>> china heads into the lunar new year on the start and deflation. in a surprise move, beijing replaces its top securities regulator. all of that after a pause forecast. the u.s. benchmark now hitting 5000. talking about the german conglomerate. the industrial bits of proper coming in slightly above the estimates.

2.7 2 billion euros. that comes in for the first quarter, net income coming in at 2.5 5 billion. well above the estimates of 1.7 billion euros. the chief executive has been speaking to bloomberg's oliver cook about the outlook. let's take a listen. >> let's dive into this. we have a stronger and softer business here. automation is held back. there are various strong persons in china. this is where the chinese market is still very slow. it is driven by lower private consumption. we can grow the economy.

this is the reason for automation. do you see the biggest risk to your other being that demand in china not coming back? >> we confirm your guidance for the year. this includes di.

we are working on different verticals here. we are talking about aerospace and defense. you see them going forward in investment and semiconductors. intel will bring that to the next level. also applications in the cloud. looking forward, we can confirm our guidance. absolutely mammoth.

that is good for you, it is good for inventors and investors. it may not be so good for your clients. do you need to boost the manufacturing capacity to fill some of these orders? they cut across china. also, plcs and electronics manufacturing. 50% of that comes from mobility. we invested in the united states and therefore, we have a good set up with our capacity.

craig's artificial intelligence is something we are hearing more and more about. we are hearing that you spend your partnership with microsoft and aws. talk to us about what that means. how does ai change the industrial business? >> when we are talking about this, the key message here is -- this means ai. when you simulate something, this is an impact on the real world.

it will always behave as if it is the real world. now you can optimize it and design your products. you can optimize it before you build it. you can optimize it and manufacture it driving 10%. not talking about the lead time of your products as you are in the field. you can monitor what is happening and act before a problem strikes. this is the power. we are here to build it with our partners. microsoft using their ai capabilities.

>> i have a question for you. everybody is talking about germany as the segment of europe. if it is the sick man of europe, it is not clear. when do you think german manufacturing will recover? >> i think you have to differentiate between and has manufacturing part in the other. we have low energy intensity. we believe there is a strong innovation power. including the ecosystem of the strong company. these are very strong companies. we also believe in that market.

>> speaking to bloomberg mpox -- bloomberg's oliver on the back of that. let's get you up to speed with what is going on with the standards. this was a miss when it comes to the fourth quarter net income. all of this below the estimates of 450 million euros. this fact challenged and hedged some interest rates that had not carried out. this was below one euro. this is over the estimates of a little over one euro. the ceo will be speaking to us and giving reaction to those earnings in the next hour.

a very different story here. a pretty solid beat. marla down to records being notched up by their trading team. the estimates have been for 1.2 9 billion euros. in terms of net income for the fourth quarter, 1.3 3 billion as i mentioned. that was a beat. the traders at that bank really benefited as well from the high interest rates. we will be speaking to the ceo of that. to the tech space now. another indication here.

the net income coming in with a big beat. ¥950 billion. the estimates had been for ¥373 billion and the profit then for softbank vision fund, you're looking at a profit of ¥422 billion versus estimates of a loss that came through year on year. a big beat in terms of the profit coming through with the vision fund that has that heavy exposure to the tech sector. 950 billion versus the estimates as well. almost triple the estimates. you saw an arm stock soaring on the back of their outlook. all of this a little over 11%. let's get to the broader markets. we talked about how we are close to the five thousand level for

the s&p. we are within a hair breath of notching a fresh record for the s&p. futures pointing marginally lower. that is on the back of the gains we saw yesterday. we will be hearing from the chief later today. flat is the forecast. slightly lower given the gains that we saw yesterday. nasdaq futures pointing to a modest gains. these markets continuing to power through the caution we are hearing from fed speakers. let's look at across assets. we had a successful -- pretty successful auction of 10 year treasuries around $42 billion

worth yesterday. treasuries did not move a lot on that. there was concern from some that it may not be the appetite to absorb that. that did not come to pass. the yen is coming a slightly lower in terms of what was offered. we continue to weigh up the china data. we look at the market reaction. that deflationary funk that china remains in that has fallen quick considerably but also in prices as well. the euro-dollar at 107. close to $80 a barrel. you are seeing strength coming through for iron ore as well. iron ore prices are up 2%. let's cross over to the asian markets there and get the deep dive with a wrong.

