BHP Targets Rival Anglo American, Meta Earnings Spook Traders | Bloomberg Markets On the sleek time 04/25/2024

Give boning from London.This is Bloomberg Markets. Today I'm on alongside Guy Johnson andChrissie Gibson with the cash tray just less than an hour away.Here's what you need to know. Stocks in Asia followed Wall Streetlower with big tech taking a hit as matters earnings report spooksinvestors. Mining giant BHP approaches rival AngloAmerican with a takeover offer in a move that could spark the biggest shakeup inthe industry in a decade. Plus, European earnings ramp up, withDeutsche Bank reporting fixed income trading revenue ahead of estimates.We will speak to top executives from.

Barclays, BNP Paribas and AstraZenecathis hour. In the meantime, quick check on thesemarkets here. When you look at the futures picture, itis a negative tone, but you are seeing massive underperformance over in thestates. Your stoxx 50 futures down 2/10 of 1%.Again, the tech underperformance not seeping through yet.You're seeing it more than nasdaq 100 down 1.4%.However, positivity in euro dollar 107 12 is what you're seeing there.And of course we are on currency intervention.Watch dollar yen one 5568 marcus today.

Starts right now. Thursday, the 25th of April.Good morning, everybody. Buckle up.It is a busy morning for corporate earnings.We've already had a slew net net. I would say you've probably got more bigmisses this morning than big beats, but the game is still being played.Barclays is out over the last couple of minutes.You got IMAX numbers as well, hitting the screens as well.That looks like we can maybe add it to the beat side of the equation.Yeah, absolutely.

Omar, as first quarter sales, then up by17%, the estimate was up by 14%. And we spent a lot of time so far thisearnings season talking about how much you could read across from Gucci inChina to other parts of the luxury space.Well, maybe there are limitations to that argument.Absolutely. The idea that the US consumer may bekind of be able to make up the gap. It's the exact flip story at Hermes.You're seeing the Americas revenue coming in a little bit lighter than theestimate. The outperformance is actually Asia.So Ana, to your point, the exact.

Opposite of what we're seeing carrying,as I mentioned, lots of earnings stories coming out this morning, AstraZeneca,Unilever, plenty from the banking sector.We've already had numbers out from BNP Paribas and from Deutsche Bank.Let's focus now on numbers out of Barclays.The first quarter investment banking revenue coming in at 3.3, £3 billion.That is broadly similar to the estimate of 3.35 billion.The net interest income entirely in line with the estimates.Let's dive into a bit more detail, though.I'm very pleased to say that.

Joining us now is Ben Carter Krishnan,the CEO of Barclays. Venkat, a real pleasure to have you withus today. Thank you so much for joining us.We want to talk about net interest margin, want to talk about theinvestment banking part of the business. I'll go to the net interest margin storyfirst, if I could entirely in line with estimates.That number this morning, yesterday, we saw Lloyds reporting something a littledifferent under a bit of pressure as consumers shop around for higher ratesof interest on savings products. How should we look at net interestmargin with all the volatility around.

Rate expectations?What's your sensitivity to the rate environment there?Yeah, well, Anna, thank you very much forhaving me. And as you say, these results areentirely in line with our expectations and with what we put out on our InvestorDay about ten weeks ago. At that point, we said that we had atarget for 2026 returns of 12%, 10% and 24.Our first quarter growth is 12.3%, which is entirely in line.Our income numbers are in line, our costs are in line and our capitalisationis in the middle of our range at 13.5%.

On C 81.As far as net interest income goes, you know, the rates markets have beenvolatile. There's been a round trip approximatelyof 90 basis points, down 90 basis points back up in the ten year gilt in the UKand roughly the same numbers in the US. And so it is very early.Our numbers are in line with what we said.We've seen deposit growth, we've seen lending growth in mortgages and incredit and so we're pleased with that. But it's one quarter in a longer journeyof three years. Yes, it is.I mean, some of the talk at the margin.

Has been a little bit more on thehawkish side, the higher for longer arguments producing that 90 basis pointsroundtrip to the upside at most most recently when that as you mentioned.So so where does that leave us then as we go through the rest of the year andwe look at what happens to rates? What does that do to net interestmargin? Give us a sense of the sensitivity.Well, I think net interest margin, obviously, as when you have higherrates, you have a better lending difference.You pay more in deposits, but you get more in lending.And there's a firmness in the markets.

But, you know, rates are very, veryvolatile. So I would shy away from predicting anumber in just the first quarter of the year.Venkat. Good morning.It's Guy. As you say, the rates market is veryvolatile, yet Q1 FICC revenue looks a little light.Why is that and why are we seeing big differences beginning to emerge betweenbanks in terms of the way they're performing in that space?Yeah. So I think, first of all, within theBarclays investment banking revenue.

Complex, as in any quarter, you willhave some ups and downs. When we look at our own FICC business,one part of it, which is one of our strategic areas securitized products,has done very well on the rate side in Europe is a little weaker.And then on equities, and we were talking from our equities floor here atBarclays, we've done extremely well. So on FICC, I think it's a bit of thecomplexion of the business and it's a bit about where the movement has been.But I think it's hard to read into any one bank in any one quarter.You've got to see the trend over a longer time.Okay.

Do you think do you think the US fakeenvironment is more conducive to profitability than the European fakeenvironment? It's interesting.We're going to be talking to BNP Paribas in just a moment, and I'm kind ofinterested in the compare and contrast between the way that European banks areperforming in that space and U.S. banks are performing in that space.Yeah. I think, you know, for instance,Berkeley, we have a fairly big U.S. presence, as you know.I think what you've seen in the US market is more active positioning.The market is, of course, broader across.

The full range of credit and the foodand includes securitized products. So I think there's a greater and richeropportunity in the product set in the US, which lends itself to greaterperformance by those with bigger US exposures.It's Kriti in London. Thank you again for joining us thismorning. To offset, though, some of that kind ofdepression that you're seeing in the FICC area.Talk to us a little bit how you're viewing kind of the capital markets, thedeal flow as well. Is there enough momentum there or earlysigns of momentum there to offset some.

Of the pain perhaps in the bondbusiness? Yeah.So I think deal flow and the equity markets themselves have been starting toshow some buoyancy. As I said, we on our equity floor hereand then our own numbers in equities have shown an uptick for this quarterversus the same quarter last year. I think deal flow is increasing, youknow, in our own energy business or our sustainability business and thetransition business. We've seen nine deals in the lastquarter and a bit. And so I do think that there is a dealflow happening.

I think, though it's very early, you'vegot to give it a quarter or two to cement.Is Barclays prepared to capitalize on that when it does ultimately come tofruition, when it does actually see a little bit more momentum?Is Barclays positioned to capitalize on that, given a little bit of an exodus interms of your bankers as well as lower advisory fees relative to your Americanpeers? How do you tackle that?Yeah, well, it has been and it is a very, very important area of focus forus. It's we want to increase what we do inM&A.

We want to do increase what we do inequities. We have hired a lot of very talentedbankers. We are focused on the energy transition.We are focused across the important sectors of technology and healthcare.And so we absolutely are positioned to capitalize on it.And you should see the results over the coming quarters.It's not something that's one in days, weeks and months, but over a longerperiod of time. And we've put the sustained investmentand skills behind it and we will continue to do so.Can I ask you about M&A within the UK.

Market?We've got a bit of M&A taking place. Barclays, you yourselves in the processof acquiring Tesco's retail bank offering, we also have consolidationwith nationwide buying virgin money, the building society space.We see consolidation there as well. Is this a sector where we'll see moreand are you going to play more of a role in that?Well, I think at any time you have an inflection in the interest rate cycle,as we have had with changing capital models and changing consumer regulation,it stresses business models and it therefore drives some amount of M&A.I think our own acquisition of Tesco.

Bank is something that's a win win forTesco and for us. We were looking to grow our unsecuredlending and I think you will see other institutions look at that.We have been very, very clear. Our plan for growth is predicated on asan organic one. Obviously in our areas of focus, whichare largely UK centred, our UK consumer bank, which has had strong earnings thisquarter. Our UK corporate banking, our privatebanking and wealth, if we see some attractive opportunities which aretractable and reasonably integrated, we will look at them.But that's not the focus and thrust of.

Our plan.Hmm. I'm talking about the UK then.Cap, what are you seeing in terms of credit impairments in the UK?Any areas of concern or any areas that are performing stronger than you wouldhave anticipated? But I think the UK continues to showstrength in the economy. You know, there are minor tick ups inunemployment and so on, but in the broad scheme of things, growth is strong,employment is strong. Productivity has to grow.But that's a great focus of both of both sides of the House in the UK.Our our credit stats are very, very.

Strong.We continue in the UK to outperform estimates quarter after quarter in arow, and so we feel very strong. We feel good about the strength of theUK consumer and UK credit and that's part of our growth strategy.UK lending. Venkat Just picking up on that, then.Hey, do you think this is a is a country that needs rate cuts right now?Is that your sense? You sound quite positive, if I'm beinghonest about what you're saying in the U.K.,use the word strength a lot. So do we need rate cuts?And the second thing is, it is likely we.

Are going to see a change of government.What do you think the change of government implications are forBarclays? And do you think you are looking at ahigher tax regime going forward post that election?Yeah. So first of all, I think one of the mostattractive things about the UK in this year in which there are elections allaround the world is that there is relatively little difference in economicpolicy between Labour and Conservative. So as far as industry goes, as far asthe financial sector goes, indeed as far as the economy goes, I think that's agreat source of strength because.

Political change I think is unlikely tointroduce a volatility, certainly nowhere compared to what it was ten, 20,30 years ago in the UK and differences between the two parties.So I think that's a great strength of the UK, the commitment of both sides togrowth, to productivity and to business. And so I do feel strongly about the UKand I feel strongly about the momentum of the country.Do you think? Okay.We'll come on to the rights question just to say, do you think, though, thatthe there is a greater likelihood that the financial sector in particular,which has had a raised tax burden of.

