tom: good morning. this is "bloomberg daybreak europe," i'm tom mackenzie in london. stocks in asia slide following a sluggish u.s. session. the dollar rallies and the yen drops. minneapolis fed president neel kashkari says rates will likely be on hold for an extended period. the israeli military edges further into rafah. buys a -- biden pauses shipment of bombs to israel on fears the idf could deploy them in the densely populated city. xi jinping welcomed with open arms in serbia. the chinese president looking to bolster support in eastern europe. from geopolitics to the earnings story and the lines from the brewer ab inbev with a beat in the first quarter in terms of organic earnings, up 5.4 percent, an increase versus the estimates of 2.75%, so in terms of organic adjusted ebitda, a

solid beat in the first quarter for ab inbev, the brewer of budweiser and bud light. in terms of the margin story, also a beat in the first quarter for ab inbev with adjusted margins coming in at 34.3 percent, slightly above the estimates and in terms of volume growth, this is important for analysts as we look across the markets of europe, u.s. and china, contracting 0.6%. volume growth contracted in the first quarter but well above the estimate, so less of a contraction that expected, the expectation had been volume growth when contract 1.3% but you are seeing contraction of just a little over half of a percent. a less dire picture at least in the first quarter, in terms of the full year view from ab inbev , they still see full year organic adjusted earnings between four to 8% growth. the redhead is a beat in terms

of organic earnings a buy up for a be invalid under the first-order. siemens energy another story we focus on, either very different sector with a focus on get mesa but wind turbine outlook particularly across europe, we know that cost input is a challenge more broadly for the sector, full year siemens energy seeing full-year copper to sales increasing 10 to 12%, they are upgrading their forecast for the full year. they had seen growth of between three to 7%. they are upgrading that full-year view in terms of comparable sales to an increase of 10 to 12%. investors will likely applaud that. this stock is already up 67% year-to-date. second-quarter revenue coming in line with estimates of 8.2 8 billion euros, bang in line with estimates of the second quarter. the profit margin contracting 1%

, from -1% to 1%, so the profit margin is improving as well rate and terms of the order book for the second quarter, coming in at 9.5 billion, the estimates have been 10.6 billion, so orders slightly softer but there is a raise in terms of the outlook from siemens energy. we are going to speak to the ceo,? ? christian bruch, at 615 a.m. u.k. time. a fourth straight day of gains across the s&p yesterday but it was broadly soggy, you broke above 5200, but then you posted a gain of about 10% for the s&p, four straight days of gains for u.s. stocks but this market is looking for additional catalysts and you see the read-across to asia, the downside coming through, stronger dollar trade the auction well absorbed by markets trade european markets looking at losses of about 0.1%. the earnings story continues to filter through. we will see how that changes as

we lead up to the open. ftse 100 looking to gains of a little under 0.1%. ftse futures looking to break back above the 5200 level trade let's briefly check in on the u.s. dollar. we will do a deep dive on the japanese yen in a minute. a challenge once again in terms of the emfx space. 4.83, two-year, brent $82 a barrel, down 0.6%. we keep an eye on the stockpile buildout in the u.s. and geopolitics. $82 a barrel on brent, gold at 2318, a little puff for the yellow metal. let's cross over to avril hong standing by with the earnings story in singapore. what are you looking at this morning? >> just what you just outlined there, as we see that winning streak of four straight sessions

being snapped, tracking wall street performance, the declines being led by the nikkei, as it slumped about 1.7% at one point. this was no thanks to the declines in tech stocks, but also as the focus shifted towards the earnings, as we had the automating document -- auto making giant toyota reporting. the sector is declining. the numbers show the miss on the outlook for the full year. this is no thanks to the production cuts related to the safety scandal. the stock slumped as much as 4% after the earnings drop, paring declines now, but i wanted to highlight the cheap yen's impact on automakers is being unwound. if you look at the performance this quarter, this auto making index in japan has declined 4%, despite the yen weakening about 2%.

