>> >> good morning. this is bloomberg daybreak era. these are the stories that set your agenda. >> shares in hong kong valley while treasury yields cut off that 2024 hi. as traders count down to the latest reading on u.s.

inflation. rafael bostic says he sees just one u.s.-made that this year. apple says it made $14 billion worth of iphones in india, double and production as the tech giant accelerates its private away from china. good morning and it is cautioned in the markets this morning as we await that inflation print. traders impatient for rate cuts and have already had to contend with two cpr reports this year. we have another thorn in their side. the stock were waiting for this report. you had the s&p 500 dipping. nvidia leading the losses. closing just above it. if we flip the board over to the cross as a picture, we are not expecting too much movement on

treasuries as we wait for the cpi report triggering fireworks in the markets. but you did have treasuries climbing. while below that 4.5% level. 4.35% is where we are currently. the dollar pretty steady. brent back below $90 a barrel. holding the two day decline because on the one hand you had this industry report pointing to a gain in u.s. stockpiles. then you have geopolitical tensions in the middle east cap in the losses. the level we are looking for for the intraday record high for gold is 2384. we are hovering just below that currently. let's look at the broad range of markets. >> just breaking in the last hour, we saw the ratings after

the outlook for china down to negative from stable. just want to give you a couple of details here. they are citing long-term foreign problems. physical buffers. the agency did affirm its a-plus default rating given the solid economic growth prospects and their strength in trade. just wanted to tell you also about the response we got from the chinese ministry. it will continue to resolve its local government columns. and then the scale of the local hidden debt has been reduced gradually and if you take a look at chinese equities, they just reopened after this lunch break. prior to the lunch break they were outperforming in the tech shares. it seems they are holding onto those gains. you know the bond yield did really react much when the news had come out. the same with you on. they may be because sentiment has already been priced into the market.

we saw they did the same revision, cutting the outlook to negative. that was on similar concerns around the fiscal picture but also the spiraling property downturn as well. in equity benchmarks across asia, white light trading day ahead of cpi. a couple of holidays in asia as well. most of the attention right now is on the forex market. if you flip to the end board there, the end is still right below that 34 year low against the dollar earlier today. bloomberg had reported there is a consideration the central bank may raise its inflation forecast later this month. traders are really waiting to see if the japanese government will come in and intervene. especially right below that 152 level. elsewhere in new zealand they had a hawkish hole today, concerns around the inflation picture but also looking potentially for more sustained restrictive policy.

you are seeing the kiwi slightly higher and also the taiwan dollar there. >> we thank you. the markets are closed in singapore and south korea, plenty happening nonetheless. let's get back to the u.s. macro story. rafael bostic said he is opening to change in his view on cuts if the economic picture changes. this is ahead of the u.s. inflation reading. joel joined us now. what sort cpi print could move the market back toward the fed cut? >> what you really want to see is more about moderation and some of those core services prices.

you want to see something that is more of a diss inflationary trend here. you're looking at the court cpi gauge. a lot of the hotness around those numbers is attributed to more seasonal factors. i think that when you are combining in any case -- what we have already seen added this really resilient labor market -- it is really about how much progress we can make to get the fed back in line with the 2% annual target. i think it will be a little bit more difficult to explain things as seasonal. we will see once we gear up for the cpi data later today.

>> given all the data requests in the last hour, how useful will these minutes actually be? >> i think anything is useful when it comes to the fed to some a stent. i think you will see something in their that at least kind of tells us about how those fomc members started to pare back all of this. we did not see a massive shift to the dot plot. maybe we will get a little bit more clarity there. maybe we will get some more details on the supply side and economic concerns. i think you might get some more flavor in there about why it is the fed really sees this as a goldilocks economy right now. what do you do with that when you're trying to gear up for

this first interest rate decisions to come. i think it has been a little bit noisy. particularly when we have that labor market data. also, the cpi data coming up. why they were thinking about. back those rates. >> we will take any clues. thank you, jill for that analysis. they double production as they celebrate the push to diversify beyond china.