Late, even under the currentadministration, will see that penalty going higher?And do you think if we do see increased taxation in the UK, that that will becompensated for by lower rates potentially on on the monetary side?I'm kind of wanting what the balance looks like.Yeah. So.Well, it's hard to say what the balance looks like because the rate policy comesfrom one side, which is the Bank of England.And the fiscal policy comes from Treasury.So.

I think as far as fiscal policy goes inthe UK, growth is the most important thing.That is the way that we can fund the future of the economy.And as far as taxation goes, look, I think the government and the governmenttoday and the Labour Party both understand the importance of growth andthe importance of balanced taxation. So I'm again quite hopeful and thecountry. Venkat Let's let's build on that alittle bit. When people talk about how they approachthe UK, there seems to be a lot of questions about why the IPO market,specifically in London, isn't catching.

Up to some of the strength that at leastyou're talking about. Is there some sort of rebound in theLondon IPO market in the near future? And if if not, what does it need to getthere? Yeah, I think that's a very, very goodquestion. I think the equity market in the UK, anequity risk culture needs a shot in the arm, to be frank.I think that it's important for companies to list in the UK, especiallyfor life sciences technology companies, and it needs many things which areslowly coming together. There's a part of it which isregulation.

There's a part of it which is equityinvestment and people buying more stocks, pension funds buying morestocks. And we think that some of theinitiatives, for instance, the public flotation of the government share ofNatWest should be important aspects of that.And then the entire ecosystem of the UK and innovation in the UK coming tofruition in the IPO market is really important.And Barclays is trying to play a critical and positive role in that.It will take time. It will take time to undo what has beenhappening over 20 to 30 years.

Thank you.Thank you very much. Thank you for your time.We appreciate it. She has been kind of question out theCEO of Barclays. Coming up, plenty more earningsconversations to come as AstraZeneca reports.A beat on core EPS. Don't miss our interview with the CFO ofthe pharma giant. That's at 7:30 a.m.UK time. Plus, mining giant BHP approaches rivalAnglo American with a takeover offer. It is all about copper, a move thatcould spark the biggest shake up in the.

Industry in over a decade could benefitinvestment bankers, as we just been talking about in terms of deal flow.We'll bring you that Bloomberg scoop, the confirmation of that pulling back alittle bit later on in the program. But up next, we'll be back to the bankearnings stories. BNP Paribas fixed income traders trailthe large Wall Street banks in the first quarter.We've got some insight into that from Vancamp.We'll speak to the CFO of France's biggest bank.That conversation coming up very shortly, please.You get in touch.

There's a lot to talk about thismorning. I've got to go.Is the functions use on the Bloomberg domino.This is Bloomberg. The recovery in the wallet in corporatefinance will continue across the year. Q1 was obviously very strong in debtproducts, so investment grade and a recovery in non-investment grade.We do expect that to continue and hopefully see see a further recovery inM&A and equity activity. James on Mulkey there, the Deutsche BankCFO, speaking to our very own Oliver Crook over in Frankfurt.We want to stick with the bank earnings.

Story and go over to another majorEuropean bank. Fixed income traders over a BNP Paribastrailed all of the large Wall Street lenders in the first quarter, taking theshine a little bit of a strong performance in other parts of theinvestment bank. We're joined now this morning by theCFO, Lars McNeill. Thank you so much for joining us thismorning. We'll start off with that fixed incomerevenue numbers. It looks like you're coming in, seeing alittle bit of weakness. You saw it in Barclays.You've seen in some of the other banks,.

Deutsche Bank, the notable exception.Walk us through how you're thinking about FICC revenue given the exposure toEurope. I can appreciate that puts be a littlebit of a disadvantage given the lower volatility story there.How do you recover? Yeah, listen, it's not recovering.Basically the bank is doing fine. If you look at CIB as a whole, let's notforget we're basically a flowback. Yeah, we are accompanying the flows.And if you look at the parts of CIB, if you look at global banking record levelsof 6%, if you look at security services up 7%, look at equities, equities, primeservices up 11%.

And so your question is what's what's onFICC and on? Basically, we have a very high base ayear ago. I remind you that a year ago, given allthe uncertainty, there was there was a very high demand in Europe for FICC, andparticularly if you look at commodities and currencies, remember in the energycrisis and BNP Paribas, we are mainly a European bank, 60%, six 0% of therevenues of our FICC stems from Europe. And that is way above what you have inthe overall banking system. And so we had that high base which hasreturned to normal. This is basically what we see.So really, if you look at the longer.

Term, you clearly see that we are up onmarket shares and that is basically the base we will go forward.So our activity with the clients is very solid and we will continue to ramp upour market shares in all of the domains, including FICC.Certainly an argument that I'm sure your peers over Deutsche Bank are watchingvery closely as well. Talking about ramping up, though.I'm curious about the ramp up in capital market activity in particular that dealflow that we're talking about. There's early signs that perhaps you aregoing to see a little bit more deal flow coming up in the next couple ofquarters.

We just talked to the CEO over atBarclays about that as well. Where does BNP fall in that?Does this actually is that a bet just on volume or is that a bet on advisoryfees? Where do you stand?Listen, if you look at our first quarter, so our capital markets activityis basically lodged in a department we call global banking.And if you look at global banking, as I said, a record level up 6% compared to ayear ago. And capital markets is mainly a driverfor that. So, again, if you compare against a yearago, you needed the magnifying glasses.

To see those activities.What you clearly see is now there is a pickup.And if you look at the Eurozone with what is ahead of us, what we anticipate,how we see inflation evolving, what we anticipate on on that from the ECB.You clearly see that there is a positive trend on this.Love. Good morning it's guy.That's talk about the ECB. The rates market is all over the place.We've we've expected rate cuts. A lot of those have now been priced out.How much visibility do you have on net interest income going forward?What do you think the margin is going to.

Look like?How easy is it to make a prediction on what those kinds of figures are going tobe looking like? That is basically guy, if you look atit, there's two things. So the first question is what is the ECBgoing to do? And so my read whatever, I don't have acrystal ball, right? But my read is that you see in theeurozone, you see inflation tapering off.So I anticipate that the ECB will lower interest rates.That will create a positive momentum. That positive momentum will then triggergrowth, which will it and so on.

So this is a virtuous circle that isprobably going to come. So that is the first thing that we see.And as you know, we had BNP Paribas. We stand to benefit from thisenvironment. And then the question is what will bethe overall environment on the pricing? And so what we see is that several ofthe banks we are competing with are somewhat in dire straits.And so we anticipate that the overall pricing will basically hold well.So we believe that the anticipation of lowering interest rates in the eurozonewill be a stimulus for a bank like BNP Paribas.LA's investors have been buying European.

Banks this year and it's the bestperforming sector year to date because there is this big anticipation that weare going to be seeing significant capital returns to investors.Do you think that. Do you think that belief iswell-founded? Do you think the market is going too farin its expectation given the uncertain economic environment that we now livein? Do you think that capital return storyis actually going to be delivered upon? Listen, before we we will look atcapital return. Let's look at the overall environment.So does one believe that the banking.

System will continue to do well andbasically pick up? And if you look at that, well, you youneed to take to take a geopolitical view.I'll let you guys decide on that. But then you have to look at what is theoverall environment, the regulatory environment.So if this one is kind of stabilizing, which is something you see in Europe,you might have some kind of questions of where do us is going.But on Europe, you see some stability on that.And so that could you could imagine that the banking environment should be wellpositioned into that.

But then the question is, what is theoverall position going forward for a bank?And that's where things might be different.So if you are a bank that is positioned in zones and with products and withservices that can fuel growth, that will be the case.So my message is overall, the environment should allow that.But then there should be differences between the levers that bank have tocontinue their kind of profitability. Last.Good morning. You said a little earlier on this yearthat this year's profit would surpass.

€11.2 billion.If there are analysts out there who can't make the numbers work.What do you say on the back of today's numbers to convince them that you canmeet those goals? Listen,not wanting to say anything bad, but we thought when we guided that our resultswould be higher than that of last year and that we also said that we wouldoperate at positive goals and that our cost of risk would remain below 40.We would have assumed mathematically that that basically leads to assumptionson what the top line will do. And so what we've done is if you look atthe first quarter results, again, if you.

Look through the exceptionally high basea year ago, you'll see that the top line evolved by 3%.And so what we've now added towards our guidance is that basically saying thatwe are confident that the top line will evolve by at least 2% over the year.So that's basically the kind of elements we now give and we give guidance on thetop line, on the cost. On the cost of risk.And therefore, we clocked in a first quarter that basically supports thatevolution. Okay.So the first quarter supports the evolution that you've previouslydescribed in profit.

Thanks a lot.Thanks so much for joining as well as Mary Neal, the BNP Paribas CFO with usas as he often does make time for us to talk to us about the earnings storiesand the wider banking landscape. But we will turn to another sector aftera short break. Talking about the drug space coming up,as AstraZeneca reports, a based on core EPS.Don't miss our interview with the pharma giant's CFO.That conversation coming up next. They've got an Investor Day coming up inin the next month or so. So a lot of key information and keyassumptions, I suppose, will rest on.

What we hear from that Investor Day.What insights can we get from the CFO today?Also, US pricing very much in focus. A lot to talk about.We'll return with that conversation shortly.This is going back. 20 folks.Welcome back. About half an hour to go until the startof actually trading here in Europe. You've got a lot to digest.You've got a lot of pieces to put together to try and figure out exactlywhat's going to be happening here. The picture is quite mixed at themoment.

The current, at least at the get go,looks like it's going to be potentially where we're going to see the weakness.This morning, though, immense numbers look quite strong, But my understandingis they're going to trade fairly kind of flattish at the open.Net net, it feels and this is a very basic assumption assessment, sorry, ofwhat we're seeing here this morning. There are 40 wall misses out there thismorning than there are beats. Does that add up to a negative market?One company that is not on the miss side of the ledger this morning and is verymuch firmly on the beat side of the ledger this morning is AstraZeneca.It is out with numbers.