this relationship seems to have broken down. this will be key to watch, as we break through the toyota numbers along with nissan and honda, which also report this week. as we track those japanese currency moves, the things we have been watching out for, whether it is commentary or stern words coming from the japanese finance minister, but also the boj governor, it seems like verbal pushback coming on the day after we heard how ueda and kishida were said to have met and that signals to some in the markets that we will see greater policy coordination. and to some, this could come in the form of the signals of a reduction of bond purchases come june, that is when the boj next meets. that is not helping, the, yen as you can see today, the focus shifting to yield to differentials but also given the weakness today really highlighting the urgency for japan officials to act.

they don't want to waste of the effort from last week when we are likely to have seen those two rounds of intervention. tom: avril hong standing by in singapore. fascinating how that story around the software yen is not now benefiting the automakers on a great day with toyota the largest automaker. now to the geopolitics and the focus on what's happening on the middle east. the u.s. pausing affect shipment of bombs to israel last week over concerns about plans for a full-scale assault on rafah. meanwhile, israeli forces are edging closer into that city, with truces talks stalling. washington says israel and hamas should be able to resolve differences over a proposed ceasefire. i'm joined by dana kraich in dubai. what is the impact of this decision to pause shipments? this is something many on the left in the u.s. has called for.

this is the first time the biden administration has taken this step. the consequences of this move and can we expect more? >> this is very much symbolic. this is the part of the u.s. decision as a last resort, using some of its leverage over israel to convince if not to go ahead with a full-scale invasion of rafah. that hasn't started yet, but israel is asking civilians to move out of certain areas, and taking over a vital border crossing which is the rafah border crossing, sparking worries that israel is still very adamant on going ahead with a full-scale offensive on rafah. it remains to be seen whether that would convince israel not to go ahead with it and to see what would be netanyahu's balancing act here. i doubt it would impact the long-standing relationship with the u.s. and israel. we saw president biden yesterday saying the u.s. support for israel is still very much ironclad.

but this is very symbolic and remains to be seen whether it would convince israel to go ahead with it. even if we see more with that, it is still very much symbolic, and it won't impact that relationship. tom: largely symbolic but leaders are being pulled on all sides it seems, as these ceasefire talks continue in the background to some extent. give us an update on where those ceasefire talks are. >> a delegation from israel and another from hamas arrived in qatar, or will arrive today, sorry, arrived in cairo. qatar dispatched its own delegation and the u.s. is there as well. we saw the u.s. saying yesterday that these differences can still be resolved crude we can still amend the ceasefire draft proposal to reach some kind of a deal eventually. despite the fact that israel completely rejected hamas'

offer, which is a permanent ceasefire, and of the prize -- surprise acceptance of hamas, there is some hope the two can reach agreement vis-a-vis the rafah offensive which hamas has said if you go ahead with this, we will completely withdraw from ceasefire talks. lizzy: dana with the latest out of the middle east. thank you very much indeed. here's what else you need to be thinking about. that is a story we continue to monitor that continues to evolve at a rapid pace. other topix on the agenda, eight 30 a.m. u.k. when it comes to central banks, the riksbank rate decision tree this is suspended for, they can either cut borrowing costs, or they can avoid that because of concerns about the weakness on the krona. it seems to be a decision on the balance. that comes through 8:30 a.m. u.k. time. we will break that for you live. 6:00 p.m. u.k. time, u.s.

