>> good morning.

i am pretty good. and london. markets trading mixed, then holiday volume as core inflation data is in focus. a soft day of economic data around the world. in asia, china cracks down on online gaming yet again. also, japanese inflation puts the spotlight on the boj. plus, nike misses estimates and issues a warning on the chinese consumer. there is a lot going on in the consumer space, not to mention the geopolitical one. holiday trading does not make this easier. let's look at how futures are actually trading. what is important to keep in mind is we are seeing magnified moves given light liquidity. here is why this matters. the rally people were expecting has largely been pulled forward. red across the board, including

in euro stoxx 50, down by 0.2%. across the atlantic, the story isn't any different. the pullback you are seeing from any buying of the dip you saw in yesterday's session, all of that has been pulled back. take a look at the cross asset picture. the 10 year yield, virtually unchanged. if you are seeing dollar strength come back, today's trade is basically a reversal of what we have seen all week. this is the last trading day before the long weekend we get with the christmas holiday. perhaps cash being taken off the table here. euro-dollar trading at about 1.10. you are seeing the cable straight -- you are seeing angola pull out of opec, a $79 handle on brent crude. april hong is standing by in singapore. walk us through it. avril: china markets have had

quite the day. they started off wanting to talk to you about how these big state owned lenders have cut their deposit rates and that is seen as a sign that the pboc could cut lending rates. some see it as soon i january. but then china unveiled online gaming curbs, and things went south. the big drags coming from these gaming companies, tencent falling by as much as 28%, the worst on record. this curb coming through from china is to curb the excessive spending, as well as rewards for on what -- for online gaming. that will affect the number of active users as well as how these companies have prospects for monetization. that is why you are seeing this performance in the greater china markets today. but it is not just regulation on gaming that china is pushing

through. it is also turning up the heat on trade policy. it is going to restrict some of the exports for the processing technologies. this will make it more difficult potentially for western nations to secure supplies of the material. we have seen this counter in australia. we are watching apparel makers in the region. nike cutting guidance and missing on the forecast for the greater china sales. it is slumping along with some of its competitors. kriti: that is the gaming story, and what is important as well as we talk about the other major story in the region, japan as well, inflation seems to be in focus. avril: absolutely. we had the inflation data coming out of the country, the last one for this year. and it showed that no matter where you look, inflation is

cooling and japan. whether you look at the cpi, which is fresh food, which is what the boj is paying attention to, or fresh food and energy, they all show acceleration in line with forecasts. adding to the view that the cost factors in the country are dissipating, but it is worth noting that if you take a look at the service prices, that rose at the fastest pace in decades. perhaps some indication we are actually seeing these inflationary drivers broadening out beyond cost factors. overall, if you take a look at things, there is no sign that inflation is being driven by demand, which is what the boj wants to see. we will have to wait to see the outcome of the spring wage negotiations in march next year for whether there is that wage push coming through in the inflationary picture in japan. certainly the next live meeting in april, and our colleagues say

stimulus is being kept next year in japan. that is probably why you are not seeing much movement in the asset classes in the region, or in japan for that matter. the nikkei flat. topix as well. the yen slightly weaker. kriti: interesting dynamic. i think we have bloomberg saying that even though the focus is on the spring wage data, we might not get a real reaction until the summer, if the boj has to be more data-driven. it is perhaps catching it when it happens. avril hong, we thank you. she is talking about the developments in asia. it is turning out to be a global story for one of my favorite bellwethers, nike. the shares plunging as the company announces it is seeking up to $2 billion in savings. su keenan has the details.

