Tesla in Disaster? | Fracture of day: Europe 04/24/2024

Good morning.This is Bloomberg Daybreak Europe on Tom Mackenzie in London.These are the stories that set your agenda.Tesla shares soar as investors cheer Elon Musk's promise of making cheapercars sooner. Investors overlook a big miss onearnings stock's gain in Asia. Following a tech fueled rally on WallStreet. A $69 billion sale of two yeartreasuries. No solid buyer demand, even as a 5%coupon proves elusive. Plus, President Biden says fresh U.S.military aid will start flowing to.

Ukraine within days after the Senatepasses a long delayed aid package. Let's check in on some of the earningsthat are breaking across the terminal. Right now, we go to Volvo cars with thefocus, of course, on the competition, the price cutting, the cost cutting,that company. We know that EV sales overall, ofcourse, across Europe have been slowing in terms of the growth is over EV sales.Volvo Cars sees full year revenue at least of up 15%.So they see full year revenue growing at least 15%.That's pushing forward. In terms of the first quarter, therevenue is a miss for Volvo cars logging.

93.8.So 94 billion Swedish krona in the first quarter in terms of revenue below theestimates that had seen just shy of 100 billion Swedish krona in terms ofoperating income for the first quarter, that number came in again below theestimates, 4.71 billion Swedish kronor, 4.7 billion versus the estimates of justshy of 6 billion. The margin as well.Also a miss 5% versus just shy of 5.7%. But again, the full year revenue stillseen that growth of up 15% to Volvo cars.That is a company we will watch, of course, at the open as we continue tocontend with a little bit of softness in.

Terms of that demand.Again, the competition from China, the price cutting, the competition from thelikes of Tesla as well, a red head as well on Rush.We'll get to that shortly. But just a fly that we're going to bespeaking to, the Volvo car CEO and President Jim Roe in that conversationat 7:15 a.m. UK time and on road, the redheadcrossing for this Swiss drug maker. First quarter sales coming in just shyof the estimates, 14.4 billion CHF. The estimates have been for 14.5billion. So just a small mix coming through forthe first quarter.

We know that in terms of the COVID 19input, that has slowed the sales, basically that business fading lastyear. So we know that that could havepotentially been a drag as well. We look for more details on this, ofcourse. And then the Swiss see the the impact ofthat strong Swiss franc is a factor to be looking at as well.They're confirming their outlook for 2024.Not a big surprise that that was expected.But again, the outlook confirmed by Roche for 2024.And in terms of the breakdown in some of.

The individual drugs, we'll get thedetails on that. But the top line is first quarter sales,just slight mess there for Roche in the first quarter.Let's check in on these markets because the earnings story is part of thepackage here, but there's a number of positive catalysts coming through andfeeding into the upside that we're seeing.The good news is bad news or the bad news is good news when it comes to usdata with business activity slowing. And that suggests that there iscertainly still a window for the Fed to cut at some point this year.Then that was a Treasury auction that.

Was very well received as well.And then the earnings story and the optimism in terms of the outlook comingthrough from Tesla, the earnings not as bad as they could have been, was theline from some analysts out there and then pushing forward in terms ofpotential cheaper model. We'll break that story down for you, ofcourse, in detail through the show. European futures pointing out by 4/10 ofa percent footsie 100 looking to add 48 points.Commodities getting a lift as well, copper and iron.Also, keep that in mind, S&P futures back above 5100, looking to gain 3/10 ofa percent after two solid days.

In terms of the upside that we've seenfor the S&P, NASDAQ futures currently pointing higher by 7/10 of a percent.Let's flip the board and look across asset then with the focus on theTreasury curve. Given that two year auction yesterday inthe US, it was well received for 92 on the two.Yet right now Eurodollar at 1 to 7 flat essentially for the single currency butback above that 1 to 6 level Brent $88 a barrel up just a 10th of a percent iniron ore rallying today on question marks about supply close to 5% on ironore. So we'll be watching basic resources andthe miners at the open.

Let's cross over to Asia now and see howthat market is shaping up. Optimism there as well.Abraham standing by for us in Singapore, April.Optimism indeed, as we saw last week, though, remember how it was verytentative in the Asian markets and we saw the infotech sector badly beaten up.It was that confluence of factors, no thanks to the Fed narrative, Middle Easttensions and then tsmc's guidance. Today, Asian markets are getting theirgroove back on the info. Tech sector is the top performing one wealready knew coming to this week that earnings were going to be a key test.So far what we're hearing from Tesla and.

Texas Instruments as well is providingthat sense of promise and optimism to the markets.You're seeing the Nikkei, Cosby, Taiex all moving higher and the Hang Sengalso, well in the green for another session, erasing the declines for theyear. Let's take a look at what this is doingto the effect space. There is a read through from that techrally that the board as the south Korean one, is a top performing currency in theregion today amid the stock market inflows.Taiwan dollar also doing well, keeping an eye on the Aussie after a hotinflation period.