10-year note auction coming through after the auction yesterday was well received by markets but it was a massive week in terms of issuance for the u.s. treasury. so far the market has absorbed this, the 10-year auction later today. on the earnings front in the u.s., the focus switching to arm, the u.k. company with a listing in the u.s. and whether that ai generator continues to come through for this maker of chips. and uber come out with earnings as well later in the u.s. coming up, a beat for disney, for shares in the world's biggest entertainment company slumping. we will unpack why that was after the break. this is bloomberg. stay with us. this is bloomberg. ♪

>> the challenge for everyone and the opportunity is how do you have a notion of what is objective and real? i think it is part of what will define search in the decade ahead. people often come to google right away to see whether something they saw somewhere else actually happened. it is a, and pattern we see. we are making progress but it is going to be an ongoing journey. lizzy: that was sundar pichai, the google a bit ceo speaking to emily chang. you can watch the full interview tonight at 11:00 p.m. u.k. time on bloomberg television or stream it at bloomberg originals. disney shares tumbled of the most in 18 months, after a report of a tepid outlook for

growth in streaming sioux tribe is in the current quarter. the ceo hugh johnston says price hikes are not impacting streaming negatively. >> we took prices up a little bit in the beginning of this year and it didn't really see much of an impact. as to what the future brings, we are obviously very judicious with the way that we price, we want to provide access to as many guests as we possibly can. but we do believe that the great experiences we provide, people are willing to pay for. tom: disney's cfo speaking to bloomberg. was bring in charlie wells from the team. the results topline for the quarter was a beat but the shares were hammered. what was the investor reaction, where is the fear situated in this stock? >> yesterday was trouble not in the house of mouse, but around it, actually it was a solid second-quarter earnings report for this company. one thing to focus on was disney

plus, which is that all-important streaming platform for them, that was profitable for the first time ever. streaming had other challenges around it in other units but disney plus was profitable. what investors are honing in on in the negative sense was the potential for softer growth in the streaming in the current quarter, as well as subdued growth and visitors to it's very important theme parks. tom: the theme park seeming to normalizes the way they characterized it. the reason we are interested in disney apart from the components of the business is the broader gauge on the u.s. consumer. we need to know how the u.s. consumer is holding up. do we have a broader read-across in terms of the health of the u.s. consumer across the disney empire? >> you get a sense of how they are spending on discretionary. interestingly, the cfo speaking yesterday said they had pricing power and it did raise prices a bit, but they were seeing stability there.

what was important was his comment on travel. he talked about normalization to travel and seeing the end of that post-covid revenge travel, which really boosted these parks grade we forget these parks are crucial to this business paid in 2023, they were 70% of operating income, so when we see a down to cut will have serious impact. tom: charlie wells on those dizzy earnings. will be speaking to the ceo of siemens energy. stay with us for that conversation. this is bloomberg. ♪

tom: welcome back to "bloomberg daybreak europe." siemens energy is making headway on decisions to fix its troubled wind turbine business. the german manufacturer cut output and jobs in its gamesa

unit to return the division to profit after four years of losses. as the company boosted its comparable sales forecast for the full year. i'm joined now by christian bruch, the ceo of siemens energy. thank you for your time this morning. you are upgrading your outlook for the year. what is behind that relative increase in optimism? christian: good morning, thanks for having me. we have a very solid quarter after a good start to the year. we see strong order momentum across the board of energy, in particular, grid is growing fast, you have seen uplift there on a particular with revenue growth, order book at 25 billion, we have 11 quarters in a row with a book to bill, order intake compared to revenue above 1.00, giving us the positive momentum. it improves cash flow, which is

important, we not only uplift the revenue guidance but also indicated that we will have positive cash flow generation of around $1 billion this year and that is something which is backed by a strong energy market. tom: how do you see that story evolving in the quarters ahead in terms of the demand, the order intake that may be coming through from your customers, how does that evolve in the quarters ahead? christian: we are on a long investment cycle in energy. we have to recognize the grid has been underinvested for decades. you see the need for it if you turn to a more electrical world, the grid is at the center. so we see this on a trajectory. the same thing is also what we see on the gas side. a much bigger push than we originally expected. that is driven not only by the point around energy transition but also driven by the point of electricity demand, or you talk about data centers all of a