su: nike is warranting about a slowdown in consumer spending and is seeking to spend about $2 million by dismissing workers and to streamlining its product line. the announcement sent shares of nike tumbling and extended hours in the u.s. trading. on the conference call, the new outlook reflects a challenging environment, particularly in greater china and the emea, referring to the middle east, europe, and africa. there are indications of more consumer consume -- cautious consumer behavior around the world. the ceo reiterating their performance in china and ability to compete, but saying they are taking a more prudent approach to the rest of the year. revenue in the quarter was roughly in line, but sales in the greater china region came in lower than expected, while earnings per share beat wall street estimates. as for outlook, nike sees full year revenue at a modest

increase in the next year. su keenan bloomberg, new york. kriti: an interesting dynamic as we talk about the slow down. we have a chart for you that talks about what those sales actually look like. the shares are lagging. s&p 500, for the third straight year. even though nike to me is a real bellwether of the global consumer world. this is taking quite of the hits, especially in the last three years or so. to what extent is that reflecting what you will see in the american and chinese consumer markets? that will be something we watch closely. i want to stick with another of our top stories. a hong kong court has rejected jimmy lai's request to dismiss a sedition charge. he will be tried for all three original charges, which could see him jailed for life. i am joined by jenny march joining us from hong kong.

what can we expect from the trial itself? jenni: the trial is set to be 80 days. he will come up against three major charges. one under this colonial era sedition law, the other under the national security law, imposed by beijing. that is for conspiring to collude with foreign forces. i think the trial is going to be interesting primarily because jimmy lai is the biggest target of the national security law. he is also one of the most well resourced. he was a hugely wealthy oil tycoon before founding his tabloid newspaper, which is now closed. he has some of the best lawyers and they will be challenging the prosecution on this vaguely worded law they are using to potentially jail him for the rest of his life. they are trying to put flesh on the bones of this law and hopefully test the contours of the national security law and show what it means to violate national security, what does it

mean to collude with foreign forces, because many of the thing that -- many of the things that jimmy lai is accused of doing were permitted within hong kong. kriti: talk to us about the implications in terms of hong kong as asia's financial hub. what is the readthrough? jenni: i think this does have a big impact on hong kong as a financial hub, not the least because others have called for his immediate release. if you put jimmy lai behind bars for the rest of his life, as is expected, this could have a negative impact on hong kong's geopolitical relationships. one of the reasons people do business in hong kong is for this frictionless business environment. when you have the government conspiring with one of the world's biggest economies, that

is bad for business and creates an unstable environment. kriti: a really interesting readthrough. that is when i had not connected the dots on. thank you for that crucial context on what is turning out to be a story that has global repercussions. i want to go from hong kong to what is going on in the middle east. the u.s. house has signaled it could support a resolution through the un's of -- security council that would send aid to gaza. let's go to henry meyer. the -- let's talk of the yuan resolutions are impacting what is happening on the ground. henry: it is an interesting development because the united states recently vetoed a un security council resolution calling for a cease-fire in gaza, so there has been some movement. the language in this resolution originally mentioned the need for a set -- cease fire, and now

it only refers to creating the conditions for a sustained cessation of hostilities. i think the united states is trying to increase the pressure on israel to at least scale back its offensive in gaza. we have now seen, according to the hamas run health authorities, more than 20,000 palestinians have been killed so far since hostilities began in october. the u.s. would like to see the operation move to a different phase, much more surgical strikes without the massive aerial bombardment which is taking place. but i don't think israel is ready to listen to this advice. there isn't any sign that u.s. is going to increase the pressure so much so that israel would be forced to change what it is doing. kriti: i feel like what i am hearing is there will not be an immediate resolution.

i think the readthrough is there may not be an immediate resolution to what we see in the red sea as well, where tanker traffic has already been dropping pretty sharply. in terms of global trade, the timeline, the expectation is only going to be a couple months. how realistic is not? -- how realistic is that? henry: a lot will depend on what will happen with this new naval task force which the u.s. is assembling. it is said there are now 20 countries participating. how effective is it going to be in keeping this key waterway, which goes to and from the suez canal, open? what we see is the maritime volumes have been dropping sharply. this week, data showing it is down 40% this week compared to the previous three-week daily average. i think shipping companies are still very much concerned, and they are waiting to see, will

the u.s. and its allies be able to thwart further attacks by the houthis. it is linked to the war in gaza. the houthis say they will halt their attacks as soon as that conflict is over. i think we will see potentially this could drag on for quite some time, and obviously with an impact on glob -- an impact on global trade. kriti: one i think a lot of people are not able to quantify, given we don't know what that 40% increase actually does to the global economy. we thank you for joining us for that crucial context out of the middle east. that is something we will be watching closely, not only in the months ahead, but the next couple months -- the next couple weeks as we look at how these shipping companies deal with some of these issues, especially when it comes to labor as well. i want to talk about what we will get into in the day ahead, and it starts with the u.k. gdp numbers.