Now we are also keeping an eye on theyen weakness despite the Bloomberg dollar index softer fourth session, itis moving towards that 155 level on dollar yen as the BOJ heads into thattwo day policy meeting tomorrow, you can bet that yen weakness will figureheavily into the equation and conversations about imported inflationthat the board. Again, I want to take you to the chipstocks in the region after Texas Instruments gave that solid forecast.It is, of course, seen as a bellwether for the sector.So the South Korean, the Japanese chip related stocks, they're moving on up andthat's good.

The board again, take a look at whatwe're seeing among the EV related stocks, thanks to Tesla allaying someconcerns about its strategy by saying it's going to push out these cheapermodels soon and it's taking along for the ride its suppliers as well as someof its peers. These two listed in Hong Kong, Tom.Okay, as April says, the Asian markets getting their groove back.April Hong and Singapore, thank you very much indeed for the breakdown there interms of the Asian market action and as you said, tying that to the Tesla story,at least to some extent on the earnings story.Tesla shares then surging after it said.

That it is accelerating the launch ofmore affordable models following a decline in its profit margins and sales.The EV maker says it aims to start production as soon as this year, wellahead of the like 2025 timing that had previously been pledged by the company.Let's bring in Robert Lee, standing by now, a senior analyst for BloombergIntelligence, joining us with the details, the deep dive on the earningsstory when it comes to Tesla. I'm pushing ahead as well.And arguably, Rob, it was all about the call rather than numbers that camethrough for the earnings. It was the call and the conversationwith Musk that seemed to alleviate those.

Investor concerns.No, I think you're absolutely right. I mean, the market anticipated weakresults and it truly got those. But those are in the rearview mirrornow. To use a driving pun, it's all aboutlooking forward. And I think investors gained a bit ofconfidence on the strategic direction of the company, given that it now seems tobe focusing more on the mass market and returning to their original stated aimto go into lower priced EVs. So the market's taken that quitepositively. Robo taxis, etc.is still a potential focus, but the I.

Think most people would agree that's alonger term opportunity with various question marks as to when these thingsreally become viable. And then secondly, the CYBERTRUCK, whichis a low volume product for them at the moment.Tesla confirmed, or Elon Musk, I should say confirmed, that production isramping up faster than expected on that. And that gave the market some confidencethat that particular business line could potentially reach breakeven as soon asQ4. So those were two main incrementalpositives that the market didn't really see coming, and that's why you'regetting both a bit of a short squeeze.

And a rally in the aftermarket.How was that tying in to the earnings outlook for Tesla and how that'sadjusted? Rob?I guess analysts are still pencilling away on that.And so we've yet to see the update on the consensus numbers.But arguably, the you know, the numbers given that were baking in very lowexpectations, could come up a little bit for this year.And also, looking at the numbers reported, the gross margin also came ina little bit higher than expected. And Tesla has clearly been cutting costswith the staff, layoffs, etc..

So there is maybe some incrementalupside on earnings estimates in the near term.And as I said, I think most people would agree that the mass market opportunityis both near-term to them. And as you said in your intro, they'relooking to roll that out faster than expected.But that's a more near-term opportunity versus robo taxis, which really, I wouldargue, are still in the realms of realms of science fiction to some degree.There's been some interesting trials, but that technology is nowhere nearbecoming mass deployed at the moment. So the lower priced EVs is a near-termmarket opportunity for them that could.

Well generate some medium term upsidesto their earnings estimates, assuming they execute in a very, very competitivemarket. Okay.Rob Lee, on the near-term and then longer term prospects for Tesla, senioranalyst at Bloomberg Intelligence. Thank you for the analysis, Rob, asever. Now to the US and the macro,particularly when it comes to what is happening on the fiscal front, the USTreasury's hefty $69 billion sale of two year notes still solid buyer demand.There some questions as to whether or not that would happen, but even as themuch desired 5% coupon proved elusive,.

You're close to that be didn't cross the5% level. It comes as business activity meanwhilein the US expanded at its slowest pace slowest pace in four months.The jobs component also softened within that data point.Bloomberg strategist Mary Nicola joins us for the breakdown.Mary, let's start with the Treasury markets, at least the auction and towhat extent this was well absorbed by the markets, A positive, it seems.Yeah, absolutely. I remember yesterday I was on your showsaying that there were headwinds for the 2% for the two year auction.But obviously, you know, the 5% coupon.

Is quite attractive.So it could signal that we could see a good one for the five year and the sevenyear today. But it will still be on what the run uplooks like heading into these auctions and how Treasurys are playing out.But it's it's the momentum for Treasuries right now looks a bit still abit precarious when you have GDP data coming out and of course the you've gotPC on Friday as well. And meanwhile, Australia a reminder thatinflation isn't just sticky in the US, it's sticky in Australia and it seemsthe markets are starting to push back in that jurisdiction as well.The prospect of cuts from the central.

