tom: good morning, this is "bloomberg daybreak: europe" i'm tom mackenzie in london.

stocks in asia in a holding pattern as markets look ahead to growth and inflation data due this week. u.s. and european futures pointing lower. congressional leaders meet president biden as efforts to avoid another government shutdown ramp up. apple shares again as bloomberg reveals the tech giant is ditching efforts to build an electric car, as it pivots towards ai and mixed reality headsets. let's check on these markets. there is a bit of a holding pattern. bit of a mixed picture. you want the detail on the inflation story of the u.s. on thursday with personal consumption expenditures, the pce, the favored gauge of the fed and then gdp today out of the u.s. we will see if the revisions change the picture with 3.3% currently on the board for the most recent quarter out of the u.s. modest gains on wall street yesterday for the s&p, ending higher 0.2%.

still in the green for europe. we will see how that evolves today. currently european futures pointing lower a little over 0.1%. if is 100 futures in the u.k. are flat. we keep an eye on commodity markets and the pricing around iron ore and copper. s&p futures currently down 0.1%, after modest gains yesterday, still above that 5000 level. nasdaq futures just below that 18,000 level, losses of just 0.1%. let's have a quick look at the asian session. in terms of what's happening, the lines crossing from the budget in hong kong. important changes around the housing market, real estate, and tax changes for the highest earners in hong kong. easing some of the curves around the property market of hong kong. you are seeing again on the back of some of those real estate developers on those changes. also easing of mortgage requirements as well. across the asia benchmark, the msci asia pacific down 0.4%. that rally in mainland chinese

stocks taking a breather. we have data next week in terms of manufacturing and services, and the start of the national people's congress. the hang seng index currently down by 1%. but the property index is showing gains, up 0.8%. because be in south korea, currently at 2651, up a full percentage point so far. let's look cross assets. more issuance across the treasury market on the corporate and sovereign front. the u.s. 10-year at 4.28. 1.08 on the euro-dollar, down 0.1% rate brent crude relatively stable despite geo-clinical risks and concern about demand out of china, currently down 0.4%. iron ore currently down 0.9%. you can tie that to concerns about the china story, 116 on iron ore.

let's get back to macro and the fed. bond traders no longer expecting that the fed will lower interest rates by more than 75 basis points this year, bringing their view in line with the fed's dot plot brainless bring in mliv strategist mark cranfield. this felt inevitable, the move towards that view of 75 points by the and that of this year, what is the risk for treasuries from here? >> the irony is it has taken traders so long to get in line with the fed's view of three dot plots, they might be too late. they have got gdp data today, the important pce data tomorrow. looking at the general picture, we have had a strong resilient u.s. economy. it might well be that the federal reserve needs to dial back on three rate cuts, and i shall he look for two rate cuts this year. we might get a position where the dot plots are change in march anyway to reflect the fact

that the fed can afford to wait a lot longer until they start lowering rates. which is been part of the message from fed's figures recently. they are certainly in no rush. they think it could be more risky to go too early because the economy is running pretty well anyway. traders have gone through a big adjustment process to get where they are now, yet the next few weeks they may have to do it all again because the fed dot plots are skewed towards going down to two. but it does depend on what we see in the data the next few days. but based on the patterns of so far, the resilience in american numbers makes you think the fed will be less dovish than they have been this year. tom: there can be further to go could we move from three to two on the dot plots? the rbnz of new zealand, the central bank there sounding less hawkish, but also saying they don't expect cuts until 2025.

is there a read across from what we have been hearing from the central bank of new zealand? >> particularly for the foreign exchange market. currency traders if you have been paying attention recently, you noticed they are a board bunch. implied volatility has slumped. not much going on in major currencies and suddenly they have a new theme. going into today's meeting, most traders suspected a hawkish old from new zealand, we didn't. we got a dovish hold. with people skewed towards long positions in new zealand's dollar, that needs to be reversed and value have a target on the back of the kiwi because it is one of the few themes that look clear in the foreign-exchange market. we have seen it drop 1% during asian trading today. over the next few days, is probably going to be right in the sights of foreign-exchange traders, as one of the few things they have some consensus. this currency is probably too strong and needs to readjust.

