>> good morning and welcome to do break your. am kriti gupta in paris this time around. let's get to the top stories that your agenda. donald trump beats nikki haley in the new hampshire primary, putting him on course to win the republican party nomination for president. meanwhile, over in the middle east, israel and hamas have moved closer to an agreement on a 30 day cease fire. that reporting coming out of reuters. netflix urges gaining 13 million subscriptions in the fourth quarter were his biggest jump from the pandemic. as out-earn's crossing the wire right now. all of this as we talk about the big tech company. 9 billion or so. now you are saying then, on top. the ai moves require significant

here. this is somewhere between 40 and 49%. the estimate was just shy of 51%. the bookings are not really what matter. 3.6 billion is but they're coming with. this is almost triple what wall street had estimated. 39% of the system sales are coming from china. it is the gross margin taking a little bit of a hit. the triple number of bookings really sets it up for quit a positive open. that will be quiet significant when we talk to the ceo. we do have the promo coming up. they are talking about the ai story.

they are talking about a massive restructuring here. this is going to be interesting. a job restructuring all on a big bet of artificial intelligence. some of the other big tech companies in the united states. they are talking about raising the 2025 outlook. dennis quaid a bit of foresight. their operating profit rose to roughly 12 billion euros as a result. we will ask the ceo about their plan and where the hiccups might actually be 12 months ahead in the interview. if you are in new york, 2:42 for you. christian client will be diving into all of those details for us. that is your micro story. talk a little bit about what this is doing. features are higher by about

.7%. a lot of optimism coming from here, the s&p story. the big tech conversation that drove those u.s. gains showing up in europe as well. they are not enjoying that same move. it really comes down to the big tech story. higher by .4%. that is where you see that optimism. monetary policy is in the background. we had quit a few central-bank meetings coming up this week and next week. i believe that is coming up on the week of the 29th. it is sustainably staying above 4%. this is significant. there is that dialogue that

european central bank's and the ble are going to perhaps cut their rates first. brent crude with a very cautious tone. that is your cross asset picture. he digested a lot there. let's go over to april in singapore. she is monitoring the asian market story. walk us through it. >> we are seeing stocks in their region taking higher. not by much. jack really coming from japanese equities. it is the readthrough on boj day. we have been talking about how long this japanese equities rally can continue. it looks like the boj governor has donated for today and all of this is a negative territory. it is the stocks that benefited from a japanese currency that are pulling things lower. japanese backstops are rallying.

let's look at the bond space. that is where much of the repricing is happening across this. jgb futures sharply fell. we are seeing the japanese currency on the move but those games seem to be capped because he also have to consider how yields in the u.s. seem to be climbing as well. there seems to be the possibility for downside momentum on the dollar-yen if japanese bonds continue or keep up this performance they saw in december. now at least let's put the board and look at one of the stocks we have been watching in the region very closely today. that is of alibaba, the former chinese e-commerce darling. we heard how the cofounder bought out all of the stock.

you have to ask how long this will keep up. is this just going to be a short-term boost given help it is dealing with very intense competition? it has also been languishing a little bit among the regular tory crackdown and policy missteps. let's flip the board. speaking of the chinese markets, or to take you to the cross asset sure where we saw them coming through from that report of a risky package for the equity space. today it looks like it is extending gains. again, this is something we are seeing in the afternoon session. on the onshore benchmark, it actually slipped into the red early on. we are seeing the offshore and onshore again, the rally from yesterday. both of them petering out. you still get the sense that most the fundamental issues in the chinese economy are fixed, the performance you are seeing across assets could quickly fizzle out. >> we thank you so much for that

market update. walking through those really interesting dynamics. i want to bring it back to the election stories. the result moves president trump one step closer to claiming the republican nomination for president and raises questions about the viability of haley's campaign. >> this is not your typical victory speech but let's not have somebody take a victory when she had a very bad night. she had a very bad night. >> i want to congratulate donald trump on his victory tonight. he earned it. i want to acknowledge that. >> i am joined by bloomberg. he is monitoring this very closely. it is no surprise the present -- that president trump was going