Bank that talk to us about the relevanceof that inflation data out of Australia. Absolutely.It just resonates the higher for longer a longer mantra.Not only is it coming from the Fed, but it's also from the RBA, and it justshows the stickiness of inflation more globally.And of course, then you have the resilience in oil prices.Oil prices still remain high. So there's still some upside risks toinflation, which could keep a lot of central banks on the sidelines for now.RBA's perfect case heading into the CPI data swap markets, we're looking about a70% chance of a cut.

Now they're pricing in about less than a50% chance of a cut for this year. So a lot of a lot of these the theinflation numbers are coming out showing that, you know, the central banks reallyhave to be a bit more careful before even considering these rate cuts.Yeah, the hard work that needs to be put in to get through that last mile when itcomes to inflation, with that three plus percent handle in terms of CPI, I thinkwas 3.6% on Australia wasn't a stretch. As Mary Nicola, thank you very muchindeed. Walking through the Treasury auction inthe US and of course that inflation print and how that resonates globallyout of Australia.

Here's what else to think about that dayahead 7 a.m. UK time because it is a big week interms of bank earnings across the eurozone here in the UK as well.7 p.m. UK time we're going to get LloydsBanking Group earnings. So think about that in terms ofscrutinising what is happening in the UK banking space.9 a.m. UK time as well.The German Ifo business climate is expected to take up is expected to buildout the picture of a modestly improving German economy.That data and that data out at 9 a.m.

UK time.And of course on the earnings front, another big big day.Winning at Boeing in the US of course matter and to what extent the aircatalyst is feeding through into that company, IBM as well and Ford on theautos front, all of those earnings coming out later in the day stateside.Coming up, US President Joe Biden expected to sign a long delayed aidpackage into law today, today clearing the way for resumed weapons shipments toUkraine as soon as this week. The details are next.This is bloomberg. Welcome back to Bloomberg DaybreakEurope.

Now US President Joe Biden is expectedto sign a long delayed $95 billion emergency aid package for Ukraine,Israel and Taiwan into law as soon as today.It clears the way for resume shipments of weapons to Ukraine this week.Let's bring in Bloomberg Markets today anchor Christine, for the details onthis. So quickly, what can Ukraine expect fromthis, though, replenishment of air defense systems?That's the big one here. We already had a really unique, forexample, the last 24 hours, talk about giving long range missiles inparticular.

So the ammunition is coming from otherparts of the world. But the actual machinery, the actualsystems, the actual air defense systems, drone warfare, for example.That's the part that's getting replenished from the this aid package,about $14 billion of US defense getting added to that $13 billion.When it comes to the actual machinery, the equipments, the firearms.There you have about 9.5 billion though, in forgivable loans.I think this part is a really key piece of the equation simply from a politicalstandpoint. One, because this was President Trump'sinitial idea and actually brought on.

Some of the kind of more right wingcongressional representatives onto this bill.But it also means that it has to do things with more things like aid, forexample, in parts of communities. It's not necessarily related directly tothe defense store in Ukraine has a little bit more to do with economicassistance. So that is the key parts of theUkrainian bill at a time, by the way, when the ports, for example, are comingback into focus, you're really keeping an eye on things like grain shipmentsout of Ukraine and what that looks like. It was certainly under a lot of pressureas Russia was making ground.

And arguably the Ukraine segment of thisbill was the most important. But there was a lot in there, includingadditional sanctions on Iran. Iran is already heavily sanctioned, ofcourse. So do these additional sanctionsactually move the dial? In theory, they should.And all of your blocks over I Bloomberg opinion made a great point that'sactually not about more added sanctions about the enforcement of the sanctions.The question is how much money does it add?And I think the fine print is really important here because it's not justabout targeting refineries or ports or.

Vessels for Iran, which is already beingdone in a lot of ways. By the way, it's targeting the financialinfrastructure that ends up with a lot of Iranian crude into places like China,for example. Again, Javier Blas I love his column inthis week where he said that a lot of that output is being kind of branded asMalaysian crude instead and ending up in China.What's important here is that this bill now targets that financialinfrastructure, the banks, the financial institutions that really carry out someof those trades. What it means for the oil price, though.Eurasia Group saying that stricter.

Enforcement of those sanctions, not justpassing it, would add 2 to $3 per barrel on top of a $90 baseline.Again, it comes with the implication that it has to be stricter.Enforcement is something that the Biden administration has been having a lot ofpushback on that they haven't been tough enough.But even the White House saying that they're okay with doing this this timearound. What about enforcement?Amrita said something else yesterday as well, that that enforcement hasn't beenthere up until this point. So we watch that, as you say.Meanwhile, the divestment of TikTok from.