Core EPS comes through at 2.06.The estimate there, 1.89 key one revenue, 12.6.They estimate that 11.8 cents. These are these are fairly decent beats.And it's worth kind of asking the question about kind of how sustainablesome of these numbers are and what happens next for these businesses.And I pointed out just a moment ago, I think it's on May the 21st, we've got awe've got an Investor Day taking place up in Cambridge.I think you could join virtually. But if you want to go up there, I thinkit will probably be excellent. Aaron Hannah Sarin is the CFO of thecompany and joins us this morning on.

Set.Good morning. Thanks for coming actually to see us ona such a on such a busy day. So we really appreciate that.These are good numbers. The market clearly has underestimatedwhat you are going to deliver this quarter.And I'm wondering therefore, kind of is everything good?Are there some standouts? It looks like oncology has been verystrong, two or three really key drugs in that space of really performed.Is it consistent across the business are the areas you need to focus on or isthis a business that is firing on all.

Cylinders kind of across the piece?I think the revenue and EPS that you see is really performance across the board.So this was the first quarter that both our biopharma business and our oncologybusiness exceeded 5 billion in revenue and our rare disease business was over 2billion in revenue. And when you look at the growth rates,oncology growing at 26%, cardiovascular medicines, business growing at 23%,respiratory business growing at 17% and rare disease at 16%.So I think one of the key strengths of AstraZeneca is this diversity ofportfolio. So it's not one or two medicines that'sreally driving the growth.

It's a very broad base of, you know, 12plus blockbuster medicines that's driving the growth.If you look from a geographic standpoint as well, it's again, emerging marketshave been going really strong. The U.S.is really strong. Europe is really strong.So it's really across the board that we see the strength in the performance.But what's really exciting, you mentioned the investor event.Yep. Is the portfolio that we have.So it's really the pipeline and how that pipeline is coming to maturity and we'recontinuing to invest in that pipeline.

And I think that's what's reallyexciting. Okay, so everything's doing quite well.The Investor Day is going to be worth turning up for August so far.What you are doing is is also a series of bolt on acquisitions.So again, I come back to the business. I look at kind of where you'reperforming and you're telling me you're performing really well across the board.If you think about further bolt on acquisitions, therefore,are you agnostic as to which area of the business you would be bolting those boltons to? Or are there specific areas you thinkthat actually could do with bulking up.

With those Boltons?So we have done multiple bolt ons, As you mentioned, over the last 18 months,we've spent about 6.7 billion in capital and across multiple acquisitions and BDtransactions. We have defined our core therapeuticareas as oncology, cardiovascular medicines, respiratory and rarediseases. So those are the core areas within whichwe will look to license products or add products, but process carries on.I think the I'm not sure it carries on. I think we've been very active in thelast 6 to 8 months, probably 12 months. But before that, for last two or threeyears, we weren't really active.

So I think it's maybe the nature of themarket and being able to find certain opportunities and also how theystrategically fit with our vision. So for example, we acquired a companycalled Grey Cell, which is in the cell therapy space, and cell therapy isstarting is is a technology that is starting to come to maturity andprobably will have implications not only in blood cancers, which is where it'snow being used, but also solid tumors as well as autoimmune diseases.So so I think as technologies mature, we look at where are things which, youknow, when we can think of the next ten years and the ten years beyond that,that where we invest around the.

Good morning.I want to ask about the margin story at AstraZeneca, because clearly thesenumbers will please the market. And you've talked about the growth ratesthat you're seeing A lot of this growth, a lot of this pipeline, though, needsquite a lot of R&D, at least a lot of spending on it.And they do seem to be some investors a bit concerned about how you keep keepyour margins. And what can you tell us about how youprotect those margins? What's what's front of mind?Yeah, So when we look at our margins, we really think about are we gettingoperating leverage and the business.

So is our revenue growth higher than ourexpense growth? And that is clearly the case.So for example, this quarter we saw 19% growth in revenue and a 13% growth inACG. And obviously you need to invest todrive that top line. We also invest about 21, 22% of ourrevenue in R&D. So when you think of the breadth of ourportfolio 120, you know, phase three, phase two studies, late stage studies,that requires obviously a lot of capital.And so we do invest in R&D and not everything will work for sure because itis science, But we're investing for,.

Again, the next ten years.So this growth continues not just this quarter or next quarter, but for thevery long term. And of course, pricing will be importantin what you're able to turn these products into.Over in the United States, you had a lawsuit against the in the InflationReduction Act and drug pricing program, but that was dismissed.What's next for you on U.S. pricing?You know, pricing is is clearly an important factor.And I think there are many elements when you think about pricing.First and foremost, price is.

Very correlated to value.So when we think of innovative drugs, you have to bring true innovation to themarket, not just incremental innovation to the market.And that real innovation will allow for, you know, to justify the prices that welook for. Secondly, we're very focused on access.And the great thing about the Inflation Reduction Act that is in the US isactually it provides access to a much broader set of patients and also thatallows for patients to stay on drug longer and reduces in some ways theamount of free drug that we provide because now you have broader access as aresult of the limitations on Part D, So.

So I think we'll continue to work with,you know, with governments across the across the globe.But both those elements bringing value through innovation as well as access areimportant to us. Sticking with the US legislation themeas well, and I love the about the access point of it.There's another piece of legislation coming through in the House, the Senate,the Bio Secure Act, which I'm sure you're familiar with for globalaudience. It basically means that it kind of putsprohibit prohibitions on contracts with companies headquartered in otherjurisdictions, like China, for example,.

Citing national security.AstraZeneca has about a 12% exposure to China, about a 42% exposure to the US.Do you see a trade off there? Is there one in the future that mayimpede your ability to bring that access story to China?Yeah, we do have a large business in China, a large commercial business inChina, and we also are doing research and innovation in China relating to thebio secure act, I think are when we look at how we supply drugs and our supplychains are actually very resilient. And that was proven out during thepandemic where not only did we supply, you know, billions of doses for thepandemic, but we also did not miss a.

Single dose of our own drugs, whether itwas cancer drugs or heart disease drugs and so forth.So we have built very resilient supply chains and we have a very globalnetwork, both internal as well as with partners.So our ability to manage supply from different manufacturing sites is itgives us a lot of flexibility. That being said, we obviously willcomply with whatever regulations there are, but I think we we have we have veryresilient supply chain and probably will not have much impact as say so very,very quickly here. Just comply.I mean, limiting the exposure with China.

If the US imposes that.So the bio secure act is more focused on manufacturing supply itself, where wealready have our own manufacturing in different places.But you know, we have a commercial business and a research business there,all right around us there. And we, the CFO of AstraZeneca, we thankyou so much for bringing the headlines us on the AstraZeneca earnings.In the meantime, we are getting some numbers coming out of BHP.We know that the potential acquisition offer being made for Anglo here, BHPgroup saying that Anglo would receive a 0.7097 BHP shares for each share ofAnglo and that the offer would value the.

Company at about £31.1 billion.We're going to bring you more analysis, of course, after the break.In the meantime, stick with us. This is Bloomberg. Welcome back to markets today.We have 17 minutes to go until the sounds of cash equities trading.There's so many earnings stories to factor in here.The net result of all of them is that the stoxx 600 perhaps won't moveanywhere in a hurry, but we could be flat.But some really interesting moves expected at the stock level.Let's go macro though, and think about.

All the themes in these markets.We're joined now by markets I've executive editor Mark Cutmore to give us2 minutes on the markets. And Mark, let's start with the BOJ.We're looking ahead to the big day tomorrow.We, of course, have been through 155. We're still through 155 on dollar yen.What's the game plan? What are you hearing people saying isthe game plan as you head into tomorrow? So I think the vast majority of themacro discretionary market are not short gen and are looking to for interventiontomorrow. And there are a lot of a lot of themarket is buying short term short dated.

Downside dollar yen puts on this ideathat hey we might get a U.S. data surprise tonight U.S.GDP tonight might come in strong. Atlanta GDP now is reading 2.7% for a2.5% expectations. So you might get a hot print there.Higher yields, higher dollar yen into DOJ.BOJ obviously disappoints tomorrow. And then what we see is the IMF has tocome in on Friday afternoon to intervene when it will have max power.And we've got precedent for that, of course, happening before only a coupleof years ago and therefore dollar yen will come much lower.But ultimately most of the macro.

Discretionary market probably wants tosell yen again, if we do get that intervention.For myself, all this narrative makes sense, except I'm slightly worried wemay not even get the intervention. I just I think that it's very, very hardfor the IMF to come in when the US narrative has not yet turned.And so I think that's where there might be disappointment in that narrative.Okay. There could be disappointment therethen. What about the chances that they don'tdo intervention but they do a rate hike instead?Look, I think the if the risk reward is.

To bet on a hawkish surprise becausethere's nothing priced. And, you know, look, our colleague SimonFrench has done this excellent analysis saying, look, they really should behiking now by everything kind of the all the analytical thinking or the economicthinking. The problem is, everyone tells me, knowsthe DOJ is it's too political. Without the communication, without theguidance, they cannot hike tomorrow. So it's likely that, you know, they willprobably disappoint on this. People are betting on a rate hike.And really what we're going to get on the guidance of whether it's a hawkish,dovish surprise will depend on their.

Forecast.It'll depend on their long term inflation forecasts, what level theycome in at. Do they show sustainable inflation or dothey show they're still worried that they need to provide more easing to thiseconomy? Mark, thanks very much.Bloomberg Markets Live executive editor Mark Cudmore with the latest on thesemarkets. Remember, you can get more from theteam, the whole me live team available to you.That's the function MLA You go on the Bloomberg terminal let's talk techMesoblast 50% post-market.

Also the company's second quarter salesforecast missed estimates. The tech giant also announcing plans tospend billions more than expected on ai developments.CEO mark zuckerberg touched on this in the earnings call.As we're scaling CapEx and energy expenses for A.I., we'll continuefocusing on operating the rest of our company efficiently.But realistically, even with shifting many of our existing resources to focuson, AI will still grow our investment envelopemeaningfully before we make much revenue from some of these new products.Robert Lee is a senior analyst for.

