Bloomberg Crack of break of day: Europe 04/04/2024

Good morning.This is Bloomberg Daybreak Europe. I'm Lizzy Burden in London.And these are the stories that set your agenda.Stocks gain in asia along with US futures as jay Powell reaffirms his viewthat the Fed will cut rates this year. But he says the central bank is in norush to loosen policy. Reducing rates too soon or too muchcould result in a reversal of the progress we've seen on inflation andultimately require even tighter policy to get inflation back to 2%.Oil's rally rolls on and Brent crude flirts with $90 a barrel as Opec+ stickswith supply cuts through to June 1st,.

Janet Yellen goes to Beijing.The US Treasury secretary warns against decoupling from China, but says trademust be on a level playing field. Well, those are your headlines.Good morning. Welcome to Thursday.Yet Jay Powell sticking to the script yesterday.Wait and see mode is still where the Fed is.And that gave a bit of relief to stocks and bonds yesterday.You've got futures pointing to an even higher opening this morning on bothsides of the Atlantic. And if we flip over to the cross assetpicture, you can see ultimately the Fed.

Chair's comments didn't really move thedial when it comes to where the markets are in terms of bets for when the Fedcuts are coming. You had Treasurys ending broadly higheryesterday, but now pretty steady. And now all eyes turn to the jobs reporttomorrow. Remember, Powell said last month that anunexpected weakening in the labor market could warrant a policy response from theFed. You've got the dollar a touch weaker.It's one close relationship with the Fed.Bets seems to have evaporated. But gold very much listening to JayPowell, the yellow metal setting another.

Record above $2,300 an ounce yesterday.On the back of those comments. It's just a touch below that now.But every day this week, it's hit a new high on the central bank pivot and thegeopolitical risk. Speaking of which, oil, Brent, as I say,flirting with $90 a barrel after the Opec+ meeting.Sticking with the current supply cuts, could we see 00 a barrel by the latesummer? JPMorgan's Natasha Cleaver says yes.And we'll dig into all of that throughout the program.But let's get over to Asia now. You've got lots of holidays happeningthere, but bloomberg's Vonnie Quinn can.

Take us through what is in action.Vonnie. Plenty of holidays, plenty going on aswell, though, Lizzie, and some of that thanks to some of what you just laid outthere. So China on holiday, Hong Kong onholiday, but returns on Friday and we have Taiwan on holiday as well as ittries to assess damage and rebuild to a certain extent and also find some moresurvivors from the island's earthquake yesterday.But do have a look at what is going on, because markets around the world, itseems, are reacting to what Fed Chair Jay Powell said yesterday about, youknow, continuing to expect to see rate.

Cuts later on this year and to wait andsee what happens with the inflation data.Also, don't forget that services data that came in a little bit, you know,less help than anticipated. The Fed has been waiting on services toshow a little bit of a cooling down, let's put it that way.So if you look at the MSCI Asia Pacific Index, you'll see we're up about 8/10 of1%. Some of that has to do with Japan up1.3%. The other thing that's happening inJapan is that earnings start this week and investors are expecting maybe alittle bit more of a payout now in terms.

Of dividends and so on, because Japanhas been doing so well and companies have been doing so well and the yen hasbeen weak as well, which has helped companies for the most part.So Japan up 1.3%, the cost of 1%. That's a slightly different story thereas well. Thanks to SK Hynix for some of thesegains as an example. More than four and a quarter percentright now, it's going to invest $4 billion in a plant in Indiana and theUnited States, in fact. But it's going to do some research anddevelopment on chips. And really that's having a halo effecton chip stocks around Asia at the moment.

Is helping those indices move higher, aswell as the fact that those chip plants are coming back online as well in Taiwanafter yesterday's tragic earthquake. So as you see, the costs be up 1%.But if we flip up the board, a little bit more volatility in currencies.So the yen today is still trading around one 5170, perhaps not in the dangerzone, but that might be thanks to a little bit of relief for the dollar,which have been strengthening day after day after day and finally saw a littlebit of weakening today. The U.N., though, the renminbi is one tokeep an eye on because we were very, very close to the weakest part of thetrading band once again today.

It shows that the PBOC policymakers arereally very close to more intervention if that does bypass that.The offshore you on a course has been flirting with that level for severaldays. The onshore yuan now as well, it wouldseem. And then I just wanted to point outcopper because you mentioned earlier oil being on a tear.Well, we're seeing it across the commodity complex.Copper at the moment up another 8/10 of 1%.This partially thanks to the PMI data out of China earlier this week, but alsoall of those other reasons that you just.

