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tv   Bloomberg Daybreak Europe  Bloomberg  December 9, 2021 1:00am-2:00am EST

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>> 39 a at spacex. a different start. falcon 9 getting ready for launch. good morning, is this a collaboration with nasa? getting telescopes into space? .
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dani: this exciting. it is the size of a refrigerator. less than 10 seconds until this is launching off. it is interesting, there is the left off. manus: but see if we can hear from mission control. >> a beautiful shot there. an onboard camera is showing great now. -- showing right now.
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>> spacex takes off. we have your headlines this thursday morning. force johnson urges britons to work from home as omicron spreads. rate hikes are in flux. return to office goes into reverse. they are asking staff to work from home. they do not have to come back until 2023. inflation slows in china. most asian stocks are rising. that is lift off with a difference.
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good morning. the question is, what kind of trajectory and lift off -- get the pun -- will -- dani: i get what you did. manus: we are on it. this is the re-rating by the fed. transitory pin, a faster taper on the way. dani: not just a faster taper, the meeting next week, they will discuss faster rate hikes. i do not know if the market is ready for that. manus: listening to majors interview where he says, once bitten twice shot. the june pricing, transitory billing. major makes it clear, he is worried there could be a hawkish
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pivot next week. you have the equity market, how wide is your equity market called gap? dani: 20%. thank you for team that up for me. this is the second widest gap between the highest effort -- estimate and lowest. it is no quincy didn't that the next widest time was 2018 which we embarked on fed tightening. this gives you a flavor of how unknown the future is for risk assets over the next year. manus: how are those -- this morning? dani: they are off. this is not a positive day. it would snap a today winning streak. it is slightly better when it comes to european futures. we are looking at a 10 year yields. we're looking at a little bit of buying today. we are looking at brent crude
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higher. let's turn to the strain china. china's inflation slowed last month. prices jumped at the fastest pace in over a year. let's get to juliette saly. some moderation, not as strong as a picture as was expected. juliette: what was interesting is we saw the gap shrink from factory and cool. that was the first we have seen. this year, dr. inflation is slowing from the 26 year high in november. it was that in court inflation, the 2.5% that was above forecast. it is driven by a pickup in food prices. all of this moving towards a more positive equity market
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because it does mean that we will see more easing, perhaps. the best three-day gain since february. we have seen some strong positivity coming through. also, watching the on short you on, it does seem -- watching the on shore yuan, it does seem to be fixed. manus: may the pboc wants to cause the traders to ouch. thanks to juliette saly. on to the u.k.. force johnson has tightened measures to curb the spread of omicron variant, advising people to work from home. let's bring in lizzie burden for more. u.k. government, the impact on
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the economy is the most important thing for our audience , what do we think? lizzy: goldman sachs says it is the nail in the coffin for bank of england december rate hike. bloomberg economics is a could shave 2 billion pounds off gdp per month because people will be returning to work from home. the introduction of vaccine passports will hit entertainment directly be because -- directly because they have deemed it so bad, it will hit consumer confidence which will wait on consumer spending, especially in consumer facing services. the other thing is, this could have less impact than previous waves because this is the fourth time burton has been through this. every time, people get more used
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to restrictions. there's likely to be people still going out and keeping economic reactive. they are more vaccinated. they are sick of restrictions. also, there is likely to be an element of defiance because of the christmas party debacle. if the government was not following its own world -- rules last christmas, people would be asking why they should follow them now. dani: that element of distrust is there. that is our lizzy burden. let's get first word news back with juliette saly. juliette: a third dose of the vaccine may be needed to neutralize the omicron variant. findings found that two shots may not be sufficient to protect against it. a third dose will boost antibodies to fight the new strain. pfizer says the new vaccine that will target the vaccine should be ready by march.
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-- target the strain should be ready by march. >> it would provide for omicron the same protection like the first two doses provided for the initial strain. juliette: u.k. employer's increased starting salaries at a record pace. this is according to a survey by firms. there are being forced to boost conversation. starting salary is the highest since 1987. apple is on the verge of a $3 trillion market value less than three years after passing a different mark. it is taking its valuation be conned market cap. that is as the company wants to delay court mandated -- to its
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store. global news, 24 hours a day, on-air and at bloomberg quicktake, powered by more than 2,700 journalists and analysts in more than 120 countries. this is bloomberg. manus: thank you. let's turn to the wall street story of the day. jp morgan bull see trading revenue dying in the fourth quarter. the update comes from a bump of pandemic field year which saw the income sort. let's get more. where are we on this? if we look at the ipo frenzy in my part of the world, if you look at some of the spac flow, are retailing off? >> we have seen euros to well but trading off mna on the other hand, continues at pace.