Bloomberg Intelligence and joins us now.Robert, the markets took a dim view of what we heard here.What do you think was driving that? What was that?I've seen three things listed as possibly driving the negativity.What stood out to you? Yeah, well, I was going to say what adifference a quarter makes. You think last set of results, there wasall the euphoria on the share buybacks, on dividends and obviously the benefitthey were gaining from the earlier cost cuts.But I think, you know, what we heard last night is perhaps reality bites thatwhilst most people agree, you know,.

Generative AI in general is aninteresting secular trend that's going to last many, many years to come.The reality is the software companies are a bit caught in the middle at themoment because they're spending billions and even tens of billions out on theCapEx side at a time when the monetization efforts are very earlystage in a very immature stage. So they're nowhere near covering this,they're nowhere near breaking even yet breaking into profit on their side.And one key attribute, positive attribute the Magnificent Seven has,including better, is its free cash flow generation.So again, there are concerns in the.

Market that the very heavy andincreasing CapEx burden is beginning to eat into their free cash flow again at atime when they're not really properly monetizing it at the moment.So the year of savings feels like it's over.So that's in the rear view mirror when we remember what is happening right now.Do you think we'll look back on this moment as peaky?Wow. Yes.Set myself up for a full year. I think we are.You know, we're potentially at that point.This is going on in the blooper videos.

In years to come.But, yeah, I mean, the tech sector is notorious for hype cycle, isn't it?We've you know, we've we've had all the hype around Bitcoin and the initial waveof euphoria on that. And we've met a metaverse.You know, it's I kind of follow a similar cycle.I think, you know, it comes down to human behavior, human psychology and theway that markets work, this sort of trade straight ahead, priced things inahead. But I think, again, the reality is it'sgoing to be a bit of a struggle for all the companies, not just matter toproperly monetize this.

It's a multi quarter multi-decade oh,sorry, multi year challenge for them. So, you know, yes, I would agree.Arguably the market has got better had given the multiples these stocks havebeen trading on recently. Well, Robert, it just feels like eventhough every company is investing in a really big way, Metta has done this andthrown their weight behind so many different projects with very littlereturn. But compared to, say, like the Alphabetand Microsoft, where they have actually been able to gain a little bit more ofthat market share. Walk us through the numbers that matterwhen those two companies report later.

Today.Yeah. Key difference with Alphabet or Googleand Microsoft is they've got sizeable cloud computing businesses which areboth large in scale and highly cash generative.So you've got this cash cow business. Well, I call it cash cow, the growthbusinesses as well underpinning their earnings and matter really doesn't havethat. So that is one key difference betweenthem. I would say in terms of Internet stocks,not just in the US, but globally, there are three things that matter.One is the AI monetization and we've.

Just talked about that.The second, though is the reality is advertising, which is a very cynicalbusiness again underpins their earnings. So in a slowing economic environment, weneed to watch that closely and we'll see what Alphabet says tonight.And then I think the third area to focus on is really shareholder returns.So again, back in last quarter, we saw share buybacks or enhanced sharebuybacks announced. There were some questions as to whetherGoogle could announce a new dividend tonight.So we'll have to wait and see. So I think enhanced shareholder returns,again, is is an area the market will.

Definitely be focused on.All right. Shareholder returns, cloud market share,and of course, our business investment. Robert Lee, senior analyst for BloombergIntelligence, we thank you so much for walking us through that.I should mention those results, by the way, pressuring Nasdaq 100 futures thismorning, really taking a beating. Let's stick with the equity picture andget our stocks to watch. Joe Easton from our equities team isstanding by Joe. Morning.We got potentially huge overnight news in the UK.Here's Anglo American receives a.

Takeover proposal from BHP over inAustralia. Now we're just getting a potentialprice. It could be around £31.1 billion.Now, the last time we had a deal of a similar size was when Sky was taken overby Comcast back in 2018, just telling us that we don't get many deals as big asthis in the UK in terms of why they're doing it.It would give BHP a 10% share of the global copper supply market and alsomore growth over in other metals like nickel and also some iron ore as well.The thing with the deal is that Anglo is also the majority holder of De Beers anda couple of South American units as.

Well.South African unit sorry. And in terms of BHP, one in this deal togo through, they say they would have to sell those units in order for them tocomplete the deal. Now, in terms of valuations, which iswhy they've been attracted to the stock, we can see UK miners trade a very bigdiscount to the global mining sector. We can see trading on around 12 timesprice earnings versus 16 for the broader global market.That has spurred some worries that a couple of the big commodities firmscould actually delist in London. This is adding to those concerns thismorning.

Here's the chart.In terms of some other peers, Glencore, Anglo and Rio's.While not having a great one year period, the thing is, could they extendshine the light on other firms that could then become targets or could thereeven be rival bids for Anglo? That's what some analysts are talkingabout today. But massive news in terms of UK M&A.Then in terms of the chips, we got a sales warning.This one coming from SD micro sales for the year.It could be as low as 5 billion. The market was looking for 16.It is a big slow down in terms of the.

Auto chip space according to thecompany. And interestingly, it comes just a dayafter SD might create a massive gain following some reports from SMI, TexasInstruments over in the US. And it wasn't just that stocks again, wesaw gains across the chip space yesterday.So this could potentially be -18. Analysts have buy ratings on SD Micro.And another point to note, so we've also got a bit of a warning out today fromthat B semi over in Amsterdam. That one is giving us a negative rate aswell, saying some sharp calls lower and that bears the buy ratings are nice.You might 18 on that one.

Finally, Nestlé getting a negativereaction today. They are seeing some weakness over inNorth America, according to analysts. Analysts over at Jefferies, pointing toa frozen food decline mix and also weakness in some of the coffee.And also the pet care market says a quote from Jefferies, calling that avery weak report, citing the consumer demand, particularly in North America.It has had a bad one year already and potentially we could see that continuingtoday. There it is, over one year.Next slide, down 19% in Switzerland, potentially that could continue.Keep an eye on Nestlé this morning.

Joe.Thanks very much indeed. Unilever's probably worth throwing inhere as well, which I think is an interesting set of numbers, too.Joe's bringing up Nestlé Verve, certainly having a very tough morningthis morning, but the Unilever numbers are really strong and there's talk ofkind of them being so strong that actually could could see a series ofrerating on that stock to the upside, Very big compared controls within thatspace. Yeah, absolutely.And another thing Joe points out, I think really interesting talking aboutweakness in the North American consumer.

I saw that in the piano numbers as well,that organic sales numbers dropping and dropping more than expected in thatNorth American market. It's a funny guys talking about thenumbers. The headline for me was Ben Jerry's saidthat the sale would not affect their business.And that to me is what I really latched onto on the consumer sector.Really dive into more ice cream and of course all the corporate stories comingup. It is the market open, futures pointingjust marginally higher. Stick with us.This is Bloomberg.

The 25th, 2 minutes to go until thestart of equity trading here in Europe. I have got a list of stocks that aregoing to move this morning. As long as my arm, it is going to be avery busy morning. Net net, what is it going to produce atthe moment? Futures kind of pointing us to aactually fairly flattish open. But maybe as we start to digest some ofthese figures, we'll get a little bit more clarity.There's also M&A we need to talk about as well this morning.Is this the precursor to a big round of consolidation within the the miningspace as we see potentially BHP and.

Anglo getting together now?A lot of premium in there, though. Yeah, certainly not a lot of premium.This feels very 15 years ago, doesn't it, these big deals in the mining sectorand after that they didn't deliver in some cases didn't deliver what peoplethought they might and then the sector went through a whole period of we won'tdo that anymore, we'll return cash to shareholders.Well, now the pursuit of copper gives us something different to talk about.Well, I think the copper story so interesting, cause in the short termit's a really kind of scary place to be right now with all the shortages.We of course, the Anglo American.

Downgraded their forecasts or productionforecast. I think this was Monday as well.On top of that, they're also downgrading their DeBeers division as well.They're saying that they're starting to see shortages in that piece as well.But in the long term, this kind of energy transition creates thisunderpinning for the copper story. So is this a short term supply story ora longer term? I think this is a management mess upstory. Oh, okay.Anglo is not Anglo, to your point. I've had a series of downgrades in termsof what they've been able to deliver.

That has pushed the share price lower.They're listed in London. Anglo is now looking very cheap.And what you say about the copper is right, but Anglo has got very cheaprelative to the rest of the space. And I'm just wondering therefore this isa kind of isolated opportunity. Yeah, we want to see where this one goesat the open. Not a huge amount of premia, as we said,so we might well probably get some upside.But how much will others come in to bid for this asset?We'll see if there's any other interest here.So many others reporting today.

As Guy said, I wonder if these marketsare just little stunned in the face of so many Cup corporate earnings stories.Plus, the tech themes of yesterday coming out the United States, plus theM&A. There's a lot to deal with.European equity markets then opening the 5100 is up by 2/10 of 1%.So we see a little bit of a move higher there.The DAX is flat so far, so net net so far, moving nowhere on the Stoxx 600,but it's early days. We'll wait for some movement.We haven't talked about all the stocks reporting this morning.It's just not possible.

I was drawn to the BASF news earlier onas well because chemicals are no go. We often talk about how you you want tokeep across that story. The numbers beating estimates, it seems,but saying that they can't confirm turn turnaround in the chemicals industryjust yet. You wonder where that sector goes duringthis earnings season. That was a wacker also quite good, butthey have beaten expectations. But they are still if you take a look atwhat the lens, they're not great numbers.So that kind of relative to what we thought they would be, yes, they lookgood.

But actually in the kind of the bigscheme of things, as you say, the turnaround in maybe that sector has yetto appear. Nestle is getting hit pretty hard thismorning. ASML is down pretty hard as well.I wonder if that's a read across from SDM and BP.So that's coming into that space you are seeing.That's the kind of the tech sector broadly across Europe under pressure.The real standout story, AstraZeneca. AstraZeneca is lifting the Footsie 100this morning. It is a the biggest points gain on theStoxx 600 it's up by five and a half.