sudden, trying to build electrical info sector. we see good momentum going forward. we have to decide what is the right speed in growing. we will still remain active. we want to drive it with a limp improvement in the profitability. this is what we are looking at. we are also extending capacity. you may have seen we launched over the last couple of months two new factory extensions for the grid business, one in india, one in the u.s., so we do at step after step but in general i would say the energy market still shows strong momentum going forward. and it is a longer investment cycle which we're expecting. tom: can you give us an update on the plans and the timeframe around fixing some of the turbines that have had issues? what is the plan, how many turbines need to be fixed and when do you see that program coming to a close? christian: long-term really to work through the whole program. over the last 12 months, the

team have done a tremendous job of investigating the different elements. ending to an implementation plan which means getting up to the turbines and fixing things will be a multitier program. we will work it off jointly in coordination with customers. it will take time. at the same time, we decided now about the long-term strategic plan. where are we going to take the wind business to, to get back to double-digit margin, what we expect also from that business, and that is obviously underlining we will stay in onshore much more focused. focusing on certain products and regions. we drive offshore from our market leadership position, so we are on this trajectory of working through the matters from the past but also looking forward going into the market, and step after step improving, but also, things will take time. this is what we said before, step after step, but it is also another time to say that is what we will do going forward.

we will continue to have a significant team working on the quality matters really to make sure we can fulfill the expectations of our customers. tom: change at the top of gamesa . it is a troubled unit. that has been well documented. you are trying to get to grips with that. the ceo stepping down after two years. the fourth at gamesa since 2017. you said there needs to be generational change at that unit. by? -- why? christian: i wouldn't call it step it down, it is a transition which we had to do at one point in time. obviously, life planning of individuals. we are now ahead of relief long-term plan journey, which will take us four or five years, and we knew we have to do it sometime, and we discussed how to do it. joachim nagel programs. he is not stepping down immediately. he will launch also the new

changes. i'm fully behind that. what he has done. but we also know we don't want a dual leadership change two years down the road when we are in the middle of all the changes coming to fruition. because we are now setting the key basics for the next 3, 4, 5 years and we also want to give fair communication to the market, but also our employees saying that is a structure we will stay in. we are simply in this transition phase. this is where we had decided one point in time how do we do it best? and we believed this summer would be a good time to do it. most individuals have worked closely together, i feel comfortable with that. tom: the chinese president is in europe this week. how much time do you spend fretting about customers switching to cheaper chinese turbines? is that a concern, how big is the threat from chinese turbines? christian: it is always good to

have great respect for your chinese competitors and look at exactly what they are doing. at the same time, it is like in other areas, you always have chinese competition. you cannot avoid it. you have to have focus and selectivity. choose the right markets. have a clear focus on your core products. if you are talking to our customers, they very well distinguish in terms of what they get from whom and what they want, so it is possible to compete but we will not defend each and every market, in particular onshore, or be do not see the midterm profit. it is about focus and selectivity. it will not be an easy competition, as it is not in other areas, i clearly have to say. we see other areas doing good, also there is chinese competition but obviously we have to look on markets which bring the regulatory framework to really allow middens long-term profit pools for a supplier like us. tom: the ceo of siemens energy

joining us on the upgrade in terms of the outlook for that company, getting to grips with some of the troubled units around gamesa, but seeing a brighter picture in terms of demand outlook in the quarters ahead. as they concentrate on the european market and rationalize some of that business. bmw set to report first-quarter earnings as the german automaker is expected to reiterate its full-year guidance. the markets in europe, the u.s. and china really consequential. and what is the cost component and can margins be held at double-digit level for this company? those numbers dropping in a couple of minutes. this is bloomberg. ♪

and they're all coming? those who are still with us, yes. grandpa! what's this? your wings. light 'em up! gentlemen, it's a beautiful... ...day to fly.

♪ >> good morning, i'm tom and

these are the stories that set your agenda. stocks in asia slide, yen drops. fed president says rates on hold. israeli military edges further, u.s. pauses shipment of bombs. european earnings season rolls on with a beets, numbers from bmw and continental. bmw with a mess -- miss. below estimates of 9%. on sales that was a modest miss.

