♪ >> good morning, i'm tom

mackenzie in london. asian stalks as china will sell long bonds. uscp are dated due out later this week. president biden set to quadruple tariffs and increase levies on key industries as washington's trade battle intensifies and russian president vladimir putin replaces his minister, an unexpected changing of the guard. let's check in on markets, a big week with focus on inflation on wednesday. you get earnings and wages out of the u.k., some indication of

whether the boj has a pass to go after european stocks point lower. let's put the board to the cpi print out of the u.s. on wednesday. the two-year is at 485, 125 on the pound, haiti five dollars a barrel on brent. some tied to soft data, gold at

2354, let's cross over to asia where avril is standing by. what is standing out to you russian mark avril: seeing a mixed bag as far as equities are concerned. ahead of that we got china data on credit, things pointing to the fact that chinese authorities are struggling. the focus shifted to china issuing sovereign bonds. the idea is to raise funds to support the chinese economy and this could be a way for china to raise funds without leading to a higher deficit, helping sentiment. csi is higher, hang seng moving

up. asian equities are under pressure. take you to what we are seeing in china and japan. the yen is in focus. the data out of china weekends. expectation being policy easing and u.s. china tensions, i want to highlight bonds under pressure. the boj reduced bond purchases and it is testing the water before scaling back in debt markets. that's overseeing today. tom: the expectation is joe

biden will announce those cuts in one component is quadrupling tariffs on sales. what is the market reaction to the increase in tariffs? avril: we are seeing how the chinese tv makers have sold off despite lack of confirmation. this is a continuation from last week, perhaps what is catching our eyes is quadrupling of tariffs and higher levies on other products. something worth noting is biden pushing through these moves, it will be announced at white house events.

this could be framed towards defense of american workers and for chinese tv makers the u.s. is a small market, walked out years ago, a bit of reaction in the eeev stocks and solar firms. tom: politics not far away. thank you indeed, raking down the details. broader market reaction this monday, the state of u.s. china relations and china's capacity issues from janet yellen's interview with bloomberg tv later today. we are looking to key u.s. inflation data. we expect the cpi number to show marginal improvements with traders on edge.

let's bring in mark cranfield. why the focus on this? mark: investors care because the federal reserve cares. they were wrongfooted earlier in the year with cpi that came in hot and disrupted foreign exchange. only a few months ago they are taking treasury yields below 4%, that followed adele this outlook that chair powell gave and we had a complete change. march and april data which came out triggered changes in the bond market, the dollar got stronger. a lot of read through and

volatility around specific days have been high. mostly because numbers have been hot. we expect something in line but nobody is confident that they can go into the report with their eyes closed. people need to be on the alert because the readthrough is quick into what the federal reserve have to say with several speakers. we will get quick feedback of what they think about the numbers. tom: investors need to be on alert. which class is likely to be most sensitive? mark: it will be the foreign exchange market and if you think about the report in april, that was the trigger for dollar-yen, we broke through 152.

it continued north and exemplified the difference between yields in japan and the u.s.. we are 4.5 now on the 10 year yield and lower before the previous report. equities are shrugging it off, unless the numbers deviate a lot from the 3% cut equities do not mind because they've got an ai narrative, earnings are decent and jobs market is strong. equities are the least concerned so if speakers turned hawkish and threatens to raise interest rates, everyone would be worried. jerome powell thinks there is a high bar to raising rates.

tom: mark cranfield setting us up for the data on wednesday. out of south africa, one of the largest providers on the continent of africa with earnings, a miss in earnings-per-share. estimates had been 9.21. revenue was a modest beat. again it is earnings-per-share where you're seeing the mess and the dividend below estimates, a disappointment for investors. 5.9 dividend per share. vladimir putin replaced his defense minister with his former economy aid. the reshuffle signals a focus on growing the russian war economy after the invasion.