Laid out as a.Yeah. And yet iron ore dropping to, what, aten month low? Why?We'll dig into that later in the program.Usually you'd see copper and iron ore moving in a similar direction, but we'lldiscuss the commodities picture in the program.Bloomberg's Vonnie Quinn in Dubai. We thank you for that update on Asiamarkets. And now let's dig deeper into the Fed'sstory, because we had Fed Chair Jay Powell again signaling that the centralbank is going to wait for clearer.

Signals of lower inflation before theFed cuts rates. Take a listen.These recent data do not, however, materially change the overall picture,which continues to be one of solid growth, a strong but rebalancing labourmarket and inflation moving down toward 2% on a sometimes bumpy path.On inflation, it is too soon to say whether the recent readings representmore than just a bump. We do not expect that it will beappropriate to lower our policy rate until we have greater confidence thatinflation is moving sustainably down toward 2%.For more on this, I'm joined by.

Bloomberg's Kristie Gupta Kristie.Jake, his message seems pretty clear to me.Why is the market making it so difficult?Because he's not the only one in charge, as you know, simply for the bow.It's very kind of touch and go in terms of what the consensus actually is.This diversion you're starting to see within the FOMC going from even the mostdovish people like Rafael Bostic, for example, reiterating that he may onlysee one cut in all of 2024 while some of his peers just 24 hours ago.Loretta mester Mary Daly are saying three are still on the radar.There is a massive difference,.

Obviously, in terms of the read throughof that. And that's why I think the best part wayto look at this interpret this is what you're seeing in the bond market.Take a look at the ten year yield for 36 right now.And if you just to pull it out to an intraday chart, take my word for it.It's very choppy, which shows the market doesn't know who to listen to, doesn'tknow where the consensus is coming from because the wage data is so all over theplace, because the inflation data, we don't know if the bump that we saw, thebump higher that we saw in the last couple of months, and it has been 2 to 3months of some hot data, and that's just.

A temporary kind of bump.Or is that something that is indicative of inflation going off the rails throughJune, July or beyond? When to cut first did Paul make clearwhich data he's looking at to make that decision?I mean, he's sticking with his his fan favorites, right?The wage data, the labor market is too soft.The numbers, he didn't really go veer too much off script here.But I think what's interesting is he did say that while we are considering allthe options, if you actually look at some of the nitty gritty of what hesaid, he very specifically said that.

There could be a reason to reevaluate ina couple of months as opposed to in previous speeches.He's kind of backed himself into a little bit of a corner.To your point about the June and July, and that's why the markets are socareful about pricing in that June cut. Yes, it's below 50%, but still on thetable because that was the time frame that Jay Powell gave before the factthat he said this could potentially be a the early indicator of getting off therails, an early indicator of inflation being sustainably higher.That was the indication he gave. It's not his base case, of course, butit is something that he's saying.

This is the questions we have to ask,though. And speaking of backing yourself into acorner, where does that leave the European Central banks, the bogey on theECB, who might not want to jump first and go before the Fed?Well, they might not have much of a choice because what every central bankerloves to say is we're not watching what the other central banks are doing.We're kind of doing what's right for our own country, a nation which is great.Right. It's of a gigantic eyeroll.But this would be a historic moment if the ECB were to cut first.But I think the difference is here is.

That and we saw this in the inflationnumbers yesterday, the inflation is coming down faster in the eurozone.You are seeing that tick up in the data that you are seeing in the UnitedStates, and that's why that divergence actually makes sense.The facts, the difference, I would say now is that markets are actuallystarting to believe in the best way to see that is in the currency picture.Yeah, indeed. And we're going to dig into that withour live team later on. But Bloomberg's critic.Thank you for joining us, Chris. He'll be on markets today later in themorning.

But now let's get back to thegeopolitics because we've got a significant meeting happening.NATO's foreign ministers meeting in Brussels today as the alliance marks its75th anniversary. Secretary-General Jens Stoltenberg willbe speaking later this morning at 9 a.m. UK time.But here's what he had to say after the Bloomberg scoop on his proposal for a00 billion five year funding plan for Ukraine.We are transforming NATO's Comprehensive Assistance package into a multiyearprogram of assistance. We are helping Ukraine move closer toNATO, NATO's standards on everything.

From procurement or logistics.And we are supporting Ukraine's reform efforts to bring Ukraine ever closer tothe alliance. Joining us now for more is Greenberg,Natalia DROZDIAK in Brussels, who's been all across this meeting.And tell you, I noticed that Blinken's official plane broke down on the way tothis meeting. Is the turbulence a sign of what's tocome? Yes.Well, I think, you know, just the point on, you know, everything on the NATO'sallies agenda at the moment, I think top of mind is the war in Ukraine and how tomake that that aid more sustainable over.