Bytedance that will be signed into law,they have a period of time to work through that.Legal challenges. What's next?Well, it doesn't happen as quickly as perhaps it has in the past, where TikTokjust disappears from the App Store or Google Play or whatever it is, beingalready a hotly contested issue. You have the leadership over atBytedance, in particular in China, but also in tech talk as well, saying we'regoing to put this up in the court. This is a long legal battle if indeedthe United States is able to pass this bill, which is looking like, but itwon't immediately disappear from.

Everyday use.The concern here, of course, is the algorithm.You've made the point that this is China's hard line as well.It looks like it's the United States hard line as well.I think what we're looking for ahead is a very long legal battle that willultimately end up in the Supreme Court. Yeah, 170 million users or so in the USwill be looking at that as well, monitoring that Kristie.Thank you very much indeed for the breakdown, the importance, of course, ofthis bill as it clears the Senate hurdle and will be heading to the president'sdesk, where, of course, he says he will.

Sign it.Now, coming up, Boeing prepares to release results without nets, watching,of course, for the cash burn in the wake of its max seven crisis.The challenges for Boeing and how that is all fitting in to those earnings.We don't set you up with the preview for that.Stay with us. This is Bloomberg. We believe for the next five years, thefocus on South Africa. Like I said, this business banking, thisinsurance is optimized. 22 million clients are you create theecosystem for 22 million clients and and.

Then we've got a fund that operates inMexico, Spain, Poland and Latvia. It's online lending business.And how do you transform that through a bank over time?And how do you then take their Capitec brand that we've both a digitalplatform? How do you take that international?So that's what we believe is the long term plan of.And that was the CEO of South Africa in the lead lender, I should say, CapitecBank. Speaking to Bloomberg's Jennifer Zagat.Sandra and Jennifer will be leading, of course, our special coverage of SouthAfrica's elections on next Friday's.

Africa amplified right here on BloombergTV. So tune in for that as well.Back to the earnings story now and Boeing's cash burn will be in focus whenit reports earnings later today. The plane maker is engulfed, of course,in a crisis involving its main source of revenue, the 737 max jet.Let's get more then from Bloomberg, said Philip, who covers all of this for us ingreat detail, said, what do you and the team or investors going to be lookingfor then from Boeing's results? Morning, Don.So what investors are really looking for from Boeing is about the cash flow andthe cash burn this quarter, because.

Essentially there's an estimate thatthey may have burned through as much as 4 billion in cash and also takenbasically 4 billion and debt. So that would have reduced thatavailable cash by almost half. And that's a really big concern to seewhat that cash burn looks like and how they can sort of get that cash flow andget cash back towards the estimate that they had at the start of the year beforethe blow out on the airplane. Okay, So the cash flow in the cash burnclearly in focus under the lens for investors and you and the team.What about what about the moves from regulators around Boeing?How consequential have they been?.

What action have regulators been taking?Yes, the regulators have obviously put going under a lot of scrutiny because ofthe max max nine door blood blowout on January, in early January on the AlaskaAirlines plane. And that's really been a big concern forboth for Boeing's production because regulators there, they've restrictedthem from ramping up production on the 77 max.They also sort of demanded lots of audits and they've done lots of variousquality checks. And that's really had an impact onbasically deliveries. And so Boeing isn't able to deliver asmany planes to airlines.

And as a result, they're basicallyhamstrung in terms of being able to sort of ramp up production at a time whendemand is really soaring. And said, get us up to speed in terms ofthe steps that Boeing is taking to kind of address these multitude of issuesand taking a wide range of measures, including the fact that they'veannounced a sweeping management change with the CEO stepping down at the end ofthe year, the chairman stepping down, and also they replaced the head of thecommercial airplanes unit. So they've announced wide leadershipchanges. They've also announced the fact thatthey are looking at acquiring Spirit.

Aerosystems, which is an importantsupplier to Boeing and which makes 70% of the 77 max fuselage.And so they've announced various measures, and now it's really a questionof implementation. And also investors will be looking atquestions about what would the next EU is going to be.What the board is looking for and essentially what where where Boeing goesfrom here. Okay, Glenn Beck said.Phillip, setting us up in terms of the preview for those Boeing earnings.Clearly and a lot of questions still need to be answered, whether it's theexecutive team at Boeing, of course, the.

Changes, adjusting some of thesechallenges and the cash flow as well. The cash burn clearly going to be infocus for investors. Thank you very much.And don't miss our interview, by the way, with the CEO of their competitor,Airbus GM. For that is tomorrow.That interview, of course, well worth tuning in for.Let's check in on the futures and a number of catalysts coming to the floorto push us up in terms of setting us up for a positive day across the equitiesspace. We've had a solid handover from Asia andof course the gains coming through from.

The US.European futures pointing higher by 5/10 of a percent.The earnings story is there. The fact that the Treasury auction inthe US was well received footsie 100 futures as well, pointing up by 6/10 ofa percent. The commodity story, particularly thelikes of copper and iron ore, will play into that.DAX futures over in Germany looking to add 4/10 of a percent.Coming up, Tesla's earnings, miss. But it's overtaken by Elon Musk's newplan to deliver cheaper cars faster. He's relatively optimistic on theprospects.

