Good morning.This is Bloomberg Daybreak Europe. I'm Tom Mackenzie in London.These are the stories that set your agenda.The stock selloff takes a breather after another jump in treasury yields.Fed chair jerome powell reversing course, saying rates can be kept steadyas long as needed. Morgan stanley is set to plan itsbiggest round of job cuts in China in years.We bring you our scoop and a wrap of Wall Street bank earnings.Plus, the corporate earnings focus shifts to Europe, with two heavy hittersreporting luxury.
John LVMH reveals a slowdown in salesand now dropping across the terminal. The details coming through from ASML,the chip equipment supplier, of course. Bookings for the first quarter, a messfor ASML coming in at €3.61 billion. The estimates had been for €4.63billion. So a sizable miss in terms of firstquarter bookings. We know the analysts have beenscrutinizing that data point out of these first quarter numbers.The focus as well on the demand out of China given the US restrictions.And we'll look for details on that second quarter gross margin.The forecast from ASML is that they'll.
Get 50 to 51% in terms of the grossmargin for the second quarter. Looking ahead to the second quarter aswell, they see sales of between €5.7 billion to €6.2 billion.The previous estimate had been for €6.46 billion.So that's looking ahead to the second quarter.But again, coming back to the first quarter numbers sales and the ordersmissing, the estimates on the sales numbers, net sales, €5.29 billion.The estimates have been for €5.47 billion.But again, the top line, the red had of course, the terminal first quarterbookings for ASML, which of course.
Provides the essential equipment tomaking the high end semiconductors used in everything from EVs to missilesystems. Those first quarter bookings coming insignificantly below the estimates, €3.61 billion versus 4.63 billion.So we'll be checking that at the open, of course, for you and the read acrossto the European semiconductor space. Let's check in on these markets.As we say, stocks taking a bit of a breather given the sell off.What we see, three straight days of selling pressure, this time across USstocks today. Futures pointing slightly higher.Yields jumped again yesterday.
In fact, the front end sale yieldsmoving at the two year, so a little about 5%.We'll get into the detail of that in the next minute or so.But it can the futures when it comes to European futures, are looking a littlebright, up a 10th of a percent after the sell off that we saw yesterday.Not a sell off in European stocks, obviously, 100 futures pointing higherby 3/10 of a percent. S&P futures stateside looking back about5100 gain a little under 2/10 of a percent.NASDAQ futures also pointing higher, again modestly by 2/10 of a percent.Let's put the broad cross asset then and.
Reflects on the moves that we've seen.Again, the sell off across Treasuries. The two year did break through that 5%level, now at 4.9, 7%. Not a lot of movement in the Treasurystory today, but of course, you have seen that run up in years.Jay Powell seemingly reversing course from the comments he made in March,painting a picture of higher for longer when it comes to these rates, 124 on thepound. As we look ahead to the CPI, theinflation print out of the UK, 7 a.m. UK time expected to moderate from 3.4%to 3.1%. The pound 3124 Brent $89 a barrel, down5/10 of a percent.
As investors in the oil space continueto wait for that potential Israeli response to Iran, an iron ore price isactually rallying in the sessions today. So a turnaround from the pictureyesterday. We're going to be watching miners thatlisted in the UK at the open one 112 on iron ore per tonne, up 2.6%.Let's cross over to Asia, where mainland markets in China are having a relativelypositive session. Abraham is standing by in Singapore,April. Yeah.Tom, we're seeing Asia stocks catching a bit of a breather, similar to what we'reseeing in the other parts of the world.
And the currency is where the focus isreally at as they've gotten hammered in the past week or so.No thanks to the US inflation print. And despite the hawkish comments fromPowell lamenting the lack of progress on inflation, the idea here behind theirrebound seems to be that he's not seeing something materially different.Traders were already pricing in a delay in those rate cuts.So we're seeing the Korean War in the Japanese yen there recovering some lostground. That being said, the one still hoveringnear the 1400 level that it hit yesterday, The yen, some say 160 couldbe next on the Chinese currency.
730 seems to be the next level to watch.We did get the PBOC unfixed coming in at 710 for another session.So that seems to suggest that a new trading range is in play.But let's flip the board and take a closer look at what we're seeing on theJapanese yen as well as the Korean one. As we got jawboning from South Koreanfinance Ministry officials, they said to have met the Japanese counterparts.They said to have discussed their serious concerns about the weakness intheir local currencies as well as the volatility.So the jawboning for now also seems to be helping somewhat.Let's take another look also at what.