into and a half triple and very hot and i think the expectations from a lot of political strategists around the world is that nikki haley did not necessarily need to beat him to call it a success but did need to narrow that margin in terms of how much she was lagging him. has she done that? >> i think that will be one of the interesting questions going forward. because she has a month between now and the primary in her home state of south carolina and then a couple more weeks until super tuesday. that requires resources to be able to run that sort of campaign. one of the critical things we will need to keep our eye on is what donor injections we might see into her campaign. certainly she did reasonably well, did not win. he would rather win the not but her camping set in the closing days that they would take a strong second. i think the difficulty is that

as much as south carolina is her home state, it might be harder to her for her. most of south carolina's officials have endorsed donald trump. scott was behind trump at the victory rally in new hampshire. right behind him and the cameras were panning there. at some point here, if you wanted -- want it to not be donald trump, someone else has to win. the math is really that simple. somebody else has to beat him. nobody has shown the ability in a republican primary field to defeat donald trump. that is usually ballgame. it is very much on her team to be able to show that that is not the case here for some reason. president biden came out and basically said after this it will probably be donald trump.

we saw a huge coalescing among republican leaders. trump is trying to project this idea that it is basically all over. it may be but if she was to keep going she will need those resources. she needs to show she can knock donald trump off somewhere. quickly else -- he is still attracted millions of dollars from some of the big fundraising events that kick off next week. all that despite the lack that there just pointed out. thank you so much for that crucial analysis on the u.s. elections story. i want to go to the corporate story. netflix shares surging. this is the best courtesans

early in the pandemic. a little more context, chloe joins me now. >> as you said, the key idea here is this explosion in subscriber numbers. it still worked for the fourth quarter. that is a cracked on password sharing. that is a strong slate of programs. third and crucially is this development of this subscription tier with ads. it would seem this ad driven model is what netflix is going toward. about 40% of all sign-ups in the as market, they plan to phase

out the basic plan with no ads starting in the u.k. and canada. it has also been point strong outlook -- a strong operating margin. overall, quick a positive turn in the fourth quarter. that was what was struck throughout 2023. it seems to be going into 2024 as well. it is to very strong quarters. all of this is coming from around the world. necklace is still doing that classic big tech thing where

they are wanting insane don't get too excited about this growth. we might need to see a slow down, what does that actually look like in the 12 months ahead question mark >> these subscriber numbers may not continue throughout 2024. that does not necessarily mean there will be a drop off in revenue. that would be balanced by price increases. that is upping up with has done for a long time now. they'll have to keep balancing this subscriber growth and price increases. they are in a strong position. they are more comfortable. they are going to be in a good place right now. something else as well is that they are kind of change in shape. the company is moving to live events. they announced yesterday they have a deal with the w wa. they have made moves into the gaming space. the company is changing shape. that is something that we will keep our close eye on. that will boost the advertising revenue as well. >> we will keep our eye on this

developing story. we thank you so much for the analysis this morning. once more ahead for you, stick with us. this is bloomberg. ♪

looking back to daybreak your. i'm critical to in paris today. please park -- turkey's parliament has approved sweden possible addition to nato. it leaves hungry as the loan hold up to the enlarging of the defense alliance. good morning. talk to us about how turkey got to this point. >> good morning. it has been a marathon to this point since june of two to, it was supposed to be this exhilarated exception process, big show of unity for native as

they try to counter russian influence. instead, turkiye emerged and hungry as obstacles to that process. turkey says hang on, these countries are presented obstacles to our own national security interests and it turkey's case, it was what they saw as support or at least a permissive environment for terrorist groups. any restriction on arms exports as well from sweden. since then they've had this back-and-forth over months, years in fact. between the two sides and finally last night we've had the approval in parliament. now we went from present air to want to sign. he has indicated in the past that he supports all of this. we would inspect them to go ahead. >> talk to us about where hungry falls and all the story. we knew there was some

reluctance from that part of the political dynamic there. could they change their mind ultimately? >> like turkey, i'd have been in a fairly enviable position so far but just saw a hungarian prime minister inviting his swedish counterpart to his country for talks. that will be the next opportunity for some movement with turkey. it does make it more difficult for hungry to sustain that position of the two. i think turkey was always the more vocal about its reasons for holding out. no doubt they would try to preserve their bargaining power as long as they could. >> one we are watching very closely.

