>> good morning, this is "bloomberg daybreak: europe." i am tom mackenzie. japanese stocks lead gains in asia after wall street initiatives february at fresh record highs. the fed wasted is showing u.s. underlying inflation rose in january at the fastest pace in nearly one year. china factory activity shrinks for a fifth straight month as weak demand continues to hamper growth in the world's second-largest economy. loss dozens of palestinians are killed near a convoy of aid trucks in gaza. president biden said the issue will complicate talks, but he remains hopeful of a cease-fire. let's check in on these markets as we say, another record being notched by wall street yesterday, a fourth straight month of gains. the data is looking less concerning when it comes to

inflation, a more benign inflation picture coming in line with expectations. u.s. jobless claims it ticked up suggesting there is softness coming through for the labor market and revisions when it comes to pce inflation gauge for the month of december, revisions over seeming to feed into the optimism across the markets yesterday. what is the next catalyst as we look ahead to steps coming through from the fed? do they go in may, do they go in june? european futures building on gains from yesterday up .5 of 1%. looking to read .6 of 1% and the ftse 100. come picture rallying supportive of the picture. s&p futures looking to build on the gains up .1 of 1%. nasdaq futures back about 18,000. at the rally foreign nvidia was pronounced after softness for that stock up .3 or 4% for nasdaq futures. we had a response is coming through from fed officials.

atlanta fed president raphael bostic say he thinks a cut could be coming in the summer. >> i am of the view it will probably be appropriate if things go the way i expect for us to start reducing rates in the summertime. tom: treasuries flight in the session today after the rally yesterday on the back of the inflation print. 10 year at 425. they get in focus grabbing our attention after the governor ueda came out and set the target for the boj is not get inside, pushing back on one of his officials who suggested the picture was becoming clearer. ueda is giving a self optionality, but you were getting weakness in the japanese yen today. gold remains above $2000 per ounce and bitcoin still above 61,000 just down .3 of 1%. let's cross arbiter asia with avril hong standing by in

singapore. what is sending up to you? avril: china, japan, but also the u.s., at the inflation print seems to be clearing key uncertainties for investors, and they are risk on today. asia stocks writing, decay -- nikkei leading the charge because almost 2% higher, interesting depended on the jobless rate, that slid, so this represents a tight labor market and could put further upward pressure on wages. as you mentioned earlier, we are seeing doj governor tempering expectations, and that is why you receiving the yen erasing gains from yesterday. it board, china data focus as well, factory activity showing a fifth straight month of contraction, but then at half 12

months were spent to contraction, really flashing concerns about slowing demand. let's flip the board because that seems to be shrugged up by the markets and the focus seems to be shifting toward annual gathering of the country's top leaders for the consumer, the real estate sector, baby: stimulus, and csi 300, hang seng edging higher today. a sign of risk appetite we are seeing in the region is coming through from chinese tech stocks. meituan surged by 11% earlier, the most in one year. jd.com unavailing price cuts a day after removed from alibaba, a sign of weak demand by that is

risk on in the region partly thanks to what we are saying that if u.s. data. tom: expectations are high ahead of the national people's congress. joining us from singapore. let's get to the action stateside, stock traders in risk on mode is the fed's preferred inflation gauge met expectations, a fourth consecutive months of gains coming through for u.s. stocks. i am joined by the chief equity strategists of bloomberg. always fantastic to get your insights. what do you make of the market reaction to the inflation print yesterday? >> it is consistent with market reaction we've been having all your. it is really a story of the idea that inflation is still decelerating, still well intact. it year-over-year numbers generally in line with expectations even if we got a little bit of a bump -- on a

month over month basis, and we have had strong earnings numbers coming through. the strong earnings growth that occurred of the fourth quarter with s&p 500 roasting earnings growth of it sent versus consensus expectation for less than two big is find this rally, the idea that ai is changing things but economic conditions are generally improving his support of persistent earnings gains, and that is resulting in more optimism about 2024 getting reflected in risk tolerance, which is a key driver of stocks. tom: what is your level of confidence that the earnings strength will persist for u.s. stocks in the quarters ahead? >> i think it is pretty high. expectations are very low. when we look at it is embedded in s & p 500 price expectations, it is for somewhere between 0%