that will come up at about 7:00 u.k. time. plus, the u.k. sales numbers as well, all going to be important in terms of the u.k. consumer, also coming up at 7:00 u.k. time. the fed numbers, do we see some kind of reaction? coming up, african nations debt to gdp ratio has increased. we will bring you key conversations next. this is bloomberg. ♪

kriti: welcome back to "daybreak: europe."

for the past decade, china has been pouring investment into sub-saharan africa as part of its belt and road initiative. now, the u.s. and europe are trying to catch up. our documentary explores how the battle is playing out on the continent. >> this train running across angola is at the forefront of efforts to listen china's influence on this part of africa. it is about to get hundreds of millions of dollars of u.s. investment with one goal in mind -- removing valuable natural resources from what is known as the central african belt to the west. >> more than a kilometer below my feet lies enough copper in a high concentrated form to power over 100 million electric vehicles. >> getting those metals out of the mine is only the first step. what is difficult is getting them from the minds hundreds of miles across to the ocean, to the ports, and onwards to the final consumers. that is where this comes in.

the biden administration has a plan to finance the refurbishment of this railway. >> there has been a realization from the u.s. in the context of broad competition with china that the african region could be an area where that competition could really play out. >> still, investment in the region from the u.s. and its allies remains a fraction of what china has put into the continent over the past decade. >> the biggest question is not what the u.s. or china are getting out of africa. the biggest question is what are african countries getting out of their relationship with the u.s. and china, and is that delivering? kriti: bloomberg's mini weekly documentary asking those questions. i want to stay with the subject and perhaps answer that question. the bank has gone through a lost decade.

african nation's debt to gdp ratios have doubled since 2013. i want to bring in our african economist, live in johannesburg this morning. good morning from london. we are talking about these several countries being highly indebted. what does that actually look like? yvonne: we have seen several african countries build up their debt over the past two decades. as a ratio of jet to gdp has increased, we have half of africa's low income countries considered to be at a high rest -- high risk already in distress as a result of this significant inquiry -- increase in lending. we are in a situation where countries have defaulted since the pandemic. in particular, zambia and going ghana have defaulted in its

debt. looking into 2024, the next country that is being watched is kenya because there is a sizable eurobond payment due, $2 billion. we are also in a situation where we have at least eight african countries that are seeking to restructure their debt to avoid defaulting on their debt. kriti: but this feels like it is a little bit of a liquidity story, whereas i felt a couple years ago so many people wanted that exposure to frontier nations, specifically on the african continent, competing with the likes of china. now very much a funding squeeze. why that transition? yvonne: the change in u.s. interest rates. prior to the pandemic, we had low interest rates, global liquidity chasing yields, and a

lot of that liquidity came into africa and helped finance the restructure projects we are seeing on the continent. but the past two years, we have seen a sharp increased in u.s. interest rates. it has made it harder for u. -- for african countries to refinance their debt. we have not had a sub-saharan african country issue a eurobond since the beginning of 2022. that is part of the challenge of countries do to repay debt. they are struggling to refinance that debt. you are finding this type plan -- foreign exchange has contributed to the depreciation of currencies. that is due to the sharp decline in foreign exchange liquidity. kriti: liquidity around the world is starting to see that crunch magnified in those

african nations. yvonne mhango, we have to leave it there, joining us live from johannesburg. plenty more ahead. stay with us. this is bloomberg. ♪