36 million versus 36.8 billion. so modestly below estimates, not huge, but low sale story. margin softer. fourth-quarter earnings at 4.0 5 billion, estimates had been for 3.96. watching on the chinese market and u.s. demand. a miss on the margins and sales. full year auto margin between eight and 10%. estimates have been nine percent so they continue to hold that view. earnings from toyota with avril hong.

we will speak to a continental executive around the story, they were a key supplier to the auto industry that is facing challenges in growth and cost-cutting, competitive environment. tesla and others cutting costs. continental keeping full-year sales up 41 billion euros. that's the full year view. they still see full-year adjusted earnings. auto market in focus, bmw with a miss. what's go to toyota, avril

standing by with details. run us through the earnings. >> yeah, if you are a toyota investor you experienced a choppy ride. share prices have evolved in the last 30 minutes. when they first dropped it was the second year of record profits. when investors focus on, full-year operating income was a miss versus estimates and declining 19% versus 5.3 trillion, profit outlook was affected from production cuts no thanks to safety scandals from daihatsu in december and january

from toyota industries so we knew this would affect production and outlook. markets did not expect it to be this bad. investors are focusing on the positives and strong sales order hybrid sales. demand came up, resurgence thanks to dwindling demand as consumers bulk at high prices and service related battery issues. toyota benefited from the demand, seeing investors reacting, sales of toyota and lexus in china are humming along

, but if we can flip the board she began and what that means for auto making stocks, relationship has broken down. we've seen how these stocks in japan are up 4% versus achieve en and's this speaks to how investors brace for a snap back in the japanese currency, so keep our eyes on that. also nissan and honda. tom: excellent breakdown. thank you very much indeed. back to the earnings story in

europe, stock down 33%. they plan to increase capital, one billion euros capital increase plan is part of deleveraging efforts. this stock is going to move. the announcement is in line with earnings. sales above the estimate. not paying a dividend or the fiscal year, though dividends by the maker behind train engines with margins shy of six and a half percent. slightly more comfortable margin, but they plan a capital raise of one billion euros as

they wrestle with the deleveraging plan. the earnings story ties in across markets. let's check in on european futures. wall street closing up higher by attempt of 1%, four days of gains. looking for catalysts, whether the momentum will continue is something we will watch. ftse 100 has a different picture. s&p futures flat, slightly below that by the end of the session. we will see arms earnings as well. nasdaq futures lower.

what is happening across commodities, oil and the dollar. dollar index is up. 483 on the two-year. well absorbed the markets. brent is down 5/10 of 1%. gold is that 2319. let's get the latest, chinese president arriving in serbia on the second leg of his european tour to tighten beijing's bond with the baltic nations. prime minister viktor orban stands alone. let's bring in p.r.. why did they choose serbia?

>> indeed, the part of the trip that will not invite uncomfortable questions, he had to answer questions about ukraine, subsidies, overcapacity. the serbian visit will be rich in history on the 25th anniversary of the u.s. bombing of the chinese embassy in belgrade which killed three chinese journalists in 89 in the story, it reverberates still very much, it is part of what xi jinping said he said this was the friendship forged in blood.

he called the bombing flagrant. there's a lot of history and there is more to this. the fact is serbia's leader has been playing a balancing act between the china and drawing in more investments and the eu, where serbia wants to be a member of, but there are conditions, they have to recognize kosovo. so a lot of history, but business ties which are very important for serbia and china. tom: what are the key takeaways for goals that xi jinping would hope to lockdown?