The long term, which is why we've we'veseen this proposal come from Stoltenberg sources, about 00 billion for Ukraineover five years. It's still not clear whether allies willwill pull back that. There's a lot of questions for ministersabout the viability of that plan and where the money will come from.But in general, allies want to figure out a way to make this more sustainablein light of a lot of uncertainty in the political sphere with with electionscoming up in the US and a possible return by Donald Trump to the WhiteHouse. Yeah, because perhaps that could undothis proposal, even if it goes through.

So how united are allies about that, butalso the challenges they're facing in general as we're at this 75thanniversary of the organization? Yes.I mean, as I mentioned, they're they're facing these internal challenges, youknow, with with some doubts among allies about the commitment by the U.S.to European security, not just because of the Trump threat, but for a whilenow, the U.S. has been pulling away and shifting morefocus towards Asia and China. And so European allies are realizingthat they're going to have to step up more and in a much more significant waythan they ever have.

So you have these internal theseinternal dynamics, but at the same time, you have the biggest land war on thecontinent that Europe has seen since World War Two.And you have all these other conflicts erupting, including in the Middle East,that they're having to manage all of these tasks at the same time.And of course, they've got to pick a successor to Jens Stoltenberg.Where are we in that race? Well, I think, you know, the majority ofallies have wanted to sign off on Dutch Prime Minister Mark Rutte at thismeeting. But there was a bit of a surprise twistin recent weeks.

The Romanians put forward their owncandidate with President Klaus the 100th.So that delayed the timeline on signing this off.But the feeling is that that candidate came forward a bit too late to make anyreal difference. The most likely route will beagainst Wallenberg's successor, but it will just take a few more weeks to signthat off. Well, we're going to be speaking to theman himself. But Natalia DROZDIAK in Brussels, thankyou for that update on the meeting. Stoltenberg is going to join thesurveillance team for a live interview.

Tomorrow, and they're going to discuss,of course, aid to Ukraine, the prospect of a Trump presidency and theirsuccession plans. That interview at 12:30 p.m.UK time. Do not miss it.We've also got plenty more on the docket today though.At 7:30 a.m. UK time, we get Swiss CPI for March.That's expected to have ticked up to 1.3%, though it has fallen rapidly inthe past few months. Just for context, it precedes the ECBminutes. At 12:30 p.m.UK time, you've got a June cut, as.

Christine says, looking like a done dealand therefore the focus turning to how many cuts will follow this year.An hour after that, we're going to get us initial jobless claims will watch outfor how many people were laid off as a result of the Baltimore bridge collapse,of course, and that up for the main data event of the week, the US jobs reportfor March that comes out tomorrow. We'll also get fed speak for Mester,Muslim Barkin, Harker and Goolsbee. What a mouthful.Whatever happened to less is more. Hey, we've got so much fed speak thisweek, but you can get a roundup of the stories you need to know to get your daygoing.

In today's edition of DAYBREAK, Terminalsubscribers can find it by going to date.Why they go. That's how I like to start my day with acup of coffee. Coming up, we're going to go to theMiddle East. Pressure on Netanyahu is mounting.A prominent member of Israel's war cabinet says national elections shouldhappen as soon as September, not in 2026.We'll have more on that next. This is Bloomberg. Welcome back toWelcome back to Bloomberg Daybreak.

Europe.Now to Israel. A prominent member of Israel's warcabinet says national elections should happen in September instead of asscheduled in 2026. The call from Benny Gantz has ramped uppressure on Prime Minister Benjamin Netanyahu, who's facing an internationalbacklash over the assault on Gaza. Those poll.Wallace joins us now for more from Dubai.Morning, Paul. I wonder if you could just give us somecontext on how influential Gantz is and if he pulled out of the war cabinet,would that force Netanyahu's hand?.

I want to start off with Benny Gantz.He is increasingly influential in Israel.He's now the most popular politician in the country with ratings far, far higherthan those of Prime Minister Benjamin Netanyahu.If there was an election held tomorrow, Benny Gantz's National Unity Party wouldalmost certainly come out with with the biggest number of seats in the Knesset,the parliament. He is an opposition leader, but hejoined this emergency war cabinet that's only made up of five members.Soon after Hamas's attack on October the seventh.And in fact, Gantz is one of only three.

Voting members in that cabinet.The other two being Netanyahu and Defense Minister Yoav Gallant.So he's an extremely important person. As to the question about whether himpulling out of the war cabinet would collapse the government.The answer is not necessarily Netanyahu's coalition, which is prettybroad based, but it is very right wing. The most right wing in Israel's historystill holds a majority in parliament and in theory, could survive even if the warcabinet itself collapsed. But I think we should be under noillusions if Gantz pulled out. He hasn't said he will.But if he did, that would certainly.