>> we have had a lot of discussion post-brexit of people, banks, operations possibly moving out of london, but it has not materialized anything like on the scale people predicted. it has shown itself to be very resilient. if you look at what has happened in the last year, we have shown we are going to be hungry to keep our businesses coming to london. we are very finance -- committed to financial services in the u.k. we passed the financial services and markets act. we are changing the rules around

ipo's to make the london stock exchange more competitive. we have the house reforms which will unload a lot of capital into growth businesses, from pension funds. we are really motoring in the u.k. we are hungry to attract business all around the world. this deal was switzerland is just another step in that direction. >> how much are you looking to some of these revenues to be able to enact tax cuts? you were looking at additional tax cuts coming down the pike. are you still planning that? and specifically, where are you planning to have those tax cuts? >> rishi sunak and i have said we would like to cut the tax burden, more if we are able to do so. but we will not be in a position to do that until much closer to the spring budget. we have announced -- we have not announced a date for that yet.

but we need to find out from the budget of -- from the office of budget responsibility to do that. but right now, our priority is to bring down inflation. kriti: the u.k. chancellor jeremy hunt speaking with lisa abramowicz yesterday on a crucial turn in the health of u.k. financial services. i want to bring you the news around a major deal. harbour energy has announced a lot -- and $11.2 billion deal to build -- to buy winter shawl. it would give the energy producer exposure to markets from north africa and the americas, as well as carbon capture and storage licenses in europe. stock price in london jumped as much as 35 percent, hitting the highest level since january, making this combination the largest oil and gas producer in the u.k..

that is pretty significant. in the meantime, the eu court of justice has ruled that uefa and fifa violated antitrust law by thwarting plans for a european super league. that follows a judgment from a spanish tribunal that warned not to interfere in preparations for a breakaway league. it is unlikely any new league will emerge, with clubs like manchester united and bayern munich opposing the move. japanese inflation is in in line -- is in line with expectations, but we will talk about what that means for the boj. stick with us. this is bloomberg. ♪ (aidyl) hi, i'm aidyl, and i lost 90 pounds on golo. i struggled with weight loss and weight gain my entire life. with all the yo-yo dieting i did in the past, i would lose 20, 30, 50 pounds just to gain them over and over again.

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kriti: good morning and welcome to "bloomberg daybreak: europe." i am kriti gupta in london. markets mixed among thin holiday falling. core inflation data in the u.s. will be the key data point as that soft number as to the case for rate cuts. in asia, china cracks down on online gaming yet again while slowing japanese inflation puts the spotlight on the boj. nike missing estimates and issuing a warning on the chinese consumer. those shares falling after hours in the u.s. session. want to get a quick check on the markets from around the world truly. in this thin holiday volume, you look at the futures trading, you cac of red. it is the last day -- you see a sea of red. it is the last day before the christmas holiday. a lot of people are taking cash off the table, specifically

after yesterday's session, where there was a little bit of bottom feeding. that's pretty normal to see during the holiday season but there are some questions about where that santa rally actually went. underperformance in the u.k. across the atlantic, a similar story. you see risk off really set the tone around the world. i want to get the cross asset story. take a look at the 10 year yield, it is at 3.89, virtually unchanged but significant that it is staying below that 4% level. even though we are talking about slight kind of steadiness, for the lack of a better term, in the bond market. if you look at euro-dollar, it hit 1.10 so new strength in the euro, and the pound. we continue to see that dollar weakness fuel some of these other currencies around the world. that dollar story is not translating as much to the oil one. brent crude trading at about an $80 handle. a lot of news, we are talking

the red sea and the repercussions. we heard angola, a nation that has not been able to meet a lot of their supply quotas, is actually now leaving opec+. we will dive into it in the hours ahead, where we are going to see the pain points in that oil story. there are pain points in the chinese gaming business as well. this has global repercussions. we know the crackdown from china into some of these tech names has been enormous as we talk about the impact on the chinese market. take a look at the pain trade over there, the hang seng down, tencent has dropped substantially, down 14%. that's going to have repercussions for the gaming companies around the world. you wait until some of those american companies start trading premarket. i want to go to the japanese story, where inflation slowed as expected with core consumer

prices rising 2.8% year-over-year, while services showed signs that underlying price growth spreading pretty widely in the economy. joining us, bloomberg's china and korea -- japan and korea economy reporter. we know japan has not had the best luck with inflation for decades. all of a sudden, it seems to be shooting much higher than their long-term inflation target. what is the key take away from today's data point? >> well, i think the key takeaway is that we have seen inflation edging down, as expected. but it is still above target. this is the 20th month we have been at 2% or more, which is the decade long -- decades long goal of japanese policymakers. when will the bank of japan ease off its stimulus measures? i think if we dig deeper into

