lizzy: good morning. this is "bloomberg daybreak: europe." i'm lizzy burden in london. stocks slipped in asia as markets stay cautious ahead of the final fed decision of the year. china leads the selloff as beijing's economic policy announcement fails to promise more aggressive stimulus. the u.n. general assembly votes over handling lay in favor of ceasefire in gaza. president biden says benjamin netanyahu must change his views on a two-state solution. for the first time in nearly three decades of climate talks, the cop28 summit looks set to call for global transition away from fossil fuels. very good morning, it is fed day, and we're looking forward to that decision out of the markets. let's check on them now. euro stoxx 50 futures pretty flat, as our equity futures. but in the green over in the u.s.

if we look to the cross asset picture, we have that cpi print yesterday relatively in line with expectations. all that really told us was that inflation loosely keeps falling. you did have bets to the degree of cuts moderated slightly but no change to the timing of the first one in may. we will discuss all of that later with rbc. but dollars steadied, it hit its lowest in five months on oversupply fears. brent currently trading at $73 a barrel. everything, it has to be said, waiting for that fed decision at 7 p.m. london time. let's go over to asia. we have avril hong standing by in singapore to tell us how asian markets are faring. bit of disappointment in china? >> that is the market driver, even though investors are also cognizant of what we got out of the u.s. inflation print that caused them to pare bets we get

rate cuts next year. we will wait to see what we get out of the u.s. central bank to connect the dots. meantime, it's china driving the price action softness in commodities, em fx, losses led by the malaysian ringgit, indices 1.3 percent down. the question with so much selling going on, how much further is there to go? seems like the selling is not done on the back of the readout from the chinese economic work report. that showed that the priority is for industrial policy, not so much domestic demand, for spurring of that. that's led to that sentiment drop in equities in the region. let's take a look at the next page. i want to show you how the japanese assets are faring because they are an outlier today. the nikkei and topix running higher on the back of the quarterly tanken survey showing

better thank they could corporate sentiment pay the yen is weakening towards 146. it is the idea that the boj will likely tweak, just not yet. let's look at the tankan survey's inflation projections we got from japanese companies. if you look at the five-year horizon, they see it coming in at two point 1%. this is the third quarter it has come in above the boj's inflation target 2%. this feeds the narrative we will likely see some tweak from the bank of japan. lizzy: thanks to avril hong in singapore. let's get back to that fed decision coming up at 7 p.m. london time. investors betting the fed will hold interest rates when it wraps up its final meeting of the year later. i'm joined by bloomberg markets life strategist mark cranfield for analysis. we have the u.s. cpi print yesterday, not a lot of surprise

here but there seems to have been a paring of bets on how much the fed will cut, if not when it's going to start, why is that? >> the numbers were -- some people were probably thinking they would be bigger on the downside, especially the core inflation, people thought it might come in something like 3.8%, it stayed at the 4% level. disappointment from traders on that side, but as you said, not a huge difference. so looking at at least 100 basis points of rate cuts for next year, so only a marginal change from that point of view. if you look at the way bonds have performed since that cpi release, we are gradually trading at slightly higher levels in terms of bonds, slightly lower yields, so markets are looking past the numbers. no major impact, which is not a huge surprise considering the fed could derail everything, or they could endorse.it it's hard to tell what the fed

will do today in terms of the immediate reaction. but going further ahead, people are more interested in what the dot plots will say for 2024. and we will get that picture later today. if you are bullish on bonds or equities, there wasn't too much in the inflation data to really upset here yesterday. lizzy: you've got the dot plot and the fed speak, what do traders need to hear to be positive next year? >> the only big surprise from a negative point of view would be suddenly if jerome powell says he still sees a strong case for raising interest rates further. that would be a big surprise. most people expect that. certainly, the indication he has given is he think most of the tightening has been done. it is still working through the system. he seems to have indicated that he sees low risk that the fed may have over tightened. they won't want to dwell on that, so most likely, the