for more on this, let's bring it sam. how -- how much is the supply increase >> apple is about 6% of india's market. the iphones are still pricey in india. much of this demand -- apple exports a book of its demand. >> what does it share about the significance more broadly of india to apple? >> what we reported is that apple made $40 billion worth of iphones in india. this shows the rise of india as a manufacturing hub.

it shows that apple is dying. it is trying to diversify out of china where washington and beijing are. it is using india as a major destination to make iphones. with this, apple is making about 50% of its global iphone output in india in volume terms. this is incredibly important for apple as well. >> where does it leave apple's relationship with china? what will china be thinking? >> i am pretty sure they are not going to be happy. apple has done the shift very steadily but very quietly. they don't make noises about it. all of their manufacturers have

steadily increased their manufacturing lines. there is an indian iphone maker and data group from china. the overall environment in india is good for apple and therefore i think they're betting on this market both in terms of manufacturing and in terms of sales as well. >> all right. our indian technology correspondent. we thank you. excellent reporting. we have a busy day ahead. we have tsmc monthly sales. this is the world's top chipmaker. shares oversaw the biggest game yesterday on the news that it is sent to win grants from the u.s. government and we will bring a full analysis out of taipei later this hour.

the numbers for march, or a takedown but of course, terry powell really hammered home recently that there will be no cuts until officials are sure inflation is on track. and then we will get the fed minutes for the march meeting. the explanation behind the shift in the dot plot toward fewer cuts for 2024. but as joe says, we have had lots of economic data surprises since then. still, we will take every clues we can get. just go to da why do you go. you have a bit of china news

there. coming up on bloomberg daybreak euro. we will discuss that after the failure to submit last year. that is next. is bloomberg. music note

>> welcome back to bloomberg daybreak euro. a curious dynamic in international relations. it comes after bloomberg reported gatherings have been forwarded with south africa family to commit to a date. what is behind the current

concerns here? >> the concerns center around south africa and the european euro. the big question is why haven't we seen any of these summits happen? these summits started based on this agreement -- this agreement that is called the tray development and cooperation agreement and as part of that agreement, they had annual regular political dialogues. that is what happened between 2009 and 2013. the big question as you mentioned in your intro is why we haven't seen summits happen since then. we heard people familiar with the matter spoke to anthony

saying that the reason we do not see it last year is that south africa was just not committing to a date. that really is a concern if you think about what we saw here in 2023, the country holding navy exercises with russia and china. potentially to point arms to russia. this all come -- this all created a bit of concerned about where this relationship stands between the two blocks. >> excellent reporting. how are we hearing that both sides are responding to that reporting? was it has been interesting to see the response that we saw from both sides. let's start with the eu. i sandra kramer tweeted on x

that this is misleading. we are hearing from south africa saying that it insists this relationship between the west, the eu and the u.s. is very important. they have held regular meetings with the west. it seems like there is some effort to have this summit be held. we are just a few weeks out from an election being held here in south africa. the question is what happens after the election. how does that affect the relationship? what does this mean for the future relationship between south africa and the western powers and russia and china.

now for some other stories making news this morning. david cameron -- to stop blocking the aid for ukraine. the talks in florida came ahead of the lawmaker trip. the aid package has become stalled on politicking ahead of the november presidential election. a new survey says about 7.5 million people are trying to pay their bills with many fully bind on their domestic or credit commitment. the estimate shows a big drop in difficulty.

we will bring more on both of those conversations we also have a conversation with the u.s. ambassador. he tells us washington is seeking to isolate china with the help of his allies in asia. we will have more on that next. is bloomberg. music note

>> i think here powell has made it very clear he is willing to look through these bumps. they will need overwhelming evidence is more than a bump for them to change their views. >> i think you look forward and you talked about in the last

hour about business confidence, if you look forward, there are reasons to believe this economy may slow. you would be more dovish than you would otherwise. if you focus exclusively on the data -- line >> small business optimism, sometimes it is hard to know how to read some of these gauges. how important is this in contrast with all of the bullishness we keep hearing? >> the big mistake was in 2021 where people embrace the transitory narrative. we are going to pass on the imported inflation.