We're seeing in the stocks, because asyou saw earlier, the gauge of stocks in the region is pretty flat.This is stemming the losses that we've seen in the past week or so.And thanks to the Chinese stocks rebound, as you mentioned, Tom, that ishelping to offset the declines we're seeing in Japan.And part of why we're seeing Chinese stocks run higher today is the topsecurities regulator coming in to ease some of the concerns about potentialdelisting of companies with weak financial health.So we're seeing the small cap gauge surging today, Tom.Overall in Singapore with the breakdown.
Of the Asian markets.Welcome back and thank you very much indeed to Jay Powell now where the Fedchair has signaled that the Federal Reserve will wait longer than previouslyanticipated to cut interest rates in the wake of, of course, a series of higherthan expected inflation readings. Greater confidence that inflation ismoving sustainably toward 2%. The recent data have clearly not givenus greater confidence and instead indicate that it's likely to take longerthan expected to achieve that confidence.Right now, given the strength of the labour market and progress on inflationso far, it's appropriate to allow.
Restrictive policy further time to workand let the data and the evolving outlook guide us.The performance of the US economy. Over the past year has really been quitestrong, come what may. We remain strongly committed toreturning inflation over time, sustainably to 2%.Let's bring in Bloomberg's executive editor for Asia Markets and Paul Dobson.It seems like a marked change of tone from Fed Chair Jay Powell from justMarch when he said he was getting more confident, at least getting a little bitmore confident that they could be closer to cutting a reverse mark of tone.It seems a march reversal of tone, I.
Should say, from the Fed chair.Talk to us about the market reaction to what we've been hearing from Jay Powell.Yeah. So you might you might wonder whetherthe market reaction would have been a little bit more violent in the USsession. Yes, we did see higher bond yields.We did see a little bit of weakness in equities as well, but nothing tooprofound considering that, you know, this is the Fed chair shifting slightlyhis view. But I think that because so many of theFed policymakers have already put that same idea out there, it's not really asurprise to see him relent eventually.
And as well, you know, the market isalready moved to price in pretty much the scenario that he's talking about,where maybe the first light doesn't come till September or even November, youknow, looking at what the market is now factoring in.However, you know, there's two ways of looking at it because as well as the,you know, relative calm in the US markets, a lot has moved over the pastten days. We've got those much higher Treasuryyields highest for the year to date. And it's really the rest of the worldthat is bearing the brunt of this. In some ways, as David was talking aboutwith the ethics markets in Asia are.
Really under pressure in recent daysfrom the strength of the dollar is the kind of I'll currency yield problemscenario once again. Yet the hammer blow of the strong USdollar really being felt across the affects markets, particularly in Asiayesterday. How is the space holding up today then,for. So are holding up better with quite alot of nerves out there. I did think that it was significant,this comment from South Korea, that they've been talking with Japan andvoicing their concerns together. I think that's really interesting and Ithink we're going to want to pay.
Attention to what's happening at theG-20 meeting in Washington this week and whether ethics does force itself ontothe agenda, given the volatility and the moves that we've seen of late and justthe pressure that Asia central banks are under, you know, the market is moving tostart to think about, well, some of the central banks may have to even hikeinterest rates in order to contain their currencies and give them that extrasupport. Where are the weak spots in the market?We're starting to see some probing and some pressures as well as we blastthrough a lot of those key levels right across right across the entire facecomplex here.
So the pressure is starting to mount,even if today maybe not as violent as what we've seen in recent sessions.Okay. Maybe just a temporary reprieve then forsome of these currencies. Bloomberg's executive editor for AsiaMarkets with a break down for us. Paul Thompson, thank you very much.Now, Bloomberg has learned that Morgan Stanley plans to cut about 50 investmentbanking jobs in the APAC region starting this week.At least 80% of the reductions are likely be in Hong Kong and mainlandChina. Let's get more then from bloombergfinance reporter on this bloomberg.
Scoop.Adam hey, adam, what do we know then about the job cuts and what it tells usmore broadly about china's ongoing struggles?Well, at the moment, Tom, what we do know is that we expect that 50 roleswill go, as you said, in the investment banking across the investment bankingdepartment. But this will be a major focus on HongKong and China. As you say, 80% of the of the cutscoming from those two locations. And clearly this is a sign that MorganStanley still has more adjustments to be made in the Asia Pacific region as itkind of reallocate some of its resources.
Given what's happening in China.They're very well flagged and well understood.Story of the slowdown in China and the decrease in the deal activity that we'veseen there. And, you know, the sluggish nature ofthe IPO market there on the equity side, but also the debt market there thatthere's been struggling as well. So I'm clearly this is another sign ofthem needing to to bring back some of the resources there to cut costs incertain areas there. But we've seen it, of course, at someother peers in the region and specifically with very China focusedChina related jobs that they've had to.