new zealand is not talking about rate cuts this year. they are talking about them next year, but it is a moving target and the way economic data goes in that country is they can change pretty fast. we have seen an abrupt change already and probably traders are looking for more of the same. this is a currency which will be in the spotlight, along with the yen the next few days. u.s. data will play into that. kiwi and yen are the most at risk of big moves after u.s. data. tom: the target on the back of the kiwi. currently down 0.9%. let's move to u.s. politics, or congressional leaders expressed confidence they may avoid partial government shutdown. after a meeting with u.s. president joe biden. let's bring in anchor kriti gupta for the details. one of the main sticking points? kriti: it feels like we are on repeat in terms of the drama in washington, d.c.

we are dealing with potential shutdown at just the end of this week. but first apartment that gets hit will be veteran affairs. a lot of the military spending that goes toward people who served abroad, health benefits, it is the first department that gets hit. i think as of march 8. you see the countdown. as more veterans get impacted, it becomes a bigger political issue. the sticking point comes down to foreign policy on three fronts. aid to ukraine, aid to israel with defense spending, and how much will be tackled in terms of the border with mexico. i will walk through these. let's start with israel defense. you are seeing more people dive into it, but it is becoming political in terms of the election in november. specifically for president biden. the last one to four hours you have gotten the michigan primary. michigan is home to the largest

muslim population in the entire country. this is something he won in the face of a lot of democrats who are very anti-trump saying we will not support either candidate as a formal protest against some of bidens foreign policy. this is something a lot of political strategists say will be his achilles heel. the israeli defense story is where he's making up lost ground . especially around potentially undecided voters that were thought to be leaning gop. the u.s.-mexico border comes down to this becoming a key issue for both gop and democrats. you see biden and former president trump making their way to brownsville texas to see what can be done. tom: pretty walking through issues that have been grappled with in d.c.. looking to avoid that shutdown but bigger issues longer-term around israel, ukraine and that border issue. the corporate scoop of the moment. apple has abandoned its decade-long effort to build an electric car.

to shift some of the team's b2000 staff to its generative ai division. apple shares gained on the news. mark gurman broke the scoop for us. why have they given up on this project they dedicated so much resources and people to over so many years? >> tuesday morning, california time, the apple ceo and vice president of technology in charge of the car project announced to 2000 staffers on the special projects group that the work on the car would wind down immediately. the company came to this decision after many years, many starts and strategy changes, after realizing they may not create something better than a tesla that is cost-effective and gave them the margins they are accustomed to. this is a bombshell decision. one of the biggest revelations to come out in a number of years .

we will closely follow the fallout from this development in the coming days. tom: a bombshell decision, as you say. what is your view on to what extent artificial intelligence played a role, at least, apple's perceived need to catch up on the question of generative ai and allocate resources. >> ai and artificial intelligence was a factor, but not in the way most people would think. it has to do with their ai not being good enough to produce an at thomas carper. -- to produce an autonomous car. now there shifting resources to generative ai. generative ai is good for a chatbot and the iphone operating more quickly, but the ai was not good enough to build an autonomous system that can get you from point a to point b

without a car accident. tom: what is the reaction from people working at apple, or apple's competitors, and does this signal a risk-averse apple? >> in terms of apple's future, this is terrible. what is the next big revenue driver. where does the company go from here. these are all key questions. is it robotics, health care, energy, home, foldable phones, airpods with cameras. maybe. but none of those areas can grow the market cap as much as a successful car would've been able to. apple has to look in the rearview and figure out what is the next step. tom: mark gurman who broke the scoop. thank you for joining us late l.a. time with the details on

the story around apple giving up its car project. plenty more on the day ahead. at 7 a.m., talking of cars, details around aston martin earnings. also at 7 a.m. earnings from reckitt benckiser, the drugmaker, and to details in terms of demand. at 5 p.m., when it comes to luxury clothes, think of moncler, 5:00 p.m. u.k. time we get details from the luxury jacket and goods maker. see if the higher end of the retail space holds up in this more challenging environment. you can get around of the stories to know. go to today's edition of daybreak on the terminal. subscribers can go to dayb . there is plenty more coming up. we will do a deep dive on nigeria's central bank decision, delivering a jumbo hike to tame soaring inflation.

what could it mean for the currency and economy of nigeria. later in the show, i will speak to asm international's ceo after the tourmaker issues a disappointing outlook. the evolution of the semiconductor industry in the face of those ai changes. stay tuned for that interview. this is bloomberg. ♪

tom: welcome back to "bloomberg daybreak: europe." the united nations is warning that one in four people in the gaza strip are one step away from experiencing famine. the un's has nearly 600,000 people in gaza are now on the verge of starvation.