projection they will give the market as they will be in a position to lower interest rates at some point next year. whether that is may, where the markets are forecasting, or further in the future doesn't make a lot of difference. people are looking at those dot plots and they were looking for at least three rate cuts. if we get something like that, we will go into year end in good condition, especially for equities people will think there is no real damage, we can continue to be bullish and markets will trade fairly comfortably. the only big surprise would be if the dot plots came out with only one rate cut for next year. that would be taken as a slightly hawkish point of view. but given the time of year, given next year as an election year, and liberate economic see a big downturn in inflation, particularly core inflation next year, it's unlikely the fed will spring a big surprise later today. lizzy: if he is too hawkish for the market, will the market even

listen? mark cranfield in singapore. u.s. president joe biden says israeli prime minister benjamin netanyahu must change or risk losing support for his nation's military campaign against hamas. he labeled elements of israel's bombing campaign as quote indiscriminate. dana joins me now for analysis. do you see any chance that netanyahu will listen to the u.s. president? >> it seems the rift between the u.s. and israel over what will happen after israel's military in gaza ends is only deepening. it is hard to predict what the u.s. will do to convince prime minister netanyahu and his far right cabinet of accepting a two-state solution as the optimal way out of any further conflict. president biden made his strongest criticism of netanyahu yesterday, saying that the country risks losing support if it doesn't back a two-state

solution. he also describes some elements of israel's campaign in gaza as indiscriminate. he went on to say that netanyahu must change course for the sake of his country and the progress israel has made on the normalization front with arab countries. in a tweet yesterday, netanyahu recognized the difference with his u.s. allies over what will happen after the goal of israel ends to wipe out hamas. he says he does not want israel through pete the same mistakes in the oslo accord, a u.s.-brokered agreement that allowed limited self-rule for palestinians in the west bank. lizzy: what biden says almost as important as what the rest of the world says. what impact will this un's general assembly vote demanding ceasefire actually have? >> the general assembly's vote

demonstrates what biden is talking about. it is international support shifting away from israel. yesterday's vote was overwhelmingly, 153 countries voted in support of immediate ceasefire and release of hostages, compared to 120 in october. that shows rising sentiment for this war to end as the death toll has reached over 17,000. that being said, there is no indication whatsoever that the u.s. would cut its support or change its unwavering support for israel, and aid for the country. let next week, we're seeing jake sullivan coming, and lloyd austin also to the region. he will meet with israel's war cabinet. lizzy: really helpful analysis.

we are up to date on the geopolitics. we have looked ahead to the fed decision. but there is plenty more else on the docket today. in the u.k. at the top of the hour, the latest u.k. industrial production figures and u.k. gdp. the expectation is for a monthly contraction in terms of growth. we already had pmi data in recessionary territory. rate hikes biting in the u.k. but it is a for between stagnation and recession. -- fan line between stagnation and recession. at 1 p.m., more data out of the u.s., this time producer prices, and of the expectation is a rise at the core level but headline to flatline, which sets us up for the fed decision at 7 p.m. london time. no rate move expected, but if jay powell suddenly sounds dovish, the market will seize upon every signal. we have to look out for a hawkish surprise, as mark cranfield warns us. we will have full coverage of all that right here.

for a roundup of the stories to get your day going, head to the daybreak newsletter on your terminal. today, they lead on argentina devaluing the peso, slashing spending, this is the rule of javier millet coming to force. we also have biden urging netanyahu to change course. they previewed the fed pushing back on a march rate cut later on. terminal subscribers can go to dayb . coming up, exciting developments after the cop's summit looks set to call with -- set to call for global transition away from fossil fuel. we go live to dubai next. this is bloomberg. ♪

lizzy: welcome back to "bloomberg daybreak: europe/" coming up to 6:15 a.m. in london. it's not just fed day, we have exciting news out of cop28. we may be on the brink of the first ever agreement on a global transition away from fossil fuels. talks have extended the summit