Pare back.And of course, globally, a lot of the US investment banks continue to try to cutback jobs in certain areas. The that the businesses continue to bekind of hammered from a number of different directions.But of course, we have seen in these latest numbers over the last few days,Tom, that some of these investment banks are seeing increased activity levels andboth in equities and in fixed income. You saw in the Bank of America numbersrecently just how much of an improvement they've been in that in that equityflow, of course. Equity markets in Asia-Pacific have beenbuoyant.
Certainly Japan has been a standoutmarket. It really has come back on to thelandscape for many global investors, having been kind of shunned for manyyears and increased activity there has helped.But also on the fixed income side, as we've seen and with a lot ofreadjustment in positions, especially in treasuries, but really across thedeveloped world and mature bond markets, those government bond markets haverepriced a scenario that looks quite different for interest rates than it dida few months ago. And of course, that's coincided withincreased activity, increased.
Volatility, which is playing through tothese revenue lines for some of these banks.So that's the good story, the good news story coming out of some of theseinvestment banks. But of course, you still have this issuethat lending income continues to be a pretty big area of pressure there.You know, net interest income is continuing to be a tricky area for thesebanks. Okay.Thank you very much. And they will continue to monitor, ofcourse, whether or not the pick up and trading businesses for some of thesebanks is going to be sustainable, as we.
Say.And as you unpack the retrenchment out of China, that continues at leastmainland China and Hong Kong, at least partial retrenchment.Thank you very much indeed. Right.Checking in on what else you need to know today.This is the day ahead. Picture that 7 a.m.UK time is the date to print the day for the UK.Its inflation data that comes out. The expectation at 7 a.m.is you going to see a moderation for the March print from 3.4% to 3.1% in March.Of course, really consequential given.
The and we've been hearing from AndrewBailey suggesting the inflation dynamics are looking more positive here in the UKversus the US, for example. So that data at 7 a.m.UK time, 10 a.m. UK time, I'm going to get the finalisedeuro area CPI. So build out of the picture in terms ofthe inflation trajectory in the eurozone and at 7 p.m.UK time it's the Fed's Beige Book. So details of the 12 districts of coursethat the Fed covers and real color on the US economy.So that's going be really important as well.7 p.m.
UK time The Fed's Beige Book coming up.The US says it will impose new sanctions on Iran in the coming days.We have the details next. Plus, Jp morgan is all in on a I don'tmiss the best of our interview with CEO Jamie Dimon from the circuit withBloomberg originals Emily Chang that conversation later in the show.This is bloomberg. Welcome back to Bloomberg DaybreakEurope now. The US says it will impose new sanctionson Iran targeting the country's missile and drone program.It follows, of course, Tehran's weekend attack on Israel that's threatening topush the Middle East into a wider.
Conflict and on, of course,unprecedented attack there from Iran over the weekend.Let's get the details. And we begin by Patrick Sykes, who'sbeen following all of this for us. Patrick, I guess the key question iswhat significance these sanctions really are.I mean, sanctions have have a patchy record at best.Is this merely symbolic from the US or is it a real deterrence here?Well, it's yes, that's right. That we know so far that targets in thedrone and missile programs. That's of course, specifically intendedbecause that was the nature of this this.
Weekend attacks that you mentioned.We know the EU is also planning similar moves, and I think it's reasonable toexpect the UK would be thinking about it as well.But as you say, this this Iran has a long track record of dealing withsanctions. It's already very heavily sanctionedplace. It's built this entire so-calledresistance economy based on the idea of finding ways around them and makingmaking them work with links to countries like Russia and North Korea with whomthey can continue to develop those arms programs.I think the symbolism is much more.
Important in this case.It's more of a diplomatic signal to Israel is saying, you know, we're yourallies, we're all here. We're acting immediately in the daysafter that attack. And therefore, perhaps you don't need togo so hard in your planned military response to that attack.You know, take it take this as a message of support and feel reassured that we'rehere for your security. Well, Patrick, on that point, then, whatmore do we know right now about Israel's plans?They've been pretty clear. They say they will respond in some insome way.
Do we have any more clarity?Yeah, we had a story yesterday sort of outlining some of the potentialscenarios. I think the key one sticking from atleast to most escalatory would be something like a cyber attack or anattack on Iran's allies or proxies outside Iran.But in the region, then you have more of like a missile strike within Iran onperhaps a military facility associated with that missile or drone program thatwas used over the weekend. And finally, at the very top, some kindof targeting of a nuclear related facility in Iran.That obviously being the most.