Nearly 6% this morning.Unilever hot on its heels. Barclays as well higher by about 2.2%this morning. We had of course had been earlier on theshow. We are watching BHP and Anglo as well.Doesn't look like Anglo is open just yet, but BHP is under some pressure thismorning. So of course, one to watch and see ifit's that class of M&A trade, how Anglo responds to it, how close you get tothat. It does seem as if all of these thingsare adding up to a better London outperformance today.There's AstraZeneca hitting the drug.

Sector, there's Barclays with a bit moreUS exposure, helping the trading side that helps it stand out from the bankingspace. Maybe the Unilever numbers, the M&A inthe mining space, all of these things coming together in London and we are upby 6/10 of 1% on the Footsie 100. Where is the rest of Europe does look alittle flatter in terms of the luxury sector.It looks like the the mass numbers have been well received.We'll talk about these in a moment. That is giving a little bit of a boostto the likes of LVMH this morning. It's interesting to see L'Oreal alsokind of picking up on the back of that.

The other bank I would just mention isSabadell. That's looks like it's had a fairlysolid set of numbers. That stock is up by over 7%.So it's a mixed performance is coming through in the banking space thismorning. But broadly in aggregate, probably alittle bit more positive there. So some real differences emerging interms of what we're seeing here. Chips are definitely down.Tech is under pressure this morning. You've got some some kind of realdivergence within the consumer space between Unilever, Nestlé.Nestlé is down 3.2%.

That's the biggest drag in Europe.Unilever up by 3.86. That's the second biggest gainer interms of points here in you still waiting for Anglo American to open up,even though even without that basic resources is the best performing sectorin in Europe today. So we'll see where that one goes.But it's mostly the paper companies at the moment.Certainly something to watch. Remember, going back to what I was timeout with the banks because you're seeing some real divergence in terms of howthings, for example, Deutsche Bank versus being.He, for example, has actually approached.

Their fixed income business.We actually asked the CEO of Barclays as well how the rate volatility isaffecting their bottom line. Take a listen to what he had to say.As far as net interest income goes. You know, the rates markets have beenvolatile. There's been a round trip APR of 90basis points, down 90 basis points back up in the ten year gilt in the U.K.and roughly the same numbers in the US. And so it is very early.Our numbers are in line with what we said.We've seen deposit growth, we've seen lending growth in mortgages and incredit.

And so we're pleased with that.But it's one quarter in a longer journey of three years.The CEO of Barclays. They're talking to us a little bit aboutthat rate volatility. Let's get more on that.Tom Metcalf, Army of Finance Investing managing editor, joins us this morning.The key theme seems to be this rate story, weakness in FICC results exceptfor Deutsche Bank. Is this a one off?Yeah, I think it's really interesting as you look across between Deutsche Bank,Barclays like Deutsche Bank's fixed rate traders did very, very well.I think up something like 7% as bank.

I was just saying that it was sort of abit of a middling quarter, I suppose, for the rates traders at Barclays.But for me, the interesting thing is you look at the Barclays share price up acouple of percent, as you were saying. And I think that speaks to whatinvestors are looking out for for Barclays, the investment banks,obviously the big piece of this, but it's not the be all and end all.And they're probably pretty happy with what the bank I was saying it looks likea delivery on those expectations they set out structurally.I think one of the differences between theEuropean banks that are obvious from.

This set of numbers.Can I can I aggregate them together? This is a sector that's done really wellso far this year. It's the big outperforming sector sofar. But but are there where's the nuancewithin this set of numbers from Sabadell to Barclays to what we're seeing thismorning from BNP to Deutsche Wet? Where does the if I'm stock pickingwithin the sector, what am I looking for this morning to determine kind of how Isee the differences between the banks? Well, I think in some ways you just lookat the domestic markets, right, Like, you know, Barclays versus a DeutscheBank.

And ultimately maybe the differencethere is your view on each of those countries.But and that's the fascinating thing is, you know, within Europe, there is such adivergence sometimes between the banks, like, you know, as I say, Deutsche Bank,Puerto Rican home very Mary, But they've got this particular strategy they'retrying to execute on house bank. Kim Yeah, exactly.So so it's always the way I guess in Europe and so so it's geography ratherthan business model that is determining kind of how how the market sees thesestocks. I think sometimes because obviously nameis such a big, big part of what.

Everyone's thinking about it.So yeah, and that's the tricky thing with an investment bank, you know,trying to sort of value that as a shareholder is really hard because, youknow, it's a bit of a black box. Why did Deutsche Bank do so well thisquarter compared to Barclays? You don't know.And as a bank, I was saying it is very difficult on a quarter by quarter basisto judge an investment bank. It's sort of that longer term view.But obviously when you see the ups and downs per quarter, it's easy to getcaught up in that, which is why you have that pressure on Barclays to be like, weactually don't want you to be viewed as.

An investment bank heavy institution.We really want that risk weighted assets to come down.He could be pleased then with the amount of time we spent talking about netinterest margin and we heard him there referencing the the round trip we'vebeen on in the UK rates and how that might play out for the business.It's interesting to think about, you know, we heard from Lloyd's yesterday,which their story was one of Nim coming under pressure because customers wereshopping around and looking for better deals on their savings.And, you know, the longer we're in a higher rates environment, the more thatmight happen.

Want to see?Yeah, exactly. You know, it comes down on the retailside, just execution on that retail side of thing, which is, you know, oftendoesn't get the headlines. But can you deliver that customerexperience? Can you sort of stand out from the packwithout necessarily just relying on a higher interest rate to bring people in?But yeah, I mean, that is going to be the big thing in this rate environmentis how much of that margin can the bank sustain.And also, you know, who is kind of getting more of a market share thanothers.

Hmm.Deals Also in Focus this morning, something we also talked to Van Zandtabout, something the bankers might be pleased to see with this big mining dealperhaps going through at home. Thank you very much.Thanks for joining us, soul mate. COMPERE With the latest on the bankingsector and talking of those deals, Anglo American shares then on the rise thismorning, jumping 11% out of the gate this morning, reflecting that BHP, thatBHP offer that we've seen for the business jumping to 2460, so perhaps alittle bit of execution risk being priced in there as they offer.Around 25, though it seems is a little.

Softer this morning.It's kind of the bottom end of the CAC, not bottom end of the CAC, but it's interms of points, a third leading loss in terms of what we're seeing from theluxury sectors. Interesting.The other names are actually doing slightly better in terms of what thecompany has come out. Actually, the sales story in Chinadoesn't look quite so bad. It does look as if there maybe has beena little bit of trading down. But it's also talking about the factthat it's not finding further price hikes for the rest of 2020 for sure.He says something about how maybe the.

The market is evolving here.How should we be reading this? Well, let's get a take from our luxurycorrespondent, Angelina Rescuer, who joins us from Paris.Talk me through what is happening. The top line numbers, the sales line,the revenue line looks really strong. The market's taking a more cautiousapproach. So so why are we seeing the cautiousapproach when we've seen such a strong top line here?Hi, guy. Yes, indeed.I mean, if you look at the all the geographies, they grew by double digitsin in in all the regions and crucially.

In the Asia Pacific, excluding Japan,they grew by 14%. However, the CFO in a call with a reportsays that he said that traffic was a little bit softer after the Chinese NewYear. So that was in March.But he said that this softer traffic was compensated by basically higheraverage baskets, so the customers would typically have missed be purchased Moreaffordable products like silk scarves or beauty and perfume weren't so present.However, they seem to have done really well with the customers who were buyingmore expensive items, you know, leather goods ready to wear and jewelry.So so that compensated potentially the.

Softer,softer demand in the sort of more entry level categories there.Hmm. And talk to us a bit more about Chinathen, because we spent a lot of time over recent weeks talking about theweakness of Gucci at carrying and their struggles in China.What's the difference in the stories here?I mean, China has been a tricky market so far this year.And it's really we see a divergence of polarizationbetween the more and the more the more exclusive brands and the and the lessso.

And that's what the caring CFO told usthis week. She says thatthe Gucci, the label, unfortunately, is located in the middle.So it's not benefiting from this polarization in the markets.And and on the other side, you have a label like Hamas, which is, you know, atthe top of the luxury pyramid, maybe, you know, up there with with with Rolexand they have this supply constrained model.So. So that's what we're seeing right nowthat those who control their their the their supply and therefore their pricingare in the better position than then.

Perhaps brands like Gucci who areperceived to be more in the middle. I want to be in the middle.Angelina, thank you very much indeed for joining us on what we've seen out ofMars this morning. Let's talk about what we're seeing inthe core six this morning, some divergence.It's really interesting. You've had a series of numbers out thismorning. Look at Schneider doing very well as themarkets marks that stock up by over. Look at Nestlé.Nestlé is getting hit hard in Vevey this morning.ASML is also coming out of weakness.

There's chip weakness this morning.More broadly, Novo also showing signs of weakness.LVMH turning around a little bit. So LVMH now a little softer, down by4/10 of 1%. Schneider's Schneider, it's aninteresting story and the numbers this morning may be confirming its place inthe kind of the narrative as well. There are many stocks this morning thatyou want to be paying attention to. I don't know how Joe Easton's whittlingit down, but he has done or maybe he's just going to take the rest of the showand kind of talk about all the names. Joe, what are you up?So it's going to be a tough one guy, but.

We're going to start with Anglo Americanbecause that move there, 13%, it's a huge move.The biggest move we've got today. As Anna mentioned earlier, though, it istrading below the potential offer price. Now, the other thing to note is as agood note from buy this morning. So there would be antitrust concernsaround this given these two copper giants potentially merging.Is that bid coming from BHP overnight that pre-Olympic limpid?We've actually bought up the secondary listing of BHP in London.The main listing is on Australia, but we can see that declining 3.7% at themoment.