let's get more with greg sullivan. what is behind these changes? greg: as you said it signals a focus on the war economy. they were instrumental in putting russia on war footing and it underscores how important that is. after the early days with missteps, russia transferred its economy into a mode that has weathered sanctions because of production from the war. he is exerting control over defense. the war was supposed to last a few days and is entering its third year. tom: what were some of the other changes or people being kept in

place at the top of the government. manger -- major changes that stood out to you? greg: ministers remained the same including the prime minister but the defense minister and security council chief have been replaced. it's not that surprising given that there were early missteps and a corruption scandal where one of his deputies was arrested. we remember the june mutiny. one of the aims was to replace the man who faced criticism. focus has been on the people managing the war and he wants to see a change. a logical time to do it was

after his reelection. tom: thank you very much indeed for joining us out of dubai. russian government reporter on details at the power structure. here is what else to be thinking about. we've been talking about data. jobs data on earnings comes out tomorrow. how that ties into a dovish boe is june. will june be important? we will get vodafone, providers in europe crossing with their numbers this week. wednesday is the big one for investors. u.s. cpi with core edging down to zero point 3% from 0.4 and

markets on edge ahead of that. coming up, a member of european parliament and belgian finance minister joins for a conversation out of next month's elections. that interview after 6:30 am. french president speaking to bloomberg's editor-in-chief. that interview at 6:00 p.m. u.k. time. plus goldman sachs ceo david solomon joins us or a conversation as he takes part in the choose france summit at 3:30 a.m. u.k. time. this is bloomberg. ♪

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tom: u.s. secretary of state antony blinken says israel risks fueling insurgency in gaza, the latest warning in escalation of concern about israel's conduct. >> israel is on the trajectory to inherit insurgency or leave a vacuum filled by chaos and refilled by hamas. >> let's get more on this with sam dagger, our government reporter out of dubai.

what you make of these comments? around the risks of insurgency? sam: prophetic. as he was speaking we have reports from the ap about renewed fighting in northern gaza, the area israel invaded immediately after october 7. there are reports of fighting in a refugee camp in northern gaza, and a neighborhood near gaza city. it is a whack-a-mole phenomenon in play. antony blinken's comment is very much on point. tom: hundreds of thousands of people have received warnings.

doing nowhere they are moving? what is the situation for civilians on the ground? sam: we have a great story by our colleague from gaza reporting from outside and speaking to civilians, hundreds of thousands of people are moving to an area which is near an area israel targeted so people are basically moving to shattered cinderblock. they are pitching tents amidst the rubble of their own homes, joining up half one million people in that area living in tents. our colleague reports that the price of tents has gone almost $1000 for one.

tom: meanwhile, in terms of cease-fire talks, are they ongoing? has the hope of cease-fire been sidelined or are there suggestions that these conversations could move forward? sam: cease-fire talks taking place in cairo are paused. on the u.s. side they are led by william burns in his counterparts. officials in the region pinned hope on these talks, particularly because of the rest specter people have for burns in a story about burns's role, all eyes were on cairo interrupted

by israel rejecting the terms and commencing its operation. egypt has said it may join south africa in its genocide case against israel at the international court of justice. egypt was one of the first countries to make peace with israel and officials are warning the peace deal may be at risk because of israel's actions. tom: sam, thank you indeed. middle east economics and government reporter out of dubai. let's check in on the oil price and the crisis unfolding. $82 on rent. comfortably below $80, down

3/10. china data pressures oil prices given credit data was weak indeed and further signs of disinflation impact in terms of data and factory prices. brent is down, wti is at $78 a barrel. middle east will be in focus at the economic forum. it begins tomorrow by the way. we will speak to global players such as the prime minister's, saudi finance minister and governor of the turkish central bank. tune in for all of those conversations. this is bloomberg. ♪

♪ tom: welcome back, happy monday. now to some other stories making news. the u.k. prime minister will reframe the general election with a focus on security later today. he will pitch himself as the best candidate for britain after

his party suffered heavy losses in council elections. tesla facing protests at its factory where activists are trying to stop expansion that would require raising the forest. 60 people were arrested following actions including breaking into an airfield, damaging vehicles and blocking a road. france says amazon, pfizer and morgan stanley are poised to boost their presence. expect a flurry of investments topping last year's $14 billion. french president is hosting ceos and executives in a push to re-industrialize france and make it a financial hub for the post-brexit european union. a line from the french newspaper