We get the details on that key story.That is next. This is Bloomberg. Good morning.This is Bloomberg Daybreak European Tom Mackenzie in London.These are the stories that set your agenda.Tesla shares soar as investors cheer Elon Musk's promise of making cheapercars sooner. Investors overlooking a big miss on theearnings stock's gain in Asia following a tech fueled rally on Wall Street.A $69 billion sale of two year treasuries.The solid buyer demand, even as a 5%.

Coupon, proves elusive.Plus, European earnings gear up with Volvo car missing revenue estimates forthe first quarter. And French luxury maker Karen comesunder pressure after Gucci sales tumble on weak demand in China.Let's check in on these markets then. In terms of the earnings picture, alittle bit mixed when it comes to Europe, but the conflicts coming throughfrom the US, certainly you've had two straight days of solid upside for theS&P logging gains of 1.2% yesterday, the best back to back rally for the S&P intwo months. NASDAQ as well.The NASDAQ 100 ending up 1.5%.

European futures pointed gains of 5/10of a percent. The footsie 100.Keep an eye on copper and iron ore prices and basic resources.That index pointing higher by 6/10 of a percent.S&P futures looking to build on the gains of yesterday, 5126 looking to add19 points. Nasdaq futures 17,734 at 7/10 of apercent. Yes, the optimism around Tesla, despitethe lackluster earnings, that's the outlook and the guidance coming throughfrom Elon Musk, but also the semiconductor space getting a lift thismorning in Asia and that could filter.

Through to Europe as well.On the back of what we saw from Texas Instruments and an upgraded or at leastmore positive outlook coming through. Of course, Mac Key semiconductor maker,let's flip the board and look across asset as well for you.The US two year in focus for us 492 well received in terms of that $69 billionauction. So some relief there across the Treasurymarkets yesterday. Euro dollar 1 to 7 Brent the $88 abarrel up 2/10 of a percent. Iron ore soaring just shy of 5%.Copper also getting a lift as well. A red head crossing right now when itcomes to the real estate story of China.

Of course, iron ore ties in to that aswell. Interestingly, this is around countryGarden and the news coming through that they have negotiated to extend that yuanbonds in terms of the payment on those yuan bonds to avoid a first localdefault. For the context Country Guide, one ofthe biggest real estate companies in China.It's a brand that's very, very well known.They did default on their dollar bonds. That default has happened about a yearago. It's the local bonds, the yuan bonds onwhich they have avoided their first.

Local default.So a bit of relief coming through in terms of the ability for this key realestate company in China to negotiate its debt payments at a time.Of course, when you continue to see pressure across the real estate marketin China, an 83% slump in home sales just last month.And that cash crunch is, of course, proving extremely painful for thesecountries. But a big relief coming through forcountry. Got move.Going to watch the local bonds on the back of that.Let's get more on Tesla then in terms of.

The earnings share surging, as Imentioned in late trade after it promise to accelerate the launch of moreaffordable models following a decline in first quarter profit margins and sales.Let's bring in Bloomberg Asia transport reporter Danny Lee standing by for us inBeijing. Danny, tell us about what Elon Musk saidduring the earnings call that led to this this optimism amongst investors.Yeah, Elon Musk looking to bring forward and Tesla's looking to accelerate theproduction or or the unveiling of what should be a new low cost set of EVmodels. And this is really important for Teslaand its future growth story, and.

Particularly as around 2020 for whichTesla faces notably lower growth. And so therefore by having thesepotentially new and more affordable models out there, it helps potentiallyrefresh a lineup that has become stale. A lot of it is also very small.And so investors are broadly happier with this accelerated timeline,something that was going to happen at the end of last end of next year in 2025could come as soon as this year or early next.So this is potentially very, very positive.But unfortunately, there is still a lot of details that is yet to be really beenclarified by Elon Musk.

And he's saying wait until August, waituntil August, when we will have an announcement on something related to aROBOTAXI and whether that could involve one of the things that could be low costand help to drive and revive this slumping stock performance.Yeah, and it just comes down to implementation.Now, the key question of whether or not they can actually implement around thatsped up time time frame. Interesting.The Dan joining us out of Beijing where of course the competition out of Chinahas been one of the key factors, key challenges for Elon Musk and Tesla, thefirst quarter mix.

Bogdan, Danny, what stood out to you?I think just across the range of the metrics that we were looking at,everything that had fallen in terms of missed estimates, rather.And so this was not too much of a surprise given what we saw coming basedon weak first quarter delivery numbers. And so therefore, with what Elon Muskhas been trying to do to kind of turn this this ship around on Tesla, in fact,the fact that they had cut made its biggest workforce cuts last week ever.And therefore it's also really going to laser in on on further cost cuts goingforward. So that for me was the most interestingpoint, aside from this accelerated.