beyond its planned end, but finally, saudi arabia is likely to accept the draft agreement. for more, bloomberg's jess shankleman has had her ear to the door of the meeting room. what has led to the change of wording that got saudi over the line? >> yesterday, the text was very weak on calling for a shift away from fossil fuels. today, the text has come out much stronger calling for that transition away from fossil fuels. crucially if this text is agreed, it also calls for action on that shift away from fossil fuels to be accelerated this decade. what that would translate to for economies that are burning lots of fossil fuels is they can't just rely on technologies such as carbon capture and storage to reduce emissions from fossil fuels they are burning.

they have to to reduce the use of oil and gas and move to more renewables. lizzy: there is a lot of skepticism around all of this, understandably. in our interview with the saudi energy minister, he made it clear that he distinguishes between the public and private stance on fossil fuels. even if an agreement is reached, would it be meaningful? >> what we're seeing is one of my colleagues was talking to jonathan pershing, a longtime veteran of cop talks. understandably, a lot of cynicism but this will run is innat -- this will resonate in boardrooms because all 200 countries backing this text sends a strong signal that countries are moving away from fossil fuels. lizzy: is there anyone else potentially holding up getting this deal over the line, apart

from saudi? >> yes, we will be looking out for -- there is a plenary starting soon, and countries might raise objections to particular parts of the language. one thing we are looking out for is that line on fossil fuels notes that countries should achieve net zero emissions by 2050. india has a goal for net zero emissions by 2070, so they are unlikely to agree. china has a role for 2060, so that could become contentious. lizzy: thanks for staying across all of those negotiations. we hope you can come back to rainy london sometime soon. today's bloomberg big take looks at how the world's poorest countries are buckling under 3.5 trillion dollars in debt. wall street encouraged nations in africa, latin america and asia to borrow, but now roaring

interest rates risk a reckoning as we head into 2024. joining me is the co-author of today's piece, who is our senior reporter based in accra, in ghana. how did somebody countries end up struggling to repay the zero bound debt? >> is maybe an issue of timing. the fact that debt is coming due is not necessarily a problem, unless you can't pay. we are not suggesting countries are not prepared, but the pressure is growing to the point where it is increasingly difficult to pay. that's because of a series of shocks that has come in close succession from the covid-19 pandemic. having to deal with that and provide stimulus with their own resources, or having to borrow

to provide that stimulus, then the war in ukraine. that's limited access to grain and makes food more expensive to import. now the high interest rate environment means investors that had searched for yield are now retreating back to safer markets. that succession means over time, the faith have been eroded for a lot of frontier markets. lizzy: let's talk about the solution. how are creditors preparing for possible debt restructurings? >> it has still been very few instances of debt restructurings. countries are prioritizing in many cases, debt payments over social spending, which has been the issue at hand. but there is a mechanism

recently in the g20, debt framework that seeks to help countries that find themselves in a position where they cannot repay to be able to restructure that debt. that framework has passed a lot of challenges. the first country to test that framework is zombie a. -- zambia. there has been a stand between creditors. ghana is hoping to find resolution to that framework. talks are quite advanced, but it is also being delayed. it's yet to see whether that will work out in the case of the need for restructuring, but that is one mechanism that has come in to tackle this specific issue. lizzy: this casts a shadow over african budgets. how is it affecting them? >> it is affecting african budgets because over time,

basically over the past decade, african budgets have increasingly relied on global issuance to be funded. for all their spending from infrastructure to technology, and social spending, specifically health and education. so now, the tool that allow them to fund their budget is now for many countries, they have been priced out of global markets. so they can't tap eurobonds to fund their budgets. their spending is competing because instead of spending on social services, they are finding a need to prioritize euro bond payment so they don't get locked out for a longer period. lizzy: thank you, that's our