Escalatory.We do not know which way Israel is leaning among all of those.What we do know is that the war cabinet's planned a third meetingyesterday since the attack was postponed.So I think that perhaps just signals that, you know, there is this space fordeliberation, the signaling, they're not rushing in to a decision in terms ofsecurity prospects. I think that that does at least signalthat that they're very much open to moderating that response.But I think we can't underestimate the fact that they do feel they need torespond.
They do feel they need to regain thatdeterrence and show some strength domestically as well.With us, Patrick Sykes joining us out of Istanbul on the latest in terms of theUS sanctions on Iran and the deliberations that continue in Israel onthe potential consequences. Thank you very much indeed.Let's check in the markets, of course, particularly in the oil markets and theoil space on tenterhooks on hold, at least for that potential response fromIsrael. Currently, Brent, at 8945, as investorsawait for that clarity, down 6/10 of a percent so far in the session, ofcourse, back down below $90, about 8476,.
Some WTI down 7/10 of a percent in thesession, gold holding above 2380. Of course, as a hedging mechanism forinvestors that continues just down a 10th of percent so far in the session.But of course, gold has had a storming year to date move 2380 currently pertroy ounce for gold. We continue to watch those assets.More details in terms of the earnings story, but small at the top of the shownow as Volvo trucks that business coming in with adjusted operating margin forthe first first quarter adjusted operating margin for the first quarterup of 13.8%, that is a beat from the estimates coming through from Volvo.The estimates have been for 13.1%.
It's a beat on the first quarteradjusted operating margin in terms of net sales, also a beat from Volvo, firstquarter net sales coming in at 131.2 billion Swedish kronor versus 129billion with the estimate. So it's beat in terms of the sales, beatin terms of the operating margin, profit also coming in higher as well for Volvo.So watch that stock at the open 8 a.m. UK time.Of course, coming on LVMH, a sales growth sputters weighed down bysoftening luxury demand from China and also in the US jumps on the back ofthose earnings. We can have the details next.This is bring that.
Happy Wednesday.Welcome back to Bloomberg Daybreak Europe.Now LVMH has reported its weakest first quarter sales growth since 2016.Since 2016, excluding the pandemic, of course, in 2020, the world's biggestluxury group has been hit by weak demand for cognac and champagne.Let's bring in Bloomberg's Caroline Connan in Paris.I wonder if we can blame currently for some of this accounting.Is LVMH then also feeling, feeling the squeeze.We've seen this, of course, from other luxury groups carrying particularlyfeeling the squeeze when it comes to.
That demand out of China.To what extent is the China story playing into LVMH, or is it a biggerpicture story when it comes to this luxury conglomerate?There's been, of course, a lot of anxiety after this profit warning fromkilling the owner of Gucci last month, especially, as you mentioned, about theexposure in China and in the US, which is not totally recovering for the luxurysector. And if you look at the fashion andleather division for LVMH, which is the most important because it includes theirlabel with Vito, also Christian Dior and Celine, there's organic sales in thefirst quarter are up just 2%, as you.
Mentioned.That's the weakest quarter since 2016. If you exclude the pandemic, of course,very tough comparison in the first quarter of last year where sales were up18%. Chinese demand still not totallyrecovery. And even though Chinese demand for thisspecific division is actually 10%, if you consider also Chinese travelersabroad, LVMH overall sales in Asia, excluding Japan, are down 6% in thequarter. And meanwhile, the US is not totallyrecovering. We're not seeing this recovery storyquite yet.
For LVMH, it's impacting also the Winesand Spirits division that includes Don't paint in your champagne Moet and cognacCognac makers impacted on one side by US retailers being much more cautious aboutcognac in their stores and also this probe into makers of cognac in China.So the Wines and spirits division suffering also in the first quarter withorganic sales down 12%. One bright spot for LVMH in this firstquarter was selective retail. We've Sephora and organic sales, they'reup 11%. But the jewelry we've Tiffany Bulgarialso suffering down a 2% overall. LVMH saying they remain vigilant andconfident for the rest of this year,.
Turning what is a broader read acrossthen from this LVMH earnings story for the rest of the luxury sector.Kidding, of course, was a very specific story because it suffered from also adesigner transition at Gucci. But clearly, LVMH is more resilient.Usually they have 75 brands. They have a more diverse portfolio.So usually they can spread across the difficulties they may find in somemarkets. But the aspirational consumer is stillnot back. The Chinese consumer is more picky.The Chinese consumer spends less but buys better.This has brought, for example, one city.
Analyst to say that eventually,potentially Irma could actually surpass Louis Vuitton in China.The reaction from around the news about this LVMH release last night was quitemuted. If you see one of these from Jefferiestalking about its fine in absolute. Still unclear on relative these overanalysts from Citi talks about sales in line with very low bar expectations inyou demand environment. We'll see how these boots are for thesecond half of the year and we'll get our message next weekstarting on up. Thank you very much, indeed.With LVMH earnings coming out, ASML.