Announcement on on low cost ofproduction. And so therefore, it could put it in abetter financial standing going forward. Okay.Bloomberg Asia transport reporter Danny Lee giving us the context around thoseTesla earnings. Thank you very much indeed.Joining us out of Beijing. Now, another of the Magnificent Seven inaction later today with Mazda reporting first quarter earnings.Today, the company's generative AI tools expected to continue strengthening itsposition. Arguably, matter was ahead of the curvewhen it comes to building out.

Let's get more from Matt Bloxham fromBloomberg Intelligence. Matt, what are you in the street gonnabe looking for then? Yeah, I mean, I think the M-word isimportant. Magnificent.I think people are expecting these to be really good results.And I had a bit of a lull 12 months or so ago, but they've kind of really comeout of that. You know, the market's looking for aboutsomething like 26% year on year revenue growth, really big improvement inprofitability. They said some of that is coming fromAI.

They're really using those toolseffectively to improve ad impressions, advertise, saying, yeah, we want toadvertise on Instagram, on Facebook, because these tools are helping us toreach customers and actually sell product to them.So that's really helping them obviously, in this kind of whole news around Ticktock, tick tock. It's been a big shadow for matter for along time now. Reels, which was the Instagram kind ofrival to tick tock It's time to getting traction too.So that's helping. So generally, I think when the streetlooks at results, they're expected to.

See really positive numbers.I don't think they're going to disappoint, but obviously the shareprices may be reflecting that already. See, another thing that people are goingto be looking at is the forward guide. So for next quarter, where is Maticgoing to kind of position revenue expectations?The Street's looking for about $38 billion of revenue.I think a lot of people are expecting maybe that could be a little bitconservative. So we'll see.Okay. $38 billion of revenue expected by thestreet you touch on sector.

It very likely he's going to he's goingto face, at least on paper a ban on is being divested from bytedance.The president's going to sign that bill it seems later today.There's a legal process to work through, of course, and it's very unsure,uncertain as to whether or not you'll actually see that ban in consequence.But it could prove consequential for matter.Yeah, could I say that that the the clock starts ticking on this to 70 daytimeline in theory at least maybe later today.As you said, there's lots of kind of resistance expected from bytedance, allsorts of legal avenues they can pursue.

To at least delay this from it beingimplemented perhaps by up to a year, possibly longer.But, yeah, I mean, I think if ultimately tick tock in the US is either sold or ithas to be kind of closed down, then for sure matter is going to be one of theprincipal beneficiaries of that because it is such a big rival to Instagram thata lot of content creators are going to have to think, well, maybe we're goingto have to go back to Instagram and use the online platform.It's going to give a big boost to reels. Obviously, lots of different thingscould happen in the next 270 days, but definitely I'm sure there's a lot ofwork going on within a matter to make.

Sure they're well positioned and theyshould be a big beneficiary of any any ban.Yeah, the prospect for them arguably is going to be is going to be tantalisingis. Matt, thank you very much indeed.Setting us up, of course, the importance of the matter, earnings coming out ofthe US and what to scrutinize in terms of those numbers.Matt blocks, of course, from Bloomberg Intelligence with a deep dive there.Thank you. Now for some of the other stories makingnews today, Bloomberg understands that IBM is in advanced talks to acquiresoftware company Hashi Corp with a.

Possible agreement coming as soon astoday. Has she Corp.shares jumped on the news, posting that biggest one day gain in more than twoyears, giving the San Francisco based company a market value of 5.8 billionUSD. IBM reporting later today.By the way, these are shares, meanwhile, gaining in extended trading after thecompany reported a profit beats the payments.Giant says adjusted net income for the fiscal second quarter rose 17 one seven17% to over $5 billion. US credit card spending growing over 6%from a year earlier, with worldwide.

Payments volume rising 8%.Heineken, the drinks maker, of course, due to report in the next half hour,also expected to benefit from an earlier Easter.So some of those seasonal changes. For a preview on the numbers with thiscompany, I'm joined by Bloomberg's Dasha Silva for the details.Dasha, what are we expecting? Boring, I think with Heineken, like alot of the consumer goods companies, 20 at last year was a really difficult yearbecause they had contracting volumes. And in this quarter Heineken isactually. Fixing to come back to growing volumesand sales are expected to grow about 6%.

So I think the key the key thing to lookfor is is that growth driven more by price or by volume.And the balance of that will kind of tell us whether Heineken is going to beable to claw back its margin. Okay.The price versus volume split is going to be important then.And in terms of in terms of the outlook, to say, look, it's less about theearnings and more about the outlook. Now, what is the expected outlook forthis company? Right.Yes. So I think that the the expectation isthat it is going to.