let's get to that. i saved the best for last. that is what helped you get out to its biggest client november of last year. that is lifting other semiconductor related stocks. supporting the benchmark there. the markets onshore closed for a weeklong holiday. the csi 300 has amazed much of the gains. it still looks to be extending from earlier in the week. investors more or less sharing on the surprise move by china to replace the main securities regulator in the country. we saw similar replacement.

the onshore benchmark extended gains for two years after that. something to keep in mind but the other thing to watch is also that deflationary funk as you called it. the steepest decline in cpi since 2009 is just showing how entrenched deflation is in the country. it shows how weak demand is and that is reflected in the performance on the hang seng, also being dragged down by the likes of alibaba and estimates that are over sharing the share buyback plans. a company we have been watching could be among the chinese biotech firms in the crosshairs of u.s. legislation. >> that was apple home with a great check on the asian markets for us. coming up, just in shares -- disney shares jumped in extended trainings. would it be enough to calm investor concerns on the struggling tv business. that is next. this is bloomberg.

>> welcome back. happy thursday. extended trading after earnings beat estimates. that would give an upbeat profit outlook for the year. held back by disney's struggling tv. what stood out to you in terms of positives from disney? >> it was really interesting from disney when it came to the side of the business. they gave this rare profit forecast. they will see a rise in profit of 20%. over the significant number for them.

on top of that, nothing i thought was what interesting was their past business outside of the u.s. is also improving. especially the parts in asia off the back of being able to open a post-covid. as well as something else when you look at the company in a very forward-looking space. >> also, this effort to bond he has been with a couple of other products in order to create a sports streaming service that should come online next year. those are both really interesting moves to position

disney to be able to react to future changes. whether that is people going on streaming or the younger generation that is much more interested in video games. >> it will be interesting to see . of course, bob iger recently taking back over as ceo of that business. we will be speaking as cfo -- we will be speaking to the cfo that business. tune in for that conversation. coming up, we will examine the state of ties between the u.s. and china in terms of trade, we have an update in terms of ruptures around the red sea and how that is impacting supply chains and shipping. all of that is next. this is bloomberg. ♪

>> time now for terms of trade. this week we are focusing on the outlook for u.s. trade with china. in a crucial election year for the u.s.. the u.s. goods trade deficit trying to its lowest levels since 2010. china's imports have faced higher tariffs and donald trump imposed detentions measures on his administration. on the changing nature of trade during these two nations, a spring in the hendrick foundation in singapore. the former executive director and founder of the asian trade center. someone who has a deep end dilemma -- deep end of the knowledge.

she talk to us about the adjustments and changes that you have seen. u.s. imports of china have fallen quick significant lead. now pulling in more imports from the u.s. and mexico and from china. how have things reshaped in terms of the trade flows between the two nations question mark -- nations? >> i think the big question is whether or not mexico developed that trade through mexican-based firms using mexican-based sources or whether that trade is largely companies including chinese companies who have moved to mexico to be a base in mexico for the production manufacturing assembly and shipping of goods into the united states. if it is the latter, if it is in mexico to serve the u.s. postal relatively chinese, i am not sure that you see that much

change on trade flows overall, you just see them coming as recording from mexico rather than recorded coming from china. >> one of the political risks? that is a really important distinction. how much is built up by chinese firms building for the u.s. market? we have certainly done some reporting to show that is part of the story. when it comes to the politics, we face election in november. we talked about the tariff that truck put in place. the fact that he is tightening the screws when it comes to the restrictions of technology, had used text the politics this year to impact trade flows? and the conversation and rhetoric around trade? >> i think the rhetoric around trade between united states and china is certainly coming out of washington and it will get hotter and hotter as the year goes on. as you have seen over the past couple of days alone, it is not just the trump team arguing for

higher tariffs, it is also the biden administration who is out saying that tariffs are a legitimate tool and should be used more widely than they are. i think the rhetoric is increasing. the white house is clearly doing so. congress is definitely involved in getting more vocal. i think there is a risk that this increasingly heated rhetoric turns into increasingly heated actions on the ground. while i don't think anyone is planning to change the terms of trade between the u.s. and china, that language can get ahead of itself. there is a real conflict on the trade side during this challenging election cycle out of washington. because interesting on the risks. in singapore you have this deep understanding of the asian region in terms of trade flows coming from asia.