Reports worse than expected bookings forthe first quarter. We will get the details next.This is Mawr. Good morning.This is Bloomberg Daybreak Europe. I'm Tom Mackenzie in London.These are the stories that set your agenda.The stock selloff takes a breather after another jump in treasury yields.Fed chair jerome powell reversing course, saying rates can be kept steadyas long as needed. Bank of Governor Andrew Bailey hints thecentral bank may be able to cut rates before the Fed, saying inflationdynamics in the two countries are.
Diverging.Plus, new orders, a small falls short of estimates in the latest quarter asdemand for advanced chip machines slows. Let's check in on these markets.We look ahead, of course, to the open. 8:00 AM.We'll be watching the tech sector here in Europe on the back of thosedisappointing numbers coming through from small but European futures stillholding in positive territory after the modest losses of yesterday.Gains of 2/10 percent being flagged across the stoxx 50 futures here in theuk. Footsie 100 futures pointing higher by3/10 of a percent.
We're watching the miners on higher ironore prices. S&P futures stateside looking for gainsof 2/10 of a percent after three straight days of losses.And again we talk about the run up in yields and Japan's marked change of toneas well. Yesterday in those comments, Nasdaqfutures points against a 31 points. Let's flip the board then and look atthe two year. What you saw jump yesterday.About 5% moderated a little bit. Treasuries taking a breather, as is thedollar as our stocks today. But we'll see how long that holds forcurrently the two year at 498 again.
After crossing above 5% yesterday 124 onthe panel. As you look at the inflation data out ofthe U.K. at 7 a.m.U.K. time expected to come in at 3.1%.That's the estimates, $89 a barrel on Brent currently down 5/10 of a percent.Still a bit of wait and see when it comes to Israel's reaction and response,of course, to those attacks from Iran and iron ore.As I say, prices jumping in the session today, we watched the miners then at theopen in the U.K., up 3%, Tony, on iron ore at 112 per tonne.Let's return to the morning's top.
Earnings story.Then it comes through from small. The new orders falling short of analystsexpectations by slowing demand and from the chipmaking industry for its mostadvanced machines. For the details, let's bring inBloomberg, the markets editor David Watkin, standing by for us in Amsterdam.David, at first glance, then the numbers look disappointing.Is that is that a fair assessment? Yeah, it is definitely.You know, the numbers there that can be seen as disappointing.It's a bit of a mixed bag. You know, it's kind of a story of acontinued downturn in.
In demand in the US when it comes to thesemiconductor industry. You know, and I think investors in ASMLwill have known that they'd have to stomach some volatility this yearas the chip industry grapples with, you know, the lingering impact of inflationand that kind of thing. So yeah, there's there's obviouslynumbers here that which which did that disappointing.There's also other, you know, other aspects that that could be takenpositively and that the outlook for the full year is unchanged.And the company has also said that they you know, they expect a strongera stronger second half.
What is the china where's the where'sthe China story in this David and all the other obvious reasons for for thesoftness. Well, I think for a small one.One of its challenges has been demand delay.You know, it's always said that this year we would maybe not be sospectacular when it comes to the numbers, because it's it's you know,this is the company that it's the only company that makes these these machineswhich can they build the most advanced semiconductor chips for, you know,processes. And so it has to wait really for morefabrication plants to be made around the.
World.So it's always pointed to next year as being, you know, a year in whichinvestors should really be ready for with China.The restrictions these really kicked in on January 1st.Those restrict ASML from selling less advanced machines.So when it comes to the EUV machines, which are which are what many investorswill be looking at today, it's not able to sell those anyway.So, you know, it did say earlier that it expected China sales to for somethinglike 15% this year based on the early restrictions.Okay.
So we continue to look ahead to 2025, asbig as being potentially a really strong year for as as you say, a year that theyflagged when it comes to those EUV and the extreme ultraviolet machines thatthey ship out sometimes in three Boeing aircraft.Given the size of them a decent demand, it seems for those for those very highend pieces of kit. Does that look like it's going to besustained? Where's that demand coming from?Well, this is the thing. I mean, looking through the numbers,you know, even reorders in the previous quarter were something like 5.6 billion.And this quarter, they actually they.
Actually fell quite considerably.So I think, again, it's there's a there's a number of factors in terms ofwhat ASML is facing. Obviously, artificial intelligence isgoing to be driving demand. It's going to be a major driver of itsbusiness and the business of its customers over the next few years isjust dealing with a fairly sort of lumpy timing in terms of orders at the moment.And again, you know, there will be high demand for this.This is pretty much the only game in town when it comes to these machines.So, you know, they always said it expects a fairly sort of fluctuating fewmonths in 2024 before things really.