Grow volume and also grow sales thisyear. And I think that the margin is expectedto come back to and it's expected to sort of increase profitability and alsotrying to find ways to claw back that raw material costs that it lost lastyear. Okay.Thank you very much, indeed. Setting us up for the Heineken earnings,of course, dropping potentially next 20 minutes or so.The volume of question, the pricing question, input costs, of course, andwhat's happening across that Africa business is all going to be in and underthe lens for us.

Thank you.Here's what else to watch out for then. Today, you're going to get thoseearnings, of course, crossing imminently from Heineken.10:30 a.m.. Then after that UK time, Germany will becoming through with a ten year auction for €4 billion that will be scrutinisingthat at 1 p.m. London time.I smell that AGM begins really, really important.Of course, the most important, arguably the most important European tech companyand changes at the top of the executive team as well.The CEO stepping down and making way for.

A new CEO.Christopher Kate will be taking over 6 p.m.UK time. Meanwhile, the US is going to comethrough with that five year auction of $70 billion worth of five year notes orfive year treasuries. Others say after the two year treasurieswell received that auction. What we saw yesterday is this themarket, this feeling indigestion or will it be?Well, we'll see it what we see soon. Meanwhile, the UK prime ministervisiting Germany. He continues his European tour.Anthony Blinken, the US secretary of.

State, is arriving in China later today,expected to touch down in Shanghai. He's got a message or two for hisChinese counterparts later US earnings, of course, IBM, Boeing.We set you up with that one Ford Motor. And as we've been discussing matter withthe focus on the economy, it's coming up, luxury spending going out of stylein China as the economy, of course, continues to struggle.We're going to check in on how that is affecting the world's biggest fashionbrands, including caring after Gucci sales tumbled on weak demand.That is next. This is Bloomberg.

Welcome back to Bloomberg DaybreakEurope. We bring you the earnings, of course, asthey break any Italian oil and gas major coming through with first quarteradjusted net income that comes in just marginally above the estimates just by ahair €1.58 billion. The estimates have been for 1.57billion. We know that the expectation was thatthe gas division, the gas unit, this business would be performing relativelybadly within this quarter and it would be the downstream part of the do theheavy lifting. First quarter production on thatquestion, 1.74 million barrels of oil,.

The estimates have been for 1.69.So production coming in slightly higher than expected exploration and productionadjusted operating profit, by the way, coming in at 3.32 billion.But the red had across the terminal for any adjusted net coming in justmarginally above the estimates at €1.58 billion.Now to the luxury space where Karen was warning that profit will plunge in thefirst half of the year after wealthy shoppers curbed spending on Gucciproducts. Comparable sales at Gucci tumbled 18% inthe first quarter on tepid demand in China.Joining us for the details is Deborah.

Aiken now from Bloomberg Intelligence.What is causing this this deeper decline actually than Deborah?So. Well, so many different things, butwhere to stop? Yeah, we start with the fact that thecarryover stock isn't working, that the product coming from new creative disenois only 7% of it is in stores and it's only in Gucci owned stores, it's not inthe wholesale stores. And then also the fact that they'retrying to really push the clean up. There's so much going on within thebrand overall and we should see improvements in about three.Q But that is going to make it much.

Worse for 2024 overall versus consensus.Okay. Well, on that pushing forward then andthen Outlook and what we learned from the earnings in the earnings call overthe last day or so and how that informs your view about the second half, what isyour expectation about how challenging it will be or if they can overcome theseobstacles by the end of the second half of this year?So the company has guided the second half.So through the first half operating profit they look for been down 40 to 45%now against this pre-release sales number for minus ten for the company forcarrying a minus near -20 came in -18.

For Gucci.She said they were looking at what consensus was expecting operating to bedown 21% so they guide 40 to 45. Let's take the back end of that.And in the second half, well, for Q2, they're saying there's no pickup forGucci and for the brands, for the sector overall, there's no real pickup in spendin Q2 versus Q1. So another soft quarter and softer thanwas expected the beginning of the year. And what does that do then?It probably means we get about 100 basis points improvement on off on margin, butfrom a lower base. So we're going to see margins tumble andthe 30% margin that they forecast around.

30% for Gucci just isn't going to hold.We're going to see those numbers come down to.So that 30% margin looks looks vulnerable at this point.China, Chinese customers turning their back on this brand to some extent atleast. What is the read across to the broaderindustry? It's a little bit more granular, isn'tit? That's what came through from the call.It's not just a one size fits all when it comes to the Chinese consumer, theChinese consumers being being a little bit putting a bit more scrutiny intowhat they buy.

So I think if we go back to theportfolio of Karan, overall, Gucci is just in terms of brand perception is inthe wrong place and it is taking longer to fix and it needs to do more at thetop in the bottom end. And so China is Chinese shoppers arescrutinizing on that. I think that overall China for them isabout -20%. And I can compare that at the bottom endwhere we have such is a L'Oreal even saying market is flat in China, but thatthey're growing 6%. So it's Gucci doing something wrongversus peers like LVMH and others. It's a difficult marketplace.But if you're brands in the right place,.