is that a longer term trend? >> i think it is both. they will be continue to -- continuing to pursue a plus one policy. they are in china for china and they are looking for alternative places like vietnam to invest and manufacture. i think that is important in the long run. i will say as a sort of warning sign that if we end up with a trump administration 2.0, it becomes more risky for a place like vietnam to have increased exports to the united states because the vietnamese or mexico or other countries deficits to the u.s. continues to rise.

ironically we have a situation where the tension between the united states and china that ends up spilling over directly to a lot of other players in this region and elsewhere -- we could have increasing tensions outside of just the u.s. china trade links. >> which makes it that much more challenging as they look to hedge some of those risks. we really appreciate insights this morning. also, the broader regional impact. camille, we will speak to the ceo. bloomberg. ♪

tom: good morning, this is

bloomberg "daybreak: europe." china heads into the lunar new year holiday with consumer prices falling last month at the fastest pace since 2009. a bullish growth forecast from the chip designer helping the s&p close in on 5000 for the first time. softbank also jumps. and net income mrs. estimates. credit agricole rounding out the story for french lenders. we will speak to leaders from astrazeneca in the next few hours. let's check in on the markets. we were within a whisker of 5000 yesterday, powered by the earnings by disney and arm.

a far more bullish outlook. european futures looking to pick up some of the optimism, up .2% so far. s&p futures currently at just about that 5000 line after pushing through fresh record. looking to eke out some additional gains. u.s. 10 year in focus yesterday, a 30 year option, $42 billion was auctioned off, coming in lower than some had expected. the euro-dollar at 1.07. brent closing in on $80 a barrel. we continue to scrutinize the action, coming through in the middle east. and the u.s. secretary of state

attempts to pull together a cease fire and still it seems is some ways from that. a little bit of optimism as we had to that lunar new year in china. let's get back to the earnings story with the latest from switzerland now. the company announced it will buy a significant minority stake . i'm joined by the ceo, thank you for joining us this morning. your reaction to these results, and what are we seeing in terms of flows into your business? >> good morning, tom. thank you for having me on the show. we are publishing a robust set of results. we have stable profitability

before tax, very strong capital ratios against the backdrop of a market that as you and the listeners will know well have led investors to at best wait on the sidelines and at worst flee to the very defensive strategies, money market that we are not involved in. importantly, we've announced decisive action plans for the year ahead with the sharpening of our delivery model, and a minority stake in the cost program. tom: that's an interesting part of the story, certainly. before we get to that part, what is your outlook on all flows? does the flow story change and have you? inflows will be the story for

2024? >> more confident is the right way to put it, cautiously optimistic. last you restarted the year with investors thinking how much damage of these going to do to flows, then you mix that with geopolitical tensions etc. and you really had investors staying in cash. that should see a rebound inflows for the industry as a whole. we're are particularly well positioned on our fixed income, multi-asset franchises and developed equity, so yes, absolutely, cautiously optimistic. tom: vontobel has talked about getting inflows from credit suisse. do you expect that to continue? >> the landscape in switzerland

has obviously changed significantly. we have also announced that we have grown organically, so this is part of the story. we have a relationship manager on the client side, so we are seizing opportunities and we are definitely alert to them. tom: from which geography are the most inflows coming at this point? >> particularly our core market which is very welcoming in the sense that we had a strong focus on developed markets, where we are less sensitive to geopolitical tension and risk and macroeconomic risk, and inflows evolving -- have also come from those regions. tom: we touched on client activity, they had been sitting on the sidelines last year for multitude of different reasons. you're starting to see them

putting money into play. how do you expect that to change in the months ahead and how much confidence is there among your clients to get more active? >> i'm going to have a via -- very biased view. i would strongly encourage the clients to look at the target yields which we have, which we have not seen really since before the global financial crisis. but that against the fact that central banks have pretty clearly said that they are done hiking rates, so it take a major surprise and inflation to reverse course on that announcement. and the growth remains more robust than expected against all odds. similarly more quality equities is a segment of the industry. tom: you talked about this acquisition at the top, let's get the details on that.