Weaken Netanyahu's hand.So that's the domestic pressure internationally.You've also had Chuck Schumer, of course, the majority Senate leader,calling for early elections, too. And you've got Biden and Netanyahuexpected to speak on the phone later today.How isolated is Israel at this point after the killing of those seven aidworkers? Is Netanyahu underestimating just howfrayed the US Israel relationship is at this point?Poll. I think that's what a lot of people arethinking, that he is underestimating.

Just how strained and and angry the USis becoming, let alone Israel's other allies in the West and even in the Arabworld. In terms of its isolation.The US is still backing Israel so solidly and is still providing itmilitary hardware for for its war against Hamas in Gaza.And everything that the White House has said suggests there's no way that it'sgoing to limit weapons sales to Israel or put conditions on their use.So in that sense, Israel still has the firm backing of of the US, which is byfar its most important ally. And Netanyahu, who knows US politicsvery well.

Some might argue that he isunderestimating just how angry people in America and beyond are with the war inGaza right now. But he is also a pretty astutetactician, and he seems to be banking on American support staying for this war inin Gaza, even if he even if he follows through with things like sending forcesinto the city of Rafah. Yeah.Okay. So that the latest on Israel,Bloomberg's Middle East and North Africa editor Paul Wallace, we thank you forthat update. Of course, the geopolitical risk feedinginto the oil story.

And next up, we're going to discuss theoil rally rolling on. We'll take a look at why some analystssay Brent could hit 00 a barrel this year.Stay with us for that. This has been back. Our baseline view assumes sinceunchanged since last June assumed that we'll be hitting $90 by May.So it does seems that that's being brought forward by about a month thatwon't be there by April. But again, you know that as youcorrectly pointed out, the risk is that actually on the way to our priceforecast goal, we will be hitting $200.

As well.That was Jp morgan's head of global commodity strategy, Natasha Cannava.So no surprises here. Opec+ sticking to its supply cutsdespite crude prices at almost $90 a barrel in London, the highest this year.And Natasha, they're telling us you could see or you could see oil at 00 abarrel by August or September. Let's get more now from Bloomberg seniorEnergy reporter Stephen Kinski. Stephen, I had a note in my inbox fromBP's commodities team saying that the higher oil price is more about tied tosupply than geopolitics. Are they right?I mean, I think certainly this is a.

Story of fundamentals.And what's what's most interesting about it is when you looked at thefundamentals coming into the new year, I'm sure I was sitting in this chair inDecember saying how everything was looking pretty bearish for 2024.But Opec+ has come through. They've had their cuts.They were expecting some froth in the market, so they carried through the cutsfor the first quarter and put them through into the second quarter.They had a meeting yesterday saying that they're going to extend them throughthrough and they reaffirmed that they will extend them through June and demandhas been a bit more resilient than I.

Think some people had expected with theeconomy kind of kind of trudging along. And all of that together is feeding intoa bit of a deficit. The IEA says that there's a deficit forthe oil market in the second quarter. At the same time, you also have a fewdifferent things happening around the world.You've got Mexico reducing their exports of heavier crude to refiners.That's going to cause a bit of an issue. And on top of all of that, I think oneinteresting thing to look at is at the Opec+ meeting yesterday, they kind ofreaffirmed as well that they've got to hit their targets when it comes to theircuts.

Iraq has been pumping a bit higher thanwhat they had promised. Russian oil also rising.So all that together is kind of driving this fundamentals view, which, you know,JPMorgan just said 00 barrel of oil. We're at $90 right now, Brent, So itwill be an interesting few months. Just really briefly, Stephen, I alsowant to talk about the slide in European natural gas prices continuing.When you've got European economic activity sputtering along, how muchfurther could they fall? You know, I think what's interesting isthey could continue falling, especially since they, you know, their inventoriesare so high.

I think one of the factors look atEuropean prices and Asian prices are sort of linked to a degree.And if prices fall low enough, it could trigger some buying in Asia.The Chinese, as well as India and Southeast Asian countries, might beinterested in buying some LNG. So less LNG will go to Europe, more willgo to to Asia, and that could act as sort of a floor.So we could fall a little bit, but maybe it won't collapse if Asia comes to therescue. All right, bring back senior energyreporter Stephen Chatzky. We thank you for that update.And we've got a lot of action happening.

In the commodities space.You've had gold setting a new record, $2,300 an ounce.This, of course, on the expectation of rate cuts this year.You've got copper hitting a 14 month high.Goldman sees a high of 2,000 by Q1 next year.So you might say it's curious that you've got iron ore dropping towards aten month low given curious because iron ore and copper tend to move in the samedirection when it comes to China. News But essentially you've got coppermore useful, more broad at its utility and also supply and demand demanddynamics varying there.