listen to the earnings call. i do think you need to listen to them. often the aggregate data does not capture what businesses are feeling on the ground. >> now to another interview. the u.s. ambassador to japan has told bloomberg that washington is seeking to isolate china with the help of tokyo and other regional allies. rob emanuel spoke to bloomberg at the white house after the visit by the japanese prime minister. >> this comes at a historic moment for both countries. five separate policies have been on the books for 70 years.

bring to a more solid and strategic level. the united states has made some fundamental changes. they made it to a multinational strategic infrastructure. the force from the head of state in the region. this is putting a. at the end of one era. that is not just for the indo pacific. the second thing bookends. the philippines doing naval exercises together.

and ending with a historic first ever trilateral. it's that changes the look of the united states approach. it also symbolizes china's whole strategy is to isolate the philippines. isolate australia with their economic origin. isolate japan are not accepting their fish to be exported. our strategy is to flip that script. china are the ones that are isolated in the south china sea. they are the ones that are isolated when it comes to trying to use economic coercion. then they become the isolated party. that is why they throw in the towel. that is this state visit has gone.

it comes at a critical juncture where the relationship will pivot into a new kind of posture. >> i want to mention the per summit with the philippines. these encounters are set to be more aggressive. this did not have a conflict. understanding that this is not china versus the philippines. this is china trying to coerce the philippines into changing a policy. they were in favor of the philippines, not china. china needs to understand the philippines has on their important friends in theand japan. >> the u.s. ambassador to japan rob emanuel speaking to blumberg earlier head of the japanese prime minister's visit to

washington. coming up on the program, a boeing employee says the playmaker took shortcuts to ease production for its 77 dreamliner. we will bring you that story next. is bloomberg. music note

♪ >> good morning, this is bloomberg and i am lizzy burden in london. treasury yields, off their highs as traders count down inflation.

rafael bostic will change his view if the data justifies. a boeing whistleblower makes allegations of shortcuts in production. caution is the watchword on the markets as we wait for the u.s. inflation report. it has been a thorn in the side of traders who are impatient. to hot inflation prints, could this be another one. he saw the s&p dipping and nvidia meeting the losses slightly higher than that level. higher opening stateside in europe, not a whole lot of movement on treasuries.

10 year yield at 4.35%, 10 year yield is below 4.5% level earlier in the week. dollar study, crude below $90 a barrel as traders way tensions and a new report. gold at 235 announce, although the record high. all eyes on the inflation report. latest sales numbers from tsmc have come in at 195.2 billion so this is up 34% year on year. impressive numbers and we will

dig into them later with tim. news yesterday tsmc is getting 11.6 liam dollars of grants and loans to build factories in arizona. we heard shares benefited from that yesterday. we will break down those numbers from taipei. 195 billion taiwanese dollars is the number for march sales from tsmc. we have tania chen in hong kong on standby for us. tonya: breaking news, recapping something that happened one hour ago, china's outlook was downgraded, citing long-term debt programs and concerns about fiscal buffers. the rating is still at a plus.

lot of economic growth that they are monitoring and strength in trade as well. china's ministry was disappointed about the outlook revision. it will resolve its government debt problems and the scale of that debt has been reduced. if you look at chinese assets, equities prior to lunch had been outperforming. extending gains around technology. yuan remains steady. moody's did a similar downgrade to their outlook, so perhaps the sentiment has been priced in. and the rest of the region, the rest of the market is waiting for u.s. cpi numbers, everyone is looking at the yen.