an infant -- independent infrastructure manager, does this add to your business or what is it tell us about your push into the private markets? >> we are delivering on one of our key strategic priorities, which is to enter private markets and we have said that we would look to do that, and this is exactly what we have done. we had our eyes very much set on infrastructure so we are pleased that today we can announce that we are entering this highly attractive segment, one of the segments that is expected to grow the fastest, even amongst the private market categories. and we know why, it's because structured macro tailwinds are supporting this segment. so it is a key step for us. tom: we have to talk about

commercial real estate, what is your exposure to cigna at this point, you will have to put aside provisions. >> you know that historically, that remains absolutely true. we are completely investment led, we are not credit led. we do not lend against liquid assets and we have no exposure to any ill estate bankruptcy. tom: you have no exposure to any real estate bankruptcy, so you have no exposure to cigna or u.s. commercial real estate, can you confirm that? >> we have no exposure to any real estate bankruptcy and you can have a look at the probation and you can see that it will confirm absolutely minimal exposure and the conservative risk approach that we have. tom: let's talk about adding wealth managers. you added a number of headcount

to the wealth unit last year. are you continuing to add headcount there, or are you done? >> we are growing in organically and organically, and in both cases, we have a very disciplined approach. we want to complement our skills and stay true to our culture. on the private client side particular, it's about having that risk conscious approach to her relationship managers understand the model of growing investment led and not credit led, and we will continue to seize opportunities wherever they arise. tom: thank you very much for your time on the back of those results and the outlook for that business as well. tesla shares jumping after bloomberg revealed managers have been asked to identify which positions are critical, possible precursor to layoffs. our sources say it also canceled

performance reviews for some employees. tesla has around 140,000 people. sources say new york community bancorp has been reaching out to investors for capital to finance a large portfolio of residential mortgages. bank is said to be considering a synthetic risk transfer backed by a portfolio of about $5 billion of home loans. n.y.c. b is under pressure over its worsening credit quality. bloomberg has learned that citadel was among the hedge funds they received morgan stanley's trade leaks for favored clients. other recipients are said to be including people at devolution capital and others. morgan stanley paid $249 million to settle the investigation. this is what we are watching out for today, we will be hearing

from the chief economist of the ecb as well, that will be interesting, given what we are expecting and how markets are starting to price around the ecb. after that blowout nonfarm payrolls print that we got last friday, that will build out the picture on the jobs front. at 6:00 p.m. u.s., we will see the u.s. selling, $25 billion, 30 year treasury bonds after the 10 year treasury bond sale yesterday was well received by the markets. janet yellen will be speaking at a senate banking committee hearing on the financial stability in the annual report. we've heard her talking about the concerns around commercial real estate and the fact that regulators and the authorities are keeping a close eye on that. coming up, a look ahead to

maersk fourth-quarter earnings, how is the global shipping giant adjusting to the situation in the red sea? a really crucial day for maersk to get a gauge of what is happening when it comes to shipping and freight rates as a result of the disruptions and the geopolitics of the red sea. we are going to discuss that next. this is bloomberg. ♪

tom: welcome back. global shipping giant maersk is set to report in 50 minutes time. the earnings sure to be of interest given the disruption in the red sea. good morning, thanks for joining us. what will you be watching for when it comes to these earnings? >> q4 results will be very weak

at maersk, with negative free cash flows well for q4. the good news is this should be very much expected by market participants. 2022 was a record year for the industry and maersk and 2023 numbers have been week. we expect the softness to continue for q4. the key focus for investors will be on outlook, the situation in the red sea and how it is impacting the cash flow to the danish company. tom: talk about the red sea and how it is impacting its peers as well. what are the ramifications of what were seeing in the red sea for the shipping giants? >> at first glance, it sounds like a negative thing, all the disruptions happening in the red sea because container ships have to go around africa and it adds 20%-30% cost to them.