But speaking of China, we'll speak aboutthe Treasury Secretary's visit there next to.Stay with us. This is Bloomberg. Good morning.This has been bad day right here. I'm Lizzie Borden in London.And these are the stories that set your agenda.Stocks gained in Asia along with U.S. futures as Jay Powell reaffirms hisview. The Fed will cut rates this year, but hesays the central bank is in no rush to loosen policy.Reducing rates too soon or too much.

Could result in a reversal of theprogress we've seen on inflation and ultimately require even tighter policyto get inflation back to 2%. Oil's rally rolls on and Brent crudeflirts with $90 a barrel as Opec+ sticks with supply cuts through to June.Plus, Janet Yellen goes to Beijing. The US Treasury secretary warns againstdecoupling from China, but says trade must be on a level playing field.Well, good morning. Welcome to Thursday.And if we just think back to Jay Powell, his remarks yesterday, we're still in await and see mode. Not a lot changing when it comes to hismessage there.

So you had relief for stocks and bondsyesterday and you can see it is set to continue later today.Futures pointing to a higher opening both in the US and in Europe.And if we flip over to the cross asset picture, you can see really thosecomments from Powell didn't move the dial much when it came to expectationsfor rate cuts from the Fed. Still pretty much on a knife edge whenit comes to whether we'll have a June cut.You had Treasurys ending broadly higher yesterday.The two year Treasury yield currently at 4.68%.So higher a basis point this morning.

But the dollar has been a little weakerthis morning. Really, it's not as coupled as closelywith expectations for Fed moves. That relationship seems to haveevaporated somewhat. Gold, though, very much listening tothis Fed chair, Jay Powell. It has hit another record high everyday. This week it's done about $2,300 anounce. It smashed through just below that levelat the moment. And Brent, $89 a barrel, we've beendiscussing just there, the Opec+ meeting, sticking to supply cuts, butalso factoring in the geopolitical risk.

Could it hit 00 a barrel by latesummer? Jp morgan reckons so.But let's get over to bloomberg's Vonnie Quinn.She's got an update on how asia markets are faring.Vonnie. Lizzie, thank you.Well, we are off the boil now in some of these markets, but still a nice rallytoday. Bigger picture, china, hong kong andtaiwan are all closed. Hong kong will be trading though in thefriday session. So as you can see, we are counting onsome markets to keep us higher in this.

Rally today.The MSCI Asia Pacific Index up about 6/10 of a percent off its highs.The Nikkei was up as much as 1.6% earlier.It's up just less than 1% now. Plenty of good news coming out of Japan,including the fact that we're starting earnings season for Japanese companiesand they're starting to make announcements.So we had Konica Minolta, for example, announcing job cuts just a little bitearlier on. That's and that's down higher probablywas enough to put some fear into the market.But we are also seeing investors.

Expecting more in the way of dividends,more in the way of payouts from companies.So that could be coming down the pike this quarter for Japanese companies.And then we have the chip story. We have the Cosby rallying now more than1%. That's thanks in part to SK Hynix, whichis investing $4 billion in a factory and a research and development center inIndiana in the United States. And that's having a halo effect on chipstocks across the region and is also sending the Cosby to a 1.1% gain rightnow. Now, across the region, we're alsoseeing the re on lining of factories.

After the tragic Taiwan earthquakeyesterday, which has killed at least nine so far and several others injured.Also, we don't know how many others are still trapped or missing, but thefactories themselves at least, are coming back online and that's having apositive impact on the chip players elsewhere.It's the macro story, right? It's a little bit of relief for thedollar, which is helping with some currencies, including the yen one 5169so slightly away from the danger zone. We also had comments from the formerBank of Japan member Makoto Sakurai, who said that the bank would be likely towait until around October before we see.

Another interest rate hike.So that's likely to be playing into those dynamics today to a little bitless satisfying to see the yuan trading very close to the weakest end of itstrading ban because we've been seeing that now for a few days.And it's been obvious that the BBC and authorities have been watching itclosely, perhaps even intervening or at least stopping swaps, contracts goingahead and so on, doing small things like that.But it's not enough to dissuade the bear is right that we're kind of going tocontinue to weaken. So we are seeing both the onshore andthe offshore flirt with that weekend of.

The trading band.And then you mentioned commodities earlier, rising copper up another 9/10of 1%. China PMI is percolating through themarkets, maybe not the iron ore market, Lizzie, but definitely the coppermarket, which is really at a 14 month high at this point.All right. Still plenty happening in Asian marketsas it happens, even though China, Hong Kong and Taiwan are on holiday.As a reminder, we post Vonnie Quinn in Dubai, bringing us the sunshine.We thank you for that update. Now let's get back to the Fed chair, JayPowell.