bloomberg senior reporter based in accra.you can read more on your terminal or at bloomberg.com. i briefly want to check on oil, because it was a significant day yesterday in oil markets. oil reaching its lowest level in five months yesterday, as signs of robust supplies did pile up. extending his decline this morning, branch trading at $72 a barrel. $68 is your number for crude. the decline very much continuing this morning, but of course, the fed decision important too for oil and we wait for that at 7 p.m. spoiler alert, netflix has released viewer data for every title on its platform for the first time. i hope they don't embarrass me with my watching of downton abbey, it's been a bit of a binge. this is bloomberg. ♪

lizzy: welcome back to "bloomberg daybreak: europe." let's get to your top stories around the world. bloomberg learned that spacex is to sell insider shares at $97 a piece in a tender offer, the increase boosting the valley of the satellite company closer to 100 $80 billion. the second most valuable startup offer is in the range of 750 million dollars. the rising valuation is indicative of strong investor demand for the dominant space transportation company. staying with the en masse, bloomberg understands that x, formally known as twitter is on track to bring in roughly $2.5 billion in advertising revenue. last year saw a billion dollars

coming in per quarter, the first three quarters this year brought just $600 million each quarter. add sales make up 70-75% of x's total revenue. apple is adding a feature to iphones to prevent thieves from gaining access to critical device data. a beta-test version futures an enhancement which requires face or touch id to access settings including payment information. it's unknown whether the new feature will roll out to all customers. netflix released viewer data for every title on its platform for the first time. the data covers more than 18,000 films and shows, and comes after the month-long fight between hollywood labor unions and major studios. the political thriller "the night agent" was the most-watched title globally the first half of the year, generating 812 million hours of viewing. season 2 of the family drama "ginny & georgia" came in a

close second. there are some of our top stories. let's briefly check on markets. you have the u.s. two-year at 4.73%, the dollar pretty steady, and oil is down 0.5%, trading $72 a barrel for brent and gold down 0.25% as we wait for that fed decision. markets have priced in rate cuts from the fed next year, but how strongly will jay powell push back on that notion later? this is bloomberg. ♪

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lizzy: the morning, this is daybreak europe and london. stocks slip as markets stay cautious ahead of the final fed meeting. china needs the selloff as beijing fails to promise stimulus. zelenskyy once more aid in the fight against russia. no commitment ahead of a standoff for funding for the first time in three decades the cop 28 looks set for a global transition away from fossil fuels. equity futures are positive but flat and has we flip to cross assets if not the two year treasury yield study -- study as well.

s&p hit its highest in a while. will the fed ride to the rescue? cpi print in line with expectations, told us inflation keeps falling. moderating slightly but no change to the timing. we will discuss that with rbcs frederick. the dollar is study. brent trades at $72 a barrel and gold is up a quarter of percent, not a lot of movement. waiting for the fed decision. next we have ven ram at the ready. the fed is likely to hold study for third meeting but jay powell expected to push back against market expectations of rate cuts.

focus will be on the dot plot. market live strategist ven ram, you have a piece on the terminal this morning about the plot, how crucial it will be against the notion of deep rate cuts. what selloff should we be bracing for? >> good morning. plenty of excitement and the inflation numbers yesterday show there is a disinflationary narrative but core inflation is at 4%. that is problematic because they don't want the markets to pricing make cuts for next year as they have been. the fed will send will do to rate cuts and projector rate of 4.9%.

if they indicate higher that plays into the hands of the markets and leads to loosening of conditions which the fed does not want. it's in the game for the fed to keep it together which means they will not indicate lower than or .9% -- 4.9%. lizzy: is it fair to say the last miles of bringing inflation down are the hardest? ven: she is speaking more as a treasury secretary then economist expressing hope, not a forecast as she would as a central banker. we've seen headline inflation crumble by have, -- by half, we've gone to 4%.