but the reality is, as though ships go around africa, there is less available capacity in the system, so the likes of nike and ikea are fighting for less ships, so to speak. so prices go up, and we've seen price increases of 300%, far outstripping the costs incurred by maersk and the like. currently, for the time being it is a good environment for maersk and its peers. tom: so benefiting at least for now. you talked about the freight rates, not to pandemic levels, but 300% is clearly not insignificant. what is the expectation around where those freight rates go from here? >> our base case scenario is for freight rates to normalize and go lower from here. it all boils down to supply and demand at the end of the day. when you look at the demand

picture and consumers across the globe are hit with inflation, with lower disposable incomes, a recession is also very much a risk. maybe less so in the u.s., but the recession has been increasing in europe in the last six months. on the demand side, there is an uncertain outlook. on the supply side of the equation it is pretty negative. when you look at what companies, container ship companies did during the pandemic with the record profits i got, if they went out and ordered new ships come of those take 2-3 years to be built. so it -- we expect a net increase in supply of ships to about a percent or 9% this year alone. if the demand side of the equation is quite uncertain and more ships are coming online, maybe freight trade should normalize in the coming months. the big caveat of the situation in the middle east.

tom: lower inflation, maybe not so good for the shipping companies, and as you say, the demand question an additional ships on the market. maersk earnings are coming up in the next few minutes. we will speak to the ceo of maersk shortly to discuss those earnings. switching to a different sector, the luxury space. the owner of gucci, they see 2024 operating income declining versus 2023. so the outlook is not bright for the owner of gucci. sales falling as the weakness persists across that label. fourth-quarter revenue coming in at 4.70 9 billion euros, above the estimates.

and it comes to gucci, revenues they're in below estimates which were for 2.50 7 billion. we have some divergence and splits within the luxury space. the outlook may cause investors some concern. softbank in the tech space reported net income for the third quarter that beat the average analyst estimate. that's as it ended japanese trading 11% higher. after a bullish growth forecast from the chip designer and softbank owns 90% of armed that is listed in the u.s.. robert, what drove that impressive beat and what does it tell us about the appetite for tech? robert: it's a pleasant surprise

to see softbank making headlines with something positive to say for once. their investment fund has been a millstone about their neck in recent years. wework filed for bankruptcy last year and was one of their holdings. there is more stabilization coming through for that fun, boosted by one of their key holdings as you mentioned a moment ago which reported earnings last night, with the numbers and guidance well ahead of expectations. it has restored some confidence back in the softbank story and the forward-looking view on arm in particular does look quite encouraging. tom: give us more details and what we saw with arm. extended trading moves in the stock were quite remarkable. the outlook being explained by the ceo in terms of what he sees as he tries to shift that

portfolio of businesses to have less exposure to smartphones. talk about what came through for arm. >> as you said, the company has been around for 30 years or so. in the early days of the smartphone boom, it profited to a significant degree as a high tech company at that point. then it plateaued, but what we saw last night is potential light at the end of the time with him gaining some early success in two new sectors, one being enabled -- ai enabled devices like smart phones, and they begin to make headway in the server market which was traditionally dominated by intel . so we got more confirmed evidence that arm is making good headway in these markets which could go on to drive the story not just through the remaining

quarters of this year, but on a multiyear view. that has given the markets renewed confidence which is why you saw such a strong aftermarket rise in the share price. tom: robert lee, thank you very much indeed for that analysis of arm and softbank. we will be back with more in the next couple of minutes. stay with us. this is bloomberg. ♪

tom: welcome back. the s&p notching up fresh records overnight, close to that 5000 level and well above most forecasts where the s&p is going to end 2024. that's the eighth time we got into this level, getting so close to 5000. will the catalyst come through in terms of the earnings story

to power above 5000? this is all despite of concerns around valuations and despite the fed speak pushing back market expectations around when the first cut from the federal reserve will come through. historically, february being a challenging month. the earning story from the likes of arm fueling optimism. we watch that development as well. let's flip the board and look at the inflation data out of china, really consequential. the biggest drop in consumer prices that we've seen since 2009. a lot of that was down to a steep drop in port crisis. the consumer in china, the sentiment is so weak, you can tie that to real estate. you can think about producer prices, this is a chart around ppi. 16 straight months of

contracting producer prices. need that real estate story to turn around, and for many this is the screaming call for officials in beijing to step up support. up next, we will speak to a whole host of c-suite sectors as we get more reports across earnings, including the likes of maersk. the influence of the red sea and geopolitics, what is that doing for shipping rates? stay with us. this is bloomberg. ♪

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>> this is bloomberg markets today. im anna edwards with cash trade one hour away. socgen ceo vows to boo