anything on business in trade? p auto: serbia, china is serbia's biggest source of trading after the eu. if we combine it is $58 billion, one key example is the railway, some is completed and it is built by china so if you're looking for investments, that's something you got to see. there is chinese investment that transforms serbia, that used to be a place where you had acid rain, now it is a decent company where china invested so what

we're hearing, the leaders will sign and there will be 20 agreements. we will find out more today. some's business, some is culture. historical ties that bind both countries, it's a bit of a headache. the eu wants to stand together against chinese oversupply. exports. the country wants to be part of the eu. tom: thank you very much indeed for the update. next is hungary. tiktok sued the government over

a lot to force bytedance to divest. the path will face a ban. the legal challenge sets up a court battle pitting free speech against national security. former treasury secretary says he is still open the buying tiktok. they believe the algorithm can be replicated and spoke to bloomberg at the global conference in beverly hills. guest: extraction -- extremely interested. i support it being signed into law in this is an incredible support with republicans and democrats, may be the only thing everyone agrees on. 160 million phones, security issue. >> does the deal work if the

algorithm does not come with tiktok? >> chinese government will not give an export license. we have technology and they don't want to transfer this. i've spoken to tech companies, working to rebuild. algorithms could be rebuilt, so my plan would be to rebuild technology under u.s. leadership, make sure it is disconnected from bytedance and robust and secure. tom: stephen speaking to wall street week anchor david. coming up, may has been kind to em currencies. the outlook with the head of em credit strategy at bnp paribas next.

this is bloomberg. ♪

>> welcome back now. emerging market currencies trimmed gains. traders have been hiking wages this year, fueling demand for risky assets. for the read across let's bring in ran, someone who is really in the weeds. thank you for joining us. there has been a rally in credit , what are flows telling us? guest: investment has been about strong growth potential which

necessitates investment to really materialize and still a very challenging backdrop with expectations reassessed. we pressed seven cuts and now we are moving to two cuts. right now it is less about financing because emerging market countries have no access to financing. stepping back in bringing the discussion to flows, inflows have not returned. we were optimistic they would return, but we're looking at outflows and no marginal buyer

per se. tom: so dependent on the fed. uncertainty around the data. we don't know if they will go with the cut. if we get that what kind of catalyst affect could that be moving cash flow into credit? tran: it would be hughes. the bar is quite low. any resumption would be catalytic in high-yielding space. if you look at the data, we see crossover participation so global funds are buying emerging markets but not high-yield. so high-yield is based on fundamentals, a narrative i

subscribe to. >> relative safety around the em space. you talk about rising star candidates. trang: this is quite pronounced. upgrades versus downgrades ratio has been the highest ever, so i've seen over 15 upgrades this year and when you look at the last five or 10 years it has been plagued with downgrades and its plagued by a the larger economies. but i still, south africa is on the mend. tom: is this a space you want to look at? >> turkey got upgraded to eplus last friday. it is positive outlook so

graduation from single migration is a big deal and investors are restricted by ratings. that would catalyze buying and even though we've seen a positive narrative around turkey if you look at the data on nonresident holdings, longer term trend is holdings are low-level. tom: this is a turning point. interesting. on china have you seen enough support? reporter: china has a country we do not have a sovereign upgrade. i do think there are reasons to be more positive. recent statements reaffirm commitment to pro stimulus

measures. is that enough for real estate? that remains to be seen. we are on the fence about direct mechanisms because we need a recovery in the fiscal market. tom: we wait for that. really smart on the eem credit space story. global head of em credit strategy, a turning point for turkey. stay with us. this is bloomberg. ♪

♪ >> most likely scenario is stay put until we get clarity.

i don't think we know the answer , we sit here for extended time. tom: neel kashkari speaking, the view on higher for longer. he did not rule out increase, he said we would consider an increase. leading into the fed market pricing 43 basis points, two credits -- cuts priced in. let's talk about inflation,

stickiness and the crocodile math -- mouth shape. you have cpi they expect 3.1%. pce is coming down sharply. what does that tell you as we see rental costs increasing? we will speak about ai with ceo dennis today. next, markets today. this is bloomberg. ♪

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