reporting microsoft will invest more than 4 billion euros and french president emmanuel macron will speak from the choose france summit. here that interview at 6:00 p.m. u.k. time and before that do not miss our interview with janet yellen, that kicks off at 3:00 p.m. u.k. time. let's check in on asian markets as investors adjust to the weakest financing impulse in 19 years. softness in terms of liquidity and demand is pronounced and you had further signs that the deflation story has yet to update. the most recent news was that china will issue long bonds. that expectation on those bonds will do something to open the

fiscal spigots. up 1/10 of 1%, hang seng up 7/10 of 1%. the nikkei is down 3/10 of 1%. bank of japan has been reducing bond purchases so we've seen a move higher in yields and support for the yen. msci asia-pacific is flat at 177. we will talk eu elections with johan, a member of european parliament. stay tuned, that is next, this

tom: good morning, this is

"bloomberg daybreak europe," i'm tom mackenzie in london. asia stocks start the week mixed as reports emerge china will begin selling $138 billion in ultra long bonds. traders looking ahead to u.s. cpi data due out later this week. president biden is set to quadruple tariffs on chinese dvds and sharply increase levies on other key industries, as washington's trade battle with beijing intensifies. leadership shakeup. russian president vladimir putin replaces his long serving defense minister, an unexpected changing of the guard more than two years into moscow's invasion of ukraine. let's check in on these markets. worth or electing on the fact that the s&p notched gains just shy of 0.2%, back above 5200. currently european figures after notching record highs by the close on friday, are looking to

add about a 10th of a percent in the session, that's what's been flagged by the european futures. it is a massively for data. arguably the focus shifting away from earnings and onto the data front. yes we have the u.s. inflation print out on wednesday with core inflation month on month expected to edge down from 0.4% to 0.3% for april, but you also have before we get there on tuesday, wage data, earnings data out of the u.k. 7:00 a.m., u.k. time tomorrow, and how that ties into expectations around the bank of england. the ftse 100 looking at losses of around 0.2%. oil may be a factor, it is weaker in the session. and the softness in the china data, particularly in terms of aggregate financing, contracting the first time on record, that could be a drag on the u.k. session today. s&p futures looking to add 0.1%, nasdaq futures pointing hires are pointing a percent. let's flip the board and

meditate on what's happening with the two-year in the u.s., as we look ahead to that inflation print, 4.85 currently. how much volatility as there around treasuries at the front end on the back of that inflation print on wednesday? the pound could move tomorrow on the wage and inflation data. the wage and earnings data out of u.k. i talked about the softness for oil, currently down 0.4% in the session today, and gold 2352, down 0.3%, that strength for the elemental year to date pronounced. -- yellow metal year-to-date has been pronounced. japan's 30-year yield rising to 2.03%, the highest since 2011, so the 30-year yield in japan rising above 2%. that's the highest since 2011, again come after the boj

adjusted its purchases, reduced his purchases of bonds. you did see strength on the yen on the back of that and selling pressure across japanese bonds. currently on the yen, 155.82, not a lot of movement but it did strengthen on the back of that news.japan's 30-year yield offering you a little over 2% of a high since 2011. let's switch to european politics. elections at the european parliament due to be held next month, with the bloc's one surging far-right groups starting to stumble in the polls, as ursula von der leyen implodes the prospect of working with some nationalist parties to ensure a second term as commission president. oliver crook is in brussels with a asked to unpick some of the political evolution transpiring in the euro zone. oliver: we're joined by johan van overtveldt from the new

flemish alliance, and was formerly finance minister of belgium, so is well across many of the topic that are important to us. we are getting into that period close to the election, less than a month away. what do you see as the defining issues of the european election? johan: if i should name one item, it would be ukraine, because it is of vital importance for the european union, and its existence into the future, its norms and values that we take for granted and are now literally under fire in ukraine. links to to that is the necessary t4 europe to build up its own defense industry, if things come close together, it will require a lot of money. there are a lot of other issues like migration, the green deal, competitiveness of the eu, but i think ukraine will be the defining issue in the coming

term of the european parliament. oliver: how do you think that changes over the next couple of years? you think there will be more commitment required from the europeans, not just from a financial standpoint but maybe a military standpoint? johan: it is to be feared that we go into the direction that things might become very complicated for ukraine. even with all the help now coming forward from the eu and united states. like the french president macron said, we might arrive at the point where they need more than just financial assistance, and the money to buy weaponry. that would be a very defining moment. oliver: there is a possibility european troops could be committed within ukraine? that is a possibility on the table and that should be considered? johan: realism imposes on us that we should consider it. whether we should try to avoid it is of course also true. we should try to avoid it, but it would be irresponsible not to