But the big move is Anglo American, up13%, not seeing a huge read across in the papers at the moment, but we'rekeeping an eye. Could there be a rival bid, Could itthen shine the light on some lower valuations of these UK miners was reallymuch cheaper than their global peers at the moment that we're going to move overto chips. It is it's it is a nasty day over there.SD Micro coming down 4%. B sent me down 6% as well and all thepeers moving lower, Infineon, ASML and SMI as well.That one down 1%. SD Micro and B sent me both giving saleswarnings on the same day.

SD Micro mostly related to the autospace, auto chips, EVs, that kind of thing.B Semi is a chip manufacturing firm. These really coming out of the blue andweighing on the tech space. This morning, we're going to look at acouple of those consumer health stocks that we've got.So we got Unilever. Those ones are rising around 4% at themoment. All the focus is on the ice cream, themerger potential IPO. Is that will that go?Will it be London? Will it be Amsterdam?But for the moment, the sales looking.

Pretty strong across the space.Nestlé, though, the big decline in North American consumers not buying enough,but potentially not buying enough. Nespresso all the other products fromthem as well. And it does look like North America isthe weak one over them. We've got another drinks warning.This one again is Pernod Ricard warning on sales.This is relates mostly to their China sales in cognac.However, we have had a number of warnings out of those recently,including Diageo, Remy, all of those peers potentially that Price said onlydown $0.01.

But take a look at AstraZeneca up 5%, abig move for that stock. The oncology powerhouse here in the UKcontinuing to push on showing strength in their cancer drugs this morning.And that is a big mover in terms of that one.We'll just flip over and look at the banks was expecting to see somevolatility in the Spanish ones given up potentially.Pedro Sanchez looking to maybe resign that breaking news last night.But the other thing is we had strong numbers out of Banco Sabadell last nightand they are this morning as well. Some analysts say that potentially thenet interest margins over there are.

Better than expected at the moment.Barclays getting a decent gain following strength in their trading business.But the weak one is Deutsche Bank, down two and a half percent.Analysts are saying the capital and also the names the net interest marginpotentially not as strong as expected. Not too much movement in BNP.A little going for that one in Paris. Deutsche Bank, those standing out down2.5% over in Germany following that weak capital and net interest margins fromthe German lender. All right, Joe Easton from our equitiesteam, we thank you so much for walking us through those crucial stories.Coming up, we continue the market.

Conversation with LJ, IBM's chiefinvestment officer, Sonia Loud. The conversation next.This is Bloomberg. This is a more of a fundamentals playbecause you look at the balance sheets, the profit statements of thesecompanies, they are attractive companies.You know, they should you know, you probably don't want to own 30% of themin your index. Right.But owning all of them, I think, is a good idea.As Quinn, CIO for Equity Strategies at Research Affiliates, speaking to thisprogram just yesterday, talking about.

Tech names, big tech names and theextent to which you want exposure to those.Let's get another view. Sunil joins us, CIO of Legal and GeneralInvestment Management with us on set this morning.Sonia, very good morning. So we'll get to some of the Europeanearnings themes, if you like, in a bit. But in terms of the stateside mood, ofcourse we had a weakness after I was in the matter numbers.I see the Nasdaq futures down by 1.2% right now.So it seems as if that's going to be something of a theme as we work throughthe day.

There were specifics around onebusiness, but broadly speaking, your thoughts on the tech earnings story thatwe've had so far? I probably would phrase it slightlydifferently, not just on tech earnings, but just taking a step back to make surethat we are, you know, capturing the signal versus the noise.Because on a day like this, you can get drowned in the headlines.And we are. Yes,that's where we are. And so it's always important tounderstand what's been the run up to the earnings season, what's been theexpectation built into the earnings.

Season?And it's very clear for tech stocks in particular.Look, on the one year performance, it's been a huge run up based obviously onthe wonderful expectation. How I will change the businessenvironment will obviously drive tech earnings.And don't get me wrong, the earnings profile has been strong.But if you then look at the valuation level, you see that we've probably gonequite a bit ahead on extrapolating that this will be a very smooth line goingforward and that there's no bump in the road.And I think we're just hitting a little.

Bit of a reality reality check.This doesn't take away the excitement around the potential for going forward,but it's probably valuation coming back to a more realistic pathway forward.Okay. So we're looking for a reality check ontech over in the United States here in Europe.But we've got so many things going on with the earnings stories, as youmentioned. So let's take the take take one one at atime. I suppose.I was looking at numbers out of the chemical sector.Big players, they're saying you can't.

Turn the corner, you can't call thatwe've turned a corner on the chemicals in the chemical sector just yet.What are you looking for from that kind of sector?Because it's often watched as really crucial to telling us about the broaderindustry. But a lot of the growth out of Europe,any recovery has been in services, not manufacturing of late.So what signal do you get that? Yes.And this is where you really want to have the reality check with it, with thefundamentals. Where are we in terms of our expectationfor the economic growth?.

You rightly pointed out we've had morepositive news from the services sector rather than manufacturing.This was reconfirmed with a PMI story in Europe yesterday.And so not necessarily surprising that the news flow out of companies wouldmatch this. And now for the large globalmanufacturing companies and chemicals in particular, you would look towards Chinaas well. And again, looking at fundamentals,what's the story there? And as such, you know, you have to lookreally regionally and fundamentally what's driving the relevant pieces ofthe jigsaw.

Sonia, is it too early to price anelection risk in the US? We are always very mindful to price inany election recipes. At the end of the day you will havenoise, you will have volatility, you will have loads of emotive headlines.That's a given. But at the end of the day for investors,what is it really that influences the trajectory of growth, inflation,monetary policy? Because that really gives you that thetrajectory that you really should focus on.And I don't think if you really look back in history, ignore the noise.There will be lots on the day and.

Clearly in the run up.But what really is influencing is more the themes we would look at fiscal inparticular because this clearly is an area that has helped the US economy alot over the past year or two. And the question really is how muchwiggle room is there, How much can the two parties and hence the president doafter the after the election. So you see you priced that in.What does it actually look like? Is there a specific asset you'rewatching? Yeah, of course.You would definitely watch the long end of the curve, right?Because if you consider fiscal.

Sustainability and where we are, wherethe fiscal deficit right now is, you look at some of the expectations, someof the headlines and we haven't got all the details yet, but you will we willexpect that the market will take note. There's no term premium whatsoever rightnow. So you have to wonder whether there is asteepening of the curve in the in the run up and potentially afterwards simplybecause of the dynamics in the fiscal policy.The Footsie 100 is trying to catch up with its peers.It started. Does it carry on?Is it something that is sustainable?.

What gets it there?I would look at the individual companies rather than the Footsie.We know that. Yes, we look at it from a countrybackdrop, but at the end of the day, you knew it as well as I this is this is theindividual companies, their positioning globally that drives the earnings.And I think today's news really, really well, let's talk about let's talk abouttoday's news. Does is it a reflection of what'shappening at Anglo? Is it a reflection of cheap valuationsin London? Is this something that we could seereplicated?.

How many companies could leave, how manycompanies could be taken over? If you just look at the stories today,it's clearly strength of earnings and a take of Astra.Astra looks really strong, but Astra is is a.All the company, the strength of their portfolios, obviously, and what'sdriving this and their customer base is global.And as such, you know, this is not related to the UK fundamentals andthat's been a story we've had for a long period of time, right?The attractiveness of a marketplace is is a you know, is a set of inputfactors.

And a company will always look at allthe factors before deciding whether this is the best location for them to to setup headquarter and to strive. And clearly a company like Astra, youknow, with with a global customer base seems to be striving here.But that has to be the ambition that you have the best backdrop to enablecompanies to do exactly this. Yeah.And that's one CEO is usually quite vocal about what he wants to see interms of regulatory backdrop and tax and all the rest.I mean, M&A, another big theme in London today within the mining sector, thoselong memories will remember we've been.

Through big waves of M&A 15, ten, 15years ago in the mining sector. And the lesson from that was investorssaid, no, we don't want to do that anymore.We want you to stop doing that. We want you to throw off cash.And that we are we are we ready our investors ready to go back to anotherperiod of M&A in the mining space. I don't think those episodesunnecessarily comparable because the narrative has changed completely.Right. And we know that the rationale for whywe might see the approach today has very much to do with the way how and howmetals and mining are used.

And electrification is the big one here,right? And we know that the demand for copperin particular is very much linked to the electrification story.And I think this is why I'm always mindful.Yes, history is a good guide, but the logic and the narrative is a verydifferent one and probably will be looked at differently in that contextbecause you're looking at the mining companies and the assets they owndifferently in the context of a very change demand pattern compared to ten.So copper is not what it was then in a way, because if you consider the demandand we have all studies pointing towards.

The incredible demand that will arisefor these metals, it is a different story.Can I just just before we wrap this up, is is Anglo attractive because it'slisted in London and therefore trades at a discount?No, it's attractive because of its assets and the potential you have inusing these in a context with massive demand for.Okay. All right.So no out. No, it's okay.It's an important question. CEO of legal and general of USManagement, we thank you so much for.

That crucial context.It's a really interesting dynamic as we talk about the deal flow in the miningspace, not just for Anglo American of BHP, but is this, to your point, a oneoff or a sector run story? Nobody's going to want copper.That seems to be the narrative, if that's what Sonia's saying as well.Yeah, it's going to be it's where do you get it?You have to dig it out of the ground that's hot.Or are you gonna buy it on the stock market?Yeah, it's easier. Antofagasta Another stock was tradinghigher this morning.

There's another sort of read across fromthis M&A story and there are the macro themes aren't that there's the what'sgoing on in Japan as well. Also in focus coming up plenty of focuson the weak yen but back 3155 again, folks, as we look ahead to tomorrow'sBank of Japan decision, the expectation is we don't get any change in rates fromthe Bank of Japan, although some analysts pointing out that that would besomething that might support the currency.They are very concerned about that. A lot of verbal intervention still.But will we actually see some some intervention once again from the centralbank, from the Ministry of Finance?.