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we are having a record year. we smashed through all records about 2.5 months before the end of the year. that is a new target that we have set. we are seeing is that the banks are coming out and saying that for the investment bankers, it will be another blockbuster quarter. you have jp morgan come out and say that they think that the fees from underwriting stocks and bonds and advising on the transactions could be up about 35% for the quarter. that would make it one of the best quarters ever. on the trading side, things are not as good. remember that trading this time lester had a record quarter. they are up against really tough comps. dani: fascinating. also tough comps on investment banking. thank you so much. that is our banking reporter. coming up, stocks rise in the
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asian section as they bet the global recovery will be resilient against omicron. we take a look at that story, next. ♪ manus: concerns grow over the new variant, we have the story, this hour. this is bloomberg. ♪
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dani: welcome back. i am dani burger with manus cranny. sucks are rising in asian section as investors bet the recovery will be resilient to the new omicron variant. joining us now is janet mui. the's the set appear for you look positive for that rally into your end? janet: good morning.
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thank you for having me. i think that with the news that the variant will be less sinister than expected, i think that is injecting optimism into the market as be have seen so far this week. it is still unpredictable at this stage. i think we could expect more volatility and i do believe there is a bit of optimism. i think we have to watch with the fed will do in december. i think expectations are likely that they will have to poke back -- push back and be more hawkish because of the uncertainty of omicron. that will be an incentive for markets. manus: good to see you this morning.
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the market had 15 basis points and baked in, it is back to six points, do you there is more pressure to come? janet: good morning. yes. it could be. a lot of the expectations will be pushed back because of the new virus. i think a has been unreliable -- i mean, disappointed markets. we cannot just take what the fed said for granted. a rate hike is probably off the table for december. i am surprised it is being pushed back. it is likely to peak in the first quarter and then moderate sometime in the second half. i do think it will be reluctant to press on with rate hikes.
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i am not surprised if they will be more strict. dani: if we are looking at pushback rate hikes, the ecb, at the same time the fed that is pushing forward, what is it due to the divergence of monetary policy, how do you trade that? janet: incrementally, i think we have a positive view on the dollar which has played out well so far. i think, in terms of asset allocation, it is likely to increase returns for u.s. investments.
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in the region. we are headed towards a more slow down phase of the expansion environment. as a result, the dollar should do well and, actually, u.s. equities tend to do well during the growth momentum. in terms of preference, we like the u.s. in this environment. manus: you have up preference for cyclicality in the market, i have guests from credit suisse to talk about the lower 70's. on which banks do you want to be exposed to? we just had a big warning that trading may be lower into the fourth quarter. talk me through your oil and banks and coal? janet: as i mentioned, i think
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the most exciting growth phase has probably passed already. also, commodities as well. we do feel that the best of those returns from the energy and materials bubbly have passed already. they peaked in 2021. going into 2022, we are less optimistic in those areas. with the gradual interest rate rise in the u.s., you probably want to favorite u.s. banks versus european banks. we expect more volatility going into next year because of a potential shift in monetary policy.
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dani: i do wonder, the inflationary picture, to what degree -- in general. there was a no yesterday flagging that taking into account inflation, real earnings yield is the lowest instrument was president. in your mind, does this undermine that there is no alternative to stocks trade? janet: so, i think the largest u.s. compromise as indicated by the s&p 500 index, they have demonstrated quite good ability to pass on inflammation -- inflation to customers and i have seen good q3 earnings momentum. we will see it into q4.
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it is likely given that demand is strong according to executive narratives. we believe that the loss of quality, we are optimistic. unless inflation becomes problematic, stay away which hurts consumers. the consensus view is that inflation is coming. it will moderate in the second half of the year. it will get back to us. we believe that the u.s. is a good place to be. as you mentioned, will rates are so low. even if you have a gradual interest rate rise, i think equities remain attractive. we are so comfortable with our modest overweight position in
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equities, i don't think this is the time to dial that back yet. manus: stay with us. we will broaden the conversation more to china and beyond. janet mui with brewin dolphin. coming up, we speak to -- who has just entered the road of parliament. that is this morning on bloomberg. ♪
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manus: kid is "daybreak europe" -- it is "daybreak europe" and i am manus cranny. we are still with janet mui from
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brewin dolphin. cpi in china is still very strong and deeply embedded. much more sticky -- how much more sticky and enduring is chinese inflation relative to american, british and european, is it more stoic? janet: i think that the chinese inflation will be repeating because a number of commodity prices -- it is a global phenomenon. we are expecting that to continue moderating. china has been going with a strict covid strategy. the economy, the operational side, supply issues, those issues may linger a bit longer. china has not really opened up yet.