He spoke yesterday, signaling thatpolicymakers will need clearer information of lower inflation beforecutting interest rates. But he says the boom in prices recentlyhasn't altered the Fed's broader trajectory.Well, let's bring in Mark Cranfield from Bloomberg's AM live team now.Mark, we saw Treasury yields going through a bit of a round trip yesterday.The hawkish comments from Bostic sent yields higher.Then you had Powell a little dovish, setting first and yields lower again.You also had the economic data feeding into the story.What market reaction could we see from.

The jobs data?We have yet to come. Well, really, I think if there's goingto be any big changes, we're going to see it in the foreign exchange world.So we're in a pretty interesting situation here for the for the USdollar. Positioning wise, trade is a pretty longUS dollars. They have been for a few weeks, which isnot surprising really. We've had a strong set of US data.We've also had fairly hawkish speakers from the Federal Reserve pushing backagainst early rate cuts. So we come to this point where the jobsdata comes out tomorrow.

Market is generally relatively long ofthe dollar. You can see, especially in the dollaryen, which is still getting not far from under and 52.But people will run out of patience if they don't see some joy for thepositions they have built up. So if we get a number on the nonfarmpayrolls, which doesn't quite meet expectations a little bit on the softside, that could trigger quite a wave of US dollar selling, which spills overinto next week. And if dollar yen starts to go down,that may trigger the euro, the pound Australian dollar.They all look like currencies, which.

Could benefit quite a lot if there's abit of a tightening in the US dollar, even if the jobs data is very strong,pushes up dollar yen, we would expect the Japanese authorities to have limitedpatience as to how much further they allow it to go.So not far above 152, you can imagine the Japanese authorities will say enoughis enough and they will start supporting the yen.That will trigger sales of dollar yen into next week and that will probablyhelp the US dollar come down January. So either way is a very big 24 hours forthe US market, especially for people holding long dollar positions.And when you've got cuts delayed, Mark,.

What does it mean for bonds andequities? But the bond market is probably going togo through a bit of a sideways pattern for some time.We've got you really haven't seen a huge difference in yield over the past threemonths. So just been fluctuating around.That can continue for a while until we get the next set of plots, which tellsus maybe there's only two cuts coming, but that's still a way off.So for now, a bit more range trading. But from an equity market point of view,they can absorb that quite easily. People looking at equities have beenable to deal with 5% interest rates for.

A very long time.They've got used to it. They're factored into their equations.There's nothing really to stand in their way as long as the earnings numbersstart to come out. Okay, we get the big banks starting nextweek. If we get through that without too muchtrouble, they can live with rates pretty much staying on hold for a while.They've got the air component as well, so the equity market can probably absorbit a lot better than the bond market can.All right, Mark Cranfield from Bloomberg's AM live team.We thank you for that.

And I mean, one person who's going to benot too displeased if it takes the Fed a little longer would be Andrew Bowles atPIMCO. You've seen PIMCO betting the Fed'sgoing to cut rates less than other central banks.Why? Because they have this higher proportionof fixed rate mortgages and therefore it takes longer, they reckon, for monetarypolicy to feed through. And therefore they've been favoring debthere in Europe and the U.K. instead.Interestingly, we're going to be speaking to Andrew Bowles later in theday on markets today, but let's stay in.

The US and flip to the politics, thegeopolitics, because U.S. Treasury Secretary Janet Yellen isvisiting China for the second time in nine months.During a stop in Alaska, she emphasized the need for continued cooperation.Agreed that it's important to both of us that we don't want to decouple oureconomies. We want to continue when we think weboth benefit from trade and investment, but that it needs to be a level playingfield. For more, let's bring in Bloomberg'ssenior editor, Bill Faries. Bill, what's the extent of thisovercapacity issue?.

Well, it's becoming a major concern forthe US, and frankly, you have to include the context that this is an electionyear. But US and some allies are increasinglyconcerned that China is looking to export more of its industrial capacityas it's its ability to absorb some of that capacity at home seems diminishedwith moderating growth and particularly in the clean air industry.That's been a priority for the Biden administration in terms of diversifyingthe supply chains and bringing a lot of that production back.So that's that's an area they're looking at very closely.Janet Yellen's trip, at least the.

Message of her trip, seems time to givea little bit of a heads up on what may be coming for Chinese leaders, as wellas to just provide a little bit of more stability in this relationship betweenBeijing and Washington. You remember there had been almost ormore than a year break and communication between the two sides until Biden andshe met late last year in the San Francisco area.This is adding to the sense that communication can continue even amid allof these disagreements about about overcapacity from the US side, about therestrictions on technology transfers and things like that.It's interesting because the call.