We'll get to that Japanese conversationshortly. This is back. Look back 30 minutes into the day herein Europe, we are facing something of a signal to noise challenge this morning.So many corporate results. How do we digestible to be honest?Equity markets aren't going anywhere in a hurry.We are down broadly across Europe with the exception of the Footsie 100, whichseems to be doing a little bit better. Interestingly enough, the IBEX isactually positive this morning. I think that probably got to do withSabadell and less maybe to do with what.

We're seeing in terms of the politics.There are some big names out there that you want to be watching in terms of thenumbers that we've seen, though, so far this morning.Broadly, actually, though, you would probably say the net story is quitepositive. Some of this is emanate to Anglos up by10%. You've got AstraZeneca on the back ofits numbers. We saw the CFO on assets a little bitearlier on broad brush story that Unilever's having a good day.Barclays is having a good day. It's interesting to see what ishappening with the chip space though.

On the right hand side of your screen,the banks that the banks are doing okay, the pharma space is doing, it's moremixed. But the chip space, the tech sectortoday is where the weak, the center is coming through on both sides of theAtlantic. The Nasdaq is kind of pitch to be quitea lot lower this morning. Yeah, absolutely.So looking is looking to pick up on that theme stateside later on today.Nasdaq futures down by one and a quarter percent.One of the big macro things we are also watching closely this week and this timetomorrow, we'll have the answers to the.

Questions we're about to ask is allaround the BMJ and Japanese response to weak currency.Japanese stocks are lower today with the yen extending losses in the lead up totomorrow's big decision. They say after the currency weakenedbeyond 155 per dollar for the first time in more than three decades.It happened yesterday. It keeps happening this morning, keepsgetting weaker. I think this is the first time since1990 we've been to these 155 levels. Let's get to you Bamba, who joins usnow, head of active investments for Japan at BlackRock.So very nice to have have you with us.

Let me ask you you about what you wereexpecting then in terms of intervention. If we deal with that first, how to maybehave a conversation in isolation about intervention without thinking about whatthe the BOJ does in its in its meeting. But what are your thoughts on what willtrigger intervention this time around? Yeah.Nice to be here. What will trigger intervention this timearound? I do.I do think you take the intervention question separately from the DOJ.What the DOJ does is going to be separate from any one time interventionthat the government may or may not.

Decide to do.We don't have particular insights on on, you know, whether or not the governmentwill do intervention. We think it's entirely possible, but Ido think it's important to separate that from what the BMJ is going to focus ondoing tomorrow and in, you know, their monetary policy decisions, which is tosupport the Japanese economy and to make sure thatthe exit from deflation sustains itself. So we think that that's the focus andnot so much the currency just supporting the Japanese economy.Does that rely on sorry, supporting the economy?Does it rely on supporting the currency?.

Is the yen weakness so, so weak that,you know, maybe we consider a surprise hike from the BOJ, for example,tomorrow. That would be one way to support thecurrency. Yeah.No, no, absolutely. I think I think supporting the Japaneseeconomy is going to entail primarily maintaining accommodative monetarypolicy, monetary policy conditions. So the BOJ, we know, is on a pathtowards normalizing interest rates or monetary policy.They have the big meeting back in March to pull out of a lot of theextraordinary policies that they put in.

Place, like negative interest rates and,you know, yield curve control. And they're on a path towardsnormalizing things, but they just want to make sure that they're doing that ina gradual fashion and not rush into things to tighten monetary conditionstoo much, to slow down this the momentum that we're seeing in the economy.And I think that that's their first priority.And addressing the situation on the FX market is at best secondary.Who's in control of what is happening with the yen right now?Is it the BJP, the Ministry of Finance, or is it the Federal Reserve in theUnited States?.

Yeah, that's a great question.I think that, you know, the the the end the effects ultimately is going to bedriven by interest rate differentials. The government can come in and dointervention, and that will move the market.You know, for a little while. But that's not really going to be thedeterminant of the facts. So longer term, as you know, the Bank ofJapan normalizes interest rates and interest rates go up in Japan.And, you know, as the Fed hopefully at some point starts to cut interest rates,the interest rate differentials start to normalize.And without the effects should, you.

Know, begin to stabilize and turn.You, which is the most important cross rate that we should look at for theJapanese economy. We always focus on the yen.But is it dollar yuan? Is that the key things that we should bewatching here? And we should think about how theChinese are watching what is happening here, too?Is it what's happening with Korea? How do we think about this?Globally and regionally? And the effects of these various kind ofcross rates have in terms of the overall basket?Yeah, I think I think Dollar yen is the.

Right one to look at and to focus onfrom a fundamental perspective. The majority of the the trades that thathappens in Japan is going to be denominated or teed off of the dollar.So so fundamentally that is the right right pair to look at.And also from a markets perspective, you know it's absolutely the dollar yen thatthat that gets the attention of markets and controls sentiment.So yeah I think I was just look at dollar yen and that's that's theappropriate one to look at. You said that for the BOJ, the currencyshould be a secondary consideration and they shouldn't want to tightenconditions too much too prematurely.

Slow down the economy.What are you at in terms of what does trigger any intervention then?If we go back to that conversation, you won't be level.They like to say it's not about the level, it's maybe about the speed ofchange. So what do you think would triggerintervention? Yeah, it's the level, it's the speed ofchange. It's the build up of speculativepositions. I think, I think, you know, from a leveland, and speed of change perspective, you know,we may already be at.

You know, areas that they justify orthat motivates the government to come in and intervene.So I think it's entirely possible. And then also I would add that alarms,you know, feeling of alarm and anxiety over the effects is starting to mountgradually within Japan as well, impacts the cost of living and and so on and soforth. So it wouldn't be a surprise at all tous if the government chooses to come in and intervene.But, you know, again, you know, like, I don't think that that's necessarily whatthe Bank of Japan is focused on right now.Bank of Japan is focused on,.

You know, the economy and the fact thatthey implemented some big changes to monetary policy at last meeting and thefact that that was taken, you know, quite well by the markets, there were nomajor disruptions or, you know, liquidity events or evolve ends in themarkets. So they must be pleased about that.And they must also be pleased about, you know, the progress in wage growth and,you know, momentum within the domestic economy.And so I think that's what they see and that's what they're focused on.That calls for, you know, gradual normalization of monetary policy of of,you know, interest rate hikes, which is.

Positive.That's positive for savers, It's positive for the financial economy.So I think that's that's where most of the focus will be.And if he were going to intervene, when would you do it?We've got key data out of the United States.So we've got, you know, GDP data, PCE data.These are all threatened to move dollar yen, could move them in a direction thatweakens the currency even further. And of course, we have the BOJ.What would be the thinking about when that intervention would take place?Yeah, I'm not necessarily in the heads.

Of, you know, the government officialsthat may make these decisions. I think they just obviously want to doit when it's, you know, most effective and they can do it over, you know, anumber of times as well. It's not a one and done thing.Yeah. I mean, again, I don't think it needs tobe tied at all around the DOJ event. So I would I would, you know, sort ofseparate the two. How much political pressure is there fora stronger currency? We were talking toan analyst the other day who was kind of joking how cheap a beer is in Tokyoversus a bear in Mayfair here in London.

And that does seem to be the sense thatyou see a lot of foreigners turning up in Japan, spending a lot of money.And the local community, there's a certain amount of resentment aroundthis. Is there pressure, domestic pressure, tohave a stronger currency at this point? How strong do you think that pressureis? I'm trying to understand, as you say,the motivation to generate that intervention.Yeah, I don't necessarily think that there's a ton of resentment in thetourism that that we're getting. We think it's great.You know, hotel prices have gone up and.

Restaurant prices have gone up as aresult of tourists. But but I think, you know, like thegeneral mood in Japan is quite positive. It's quite positive about, you know, thestock market doing so well, is quite positive about wage growth being sostrong, It's quite positive about CapEx being at all time highs.And and, you know, just generally the the exit from from deflation has been abig positive for sentiment. So.So I think that, you know, generally we're feeling good about things and weare feeling hopeful about where things are headed.Is there some political pressure about.

The around the currency?Yeah, there may be some. And I think we would all like, you know,the government as well as the private sector would like to see the yenstabilize and be a little bit stronger. But I don't think that that should sortof take away from all the positives that are going on in Japan, and that's moreof the dominant theme in the business community as well as, you know, thegovernment, I think. Yeah.Great to catch up. We're going to wait.We're going to watch next 24 hours. Going to be absolutely fascinating.Bamber, head of Active investments for.

Japan, joining us from BlackRock.Coming up, going to get back to that big mining story.BHP making that unsolicited takeover bid to rival Anglo American.We're going to discuss what could be the biggest shake up in the mining industryin over a decade. It's a big deal.Will it happen? That's next.This is Bloomberg. Welcome back.This is markets today, 844 in London. So 44 minutes into a European equitymarkets session that sets London apart to some degree.The footsie 100 up by half a percent.

A lot of the earnings stories and someof the M&A news playing in London's favour this morning.Elsewhere, we have some weakness on the on the DAX, both of those down now theworld's largest mining company talking of M&A.BHP has made a takeover approach for rival Anglo American.Anglo American confirmed the proposal after Bloomberg first reported that thebid was in the works. If successful, the takeover wouldrepresent the first mega-deal among the world's biggest miners in over a decade.Let's get more on this story now. Bloomberg senior executive editor forenergy and Commodities.

Will Kennedy joins us now.Will, thanks so much for joining us. We've talked quite a bit about why thisdeal is happening and why now. We spoke to Sonia Loud over at LGMearlier on and she was saying this isn't because it's London, it's not becauseit's cheap. This is because of energy transition andthe copper access. Is that the driving force here?I think that's right. Everyone would like to get their handson more copper. And BHP is among the companies thatwould like to do this if they got this deal done.And it's a complicated deal with many.