essentially all of the local population is relying on food assistance to survive. united nations adds that the situation will get worse as humanitarian agencies report trouble delivering aid into the war zone. in senegal, political, religious and civic leaders propose presidential elections for june in the hope of ending weeks of instability in the west african nation. wrangling over the election has scarred senegal's reputation and weighed on investor sentiment. the proposal needs the approval of the president whose term is due to end at the start of april. nigeria's central bank delivered a jumbo rate hike to tackle runaway inflation to stem collapse in the country's currency. under a conga joins us out of kigali. nigeria can no longer afford to make the popular dish of rice at home. that is one example of inflation so high that they can't make

that staple dish. talk about the impact this is having on the ground in nigeria. >> the cost of basic goods and services skyrocketed as inflation hits a high of 29.9%. food inflation trickle down effect. nigerians are struggling to put food on the table because a you look grandma price increased 98%, onions 98%. in an economy where 41% lived below the poverty line. the central bank governor attribute's this rise of food inflation to high insecurity in food producing regions. there is also the lingering effects of high energy costs and the effects of the depreciating currency. this explains why we saw that rate hike to mop up excess liquidity but stabilize the currency. good news for investors but nigerians can only sigh when they feel relief in their

pockets. tom: we are seeing protests on the streets over this cost-of-living crisis people are facing. what are the calls from protesters, what do they want to see? >> they want the government to alleviate their suffering. they state minimum wage has been 30,000 naira since 2019. there is also electricity shortage, and transport costs tripled after the government removed subsidies in fuel. even though the subsidies might not come back soon, the government hopes some of the reforms will begin reflecting positively on the economy. tom: ondiro oganga with the latest on that jumbo hike from nigeria. but the impact continues to be felt for the people of that country facing that incredibly high inflation. macy's says it plans to close 150 stores as it fends off a takeover by activist investors.

details next on the future of macy's. this is bloomberg. ♪

tom: welcome back to "bloomberg daybreak: europe." some lines crossing in terms of a potential acquisition. swisscom in switzerland is in advanced talks to acquire vodafone's italian business after fending off competition from iliad group. the swiss telecom company hashing out the final terms of the deal. it could reach an agreement as soon as the coming weeks, according to people quoted in this story. it has been discussing an offer of around 8 billion euros for vodafone italy.

it's a very competitive market in italy. the deal could still fall through, but they are making progress. the details around potentially an 8 billion euro deal that will be largely paid in cash. now to the retail environment in the u.s. and news out of the biggest retailers. macy's says it plans to close almost a third of its u.s. locations, as the department store chain tries to fight off a pair of activist firms seeking to buy the company. lowe's says sales will fall further as consumers hold off from sprucing up their homes amid higher mortgage rates. joining me is diana on the details. can you put this into context in terms of what they are trying to achieve? >> the idea is to unlock some real estate value.

that is what the bid for. the bid was $5.8 billion. according to valuations, macy's real estate is worth $6 billion. while also reducing by $750 million by 2026 the exposure it has to real estate. therefore reducing the argument for why they would want to acquire it. the two acquirers have been aggressive. they have been forging ahead to get there board members on the board. for macy's, it is a tricky one, because focusing on luxury brands is well and good, but it

is a saturated space. there are a lot of internet players. tom: to home renovations. with the details around lowe's. to what extent is this higher mortgage rates in the u.s. impacting the sector? >> that is the biggest driver the company pointed out. high interest rates and people aren't moving homes as much. there is a reduction in consumer confidence which is all to be expected. it is interesting that the u.s. consumer is doing well. but with big-ticket items, the u.s. consumer is cautious. they are not doing big renovations.