Between Biden and Xi, the readout of itseemed a little touch here on the Chinese side than the US side.Are we getting a sense that that's how things will come over the next few weeksas we have the Yellen visit, but also Antony Blinken heading over to China?Yeah, I think the Chinese know that that there are some more trade restrictionscoming in in addition to these potential trade barriers on clean energy.There has been a lot more talk about the US pressuring allies such as South Koreaand Japan to limit their servicing of high tech semiconductor equipment thatwas sold to China before some sanctions came in place.So it's a rough, complicated.

Relationship at this point that willprobably be made more turbulent as the US gets closer to the Novemberpresidential election. So I think China's aware of the politicsinvolved. At the same at the same time, they areinterested in luring investment that they can they're interested in keepingcompanies involved in the Chinese economy.You saw President Xi meeting last week with a number of American CEOs andexecutives. So they realized that they want to stayconnected. They don't want trade battles to becomeworse.

But the reality is that it could be avery rocky road ahead in the coming months.Okay, Bring back senior editor Bill Faries.We thank you for that update on the Yellen visit to China.And coming up, Disney CEO wins a vote of confidence.But what does it mean for the boardroom drama?Will it have a fairy tale ending? We'll bring you that story next.Stay with us. This has been big. Welcome back to Bloomberg DaybreakEurope.

Now, Walt Disney shareholders havehanded CEO Bob Iger a big vote of confidence, rejecting dissident investorNelson Pulse's bid for a board seat. Sources say that Peltz won just 31% ofthe votes cast and the stock fell the most in more than six months followingthe results. But it's still up almost 32% so far thisyear. Let's bring in Bloomberg's Charlie Wellsto pass this drama. What more would we expect from Disney?How did Bob Iger win this vote, Charlie? Yes, look, we live a lot like apolitical campaign. And it was probably the one of the mostexpensive one of the most hard fought.

Proxy battles in recent history.I mean, Disney spent $40 million on these campaigns.The pellet side spent 25 million. And it really did feel like a politicalcampaign. They sent out mailers to a lot ofshareholders. A lot of individual investors owndistinct talk about 40%. And they even sent out some promotionalvideos Disney did, indicating how they wanted people to vote using Disneycharacters. Okay.Well, that would persuade me I'm a minnie Mouse girl myself.Is Nelson Peltz therefore going to.

Retreat in this fight?So Peltz is try on partners owns $3.5 billion worth of Disney shares and he'stried to get seats on the board before He indicated even before yesterday'svote that he would continue to watch the company.I mean, he's got a lot of skin in the game, so it seems like he's not reallygoing anywhere. And some of the issues that he broughtup in this campaign weren't solved yesterday.He had a lot of issues with Disney's content.He had issues with Disney's succession planning.And, of course, those are problems that.

Weren't solved yesterday.So, therefore, where does Disney go from here?I mean, they really need to be razor focused on Iger's turnaround plan andhe's been really trying to update, say, ESPN for the streaming era.They've been investing a lot in parks and I mean, we think a lot about Disneymovies, but Disney parks actually bring in about 70% of that company's profits.They've invested some $60 billion in those parks.It's looking pretty good. But they've got to stay razor focusedbecause all eyes are on them. Okay.Well, Charlie, thank you for that.

Bloomberg's Charlie Wells with an updateon the Disney drama. Now to some other stories making newsthis morning. Bloomberg learned that Apple isinvestigating a push into personal robotics, a field with the potential tobecome one of the company's ever shifting.Next, big things. In today's art, the tech giant have beenexploring a mobile robot that can follow users around their homes and also anadvanced tabletop home device that uses robotics to move a display around.We're told it's unclear whether the products will ultimately be releasedelsewhere.

Shares in Paramount surged more than 15%after reports that Shari Redstone is getting closer to selling her stake inthe film. And TV giant to David Ellison'sSkydance. Redstone has been weighing a sale of thefamily holding company National Amusements to Ellison for nine months.For months. I should say National Amusements holds anear 80% voting stake in Paramount Global, the parent of CBS and MTV.Now asset Manager, a Veeva part of the insurance group Aviva, is tappingAustralia's pension funds to partner in private deals in the UK and Europe.As a surging pool of retirement savings.

That lures more offshore suitors.The firm, which manages €262 billion of assets globally, has been talking tosome funds about co-investments in logistics centres and residentialdevelopments as well in its push to double its real assets portfolio overthe next five years. Meanwhile, Aviva CEO says progresstowards gender parity in UK financial services is too slow.Amanda Blanc is regarded as a champion for diversity and equality in Britainand is one of the few female leaders of a European blue chip.In an interview with Francine Lacqua, she highlighted the importance of sharedparental leave.