core inflation will be key in the fed is not going to say we are going to cut rates before core inflation rates. treasury secretary expressing hope. lizzy: bloomberg's ven ram, thank you and that piece is a great one on the terminal so i recommend you check it out. breaking news, results from the spanish owner of zara, a beat on profit. up beating estimations of 5.13 billion. expectation had been a strong quarter despite whether being a challenge. we saw in the spotlight a campaign recalling images of the israel hamas war. they say it was shot before the

attack these are positive results. we've had nick coulter saying it's a favorite name in european retail and so far this year is up 38%, outperforming the retail sector. up 33%, the best performing sector in europe, strong results. interesting to see in 2024 whether it can push through the rises given wider pressure. then we will see how much success is the consumer and how much is zara. breaking news out of germany. an agreement on the 2024 budget. a story we've been discussing with oliver crump. difficult to reach agreements and maria telling massoud be

easier to get agreement in brussels so we will keep across that story. expected to brief on the deal at 12 p.m. european time, we will keep across that for you. let's get back to geopolitics. zelenskyy left washington with no clear commit and -- commitment from the u.s.. they do not look likely to approve the aid but joe biden vowed that the u.s. would come through. >> we will supply critical weapons as long as we can, including $200 million i approved of critical defense interceptor ammunition. without funding we are coming to the end of our ability to help ukraine respond.

vladimir is banking on the united states failing to deliver for ukraine. we must we must we must wrong. lizzy: let's bring in peter in warsaw. what did zelenskyy achieve and how it it? >> it was an important trip but there's been no progress and he has not achieved much as we seen. the press conference a couple of hours ago to seek approval of 61 billion dollars in aid. the money is being blocked for four months. although he appeared resolute with joe biden is leaving

washington openhanded. there is a huge contrast between he was treated this time and one year ago and he standing ovation. the welcome was much chillier, there does not seem to be anyone approving the aid and by the end of this week congress will stop meeting until next year. lizzy: can he count on europe to help? >> the situation is complicated and things will come to ahead this week as leaders are gathering in brussels thursday and friday on the agenda is 50 billion euros in aid. this time is a question of the

budget. heard from the advisor to president viktor yesterday said are ready to unblock and back money is -- 30 billion euros for hungary is being blocked by the eu. money from the eu may not come through exactly at the moment where ukraine needs it the most. lizzy: europe has its own finance problems but good news out of germany as we said it looks like the german coalition

reached an agreement on the 2024 budget so good news out of germany. burgs peter out of warsaw we thank you. belgium is trying to stop gangs from turning the country into a hub for illegal narcotics. the jobs commissioner told bloomberg criminals are manufacturing synthetic narcotics and exporting them around the world. i'm joined by max ramsey in brussels. how big of a problem is this for europe? max: the issue of trafficking is long-running not just in europe but across the world. what is concerning is criminals manufacturing drugs in europe so these would be consumed in europe. it's hard to say how big the market this but authorities

think amphetamines, the most common stimulant, is worth around one billion euros. it gives you a sense of how big the market is and it's hard to tackle so they think this is organized crime largely concentrated in belgium. these are small countries but very important for trade. they have the largest ports in europe so the policy response is important to the european policy response and they are taking actions that the national level. the eu put out a roadmap to tackling crime related to drugs. ports are a big part of that and they want to stop drugs coming in but they are trying to stop chemicals.

goals used to create synthetic drugs. spoke to the jobs commissioner for belgium coordinates the efforts to tackle crime related to drugs. she said it's important to toughen access to chemicals from asia and china with tougher legislation so criminals cannot access them as well as other measures around enforcement. lizzy: well that's a story to wake you up. all across markets, and the black market. max, thank you. markets are cautious ahead of the fed decision. we discussed what you need to know and bring you the latest on the german budget agreements. this is bloomberg. ♪