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i think there are some concerns. judging from commodity prices on the investment side and we have to slow down the economy. i do believe we have passed the peak on china inflation. dani: how do you position in china? we have had people come on the show and say that as a whole the investment community is under in china, do you think that is true? should people up their exposure to the region? janet: i think there is a reason why there has been an underinvestment. investors remain concerned that the political risk is too much. by western companies that have revenue to china, i think a piece of it will come to investors rather than investing directly in chinese companies.
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we also have the risk of chinese stocks in the u.s., that is a cloud of uncertainty for investors. for us, we remain cautious because of the risk out there in the cyclical slowdown that is currently happening. dani: really wonderful to have you. that is janet mui from brewin dolphin. a china attempts to engineer a soft landing, we have commentary from larry summers that he thinks the recession chance is up to 40% in the u.s. because he does not think a soft landing will be possible. manus: he does not. bill gates was here yesterday. he was in and out. he said that the pandemic will and at the end of 2022. errol flynn, an old movie. over to focus, china.
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that is one of the best charts i have seen in years. i see it and i will raise you. the credit impulse in china, i did every day in business brings something new. so get the flexibility of the new mobile service designed for your small business. introducing comcast business mobile. you get the most reliable network with nationwide 5g included. and you can get unlimited data for just $30 per line per month when you get four lines or mix and match data options. available now for comcast business internet customers with no line-activation fees or term contract required. see if you can save by switching today. comcast business. powering possibilities.
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dani: good morning from bloomberg. i am dani burger with manus cranny. this is bloomberg "daybreak europe." plan b, boris johnson calls bryn
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to work from home as omicron spreads. the bielby will delay hiking rates. lift says they do not have to come back until at least 2023. factory inflation slows in china from may 26 year high. consumer prices jump at the fastest pace in over a year. most stocks rise. my aim for every morning is to get the goldstar from you. i know you love this chart. i am bringing it back. it is the inflation-adjusted earnings on the s&p 500. this is from bank of america who flags that this is the lowest rate for real earnings since truman was president. manus: someone just said, where were you in 1947?
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i know i am vintage on this show , but i am not that vintage. we will have to ask tom keene for that. [laughter] take that chart and pause for a moment. if i get such deeply negative returns, the worse instrument, where do you go, yields are at .5% -- at 1.5%? you will put asset managers out of business. dani: inflation is a threat to bonds. 60/40, neither the 60 or the 40 is guaranteed to work from here on out. manus: we will move along. let's do a market check. we will live on the edge, maybe.