If you're looking at the first 100 andyou have ten female CEOs, 90 male CEOs, you have to say, I mean, something's notquite right about that. And if we look in financial services,and I'm the government swimming in finance charter champion, we see 1%improvement year on year. Now, that's good and we should celebratethat. But it's not quick enough.So I think we have to have a look at, you know, what, what's going wrong?I mean, it's really the pipeline of women.If I talk about gender, women coming through that is not strong enough.So we have to make sure that we keep.

Women, you know, at work being promotedby always the best person for the job, but making it easy for families to votefor the man and the woman to be able to work.But is that flexibility? I mean, I know there's been and you'vetestified and we saw the episode with the Garrick Club.It's still easier for a man to do business in the city.I'm not sure it's easy for a man to do business.Look, I think we have seen definitely some bad behaviours.And, you know, certainly I asked for for women to contact me prior to givingevidence to the Treasury Select.

Commitments and head about lots of very,very bad experiences. But I think what you have to do is getshared parental leave, right? If I'm lucky, if you're looking for whatmakes it easier, you know, out of even 80% of men take the full six months ofparental leave. Now, I think that sets then the toneright from the very beginning of childcare responsibilities, that that isa shared responsibility. That makes a really big difference.I think at that point it then becomes easier for the men and the women to dowell. And what we want clearly is for for bothto do well.

But is that more important than sexismin the city? I mean, I was for you know, for me, itwas a watershed moment because this was on LinkedIn.And you say, you know, I would like to hear from testimonies of people thathave had, you know, allegations either assault orbad experiences being women in the city. That was quite powerful.Yeah, it was powerful. And I mean, it was very emotionalactually, for that because hundreds and hundreds of private messages from that.So you do still see that some women are experiencing, you know, bad behavior.And I mean, that is clearly wrong and.

That has to be dealt with byorganizations. But I think there's the behavior pointand then there's the sort of systems processes that you put in place to makesure that opportunities are available for both men and women to succeed.But I think the behavior has to be dealt with.It has to be dealt with by organizations.And women have to feel that if they speak up, that that will be dealt with.Do you think that's going back backwards, actually, that less peoplewant to speak up? I'm not sure that it's gone backwards.I think that people are now more.

Prepared to call it out.So you are seeing more examples of that. I thought it's hard to say it's gonebackwards because I think ten, 15 years ago you wouldn't be hearing about thisat all. An important conversation that the AvivaCEO, Amanda Long speaking to Bloomberg's Francine Lacqua.And you can catch more of that interview on Bloomberg UK at 9:30 a.m.London time. Well, next up, we're going to talk aboutthe recent Fed speak, including the Fed chair, Jay Powell, yesterday.If your head is spinning, we've still got Mr.Muscle and Barkin, Harker and Goolsbee.

To come today.We'll tell you our analysis on whether the Fed is still hawkish and how dovishit's getting in terms of that Fed speak. So stay with us.This is Bloomberg. Recent readings on both job gains andinflation have come in higher than expected.The economy added in and out an average of 265,000 jobs per month in the threeyears through February, a faster pace than we have seen since last June.These recent data do not, however, materially change the overall picture,which continues to be one of solid growth, a strong but rebalancing labourmarket and inflation moving down toward.

2% on a sometimes bumpy path.If the economy evolves broadly, as we expect, most FOMC participants see it aslikely to be appropriate to begin lowering the policy rate at some pointthis year. Of course, that outlook is still quiteuncertain and we face risks on both sides.Reducing rates too soon or too much could result in a reversal of theprogress we've seen on inflation and ultimately require even tighter policyto get inflation back to 2%. But Judge Powell reiterating that hiscentral bank is still in a wait and see mode.And if your head is spinning from all of.

The Fed speak we've been having thisweek, fortunately, Bloomberg Economics been tracking it all for us, everysingle word of it. And they reckon that if you look atsentiment, actually it's still in the hawkish side, but becoming increasinglydovish. Cautious is the word that Mike McKeewould use. But where does that lead central banksin Europe who might not want to go first before the Fed?If we flip the board, you can see the ECB may cut ahead of the Fed.This is what markets are currently pricing.And where does that leave currencies?.

Well, potential risk here in Europe.But still to come on the program. Next up, we've got markets today andthey're going to be speaking to Andrew Bowles, PIMCO's CEO for global fixedincome. So do catch that interview at 8 p.m.UK time. Critic two And Guy Johnson will be withyou next. This is Bloomberg.

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