Hurdles, but if they got it done, theywould control about 10% of the global copper supply and be the biggest,biggest supplier in that position and a very well for a world in which theexpectation is the electrification of everything, all those wires and cablesthat we're going to need, all those electric cars means that copper demandis going to keep rising at a time when supply is likely to remain constrained.Well, you said it's complicated, and I think you're being polite.There is a significant South African problem that is built into this.Amplats is one part of it. The unions in South Africa are anotherpart of it.

The pension funds, another part of it,the government's another part of it. This is a complicated deal.Is that why the premium is maybe as low as it is?Yes. I mean, I think that people have alwaysseen that Anglo's cultural assets are an attractive target.But the reason that it's never happened is because of the complicated structureof Anglo and the rather hodgepodge nature of its assets.You mentioned South Africa. That's the big one.And it's important to note that BHP have made investmentsin iron ore, but the condition of this.

Deal proceeding now the biggestshareholder is the Public Investment Corporation of South Africa, a stateinvestment firm. They will be very protective of SouthAfrica's interests in any deal. And another complicating factor is thatthe bears of the diamond business, which is probably not only for BHP, but isalso partly controlled by the state of Botswana.So there are lots of hurdles. The final one I would mention isanti-trust. Now China has in the past intervened inmining deals. They buy half the world's copper or arevery interested in the map of the global.

Copper industry and they will probablythink that this would give BHP too much control.So there is an angle, but there's also an antitrust angle that we need to beaware of here as well. Okay.So a couple of reasons why this could be complicated.Well, what about all the patents to those factors just puts off others?Would it make more sense for others to take on this asset, given that BHP oftenseems to be conditional on selling lots of things?Well, I think the other bidders will have the same problems with AngloAmerican that BHP have.

But there's no doubt the Anglo Americancopper business centered on some world class assets in Chile would also be ofinterest to Rio Tinto and perhaps even Glencore, where Glencore has its owndeal going on with its bid for some of its assets.Now again that would be difficult, but onceAnglo was in play, I think it is going to set off a bit of a frenzy within theindustry about how it ultimately shakes out and what the shape of the industryis going to be from here. Thanks.Well, thanks for the update. Bloomberg senior executive editor forenergy and Commodities on hand for us at.

Just the right moment to talk history.The BHP approach for Anglo American. So certainly M&A is something we'rewatching today. A host of earnings stories as well.Here's what else we're watching. 12 p.m.UK time Ukraine and Turkey have reached decisions.1:30 p.m. London time.US GDP and first quarter jump at sorry for the first quarter.We'll also get jobless claims. We have an international auto showtaking place in Beijing. So keep an eye on the auto sector.With that in mind, Anthony Blinken is.

Also in china.We have BP in caring at GM's. Those could show some shareholderactivity. And later we get earnings from the likesof Microsoft, Alphabet, Airbus and Intel.So quite a big tech representation. Also the aviation scenes.We're going to talk tech in a moment, But but aviation also on on the list fortoday at ANA. Yeah, I'm going to be an A points to mekind of basically I said I said earlier she basically kind of puts I mean guysplaying sports so you go now young I took the game for you a little bit lateron which should be interesting.

So in the likes of the Boeing numbersyesterday, obviously we need to see that it see what we're going to see from myboss in the context of that. But Airbus, I think is interesting.And as much as it doesn't have the same challenges, maybe the Boeing does rightnow, but it does have its own challenges and the supply chain remains really akey area. How far can they ramp up?They've got all this demand that they're seeing at the moment, but they'restruggling to ramp up. They've got a Pratt Whitney engine issueon the 320 platform, which they've got to deal with as well.So it's it's really interesting that.

Everybody's struggling at the moment tomeet the demand that is out there at the moment.I spoke to Michael O'Leary yesterday. I he's he's capacity constrained rightnow. We're going to see higher airfares thissummer because there aren't enough air and this And so the Boeing travails,they matter to Boeing customers. They even matter to non Boeing customersas well as we've discussed with other airlines around Europe, because, youknow, if the whole industry is then just affected by a lack of Boeing planes,then that has a knock on impact on the availability of others.I've read Airbus Tech then very much in.

Focus.We talked a little about the metal numbers.Let's do that in a bit more detail. We've had tech earnings coming throughfrom, well, for matter in particular a host of reasons as to why this stockreally tanked after hours. Let's get more then on these techearnings with Bloomberg's Alex Webb. He's with us this morning.And Alex, I've seen three reasons cited, the sales guidance for the secondquarter. Underwhelming CapEx went higher,spending on the metaverse going higher. All of these three added up to a realselloff in mass.

Do you think that was overdone?Well, I think it's pretty clear that if you say that you're going to be spendingmore money and your revenue is going to be lower, investors are probably goingto not take that very well. And yet the stock has really been bid upquite a bit this year. It's made.Mark Zuckerberg, I think second or third richest person in the world again, as aconsequence. But the key thing here is that there isless appetite for long duration stocks right now.And essentially the message here was, well, this is actually slightly longerduration than you thought.

We are pushing out some earnings becausewe expect to deliver in a few years time.In the current higher interest rate environment, investors are more willingto go well, in fact, than we don't necessarily need you as much as wethought we did. So the year of savings, the year ofeconomy is firmly over. Is this.Is this message a struggle with the idea of saving money and not kind ofsplurging money on on the next big shiny thing?Is that the take away as well here? I mean, it's very hard not to be temptedas Facebook management when you've got.

Something like $50 billion in free cashflow to go, well, I'd like to spend some of that money.The thing is, the thing will be fascinating this year is when they hadthe prior expansion into reality labs. They call it the metaverse.There was an overexpansion that you really saw average revenue per employeeall significantly. They corrected that to a large extentlast year. It's really tough for all the peoplethat hired and of course, that they had essentially over hired.Now, if they're expanding into this new space now, it'll be a real test ofmanagement to see whether they can do so.

Efficiently because, you know, sometimesyou do need to add headcount. The question is getting it right, makingsure you don't have too much headcount given what your needs might be.Hmm. Tell us what benefit he brings to abusiness like matter then, Alex. I was reading a nice opinion pieceearlier on today by one of our colleagues, Dave Lee.He was suggesting that sometimes, you know, it's not entirely clear what thesebig tech businesses should be best doing with some of these AI technology.Yeah. I mean, there is a very, very broadchurch in terms of what the technology.

Means.And of course, matter has been using AI for a very long time and it'sadvertising business and it has been progressing some of that recently,adding New age led advertising features. It also has LAMDA, its large languagemodel. Increasingly, some of these companiesare seeing large language models as gateways, essentially new platforms, newways of accessing the Internet so that you all your future use.The internet becomes a conversation, whether with a chat bot of sorts thatthen directs you towards the things you need to go to.Facebook clearly wants to be part of.

That game and that also then provides anopportunity for licensing, whether you can license that technology elsewhere.Now it seems very clear that Facebook is playing in the first space, it's playingin the advertising space. There is a suspicion that it reallywants to play in that second space. What happened?The third one, you know, essentially remains to be seen, but it's partlyabout ensuring that you are well-placed to capitalize on any opportunities thatmight come. A microsoft and Alphabet's, if theyoutperform, going to be enough to compensate for Tesla, a matter.I think probably, yes.

You know, this is what we saw in thelast earnings cycle was that we had quite often people tend to think ofthese sort of magnificent seven, the tech stocks, whatever you want to callthem, as sort of a monolith. They're not.They're all very different companies. We saw last time around, Facebook didpretty well. Google didn't do very well.And actually we didn't see sort of a catastrophic fall out in the broadermarket because that was a mixed picture. So, you know, Microsoft and Google, theyhave far bigger market capitalizations and those are the two companies.So you would expect then that if they do.

Well, they outperform or they meetexpectations, then it should be enough to assuage any concerns.With Facebook, the big challenge really is going to be Apple looking a bitfurther ahead given the challenges that they are facing in China.Alex, thanks so much. Maybank's Alex Webb joining us with thelatest on Masser and the the wider tech space.This really stood out to me in this piece from Bloomberg Opinion Guy.This was all about, you know, what do these apps exactly do with A.I.?And one of our authors saying that when he was searching for an old message onWhatsApp, the I asked whether he would.

Like to take a moment to generate ahumorous illustration of a cat. He didn't.So he got that said. I mean, if that's where we are, ifthat's my journey, there's a long way to go.Yes. That doesn't feel like it'sproductivity. In fact, it feels like that's antiproductivity actually taking us in the wrong direction.So let's we come to the end of the show. We started the show asking the question,kind of where's the signal in the noise this morning?We've got an awful lot of noise.

Where is the signal this morning?And I'm still trying to work that one out for my kind of takeaway this morningis that actually Footsie 100 stocks are doing relatively well here.Yeah, Maybe this catch up story on the Footsie 100 maybe therefore has a littlebit of momentum this morning. Astra's up Unilever's up angle, Anglosup on its own kind of story, kind of whatever it's doing.The oil stocks are doing relatively well as well.So there's an interesting kind of footsie outperformance narrative, whichI think is worth maybe looking at. There is absolutely up by 4/10 of 1% onthe footsie as the Stoxx 600 is down by.

3/10 of a percent and some of those areUK UK specific a little I mean you could say that about some of the Barclaysnumbers, but there is a global story on Barclays and there's certainly a globalstory around the other names that you mentioned.So that's a that's interesting to note. I think it is apt that we actually endedon that conversation about techs because although we've been distracted rightlyby all these European earnings, if we look ahead to the US session, that'sstill ahead of US. Nasdaq futures down by 1.1%.And that is the metal story and that is the concern around this earnings season.And we're building up to the Fed.

That's going to be a big story as well.The earnings are going to continue. The noise will certainly be with youthroughout the rest of the day, but we're going to cut through it.Norse Hydro's CEO is going to be joining us a little later on.I'm going to be speaking to the Airbus CEO.Looking forward to all of that. That wraps things up for us.It's been a busy morning. I hope you've taken some signal awayfrom the noise. Francine is going to carry on theconversation next. The pulse is up next.This is Bloomberg.

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