sometimes when you have high interest rates and people are moving, it can create a boost to renovations because people are saying if i can't move, i will make my existing space nicer. it seems that is not helping out lowe's. it's outlook for the rest of the year isn't that great either. it beat estimates although sales fell by quite a lot. it's 2020 four outlook isn't so strong either. tom: caution amidst the u.s. consumer, at least when it comes to home renovations. we will check on the asian markets. it's been a challenging session across the msci asia pacific, you are seeing downside of just under 0.5%. selling pressure coming through on mainland china. the csi 300 is down 0.4%. a bit of downside after a decent few days for mainland stocks

paid leading up to important data out of china next week and national people's congress. the heaviest selling on hong kong. that reaction on the back of budget changes from hong kong in the last few hours. the hsi property index performing slightly better, up 0.1%. in south korea, the kospi at 2654, a gain of more than 1%. asm international issues a disappointing outlook despite the dutch equipment maker's upbeat earnings report. we will speak to the ceo next. stay tuned. this is bloomberg. ♪

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>> good morning, this is bloomberg. i'm tom mackenzie and these are the stories that set your agenda. asian stocks in a holding pattern. u.s. and european futures point lower. leaders meet president biden as efforts to avoid a shutdown ramp up and bloomberg reveals apple is ditching efforts to build an electric car as it pivots toward ai and mixed reality headsets. let's check on the markets. the session has turned more negative. losses of 4/10 of a percent. losses of a 10th of 1%. ftse 100 futures are flat and s&p futures above 5000 gained

2/10 of a percent. no big bets until you get the gdp data. the inflation gauge crossing on thursday should give some clarity on the fed. as markets align with dot plots, not expecting more than three cuts. market change has been swift. aztec futures are down 2/10 of a percent. look at commodities. a move of one basis point for the benchmark. options on the sovereign and corporate front. 108 and euro-dollar down 2/10 of 1%. brent at 83, down 5/10 of 1%.

not significant volatility around oil. a holding pattern weighing the geopolitics. progress around a cease-fire with israel and hamas and the demand picture out of china. iron is down 8/10 of a percent. questions on demand from china real estate. swedish fintech firm cornell is moving forward plans for a u.s. listing that could be one of the largest this year. the giant has started having detailed discussions with investment banks for an ipo. they are seeking evaluation of $20 billion. alstom will buy back shares and

targets a record year with plans to list its north america unit. they reported earnings that met expectations and the new ceo will take over and pay. deutsche bank's decision to force workers into the office met with fierce criticism as they attempt to reverse a policy introduced during covid. a memo says employees made critical remarks about the requirement to attend the office three days a week. soft and is in talks with financial group pce over the sales of woodland. they have been discussing the deal for weeks and could enter exclusive talks.

heads of major u.s. banks in france say the pool of talent to increase the attractiveness of france made paris the trading hub since brexit despite higher labor cuts. leaders spoke to promote the new bloomberg paris newsletter. >> harris is a hub. we've grown from 250 employees to more than 900. >> we have more than 400 people. we can go up to 600 without having to move. >> we have 400 people on the ground and will continue to grow in a different space. >> we have tripled our headcount

in paris and this may go further in the future. >> what made the difference was president macron made france more attractive and more than anything, the pool of talent. >> french school is looked at as something with momentum. >> labor market is complicated in france. having flexibility is important and when you grow headcount, it becomes more important. >> we need to be flexible in

headcount. >> you can go to london or new york but you can also go to paris. >> you can subscribe to the paris addition newsletter upon bloomberg. back to earnings, asm projected revenue that fell below market expectations, a signal that they are grappling with uneven recovery in demand for semi conductors. i'm joined by benjamin, ceo of asm. thank you for joining us. for the fourth quarter it was a beat but the outlook will be disappointing. why a softer picture than other businesses? >> we shared our guidance, the

first part of 2024 will be slow and what we are seeing in the market is consumer demand starting to pick up, but not translated into additional capacity. we saw a report saying that customers will cut capacity for flash. there is uncertainty in the market. the market is bullish about ai and ai will be a significant growth driver, but we are at the beginning and seeing as far as ai, there seem to be constraints in packaging, so we will need to

wait more to see how the growth in ai will take place, how fast over the next couple of quarters. >> i want to unpack your views. in terms of views on the second half, you project a slightly more positive second half in revenues. what is the rationale for the switch in the second half? >> the second half will be higher but given the lack of visibility, we will not put a forecast and we are not able to quantify the magnitude. in the second half, logic and foundry will compete.