Start to accelerate in 2025.Okay. David, what comes out of Amsterdam onthose ASML earnings? Thank you very much indeed.Meanwhile, staying in the tech space, the CEO of I.T.firm Atos, which has been struggling with tumbling shares and a wall of debt,says he's confident the French company will be saved.Pull Salah spoken in exclusive interview with Bloomberg's Carolyn Connor inParis. Actually working with our creditors,both our banks and our bondholders, for a solution to our high level of debt.And the maturities are coming due in the.
Next 18 months.And the dialogue is very, very positive. It's up.We're operating under the reconciliation, as you have mentioned.It's like a mediator is helping through those discussions.And I do believe that everybody is aligned.In fact, we recently had secured some liquidity from those same bondholdersand banks, Again, an indication that everybody is really aligned to find asolution. So what else could be part of theproposal apart from this group of bondholders?Are we going to see, for example, some.
Asset disposal announced before the endof next week? Is that a possibility or do you totallyexclude this? I think what we have presented is acomprehensive plan that included all the assets of it us.Now we're going to have to see what proposals are going to come through.Some of them will just keep the whole the whole of the company together.One of those proposals likely to come from 1.1 of our largest shareholders andothers will come in from our bondholders who seem to also be interested inkeeping the whole company. But we can just really for a go anypotential proposal that may come in and.
May entail a different mix of ideas suchas asset disposal or not, will this whole plan be able to save othersactually out of such a great company? As I mentioned to you, it just really isgoing to be when I do believe that we'll come up with a plan and the company willsucceed long term. So it will be saved.It will be saved. Okay.Paul Saleh, the CEO of ATL, speaking exclusively with Bloomberg CarolineConnan up in Paris. Now, Jp morgan is all in on a lie.In the premiere episodes of the Circuit's second season.The CEO, of course, of Jp morgan, Jamie.
Dimon, speaks with Bloomberg Originalshost Emily Chang about the opportunities and risks for the technology.Be prepared for any business. Think when you think about risk, thinkabout things that can go terribly wrong. Can you survive them?You know, it could be technology. It could be government regulations.It could be it could be the literally the weather.If you're a restaurant that might close you down, if you if you lose this week'sbusiness, you're out of business kind of cash.So you should think all that through. Bill Gates once said banking isnecessary.
Banks are not.To what extent could AI or FinTech replace traditional banks?So I think, first of all, I remember him saying banks are dinosaurs.I spoke to about 1997 and obviously he was dead wrong.You probably agree to that. But but he's not wrong.Technology changes everything. And if any one is complacent or arrogantor think that because you have a big position taking a big position tomorrow,that's a mistake. And then you've described it as banking,someone's going to have to hold the money.So he's got to move the money.
So he's got to raise the money.So he's got to do research around money.Those services will still be around. And hopefully we're doing it and using alot of tech to do a better job at it. But I've always thought it's verypossible that some tech thing, you know, intimated a piece of that.And I've been writing about, you know, big tech going our business.We got fintech, we got a big tech, and they will embed payment systems inthere. And so I'm going to white label bankskind of what Apple did. You know, they have the right to dothat.
I'm not against that.I would be against unfair use of their position to dominance in a business.Well Apple is is going deeper into financial services.Do you worry about the Bank of Apple? Well, I'm going to compete.So they have a they have a tough competitor.But, you know, they hold money. Move money.Yeah, they're a formidable competitor. You know, we also partner with them.But I'm very used to partnering and competing with lots of people.No existential threat. I don't think it's an existentialthreat.
But I think if we were complacent aboutit. Yes.Okay. Jp morgan CEO, of course, Jamie Dimon.And you can watch the circuit with Emily Chang tonight, 11 p.m.UK time on Bloomberg Television and you can stream it 2 hours later on BloombergOriginals. Now for some of the other stories makingthe news today in the banking Spy. Still, HSBC is said to have started anew round of job cuts at its Asia Investment Bank.Sources say the lender laid off around a dozen bankers on Tuesday.It comes as dealmaking across Asia has.
Slowed, of course, especially in HongKong and China. Other banks, including UBS and GoldmanSachs, have made rounds of job cuts in Asia over the past 18 months.Emirates is halting all check ins for passengers for the day as bad weather inDubai disrupts travel in one of the busiest aviation hubs in the world.Dubai has seen torrential rains and heavy flooding, prompting flightcancellations, school closures and traffic disruptions.It stemmed partly from cloud seeding operations that are meant to encouragerainfall in the u. A.E.