You can do well.Some of kering's other brands are doing better.But overall, you see elsewhere what they're doing with all of the otherbrands. If we think about Yves Saint Laurent,that's going to be clipped by aspirational shoppers at the lower pricepoint, Bottega Veneta is picking up Balenciaga.You can't get ahold of their bags. They're haute again.Rodeo bags. No, there's nothing in stock.But everywhere Kering is doing a clean up whereby they're taking around 25%.Or you can see on the numbers -25% out.

Of wholesale.So while you have Gucci dragging in retail, nobody is going in their storeselsewhere. They're pulling out of boutiques anddepartment stores and trying to elevate all of their brands at the same time.It's really a difficult place for them, China.Otherwise you've got to have your brand and actually even for the Gucci and allof their brand range and what we call the Chinese cohort.So moving out of the mainland, shopping elsewhere, Japan is up 16% becauseweakness of the yen and we are seeing that also with.Do some shopping on yen weakness for.

Beauty brand in Japan.But overall, still, I would say China is probably down 20% for them.Okay. Sounds like a mountain to climb for theGucci brand. A rodeo handbag.I have no idea what that is. I have to Google after the shortseparation. Thank you very much, indeed.Breaking down those earnings for us from Carrie and of course, the Gucci brandfrom Bloomberg Intelligence. Meanwhile, on fashion, Chanel CEO LeenaNair says the luxury giant plans to continue investing in China.We've just been talking about that.

Market despite the uneven economicrecovery. Speaking exclusively to Bloomberg'sFrancine Lacqua, Nair spoke about the strategy behind recent price hikes.So we could raise our prices according to the inflation that we see sort ofreally linked to the cost price. We've also made a commitment to priceharmonisation across the world, which means our clients should not experienceexcessive price differentials. No price differentials, no matter wherethey buy. How do you see the China market rightnow compared to the US market? Because it's not it's not that volatileactually.

You kind of have like a base that staysfor for quite some time. China is a very central market for theluxury eco system because of the fast adoption of luxury, because of theappreciation of refinement and sophistication.So it's a very important, essential market for us.I came back recently from China and I was really happy to see the energy andvibrancy in the market. So we continue to run our business forthe long term and continue to invest in China for the long term.Okay. Chanel CEO Leena Nair speakingexclusively with Bloomberg's Francine.

Lacqua.And you can see that full interview on Leave US with Lapa 9:30 p.m.this evening in New York and tomorrow at 6:30 p.m.here in London. There's plenty more coming up.Stay with us. This is Bloomberg. The theme is, is that it's a veryunbalanced economy. And that's the thing we've had for awhile. So post-COVID, it's just been a veryunpredictable environment for a lot of reasons.Some of those things we got really.

Right, some of the things we got reallywrong. And I think we're we're trying to figureout kind of what the next stage is. Morgan Stanley's a might.Well, Sunak also called the sell off in 2022.He's very firmly and closely watched, but he's being cautious around how tomake the calls around 2024. Given all the uncertainty these outlinedin the recent couple of days, though, the strength has come through.For the S&P yesterday it was the semiconductors, it was the tech space,it was in video lifting the index. And by the way, for the context and thischart shows it the best back to back.

Rally for the S&P in about two months,where the earnings story continued to propel the momentum.That's the picture when it comes to the upside.And the futures are pointing to further gains today.Meanwhile, let's flip the board and have a look at what's been happening atTesla, because the earnings were not good, but the analyst came out and saidthey could have been worse and not quite as bad as they could have been.But also more importantly, arguably, it's about the outlook and the fact thatthere was a little bit of hope that was sprinkled through that earnings callcoming through from Elon Musk, 21.

Billion on the revenue that was a messversus the 23 billion EPS as well. Also a mess and a pretty sizable one atthat $0.45 versus the $0.52. But again, the reason that after hoursTesla move time, we'll see that chart surely is because of the views and thedetail around these cheaper cars and the timeframe being pulled forward.There's all sorts of questions around how they implement this and how they getthis out to customers. Again, the cost cutting has come throughthe challenge from the Chinese automakers, but that gave the grain ofhope certainly for investors. They jumped on that comment.Tesla then gaining after 13.3%.

Let's put the ball and have a look atTexas instrument as well. This has a touchpoint in so manydifferent parts of the US economy, the industry auto space and they are seeinga draw down inventories and they're seeing a turnaround and they comingthrough with a stronger guidance, stronger outlook from Texas Instrumentsthat read through into the Asian markets.It's likely to percolate through into the European markets as well.So the affiliates there coming through from Texas Instruments, that's beenunder pressure. A turn around then in some of thoselower end chips and that stock rallied.

On the back of that.Looking ahead, we're going to be watching Germany's Ifo business climateindex later today for clues about the state of Europe's largest economy.We'll be speaking to them. Markets today is next.Stay with us. This is Bloomberg.

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