you will see traction in recovery of memory and what is uncertain is how much growth in china will continue, whether there will be a recovery, those are uncertainties. tom: memory price is picking up. uncertainty over demand out of china, you see strength in the first half of the year. what is driving strength? >> china has been strong and will continue to be strong in 2024. because of investments over the

last 18 months you might see normalization, but how much is left to be seen. >> we are cautious and we expect normalization in the second half, but magnitude is uncertain and contributing to why we do not want a concrete forecast for the second half. tom: is there more you are doing to adapt? >> we have even before october worked with governments and complied with regulations including the latest one.

we are able to sell to china and we comply with regulations. what you're seeing with china are restrictions more advanced. instead of investing, chinese companies invest in mature logic and foundry. that is driving the market. tom: that's the mature part. when it comes to ai, much more high-end chips and a focus on transistors. do you see ai as a catalyst in the market? >> definitely.

we expect for 2024 more than half will be all around investments, so it will become significant for us and during investor day we project by the time we get to 2027 there will be a driver for semi conductors which is good for us. our strength is the leading edge. ald is required for leading edge so that will be good for us in 2025 onwards. tom: that is the existing opportunity going forward. this ai open up additional

opportunities? >> one area is high-performance dram. we've seen activities pick up and memories down. high memory has been doing well and we expect investments to continue for the rest of this year and if you look at where memory customers have announced results, high-bandwidth memory brought some back to profitability. dram will grow and we are seeing additional investments starting this year and next year. tom: you are stepping down as

ceo and moving on in may. what is in store? how challenging do you think the year will be for the business? >> in terms of strategy and the way we operate, investors should not expect changes. our strategy will continue and technology development is the core of the company because we partner with customers to develop technology. that is the core of the company. the succession of me is

something we planned. we brought him from the management board so it is all planning and for me it was a personal decision to do something less intense and focus on other activities. i will continue to help the company in the role of advisor and we issued a press release that we nominated martin, currently the president of cm l who was well-known. tom: benjamin? we have run out of time, but we wish you good luck. thank you for your time, benjamin lowe, ceo stepping down in may.

breaking news around china and regulators clamping down on funds causing volatility. this is direct market access. regulators gradually shrinking the size of this strategy that contributed to the turmoil in the stock market. funds were told to stop accepting inflows and phaseout products. we will keep across that story. this is bloomberg. ♪

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tom: bond traders are paring back expectations writing the review in line with dot plots. let's bring in the global head of raymond james. to what extent are these markets at a risk? catching up is there. are they vulnerable? >> numbers are bumpy. no smooth landing. what has surprised me you had to your treasuries go up but markets rallied to all-time highs. u.s. growth is strong enough to

ride out bumps in the data and the pricing of rate cuts, so it is resilient big themes like ai. tom: what are the risks? >> the fed does not stick to its cause, but if the data is volatile, which is the prediction, they might not cut in june and delay it. tom: you said earnings forecasts remain overly rich? >> for anything other than the magnificent seven. small and mid-caps, any pullback has not materialized. if there is any bumping this and

they are not able to cope with that it will cause downside risk. tom: where are you finding opportunities? >> any businesses that have tail wind that is not extrinsic. any insurance businesses where they can hold their own and add recurring revenue, those are strong. in a lot of business services are driving, anything with a model that does not have interest rates. tom: we saw earnings from lowe's and macy's cutting stories. is the consumer looking fragile? >> there were tailwinds going

into the pullback with savings from covid and credit is harder but they can still get it. is there something in household balance sheets to watch for? pullback in sentiment is there. it's a big enough to thwart economies? eurozone growth this week with u.k. and japan in technical recessions. tom: we talked about vulnerabilities in equities so i will end in private credit. should we be concerned? >> there is a big risk if there is slowdown in growth or a trend toward recession, that will hurt credit profiles. spreads will go up. the economy continues to be

resilient but the question remains if data is bumpy and the fed holds, that puts pressure on the refinancing of the debt. that will cause potential stress on businesses. tom: important to focus on that. thank you for joining us, raymond james global head of capital advisory. this is bloomberg. ♪

tom: welcome back. some say this will be a long time coming but look at the move around cuts. go back to january and you're looking at seven cuts in january.

does the personal consumption data thursday change that? mark cranfield says we could move from three to two. plenty more on bloomberg, a deep dive and exclusive interview with the ce of italian drinks maker campari. i focus on the market and how clients are positioning. markets today is next in this is bloomberg. ♪

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>> this is bloomberg markets today with castrated less than an hour away here is we need to know. full-year earnings beat estimates. we will speak to the ce