♪ lizzy: welcome back to daybreak europe. we have breaking news of the german coalition reached an agreement on the 2024 budget. more with bloomberg's oliver. what do we know? oliver: we've been tense for several weeks since the constitutional court of germany said 60 billion euros destin covid repurposed into a different budget were not able to be used and this is what the coalition has been struggling to log the whole was 17 billion euros.

the coalition has reached an agreement in terms of finding funding for next year. we don't have the details but here from the coalition at noon cet. they will give the details and this has been a challenging balancing act for a coalition with very different priorities going into this. lizzy: what could it contain? oliver: you need to cut spending, raise taxes or suspend rules to borrow money so they could not suspend the rules into 2024 but could they say there's been a crisis, for example the war in ukraine.

a lot of german money is supporting ukraine but they've taken one million refugees so that they say there is an emergency to suspend the debt break? tax hikes has been a redline in the finance minister thinks that will be unlikely. there will be cuts to projects across the board. painful for the greens who are specific about money going to the energy transition and showed says there'll be no dismantling of the welfare state so will be interesting to see what they say at noon. to sell it so that no one has lost as a result of the negotiations. lizzy: oliver crook, thank you and i'm sure you will be across that presser. play more ahead, this is

bloomberg. ♪

♪ lizzy: it is 6:50 a.m. in london and 7:00 p.m. is the last fed decision. while jay powell acknowledge the fed is at a turning point. frederick, head of investment strategy in the british isles joins me. welcome. let me ask about the broad-based rally in equities. it looks like disinflation from the cpi report. will there be a soft landing? >> look, the market might have

gotten ahead of itself with respect to expectations for the fed. we think the fed will probably push back against this optimist like the september dot plot which contained two great hikes for next year. interest rates will stay where they are. we are mindful that financial conditions have over the past few months and while there are cracks in the labor market it is not enough to make the fed step back from the current level of interest rates so there will be disappointment coming. lizzy: how much can jay powell pushback without credibility? >> can express his message. he was late in starting the

interest rate hiking cycle so credibility is not a strong as it could be but some of the variables he's looking at, reiterating the message could help him. lizzy: you reckon the fed is going to hold but if that tone becomes more dovish would that make you think cups would be deeper or sooner? >> after hiking interest rates are cut by 4%. we don't think this would be as and certainly the fed will be mindful of the 70's. they've expressed that several times. cuts were made and within two years monetary policy had to be

tightened again. they've been mindful not to do this and stick to their guns. lizzy: it's not just the fed invest this question. it central banks. which central bank has the biggest a gap between expectations and what they are planning? >> bank of england is in tight spot because the market has been quick to transition from interest rate hike game to cutting and inflation is stickier than elsewhere, wage growth is higher and that has to do with the narrative adopted early on when inflation flared up. people talked about

cost-of-living and put the blame on external factors which means workers pushed hard for wage increases. wage growth is more than 7%, inconsistent with the 2% target so despite the pain to mortgage holders interest rates will be held into 2024. lizzy: we've got backbench is in the conservative party clamoring for tax cuts. do you think inflation could strike back 2024? >> it is a possibility given that conservatives are trailing the polls. there could be handouts in the budget which could fuel inflation. were keeping our eyes on this.

they got away with the autumn statement where premiums were lowered offset by cuts which will happen after the next election. this horsetrading could happen again and some measures could be taken meaning higher inflation. the downward trend in inflation has ended. lizzy: a word on japan, is it too late to pivot to hikes? >> pressures building on bank of japan. it's an important central bank with a lot of liquidity so a change would be wharton. there is pressure on the prime minister and bank of japan. the prime minister's trailing in

the polls and we linked it to the weekend. the bank will be mindful that if they wait for too long it will coincide with a time where other central banks are cutting interest rates. lizzy: pet of investment strategy for rbc in the british miles -- british isles. looking ahead to central bank decisions. we will speak to nestle's ceo, don't miss that enter you at 9:30 a.m.. was big to the chairman of european banking authority about the transparency report later today. that's at 7:30 on markets today and this is bloomberg. ♪

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