we thank you so much for reporting your analysis this morning. i want to stick with that general concept. the european union is progressing their plans. while opting not to seize the assets outright. they gave their blessing to the windfall tax. bloomberg has learned that it will be discussed by ambassadors later this week. reuters is reporting that israel and hamas have broadly agreed in principle to exchange is really hospitals. i want to get a little bit more analysis here. ethan joins us from tel aviv. what more do we know about this potential deal? could actually work? question morning. i am a little less optimistic than the reuters report. i sense there has been some talk going on for weeks.

the israelis want to get rid of hamas and save the hostages. hamas wants to save itself. the goal for hamas is to get the israelis to stop fighting entirely and that is not israel's goal. they want to eliminate hamas. >> we know this is a real touching point when you talk about the last cease-fire. it was really a question of how much longer. we didn't even know if we would make it a full-time. that is the story within israel and gaza. let's broaden it out to the region. but more do we know about this? is it connected to what we are talking about in israel? >> everything has kinda been echoing out from the gaza war. the idea that somehow all of these are iranian backed militias inspired but what is

happening in gaza seems to be real. iran has made the elimination of israel and official go. so yes. but it is causing enormous difficult he. whether the war in gaza would end all of that is far from clear. >> it is something we will be keeping a very close eye on. ethan joining us from tel aviv. we have plenty more ahead. stick with us. this is bloomberg. ♪

>> i am kriti gupta in paris. apple's self-driving cargoes are less ambitious. the scaled-back design and a delayed launch. bloomberg understands the company is looking to introduce its ev with more limited features in 2020 at the very earliest. it is roughly two years after a recent projection. all of this as manufacturing lapses threaten further the delay. united has not canceled their order for the max 10.

alaska air says it has found loose bolts on many of its poets , through seven max aircrafts. bowen said -- bowen says it is

deeply sorry for the disruption to airline customers. all of this after a disappointing quarterly forecast. all of that lower than the average estimate of 4 billion. the outlook suggests a rebound. monitoring all of those corporate stories out of the united states. i want to talk about what is happening on the day had. all of this all over in the u.k. as well. a similar story in the u.k. as well. plus, tesla earnings will be front and center. we are paying attention to both sides of the atlantic when it comes to the big tech story. those record deliveries are

really important. they will also be in tandem with some of the moves you are seeing around the world. specifically in the berlin facility. when we talk about the canary in the coal mine in terms of what kind of geopolitical intentions affect the supply chains. the member when tesla outperformed some of the other global carmakers because their supply chain in the shanghai plant was much closer than some of their peers around the world? that is their competitive edge. in a similar waiver for apple, their competitive edge is the security of their supply chain but how much of that is in question given the fact that we are dealing with really interesting commodity issues and not to mention tesla talking about their competitive pricing with some of the peers around the world. all of that on the docket. this could be your's has spent for its own ai joint . our interview with the is next. joining us all over that story. this is when you don't want to miss. this is bloomberg. ♪ hi, i'm jason and i've lost 202 pounds on golo. so the first time i ever seen a golo advertisement, i said, "yeah, whatever. there's no way this works like this." and threw it to the side. a couple weeks later, i seen it again after getting not so pleasant news from my physician. i was 424 pounds,

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kriti: good morning and welcome to daybreak euro. in the united states donald trump beats nikki haley, putting him on course to win the republican nomination. sweden approves succession to nato, leaving hungary as the holdout. smashing estimates, tripling orders and soaring demand for chipmaking machines. let's start with the macro story. we've seen green on the screen driven by the big tech story. asml is tripling order numbers. futures are higher. when we see outperformance it means a bid in nasdaq futures

and we are seeing them higher but again lifting the rally that we expected to get trimmed back. i want to get to the micro because we are getting a story from the maker of high-speed trains around the world. the expectation was to get an understanding of debt reduction announced in november. the third quarter backlog came in at 98 billion euros. there is on insatiable demand but perhaps there falling behind on delivery time. third quarter orders are coming in at 5 billion. sales numbers coming in. they are saying they will