the data, although it is currently down, some people might think, hey, the bank of japan does not need to back off, inflation is currently down. if we look into the numbers, we see service prices are rising at 2.3%, the highest since the early 1990's, give or take a few tax effects during the intermittent years. and i think what we are needing to get ready for is the idea that they will scrap this last remaining negative interest-rate in global banking. the question really is, when? if you've got a cooling, you could argue they can wait a bit longer. but i don't think we should be rushing to push back a rate hike. the consensus is still really that they will move by april with april january being the favorite months for a move. what more does the bank of japan

need to see? one of the things that has been keeping it stimulate the economy with these measures, including bond buying, and this negative interest-rate, is the lack of wage increases. the bank of japan wants positive inflation, inflation that is good for the economy. to do that, it wants to see wage growth. it is getting wage data in march. that is maybe one of the key factors that is making economists think that maybe april is the most likely month for it to scrap the negative interest-rate. kriti: i mean, that is the criticism the rest of the world is saying, that not all inflation is created the same. i think that was the initial criticism chair powell got when he was welcoming a lot of the quote-unquote "growth" you are seeing in the economy post-covid. governor ueda does not seem to follow that message. do you think this cpi print in

particular will be changing his message for next year? paul: i think what we do see in this cpi print is that while the headline figure has been cooling, we have seen that service price are just mentioned picking up. that's an indication that price growth within the economy is moving from the kind of cost input side of things into a wider realm of the economy. it is spreading through the economy. that suggests it has got more likelihood of it being a sustainable type that drives wages and growth. of course, the devil is in the detail. that services figure also includes a lot of other things that might be more to do with those cost inputs. but overall, i think that's the take away from this print, that it's another sign that inflation is spreading more widely in the japanese economy. and ultimately, that's the key to moving forward to easing stimulus from the bank of japan

in the coming months. kriti: a really interesting dynamic and one that feels like the world is not prepared for. i believe one of our bloomberg economics folks in japan sink even though the wage data in april is very important, the actual read through may not come until july. that just creates more pressure. paul jackson, thank you so much for joining us to talk about some of the interesting dynamics going on in japan. that has a wreath or as well because not only are we watching on the monetary front, we are watching in the corporate space and getting a little bit of weight in from the biden administration. president biden's top economic adviser has said the purchase of u.s. steel by a japanese company "appears to deserve serious scrutiny." they are talking about the nippon steel deal announced that it would buy u.s. steel, creating the world's second largest steel company. the deal has drawn concern or

outright opposition from pretty prominent democrats and union leaders alike with longtime ties to the u.s. president. we are going into an election year as well. a lot of that union vote really matters when we talk about, do we start to outsource some of that steel to the rest of the world? another story is what the latest data is showing when it comes to banks borrowing a record amount from the fed's newest backstop facility this week as increasing wagers on rate cuts make it even more attractive. the numbers from the u.s. century bank show an all-time high of $131 billion being borrowed from the bank term funding program. this was launched amongst this year's banking crisis. banks can borrow funds for one year with treasuries and agency debt as collateral. that was a program that was partially used during covid-19 as well. in the meantime, onto the corporate space. nike shares plunging in the united states after the company announced it is seeking up to $2

billion in cost savings and said quarterly sales in china fell short. i want to bring in tim lowe. shares dropped over 11% in after-hours trading. this is a company a lot of people view as a global bellwether, not just for the american consumer, but the chinese consumer as well. what goes through the story here? tim: i think investors were sort of bracing for potentially some noise. what's important is it was not a terrible earnings release. they actually beat on earnings-per-share, they matched revenue with expectations. but investors are often mostly concerned about what's coming next. in that sense, it was a bit dismal. nike cut its forecast for the next six months, which is the second half of this fiscal year. they cited above all economic uncertainty across the world, but in particular with china. i think investors were sort of

bracing, everybody is watching china closely, what's going on with the consumer over there. they seemed to be more bearish than the market was expecting, which you can see what the -- with the massive selloff. it's also dragging down the rest of the sector, footlocker down, dick's sporting goods down, under armour down, will probably see adidas and puma -- based off this. it is a juggernaut. this was a particularly, you know, gloomy assessment of what's to come. kriti: well, talk to us a little bit more about this gloomy assessment, if you will. because nike going into this report was actually fairly positive. this was supposed to be a surprise to the upside, which i perhaps would argue created an even bigger surprise to the downside as well. is there any positive news here?