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no? we can do a market check, that is what we do on bloomberg. three dozen gains, a little bit was given back, let's have a look at the board. you have to look at 10 year paper as well. 1.5% with bonds. the pit fit, moving things fast -- the pivot, moving things faster. do not get overly aggressive, that seems to be the narrative. 13215, cable. will is up. let's move it along. consumer prices rose at the fastest pace since last year. given the policymakers more room to support the economy, how much
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room do they have? let's get to jinny yan with icbc bank. the gap is narrowing, that is the top line for bloomberg, that allows more breath for policy initiatives. how much breath as it provide? good morning. jinny: good morning. we have seen rates easing, we had it effective as the 15th of december, there is room but the window is closing and narrowing. the reason being, we are heading into 2022, chinese new year, an important year when it comes to politics. at the end of this year, we are
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heading into meetings to approve the economic work report for next year. the focus will be on stability, how to deliver stability, that includes monetary and physical policy. gives more room for the time being for policy maneuver. yuri showed that char about fiscal impulse earlier, a great chart. fiscal impulse has a lag between 6-12 months. when you see that fiscal impulse fizzling out, you need to put into it. you will have more fiscal policy coming into fourth, particularly at the beginning of the year. usually in china we have frontloading policy, fiscal policy, that is why the current rate cut and easing environment
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will be prolonged. that window for any monetary policy is narrowing. dani: that is chart 6949. what is the policy risk as china does try to engineer the soft landing? jinny: it is difficult to tell with the global environment is. if we still have global inflation, rise in energy and commodity prices, china cannot always step in with administrative measures to try and contain inflationary pressures, that is costly for policy. policy risk is, how much longer can you continue to ensure that factory prices do not further
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feed into consumer prices, especially when you're trying to battle with speculative asset bubbles, property, etc. try this is one of the largest right now. and it comes to the market fundamentals, a lot of the issues are still immature compared to longer develop markets. the policy risk could be, how do you ensure there is a balance between developing your capital and financial markets wall trying to continue that easing policy in place? manus: one of those narratives on the very point is the currency. we love your full christmas, you're the full guest to come with fully loaded christmas with flashing lights. look at petry. [laughter]
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-- look at that tree. [laughter] we have tree nv. let's talk about the yuan. having free flow is something much talked about. only a few years ago, they were on the list for currency regulation. how much of an obstacle can it become? jinny: there are concerns, not about the appreciation trend, but how long this will be prolonged. of course, one of the surprising growth factors this year has been the strength and resilience of experts and imports, more recently. in the most recent data, one of the factors is that imports was strong as well. the resumption of commodity imports, particularly energy has meant that imports is strong.
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the strength of a currency is starting to reflect the domestic demand picking up. that is all good news. you are right, it is a worry when the continued appreciation exert some impacts, particularly for the trade sector. i think authorities will look at this closely. there have been saying, they do not want one way bets, they want to a fluctuation. the key policy emphasis will ensure that markets have more of a say in the yuan and ensure there is no one-way bet in the currency. dani: how do you look at geopolitical risks? we have a diplomatic boycott of the winter olympics, that listing last week going through, how do you factor that in? jinny: i would say to any
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investor looking in china, you always have to factor in geopolitical risk. particularly as dual circulation, common prosperity remain the same when coming to look at china domestic. geopolitical will continue, it is about how china will deal with it and how much of the fundamental growth is priced in by investors. i think next year will be important. it is all about stability. despite all of the geopolitical noise, one needs to ensure your trading on fundamentals rather than noise. my bet is to say that the fundamentals will remain supportive by geopolitical factors will remain volatility and noise around when markets will be trading. dani: great to have you on the program. next time, we will have a full debriefing on your advice on how to set up such a mesmerizing christmas tree.
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that is jinny yan chief economist at icbc standard bank. let's get to first word news. juliette saly. juliette: south africa's access debt has almost doubled in the week from the preceding seven day period. the rise, only reflecting a week of data, contrast with hospitalization numbers that shows that most emissions have mild -- admissions have mild forms of covid. omicron is four times more transistor bowl in its early stages than delta. u.k.'s boris johnson has tightened pandemic rules. he advises people to work from home and mandating the use of vaccine passports and large venues. john seen just johnson ruled out -- johnson ruled out making
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vaccines mandatory but may do it in the future. credit suisse says they regretfully acknowledge that the chairman reached quarantine rules recently when he left switzerland before 10 days of isolation was over. he apologized for unintentionally violating the rules after returning from the u.k. at the end of last month. global news, 24 hours a day, on-air and at bloomberg quicktake, powered by more than 2,700 journalists and analysts in more than 120 countries. this is bloomberg. manus: thank you very much. coming up, oil extends its gains after it shows initial vaccines are effective with the booster for the omicron variant. that is next. this is bloomberg. ♪
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manus: this is "bloomberg daybreak: europe." oil extends its gains after it shows that initial vaccines are effective on the omicron variant. energy trends in europe are set to last as prices climb to fresh records. the energy team has assembled. oil and gas stories plenty. let's bring it to dubai, the uae, the home of oil, so to speak. omicron and the booster seems to be driving momentum, is that the ultra alpha or could it be -- coming from saudi arabia? >> i think that is the main reason we are up. wti is up around 10% this weekend brent almost as much as
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that. -- week and brent almost as much as that. they are more bullish because they do not think omicron will be as bad as they initially feared. it is important to point out that oil has not recovered all of their losses. is still give or take five dollars a barrel. -- five dollars a barrel below what it was before the announcement of the omicron variant. dani: if those are the dynamics lifting oil higher, let us bring you into this, oil prices have hit record highs. what is the dynamic their driving prices higher? >> it is highfield prices that make it very expensive to generate power. on top of that carbon prices
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also, the most expensive in history to pollute or let out emissions, that is also driving up prices for next year. manus: i would encourage everyone to pop on your twitter streams. it is not just in the short-term, but rolling out into longer-term prices. here is the point, the curve, city cutting prices next year, they are at the back end of the curve. what is the curve telling us about the view or 2022? -- four -- for 2022. >> the market is more bearish about the first quarter of 2022 and the rest of the year. most analysts see a switch from
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an oil supply deficit at the moment to a surplus next year. it is a question of how much the surplus will be and how quickly it comes about and how quickly that leads to oil in -- inventories rising. they have been dropping rapidly. dani: while we are looking to the future, what did be the consequence of extended energy prices? >> it would show up by millions of consumers, it would make it more expensive for those who want to hedge. price levels that have never been experienced almost 20 years ago. -- since almost 20 years ago. for next year, it will be even higher. contracts that are further out, still very historic high levels.