and 2% earnings growth over 2024. the consensus of analysts is telling us we should get more than 10% based upon their forecast, and their forecast has proven to be more bearish, so there is significantly more earnings power people are concerned about, and that is about market sentiment being driven more by macro headwinds and concerned about the macro outlook and with the fed is going to do, where is it a reality earnings are improving and improving quite quickly. remember the s&p 500 was ended earnings recession until the second half of 2023 the next several earnings growth comparisons are easy for the index. it would be look across to get also see earnings breadth hit it s recent low back in 2023. as more companies participate as we start to see by the fourth

quarter, more companies participating in an earnings really does generally lead into stronger earnings emerging. tom: a constructive outlook when it comes to the earnings story. from the macro to the micro, because we had the story overnight over new york community bank discovering material weaknesses in its loan risks, so the question is whether that comes back to haunt the markets this year. how concerned are you about developments within real estate and regional banks of the u.s.? >> most regional bank analyst will target the concerns of this particular bank are representative of the concerns for the broader banking space. this is a bank that has its own lending book specific to new york, very exposed to new york commercial and residential real

estate, but especially commercial properties in new york, and that is a unique market in and of itself that us post-pandemic friction of volatility to go through, so this is not news we want to suggest is indicative of some broader endemic weakness in the banking space, nor in the financial space at large. what i will also say is regional banks are less important to the outlook for stocks. regional banks as a market cap share are significantly lower than they have been in decades within the s&p 500, so what we might see commercial real estate continue to present problems for regional banks, this is a tiny portion of market cap. what happens in the financial sector right now is driven what is happening by fintech, consumer finance companies, which we just had a major merger announced in consumer finance, what is happening across the

space for diversified financials, which are bigger market cap institutions who have less exposure to commercial real estate as a percentage of their overall portfolio, so i certainly would not just this one data point is particularly meaningful for the banking sector at large nor for the equity market indices. tom: thank you very much, always valuable analysis from gina martin adams. u.s. president joe biden says he remains hopeful for the prospect of a pause between israel and hamas, but that is unlikely to begin by monday as he originally sought. he cautioned a deadly confrontation thursday around an 80 convoy complicate cease-fire talks. joining me now is dana with the details. is there hope for a cease-fire before ramadan? >> it is getting more difficult

to hope for a cease-fire before that date, and i think last week when president biden made those remarks he was the only one confident they could reach a cease-fire. we saw qatar saying they have no new information or lead some progress for a cease-fire, and qatar is involved in those talks, so it does not seem today or in the near future that there was a breakthrough, but president biden is hopeful. tom: dozens of palestinians killed near a convoy of aid trucks. the trucks in gaza, there are conflicting reports regarding the incident. do we know for certain what happened at this point? >> i think the picture is not clear. we have reports on the ground that there were shots fired at people coming to the 80 convoy. israel denied that it soldiers shot at the crowd.

what is clear is how dire the humanitarian situation is in gaza especially in terms of shortage of food, and that will definitely deepen and become even worse as israel repairs its offensive on rafah, and even the aerial footage it does not really show you what happened. it shows people swarming the aid trucks, which is the only factual thing that we can say. tom: a disturbing story continuing to come out of gaza and the latest on a move toward a cease-fire. back to the macro story on an inflation front come at the euro zone take center stage today with the print coming through it around 10:00 a.m. u.k. time, year on year inflation seen falling.

manufacturing data out of china was weak. we will see how the u.s. compares, relative strength affected -- expected to come through. we will get raphael bostic and kudla responding to the inflation trend, their views on where the fed because next will be essential to these markets. as oil post-e second straight month again we will be talking energy security and the progress of the green energy transition with the president and founder of svb energy international. at that is a key conversation coming up. stay with us. this is bloomberg. ♪

tom: welcome back to "bloomberg daybreak: europe." oil has posted a second consecutive month again in february as traders await a decision from opec-plus overextending supply cuts, geopolitical uncertainty and differences in perception continue to stream progress of the green energy transition. policymakers are adapting to future expectations. joining me now is gender and president at svb energy international. i will start on the oil story. what is the outlook for oil as you look across the data once and we factor in the china impulse? what is your view in terms of demand? >> there is a huge discrepancy in the market based on our assumptions, and which company or organization you are going with. the demand expectation for this

year it ranges from 1.1 million barrels to 2.2 million barrels a day, so it is a huge gap. we can go from a healthy market and growth to an unbalanced demand and supply. tom: i have to interrupt, we have breaking news to bring to our audience, the snb german, stored in -- chairman thomas jordan will be stepping down. jordan from the swiss national bank to step down at the end of september this year. he joined the swiss national bank is an economic advisor in 1997, at the details on to major

swiss bank. let's get back to these oil markets and we will get more detailed set up the next few hours. the physical market showing some signs of site is. do you expect that tightness to continue in the weeks and months ahead? >> i think we are no moving toward seasonal higher demand, so particularly in the first quarter in the month of february we had refinery overall and maintenance, so as we are moving toward causing the first quarter, obviously we are having higher seasonal demand, so, yes, for at least the quarters we are heading to we are having a higher seasonal demand. tom: how much comfort to you think there is amongst opec+ and their members? do you expect them to sit this one out, or did they extend the cuts? at what level will they be

willing to but were supply into the market? >> opec members but that the ministerial level and the secretary-general over and over said they do not talk price or look at a price but at the market fundamentals, so i would say opec managed to remain unpredictable. the market can have expectations but always has been unpredictable, and even members of opec always wait for the consensus especially since 2019. i am on the side of trying not to predict, but on the opec side they are very much looking at the fundamentals, and there is a huge discrepancy. opec has its own view of market fundamentals, demand and supply, so depending on what they are seeing in the market they would obviously move on with maintaining or changing decisions about the cuts. tom: that discrepancy is there.

when it comes to the geopolitical crisis in the red sea, the oil market reaction to that, is that becoming a longer-term theme baked into these oil markets now? >> we did not see a huge impact in terms of shocking the market or significantly impacting the market. obviously the moment the conflict broke we had the saudi minister and russian minister coming out and saying they are going to continue with their voluntary cut, kind of giving an indication to the market this market is not going to cause a sudden interruption of the supply in the market, and as we saw it has not yet been interrupted to the market. tom: ok, founder and president at svb energy international.

we will talk about the energy transition as well, because that is firmly in your wheelhouse. we hope to get more details on the decision by the snb head to step down at the end of this year and we see the currency move on the back of that story. plenty more coming up. thib. ♪

tom: welcome back to "bloomberg daybreak: europe." in 2023 global sustainable debt issuance decline for the second year in a row. to explain what i am joined by my senior associate on any of -- nef sustainable finance. it is been challenging for sustainable debt issuance. what is holding this market back? >> we have seen the second year

of a drop in issuance following the drop in 2021 which was due to a postponement of debt issuance. across all asset classes sustainable debt has been dropping. reebonz -- green bonds have had a record year driven by financials and government, but it is a mix between anti-green watching, anti-esg backlash, a lot of different forces were at stake in that regard. tom: i guess the question as to what extent those factors remain for this year and whether there is a lot of green that -- debt not being advertised as such. is that part of the question as well? dark out there is a lot of sustainable debt not being labeled as such. when we look at clean energy companies that had the highest exposure to clean energy, we

looked at about 5000 of them. they have raised their financing in 2023 through debt, but only 30% was raised through labeled debt. tom: is that because there is a stigma attached? >> there is a big anti-greenwashing backlash. 18 states have passed a law, whereas only six states have passed pro esg law in the u.s., so there is that backlash and the fact that investors care more about overall sustainability performance of company rather than a credential of an instrument, so issuers are doubling down on these efforts inves in green labeled debt. tom: there is not a premium. when it comes to banks' appetite

for that, where does that sound? >> banks will have to double down their efforts. when we look at the ipcc scenario, what we found out is in the short-term between now and 2030 on average for every dollar that goes to the fossil fuel industry four dollars needs to go to clean energy, so banks will have to jump on that transition and they will be pushed by regulators, but they are committing to do so. when we looked at the banks with a higher exposure to green energy financing, 53 of them have said a sustainable financing target, so they will have to jump on the bandwagon and drive that board by policy, in particular in europe. tom: interesting insights into what is happening around green sustainable debt and how that is likely to evolve.

thank you for doing the deep dive for us. the senior associate on nef sustainable financing. swiss e done about 10% on the news that jordan is stepping down as the head of switzerland's national bank after more than a decade of the job. 61-year-old overseeing some of the biggest decisions in the snb's history including lifting the cap on the franc. now is the right time for me to step down jordan has said. we bring you more throughout the hour. stay with us.

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tom: good morning, this is bloomberg and i'm tom mackenzie. japanese stocks lead gains after wall street finish february at record highs. data showing u.s. inflation rose at the fastest pace in a year. china's activity shrinks as weak demand hampers growth in the second largest economy. dozens of palestinians killed near a convoy of aid trucks. president biden says the incident will complicate talks but he remains hopeful of a cease-fire. a fresh record on wall street yesterday, gains coming through suggesting softness for the labor market and inflation is the highest in a year, revisions

lower in december. bloomberg economics says may is in play for a cuts. european futures pointing to gains and ftse 100 futures rallied 7/10 of a percent. commodities uplift will have an impact. s&p futures building on gains, four straight months for the s&p and nasdaq and their helped by record highs. up 3/10 of a percent on futures. news crossed the thomas jordan will be stepping down from snb in september.

a move in the swiss dollar. treasuries were bid on the back of the inflation print. the japanese yen weakening after comments suggest a target for the boj is not in sight. bitcoin is above 61,000. let's get to the ai story and the impact. nvidia has been working with telecom providers to unleash ai. they hope the collaboration will enhance network efficiency and unlock economic activities. joining me is the senior vice president at nvidia joining us from barcelona.

what do you expect the impact to be? how transformational is ai likely to be? ronnie: the theme this year was ai. everywhere you go, companies are talking about ai. the now we understand the real impact. we all know how prolific video is. what is unknown is what generative ai will do to burden the network. telecom carriers are spending billions to enable us to use our phones. going forward, two aspects are important. applications running and putting

burden on the network and how ai can enable operators to deliver new applications and have a viable and growing business model. generative i ai will do both of those things. tom: that's interesting. how do you see it changing the infrastructure? moving away from 4g and 5g as we push out to six g, how embedded do you expect ai to be? ronnie: this is new. we are still investigating these areas but the move from

traditional single use infrastructure, moving that to the cloud, once you digitize, there's large amounts of data and you can use generative ai to improve efficiency, get more bandwidth over the spectrum that is there today and leverage generative ai in creating specific environments. data signals are the same, independent of where you are. if you are in a rural area, generative ai can enable you to optimize signals based on where you are.

that enables spectral efficiency to improve. those are two areas and there are more because we are still in the early innings. tom: we showed a graphic of the access network alliance, something nvidia is a part of. all the big players are there. what is going to come out of the alliance and how consequential is that? ronnie: very consequential. this is an alliance of like-minded companies to validate and develop ai in the network infrastructure. we're looking about how to combine infrastructure to

operate or deliver applications as well as radio access. the second area is how do you deliver new generative ai applications. that is not happening today. in the third is the ability to use ai to enhance spectral efficiency and leverage data. we all have this motivation to improve business models and the experience's. tom: if we zero in on one piece of the puzzle, smartphones themselves, what differences will users in the use ahead see

and speak at the edge capability embedded in the bonds? how will that change the user experience? ronnie: ai compute will happen in a cloud or read. the nature of phones, there will be limited ai in the bones. it means if you want to talk to customer service on your phone in your local language, have a one-on-one conversation, that is capable. booking travel by voice is capable. someone will enable that.

many new applications can be transmitted over the network from computers nearby. tom: fantastic. i know you have been on the ground. we appreciate your time the let's head to a story about the swiss national bank. the head of the bank will be stepping down. let's bring in kathryn bowes lee. what do we know about the motivations for jordan stepping down.

he has been there since 1997 so why is he stepping down? >> the statement does not give a reason, it just says they regret the decision. he has been there for a decade and shaped major decisions so it is a momentous moment for the country. tom: truly momentous. down a 10th of 1%, but you zero in on a point, it sounds like a surprise. talk about his legacy of that more than one decade at the helm of s&p? >> so he has built it out.

he took over when they were intervening to keep the frank from appreciating, so the entire staff can be traced to him, he has shaped their careers and is the killer niece jan own the organization. -- the cornerstone of the organization. his niece was once called the sorcerer's apprentice. basically his sidekick for years and years. so if they were to pick up the baton, it would be continuity. tom: i love that. so continuity is what we should expect then, that is the expectation? no major change?

catherine: it is difficult to say. the swiss do not like change, they like careful change in increments. so if they were to be appointed it would be a steady course. that does not mean they will be appointed. they just appointed martin who took over from andrea, the first woman at the snb who moved to the bank of international settlements. there will be calls for a woman to join the board, so there is potential for a shakeup. tom: catherine bosley, thank you for the latest on that news coming out of switzerland that thomas jordan will step down in september.

vladimir putin says nato risks nuclear conflict if it sends troops to ukraine. more on the address. this is bloomberg. ♪ is personalized based on your goals, whatever they may be. all that planning has paid off. looks like you can make this work. we can make this work. and the feeling of confidence that comes from our advice... i can make this work. that seems to be universal. i can make this work. i can make this work. no wonder more than 9 out of 10 clients are likely to recommend us. because advice worth listening to is advice worth talking about. ameriprise financial.

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tom: welcome back. vladimir putin risks triggering a war. he made the comment at an assembly of officials. let's bring in see e of -- ceo. thank you for joining us. tell me about nuclear threats on a friday, that is the world. the take from some is they have been effective at blunting the west to response to the aid they give to ukraine. is this the ploy vladimir putin is playing? >> exactly, this is his way of containing support by drawing a redline.

nato forces upon ukrainian territory, it will escalate. he repeats the line as a way to check us because we are contemplating new possibilities to help ukrainians while in a difficult situation. tom: what do you respect the response from the european union to be? do they take this seriously, is it going to shape their response? >> you should always take nuclear rhetoric seriously, especially coming from a major

nuclear power. you should be confident about capacity to manage escalation. it is not just vladimir putin who can jog red lines. the problem is last monday there was a meeting of western leaders to talk about support to ukraine and instead of redrawing those lines, we made communication mistakes. tom: i want your views on communication mistakes. you worked very closely with the french president and you were alluding to him, you are part of his political union. you come to this with deep experience. was it emmanuel macron who was misspeaking or was this a part

of the strategy of the france president? >> i have had the chance to be involved in the movement. this is a franco german alliance edits worst. it started with olaf scholz explaining why he would not give long-range cruise missiles and he said i cannot deliver them because i have to put german specialists in ukraine, which is not correct. you can do it from other places. that started with him giving the handbook of escalation on long-range missiles and then he talked about strategy, saying we

are not going to tell what we are going to do or not do. we always say what we are not willing to do and in that case emmanuel macron was correct, but did not have the consensus to back up other leaders when he talked about whether there should be more nato troops. that created a backlash. the u.k., u.s. and germany said this is not an option. so we had to push back the envelope. tom: that need for communication. bloomberg reported ukrainian officials saying that the defensive lines of ukraine could be broken and you could see a

major drive by russia to break them. how do you see the conflict unfolding? >> i was in camp twice myself and the outlook is bleak on the battlefront. it is a lack of quantity. you have eight russian artillery shells for one ukrainian. ukrainian efficiency does not make up for the lack of quantity. this is costing lives, villages and territory. the united states is not providing weapons and support. the best case scenario is we get our act together and provide enough weapons and defenses so ukraine can hold the line hoping

that next year we will contemplate a push to regain territory. i don't think we can contemplate a full thrust by the russian forces but we can ship away small pieces of the front line. tom: smart analysis from the chief executive at rasmusson global. appreciate your insights. plenty more coming up and a breakdown of the inflation data and a look ahead at china. what it could mean ahead of the mpc next week. this is bloomberg. ♪

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tom: it bombshell announcement out of switzerland. thomas jordan stepping down from the snb. the swissie is down at the news. he has been at the bank since 1997 the board of governors are sad to see him leaving. we continue to watch that story. let's look at inflation data that fueled a rally. revisions lower seem consequential, so on a month-to-month basis the increase was zero point 4%. year on year was two .8%, bloomberg economics stressing this is seasonal. also the rally is feeling

inflation, something to think about. there was a revision and that fueled optimism that ended in a record day yesterday. in china, manufacturing data a fifth month contracting. need for policy support as we build up to the people's congress. a work report in focus on tuesday. will policy support come through? that will be consequential. markets today is next. this is bloomberg. ♪

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>> this is markets today. with cash trade less than one hour away here