tim: yeah, there's a couple of things i would point to. they did site another, this is a company that's been pretty disciplined with spending in recent years, they've had cost cutting measures but now they are announcing another $2 billion cost-cutting measure. they are trying to increase automation, more efficiencies. they are trying to drive that towards future product growth, innovations in footwear and whatnot. they are the best in the world at that, so they are trying to preserve their perch there. another point where it is slightly positive is inventory levels. this is another area that's been dogging the industry for a couple of years. huge piles of unsold goods. they've had to be discounted, it weighs on profitability. nike's inventory levels came down 14%. they were already ahead of peers

like adidas at handling this problem. they brought it down to really healthy levels. the question now is they flagged some of the concerns with the red sea and global shipments. they have a flagged that's going to weigh on profitability in the months ahead. positive on their inventory levels. but once again, it's kind of the thesis here, we have some concerns in the six months ahead. people are looking at that. kriti: yeah, a lot of pain, interestingly, in the shares. i am curious to see what the readthrough is in the u.s. session amid a holiday nobody really expected. thank you for the crucial insight. he's talking to us as we foresee that major decline in those nike shares. i want to bring your other top stories from around the world, starting in china. they've signed off on the first direct delivery of a boeing 787 jet in four years, an indication that u.s.-china trade tensions

may be easing. one of china's largest private carriers took delivery of the jet and marks a breakthrough for boeing, which has been largely shut out of china's aviation market the last few years. the news pushing boeing shares higher yesterday. byd is in final talks with the hungarian government for a multibillion euro investment into a new ev factory. the chinese ev maker said to be time to manufacture batteries and electric cars at the new site in the south of the country. hungary expecting foreign direct investment to double by the end of the decade due to a surge in ev spending. the czech republic will hold a day of mourning tomorrow after the worst shooting in the country's history. at least 15 people were killed after a student opened fire at charles university yesterday. police saying there was no evidence the shooter had links to international terrorism. the attacker was killed in the rampage. eurostar train services between

london and the continents are back opened this morning. it comes after employees unexpectedly walked out yesterday, disrupting travel just ahead of the christmas weekend. france's transport minister announced last night the closure had been lifted after calling the blockage "an acceptable." bloomberg has learned barclays would delay the final decision on its bonus pool for top investment bankers this year to reflect last-minute business. sources say staff are arguing capital markets activity is picking up and their bonuses should account for that. the decision on bonuses has now been delayed until the new year. coming up on the program, the past few years have been an absolute roller coaster ride for the semi conductor sector. we are going to focus on the 2024 outlook for the industry. that coming up, next. this is bloomberg. ♪

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>> this at first glance is just a smart phone. but once you know what's inside, it becomes clear it is so much more than that. >> what really changed everybody's view of this device was what was at the heart of it, the microprocessor that was designed and manufactured in china. >> it is at the center of tensions between the world's two biggest economies. the phone made by tiny tech giant huawei represents a breakthrough by beijing as it tries to escape washington's controls on its access to technology and establish a self-sufficient chip industry. if the u.s. controls had been successful, a smartphone as advanced as this simply should not be possible without importing key components. >> china now is more capable than ever of building advanced technologies. >> it worried u.s. officials, who are more concerned about

advanced chips going into military equipment than smartphones. it left them wandering, how exactly did china do it? kriti: our team looking at some of the biggest development we have seen in the chip sector this year. one of the standout themes has been that buzz word, artificial intelligence. it is where chips will be essential to generative ai, as they have been to smartphones. china both an opportunity and risk. i want to bring in tom mackenzie, who has interviewed the ceo of arm earlier this year. walk us through this arm story this year. the future of ai, does it really just stay in the hands of this one company? tom: to some extent, 2023 has been a year in terms of the hardware and software of a company called nvidia, and in terms of large language models,