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this will be felt by the consumer. dani: of course. fascinating to have that feeds into the energy switching into oil. thank you so much to the both of you. covering all things energy and oil and commodities. goldman sachs has pushed up its forecast for rate hike amid uncertainty about the omicron variant. this is bloomberg. ♪ ♪
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manus: it is "bloomberg daybreak: europe." boris johnson has suggested that people go back to working from home. here is what he said yesterday
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about the spread of the variant. >> we do not know the severity, its exact rate of transmission, nor the full infective this -- full effectiveness of our vaccines. it has become clear that omicron had is growing faster than the previous delta variant and is spreading rapidly all around the world. dani: the spread of omicron as boris johnson was talking about in the unscented teeth has goldman sachs to push back their forecast for the rate hike and trimmed their growth outlook. let's dig into the story more. lizzy burden joins us. more restrictions coming on, vaccine passports, working from home. how is are expected to translate? lizzy: the recovery in the short term, at least. bloomberg economics reckons it
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will shave to blame pounds off u.k. gdp because of the work from home return. vaccine passports will hit entertainment directly in the hit to consumer confidence will hit consumers directly, especially in city centers. every time we have a wave of covid and restrictions, people get more used to it. there is likely to be less of an impact to these restrictions because people are braver, more vaccinated and there will be an element of defiance after the christmas party debacle with the government. manus: i love the title. for the see this morning. we all want to be a sterling bull again. we are not quite sure on the timing. nobody wants it to rally right now more than me, ironically. where are we on the rate hike?
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it has been priced out. that is gone. how do you think they are absorbing restrictions? lizzy: economists keep pushing back their expectations of a rate hike. goldman sachs joined the party yesterday as well as jp morgan, barclays, expecting a rate hike of 15 basis points. i december rate hike had been in the back before, because of the strong jobs data, inflation data, now you have policy committee members, even the most hawkish one saying they want to wait for clearer data on the variant. even if bank of england holds off, it will only mark a delay, not a change in strategic direction. manus: we are all at the mercy of covid and the risk of monetary policy. lizzy burden thank you with the
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latest. 11:00 a.m. today u.k. time, the latest manufacturing figures in south africa and where the variant will hit production. it will be followed by economic data from turkey. that will be key. dani: certainly. also key, a little later after, 1:30 p.m., we will have u.s. data including inventories and initial jobless claims. at 4:00 p.m., the federal reserve bank host a summit that will include acres from kashkari , later on today, president joe biden jose summit for democracy. we continue -- one of the risks that was highlighted by dudley,
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the fed is more hawkish, entering a blackout period last week. it time up to the decision, there is not much room for the fed to control the message. manus: what was surprising, when he talked about the shift, it is about the speed of the shift, that could -- the rate hike. the breath between the 20% variance -- if they go for fast and furious, that has a big negative impact, potentially on the equity market. the short end of the curve -- it is the tens. dani: this is something talked about. we have volatility in markets before, but usually volatility
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is not happening as we are tightening. as one of the really big risks as we look at the market that bounces back and forth. manus: absolutely. let's have a snapshot of what is going on. asia was playing catch-up. just off when you're lows. "bloomberg markets europe" is up next. this is bloomberg. ♪
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>> good morning. welcome to "bloomberg markets europe." mark cudmore joins us. good morning. the cash trade is less than an hour away.


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