Coming up, the U.K.chancellor tells Bloomberg the start of rate cuts could lift the mood in theU.K. and hints at an autumn election.We bring you more with our interview with Jeremy Hunt next.This is back. Welcome back to Bloomberg DaybreakEurope. Now the UK Chancellor Jeremy Hunt saysthe prospect of interest rate cuts later this year would lift the mood of voters,hinting that the Government won't call a general election until the autumn.The decision for the independent Bank of England, just like in the US.That decision is taken independently and.
They have to look at lots of things.I mean, we've still got very strong wage growth data.It's been going up for nine months in a row in real terms.But I think the big message from today is that the IMF are saying thatinflation is going to be 1.2% lower. There are people who are now forecastinginflation will be lower in the UK than in the US or possibly even the eurozone.And so, you know, that situation we were in 18 months ago with inflation at11.1%. That is well and truly behind us.And if you're looking forward in terms of longer term growth prospects, the IMFtoday are saying that the UK will grow.
Faster than France, Germany or Italyover the next six years. So we think we have very strong growthprospects. So you aren't concerned at all aboutwhat potentially could happen to parts of the UK economy like the labour marketif policy were to stay too tight for too much longer, given what you are sayingis a downward trajectory in inflation? Well, obviously in the short term welook to the Bank of England to get that fine judgment right.But what finance ministers like me can do is much more about the longer termcompetitiveness of the UK economy. And we know that the IMF today saythere's a whole section about the impact.
Of AI on the UK economy because theyrecognise that London is now the world's second largest epicenter for AI R&Dafter San Francisco. And there's a huge amount happening inour tech economy which is third only to the US and China globally, and that isreally where the the big growth in the future is going to come in the UK andthat's where we think is makes the very exciting bet for investors.Well in your point is taken Chancellor, that you oversee the fiscal side, notthe monetary side. So on the fiscal side you have suggestedthat an election could happen potentially as soon as October.Should we expect another potential.
Fiscal event between now and then orhave we seen all we're going to see on that front before the votes are cast?Well, it's certainly the case that, you know, the feel good factor as interestrates start to come down, as people start to feel higher, real disposableincomes will be stronger in people's minds come the early autumn than it isnow. People have been through a very bruisingperiod. Obviously, decisions about electiontiming for the prime minister and were we to have an October election.As I've said before, it would be possible to have a fiscal event inSeptember, but we would decide much.
Nearer the time whether that was theright thing to do. Well, of course, you've alreadydelivered a lot fiscally in terms of tax cuts, including personal tax cuts.And yet, when you look at polls, obviously the Conservative Party isstill running significantly behind Labour, I believe, by roughly 20 points.What else may need to be done on that front to convince UK voters to keep theConservatives in power? What would you consider doing?Well, I'd be very cautious about looking at those polls because first of all, aswe can see from the challenges facing incumbent governments, not just in theUK but in the US and Germany, France,.
The electorate have been through areally difficult period with an energy shock, with high inflation, with apandemic. But when it comes to a general election,it's a choice about the future. It's not a referendum on how you feelright now, and that becomes a very different decision in people's minds.Okay. You get Chancellor, of course, of theExchequer. Jeremy Hunt Let's get more then fromBloomberg's UK government. Lizzie Bird In terms of the take on whatwe've been hearing from the UK Chancellor.What stood out to you then, Lizzie?.
Well, it was nice of him to drop inwhile he's in town for the IMF meeting, wasn't it?The main point that I took away was that he says rate cuts later this year willlift voters mood. So that confirms essentially ourexpectation. Rishi Sunak's working assumption thatwe're not going to have a general election until the autumn, But it's moreinteresting, I think, in the context of what we've heard from the Governor,Andrew Bailey, saying that the UK could cut interest rates before the US.Does that mean that the general election could come sooner in the UK as well?He mentioned the IMF forecasts.
They were expecting that UK inflation'sgoing to average 2.5% this year, so lower than the US in line with otherEuropean countries. The flip side of that though is weakgrowth lower than any of the G7 nations by Germany.And of course, Tom, that's going to be a concern as well as Rishi Sunak headstowards this general. And of course, we have that you touchedon inflation. We have the inflation dropping 7 a.m.UK time, of course. And really interesting, given what yousaid about Bayley yesterday, really drawing a line in terms in the sandbetween the inflation dynamics in here.
In the UK versus the US and that's it.That's a change that we see in the last six months or so.That was really interesting yesterday. Talk to us about what to expect frominflation then. So economists expect a drop from 3.4% to3.1%. So underscoring that divergence betweenthe UK and the US inflation pictures, even if services stay sticky in thisdata, it's looking like the UK is finding it easiest to get towards the 2%target. Now you did see traders paring theirbets on both after that hot hot topic of US CPI prints.It's interesting because the inference.