provide a breakdown of their deleveraging plan. we interviewed the ceo, asked him what look like and he said they were figuring it out. now they will have more details in may of 2024. a quick check on cross assets, the bond market story is ruminating. 411 is where we are at. weakness in the dollar is a theme for the cross assets story. even brent is trading shy of the 80 handle. let's get into the nitty-gritty of the tech story. all over -- ali crook has a guest for us. >> 2023 was the year of ai hysteria and we hope to bring

clarity to what it will do for us. most attention was monopolized by drama but in europe there is germany's alice alpha. they've raised money in a different way than traditional startups. i'm pleased to say we are joined by the ceo in berlin. most people's contact was with openai and you are doing something different. explain what space you occupied and where you are as a company. >> we decided to focus on critical complex processes. legal, finance and government. this is the reason why we've worked with different partners. the funding round is a

consequence of that. >> tell me what you are doing to help them. we understand chatgpt. explain how this slots in. >> you want to write a report based on confidential data. it has to be top-notch, so you can't just paste documents into chatgpt and say write a quarterly report. there is always this perspective and this perspective, this evidence and this conflicts with that. so you need an environment that is secure. you have different requirements from jet -- chatgpt. we are learning a lot. i'm not an expert on

manufacturing, so in the last month i learned about manufacturing and how semi conductor and engineering companies are going about their business and how we can help them. >> do you find it annoying that openai and chatgpt dominate the consciousness around ai? >> helped us. this visibility would not be there without openai so it is a blessing and a curse. >> you are also competing with companies backed by giants. what do you see the risk of ai monopoly and what are the consequences? >> that is the play why giant companies are investing. they want to do what has been done for the intelligence

market. it will be severe because ai will influence the next generation and how they grow up and learn. this is more critical in our industry. >> you taken us to european tech sovereignty which you think is important. how important is it for you guys to be funded out of europe and is it possible to be funded under europe? >> we are not fully funded. our friends at hewlett packard helped us but we mostly fund out of germany, out of europe. this is one side of sovereignty. how do you control development? the other part is what we are giving customers. u.s. customers worry about their sovereignty. they know that if they handover the data into ownership to a

monopoly player, they are in a difficult position. >> who are you talking to in terms of investors? >> is a very different, unique funding round. we have not had something like that in germany and we will raise more capital. this year is about execution. i'm hoping that i can focus on tech, talk with professors. >> you need an ecosystem in europe. we talked about money but there is the question of regulation, talent, chip manufacturing. was missing right now in the european ecosystem? >> the most critical thing is putting technology into action. germany was lacking in applying

ai and this will be critical not only for our survival but these great companies in germany in europe. >> i talked to these companies. they say the future of germany is not heavy industry. it needs to rely on educational, innovation, technology. if you gave advice to the government who try to foster that environment, what principles should guide policymaking to attract to you and ensure success? >> we need a level playing field, so we need a fair environment. the big players can use one monopoly to fund the fight for dominance in a new area which is challenging for new players. the government, there are 4000

open positions. in the next few years we will fall off a cliff so government needs to modernize and you can do that with ai but we need a government that is lean and a level playing field. >> you have been involved in conversations i would assume about ai. what are the strengths and weaknesses about the ai act? >> the uncertainty is gone. i don't think that is the good move to be a last place behind the u.s. in china in growing ai or to be the first on heavy regulation. the creative energy in europe is needed for innovation and we are diverting that towards compliance. ais fine. >> how different is it now in

europe versus the united states? >> there have been different drafts. there are different ideas. we've seen on the last meters before the finish line there was germany and france. in police said we have strong ai companies. got france and some others. maybe we don't want to crush the innovation. let's be careful. >> talking about the macro, there is speculation about ai in a year where there are elections in democratic countries. the ability of ai is more available to identify voters. how do you see that trickling

through the electoral process? >> ai gives superpowers to humans in manufacturing and research but it also gives superpowers to people who want to bring people down or do crime. it has automated cyber crime, so that is something where criminals and totalitarian regimes are the very first to use these opportunities. that is a danger for democracy. >> thank you. the ceo of alpha joining us to talk about the competition from germany. kriti: thank you for the interview. interesting dynamic suggesting silicon valley is not alone in developing technology. coming up, latest on the euro