it's been a year about openai. we are already seeing competitors to openai. for nvidia, they have a target on their back in terms of chipmakers looking to carve out some of that market share. nvidia's stock up more than 200% year to date. the arm component is really interesting. this company touches, to the words of the ceo, about 70% of the world's because 99% of the worlds smartphones have that architecture, have chip designed semi conductors in those smartphones. can arm pivot away from smartphones and start designing hardware frameworks that meet the needs of these ai models? in terms of energy efficiency and in terms of data demands? that is where arm is trying to pivot. i spoke to the ceo and asked him about where he things that move, the evolution in terms of ai, is going to take us, how transformative it's going to be. take a listen. >> i think it will find its way into everything that we do

and every aspect of how we work, live, play. i think we are on the cusp of something that we probably thought five, 10 years ago was not in our lifetimes in terms of being able to have such significant impact, whether it's around productivity, whether it's around health. i think it's going to change everything over the next 5-10 years. tom: so, over the next 5-10 years, it's going to change everything. what you are hearing from ceo's, like arm's ceo, but others within this space is this is not a fad, it's not going away, we are still in the hinterlands of this ai revolution. kriti: the hinterlands. excuse me. let's talk about how this company went public. it's going to add additional scrutiny than we previously have seen. what are the challenges? tom: it is huge and a very significant year for arm because of that listing in the u.s. the context, this was a company that was born and bred in the

u.k. it is now majority-owned by marcel yoshi son's softbank listed in the u.s., despite lobbying for them to list in the u.k. the ceo talked to me about that. he talked about balancing the needs of their majority shareholder with other investors, given the spotlight they are on. he talked about the challenges of being something of a futurist in this industry where you are building out these frame send this architecture for these chips that may be in the pipeline 2, 3, 4 years down the line. you have to be thinking ahead. he also has to answer the needs of investors on a quarterly by quarterly basis. a pivotal year for arm in terms of the listing but also as it tries to adjust and ensure it has the solutions needed for this new world that nvidia is currently dominating. arm chips are a bit more of a commodity in the space, but he says he wants to get about 50%

market share in that part of the business kriti: this ramp-up in the next couple of years, how much of that is pulled up into 20 33? in 2024, are we going to see that same momentum? tom: within the semi conductor space, we've seen a bit of a bifurcation. we've seen the need for medical history drawdown inventories, particular for chips that going to smartphones npc's. on the flipside is this robusta demand for these ai chips, the chips on which these models are trained. that is expected to continue and extend into 2024. you look at the likes of amd coming out with a competitor chip to nvidia. nvidia is going to face more competitors next year and there will be more large language models on the market from the likes of openai, deepmind. expect some new announcements from those. kriti: we will rely on you to bring all of that news to us. bloomberg's tom mackenzie bringing us what a crucial theme

for 2023 has been. stick with us. this is bloomberg. ♪

♪ kriti: welcome back to "bloomberg daybreak: europe." i am kriti gupta in london. i want to leave you with two charts that are catching my eye, especially the pce numbers, the fed's core gauge of inflation. the blue will be headline inflation, the white will be that core preferred gauge. core services to say where the economy is going. they've kind of been on par mostly throughout the rest of the year but take a look at this tiny divergence. that blue line starting to plateau a little bit, core inflation is coming down more significantly. here's what's significant about that dynamic, this idea you're

starting to see the fed pick and choose numbers a little bit. that will be a concern going into next year if we see that deceleration in inflation actually slowdown. the other is the oil story. specifically as a lot of people are asking whether or not opec is dead, specifically because angola is choosing to leave the cartel altogether. it comes in the context of that production dropping pretty significantly in the last 10 years or so, simply this idea that they have not been able to meet their quota. are they really going to be making that much of a difference? i am sure there will be conversation on that. stick with us. markets today is up next. they will be talking about those key themes as we go into the last trading day of the. we wish you a very happy christmas and new year. this is bloomberg. ♪