still alright below the 34 year low against the dollar. traders are watching for signs of intervention. central bankers may raise inflation forecast this month. the governor reaffirms that the tightening policy may not have been one and done. kiwi strengthening. central bank had a hawkish hold, looking for sustained restrictive grades. decision out of bank of thailand today. lizzy: no surprises. tonya in hong kong, thank you. boeing, federal aviation investigated plane making shortcuts for the 787 dreamliner. boeing said the claims were inaccurate and do not represent

the work being done to ensure quality and safety of the aircraft. to take us through we have benedikt kammel. great to have you on the program. tell us what the whistleblower is alleging. >> the whistleblower appeared on a conference call with lawyers in the allegation is around the 787 dreamliner, wide-body aircraft. allegation is the way the plane was put together, they show cracks that you have to fix in the production process, that was not done correctly. they put speed over caution, they were too fast. boeing says that is not true. they say they have robust processes, but the allegation is out there in the stock took a dip as a result. lizzy: deliveries came in,

lowest in q1 for almost three years, but a glimmer of hope in march on the order side. >> first quarter was one to forget. this was a difficult phase. numbers came in light, but not terrible. so there is hope looking forward. they've managed to stabilize. they have in a border so it is a product people want to buy. if they can maintain this, maybe there is hope for recovery. lizzy: how does it compare to airbus? >> airbus had a strong quarter. first quarter is always weaker at the russian the end of the year. first couple of months are light. but airbus looks much stronger and that is the bigger story.

two companies taking diverging paths. boeing working through a series of problems. lizzy: you have to tell me afterwards which kind of land i'll be getting on. benedict, thank you for the update and the latest numbers. now bloomberg source says at least three people have been killed after explosion at a hydropower plant in northern italy. renewables and green power says fire impacted a transformer and we can get more details with bloomberg's humberto. what happened here and what is the current situation on the ground? humberto: and incident near a dam, a water basin and the workers were doing maintenance around its.

they were leveling the facility up when a turbine exploded and damaged a water pipe. that flowed into the building and they were working 40 meters deep underground. search for survivors went along all night. four people are missing, three are dead and five are seriously injured. today, authorities will start investigating on the case. lizzy: focus is on human toll, but can you tell us how much disruption in terms of hours live?

humberto: potential impact of for now, the company says the impact for now, no impact on electricity. neither nationally nor locally even though the facility is one of the most powerful in northern italy. and actually the investigations are ongoing by the authorities and judiciary. so they will take time before the plant will restart properly. and so this will remain to be seen what will actually be the impact on power production. lizzy: ok. alberto, we thank you for the update on the deadliest motion. coming up, european defense

stocks slide after goldman sachs warns of peak multiples in defense shares. this is bloomberg. ♪

♪ lizzy: welcome back to bloomberg. it is 6:42 and london. we saw european stocks falling for their worst day in 18 months after analysts warned the rally left trading at elevated price valuations. i'm joined by ali crook. a big selloff in defense, take us through these moves. >> biggest selloff and moves that only moved in one direction for the last two years since the invasion of grain.

that is leonardo, mattel in the red. a lot of this was traced back to the goldman notes that they are flagging multiples that are higher. they were pointing to earnings at a premium to the stoxx 600 versus historically when it is a 7% discount, so it is a big selloff. there are many superlatives, but since the invasion of ukraine, it is the third best performer on the world index and carries the same ratio, actually just above apple in these are things i would have bought unthinkable, but that happens when you have black swan events. europe is thinking about its own defense. lizzy: we were talking about

david cameron going to u.s., trying to lobby donald trump to keep aid going to ukraine. he would think that there is going to be funding to keep the war going and fund defense, but what does the path look like ahead for these companies. oliver: trying to weigh out those sides. tailwind in headwinds. europe needs to get to its 2% spent on nato. if trump was elected president, with the u.s. pullback and would it mean more spending, closer to 4%, what it was during the cold war. a story yesterday crunch the numbers. if we were to go to 4% that would be $10 trillion over 10 years, and we are at the very

beginning of the european rearming strategy that involves spending money on european defense. yes, we have tailwinds a what are the threats? where is the money coming from? you have to raise taxes, raise debt, cut spending more grow. growth is not a strong suit for europe and you will not get where you need to get on defense. raising taxes is not popular and getting cuts to the other parts of the government is collocated as we learned. not much fiscal headroom for countries within europe. so these things are questions investors are weighing, but when you have a paradigm shift, investors take money off the table, but were not on the final pricing.

lizzy: interesting to look at the impact of the news out of nato and diplomatic wrangling's. oliver crook, thank you. a lot to watch out for today. 12 p.m. london time it is mortgage applications. 1:30 is u.s. cpi, the highlight of economic data and at 6:00 p.m. we got the u.s. 10 year note auction were $39 billion before 7:00 p.m., fed meeting minutes with the u.s. monthly budget statements. keeping our eyes on that for the rate path. this is bloomberg. ♪

♪ lizzy: let's get back to tsmc numbers. sales in march increased 34% coming in at more than 6.1 billion u.s. dollars. tim joins for analysis. break down the numbers for us. tim: is a big number, $6 billion. more than 18 billion for the quarter, slightly ahead of their own guidance. a little bit ahead which is nice and all goes well for a good year for tsmc. chip industry has been strong. since sales fell because of iphones and other phones not doing well, ai has picked up. nvidia is a huge client, amd is

another big one. and tell outsources ships for manufacturing, so there is a lot of chip demands, that is the massive server farms building ai models for companies and that is the driver this year. first quarter looks like a good start. lizzy: we saw intel unveiling its new accelerator to challenge nvidia. what is the ripple effects for tsmc? tim: that's good news because chips will go to tsmc and if not, amd and nvidia will double down and go back with the latest designs. this ai race, everyone will need

to turn to tsmc. intel comes out with the new chip, fantastic. lizzy: yesterday we saw tsmc winning grants and loans from the u.s. government. how significant is that for the broader industry? tim: tsmc will not say no to $6.6 billion in grants. another 5 billion is a loan the government will offer. they will have to pay it back. 6.6 billion compared to 65 billion in arizona sounds like a lot of money, it is a drop in the bucket and they don't get that number automatically. they have to hit phases of contracts with the department of commerce.

if they miss they will not get all the money. they are hitting a lot of targets. if they execute they could get $6 billion, not a lot compared to the massive expenditure there putting into arizona and it will be good. intel is expanding. samsung the other chipmaker is expanding, so it's very good for the u.s. chip ecosystem but we need to see how it will play out because engineers are more expensive than korea or taiwan, so the cost will be higher in clients like apple, nvidia and amd will have to wear the cost. lizzy: chicken feed if you are tsmc. tim culpan, thank you for breaking down latest numbers. mazda ceo says there watching issues caused by batteries shortages and exports from

china. the ceo said the charges have grown after the baltimore bridge collapse. >> at the moment, uh -- our team has been working with baltimore to find out ports nearby for investors. we are working for alternative ports. we have on the east coast, jacksonville, to minimize the delay to the customer. that is the current outlook and we look forward to coming back to port of baltimore when the operation is back on track. rishaad: as far as making cars, are you dealing with supply chain constraints? >> we have a supply chain issue globally and that is a few reasons behind it. one is the investor shortages.

during pandemic, companies scrapped old investors and moved to lng based low co2. the second reason, suez and panama canal is be able to pass through. significant increase from china mainland. those contributing to major challenge for logistics. romain: i'm glad you brought up china. most of what they are exporting is ev's or competitors to mazda? >> combination between battery and internal combustion. depends on the bland. >> what car will sell the most in the next say five years?

>> internal combustion engine has support from consumers. and secondly i see great potential in the hybrid. that is a product solution for customers. there is no anxiety for range. that is an attraction. lizzy: exclusive food conversation with the mazda ceo, but the focus today is u.s. inflation out 1:30 p.m. london time. it's been a bull be path so forth for the u.s.. you can see how sticky core inflation has been. if you strip out food and energy you can see it here, but we can look at potential market reaction because nervous traders have been pretty nervous in the run-up to economic data.

you can see the difference between the one-day vix and the spirit light bars show cpi. , has not ended. markets today is coming up next, so stay with us. this is bloomberg. ♪

♪ >> this is bloomberg markets today. cache trade around one hour away. six hours until cpi data. gold is holding its record. we will be joined by francisco.