economy. a preview of january's pmi readings. this is bloomberg. ♪

♪ kriti: welcome back to daybreak europe. pmi data is due out today for

january. christine lagarde is pushing back against rate cut hopes. it's ahead of the policy meeting tomorrow. a pleasure to have you on the program, talk about pmi data and what it will tell us about the european economy? >> they will be good and bad news. the worst for the euro zone economy seems to be over. , this -- economist expect improved numbers but they will point to contraption at the start of the first quarter and that is significant. we will look at the forward-looking components, export demand, these things, they will show us how much of a chance and how quick of a chance there is for the eurozone to

recover and those indicators were deeply negative at the end of last year in december. it will take a bit for that to change so for now it will take some time to recover from the procession. we will see data on that next week so the economy seems to be on track for a soft landing, a small recession. for now the pmi's are a mixed bag of messages. kriti: what does that mean in terms of the ecb thinking? because of the weakness underlining the economy it will prompt the ecb to front run the federal reserve. do you think christine lagarde

is thinking that way? >> what they don't like is for their action to be put in the context of central banks because they make decisions for the eurozone and there is a lot from germany, france, other nations. what we've seen is that there was an effort to push back against aggressive rate cut that spy traders for easing in april and they have said the economy is slowing. we aren't seeing a slump or anything out of the ordinary, but inflation is still very uncertain.

price pressures are uncertain and christine identified four different think she is watching. and a lot of that is wage growth and those figures will become available in the first and second quarters. how companies adjust profit margins, what energy prices do on the back of tensions in the middle east and supply of bottlenecks which we've seen becoming an issue for companies around the world. those things could push inflation up or keep it higher for longer than currently forecast. central bankers are careful not to talk about rate cuts too soon and to adjust expectations. expect a lot of that from the president. kriti: interesting dynamic.

we thank you for the crucial context. i want to talk more about what we were discussing. i'm joined by rafaela from paris. i want to expand on whether the market pricing in rate cuts is justified. >> good morning. i think it is justified. we think the economy is stagnating in the first half of the year and we see inflation at 2% for most of the year, undershooting the target. the ecb is likely to reduce projections at the next round, but they are concerned about the labor market and its style is to

be cautious on inflation, so we expect 100 basis points from january because they will wait to be ultra-certain that that direction as the one that they want. they want to see how the suez canal crisis passes on to inflation if at all. kriti: the crisis that we discussed earlier, tesla had warned and led warnings from european companies that you are seeing tensions showing up in corporate earnings. have they crossed christine lagarde's desk? is this something to pay attention to or a corporate story? >> it will be a macroeconomic story but in europe, the tension will translate into profits because what surveys are showing

is that the situation is worsening, but there is little increasing pricing power. there were some cracks in appetite so when you think how tight conditions are and how feeble is domestic demand, you will see corporate profits beginning to slow. and that will allow the ecb to cut and signal a dovish direction. kriti: in terms of direction doesn't it matter that the ecb and federal reserve may diverge? there was concern about diverging from the boj. even the boe, there was concern that central banks are not on the same page. is there that dynamic between

the ecb in the fed? >> this is relevant from two aspects. u.s. economy is stronger in terms of trend. better demographics, better exposure to technology, digitalization, the economy is delivering productivity, so it can sustain higher growth, even though easing is necessary. in the euro zone there is stagnation. they are weaker on demographics, technology. politically more confused. i think there is a fundamental divergence that will reveal itself in equity performance and fx -- we think dollar strength is the theme of the year because of the divergence in the fundamentals of gdp and the rates. we expect euro-dollar to head

toward 103. kriti: one major dislocation given that if we are talking about european weakness built into the story why is the fx market not pricing it in? 10 on euro-dollar so we will see if we get there. thank you for joining us. she of course is the director of ada economics, talking about the european economic story in context with the rest of the world. stick with us. this is bloomberg. ♪

♪ kriti: something crossing my mind is how much europe plays a role in the big tech story. this chart speaks to that

dynamic. we talk about netflix. they've had two good quarters driven by the region which puts the dollar weakness into cruciate alley. what it means for the revenues is something to keep on your mind. coming up today, europe's most valuable tech company smashed estimates. can they keep up momentum? ceo of s.a.p., a conversation coming up and are coverage of the private equity conference. markets today is next. this is bloomberg. ♪

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♪ anna: