bank of england very clearly has rates well above the fed price rates, for example, in the u.s. i don't think they have time to wait for this to come through. lisa: what is your conviction level in terms of levels? before something steps in that is a little bit less market discovery. >> somehow the bank of england did by time with a statement yesterday. i still have my doubts about the fiscal plan. i assume in the weeks to come, some form of early insight into what kind of plan the government has will show to financial markets. that function changes very quickly. lisa: how much is this a dollar story? a lot of people have been saying this is the final story of the dollar ascendance and that we are starting to see some kind of washout. >> this clearly some important u.k. elements and what is going on here. i think that is the real problem here as far as the u.k. government is concerned. it is very difficul

the u.k. loses its queen as the west confronts economic and foreign policy crisis. >> we do face an increasingly insecure world. >> how will the new prime minister respond and will the relationship between britain and the u.s. remain special? new u.k. prime minister liz truss joins me for an interview next. >>> filling in the blanks, the january 6th committee investigator criticizes a parallel justice department probe. >> why don't you have your own files? >> what information and intervenes will we see this week? i speak to adam schiff in moments. >>> plus, look who is talking. we're in the middle of a midterm season defined by devisiveness. >>> hello, i'm jake tapper in washington where the state of our union is watching internat international crisis build. one thing that was clear in new york city this past week. the west were world is fighting battles on two fronts. one, against russia that ramped up nuclear threats as ukraine pushes ahead with the forceful recapturing of its own land and s