From that is that the Bank of Englandwaits for the Fed to cut raise. Our economists don't think that that'sthe case. They think that actually the Bank ofEngland could cut in June and buy more than the market expects.Of course, it's going to depend on the likes of Catherine Mann and JonathanHaskel Make in Green, who are still concerned about inflationary pressureshere in the UK. But just take a listen to the governor,Andrew Bailey, because he seems to side with our economists on the idea that theBank of England has got a mind of its own.Why not make some inflation a rather.
Different between Europe?I mean, Europe geographically now and on the US, I think there's more demandletting inflation probably pressure a bit more and demand that inflationpressure in the US and we're seeing. So I think the inflation dynamics aredifferent. We're still seeing the extension of theprocess of coming out of the big supply shocks that we had, the impact of thewar, the impact of coming out of Covid. So the governor referring to thatdemand, led inflation that prices in the U.S compared to the U.K. markets currently see a first rate cutfrom the U.S.
In September.If we get a softer CPI print this morning, could it bring that forward toJune? The countdown a little under 10 minutesaway from that inflation data, Lizzie. Patterns can be across all of that withthe analysis, of course, Lizzie, but now you can cross that.Thank you very much indeed. And stay tuned for our interview withformer U.K. chancellor Philip Hammond.That's going to be interesting as well. 9:10 a.m.London time on The Pulse with Francine LaCour.More coming up on Bloomberg when we get.
A deep dive in terms of the halving ofBitcoin and reflect again on the pricing around the Fed.Stay with us. This is remarkable. The Olympics sporting World Cups leapyears and Bitcoin halving. They each happen every four years and inthe crypto world halvings typically meant a boon for prices.In a nutshell, Bitcoin halving means fewer new tokens are issued.That's because Bitcoin miners who validate blockchain transactions receive50% less of a reward for doing so. Bitcoin's launch in 2009, minersreceived 50 new coins per block post the.
Halving in 2024.That will be cut to just 3.1 to 5 Bitcoin instead.In the past, we've seen prices spike following the event.For example, in 2012, when the token jumped by 8,000% in the following 12months. This time around, the prospect forfurther gains is unclear. Some analysts say the halving couldtrigger upside of at least 80%. Others argue the event is already bakedin, particularly as bitcoin's already risen to fresh records this year.Which brings to mind a familiar phrase. Past performance does not guaranteefuture results.
Okay.As Annabelle was saying, the question around how much is priced in aroundBitcoin is key. Of course, as we lead up to that halvingevent likely around April the 20th, you've seen about 50% gains for Bitcoinyear to date and you got that record 73,000 around the March level.You see that chart that out here. But just the reflect on the 50 daymoving average, which is around 67,000. You're completely below that right now.The last time I checked, we're at around 63, 64,000 for Bitcoin.So does that provide opening for further upside or are we now capped at thesekind of levels?.
Again, the key catalysts that camethrough for Bitcoin this year, expectations of rate cuts, but alsothere's inflows into ETFs and the halving event.And on the right question, let's flip the board and have a look because ofcourse the markets have been repricing all of that.We had the comments out of Jay Powell yesterday.Again, a marked change of tone from the Fed chair.Just reflect on where we were at the beginning of this year when expectationswere that you could get as many as six rate cuts.Now the expectation is that you're not.
Going to get the first full cut.And so potentially September of this year, this is the effect of real rate.The effective funds rate from the Fed was up around 5.3%.And the purple line is the expectation. That's what's right around Septemberwhen you get to around the 4% level. So that's the expectation changing thatyou may get as few as one, possibly two cuts versus the six at the beginning ofthis year. The way that markets have repriced thisview and the comments from Jay Powell tying into that has implications goesacross asset class, including bitcoin. Let's check in on these futures then.It's an earnings day.
SMI with a disappointment.LVMH, the ADR has actually ticked up despite sales slowing again for thatluxury group to levels we haven't seen since March 2016, if you strip out thepandemic. So we'll be looking at luxury, lookingat the miners as well, given the tick up in iron ore prices.And again, looking at the semiconductor space on the disappointing order numberscoming out of ASML futures now in Europe, having started off the sessionin the green, now Flat Footsie 100 futures are looking to gains of 2/10 ofa percent. I wanted to what extent the miners areplaying into that story.
The DAX futures, meanwhile, looking toat around 21 points, up a 10th of a percent.Up next, of course, markets today where the team will be deep diving in all ofthese questions around central banks, around the earnings story.And crucially for the UK, the inflation data that drops in around 3 minutestime. That is Marcus today.Max, this is bring back.