face up to it, and take into account that at one point in time, that might become necessity. oliver: on the question of ukraine, what do you anticipate the policy consequences will be of this election in europe? we have seen much further swing to the right. what are the actual policy applications of that? johan: one of the major implications of the drift to the right, i hope the center-right and not the extreme right, but we will see with the election brings. will be more emphasis on economic policies. we have had in the past term a lot of emphasis on the climate policies, and everything related to that. we have taken a used to forward. -- huge step forward. it was not always sensible to do it in the way that was done especially by commissioner timmermans. so we have to adjust this policy to better take into account the

social and economic consequences of these policies. that will be a very important part of the shift that will take place in this new, more to the right-oriented to parliament. oliver: in this new orientation, do you see the epp and ecr as likely allies? johan: we already saw that this term, especially the second part of this term, where if you look at when you had the vote, you sell the two groups coming closer to each other. not entirely, there are still a lot of differences, but the divergences were less outspoken than they were in the beginning of the term. yes, it is certainly something quite possible, and that might change the overall picture of the way in which the european parliament is going. oliver: we were talking in the break about the hemingway adage of going broke slowly at first, then suddenly.

there is concerns in europe about competitiveness and its future economic viability. macron says europe is basically mortal. do you think that is a correct characterization? johan: mortal, mr. macron has often use that kind of terminology, he declared nato brain-dead sometime ago. i think today nato is very much alive, so i hope we can say the same about eu in two or three years time. oliver: you would not say it is brain-dead. johan: no-no, but certainly, there is a lot of work to be done but the big challenge if you talk about competitiveness is what is happening in the united states. oliver: you have the inflation reduction act and china famously and historically supporting its industrial sector, what is europe's response to that? johan: we need to involve the private sector more than we did until now. from the point of view of the eu. the ira in the united states is basically about tax breaks that stimulates the private sector to

invest none of the things you want them to invest in. we should do that too but we don't have fiscal authority at the european level. so, we need to stimulate the member states to do that kind of stuff at a national level. secondly, talking about china, we should do what we have to do if we want free trade, everybody has to play along the rules. oliver: tariffs. johan: the chinese are not playing as the rules predict, or oblige you to play the game. so we should take the consequences of that and indeed, should not shy away at tariffs or other mechanisms. oliver: should tariffs be looked at beyond electric vehicles? johan: china has profited enormously from the free market system. we have invited them in. western capital has gone there, western technology has gone there, and so, they should

reopen their doors too and play the game. so wherever there is not a level playing field, we should intervene. oliver: one topic where there may be consensus in europe from the right to the left is defense spending. having set on the budget committee, you know how difficult these conversations can be, do you think there could be appetite for joint debt on this topic? that this could unify europe to get that defense where it needs to be? johan: we have had a facility where we have more than 700 billion european debt that has been created. we should first take stock about how that went, what were the weak points, and there are a lot of weak points in which the way the corona facility has been set up and executed, so we should take that into account. we should not forget there is still a substantial amount of money left within that corona facility. so i don't join those who say how we do another facility, and we do this and that, let's evaluate, let's see how much

money is left. let's also see how much of the responsibility of defense spending has to be taken at member state level. and then see what eventually can be added value of a european initiative. oliver: johan van overtveldt talking about a lot of the topix we are getting into. just under a month away from the european elections. tom: oliver crook in brussels. with a fascinating conversation. and ollie talked about the french president. bloomberg will be speaking exclusively to emmanuel on later. -- macron later. we will hear that interview with bloomberg's editor in chief 6:00 p.m. u.k. time. definitely tune in for that exclusive interview. we will be checking in on spanish politics. because spain's prime minister pedro sanchez's socialist party has won regional elections in catalonia. if the party is able to put together a coalition, it would

be the first time the catalan region has been ruled by a non-separatist party in more than 10 years. let's get more with thomas in madrid. the are the implications of the electoral results out of catalonia for pedro sanchez? >> good morning, as you said, the socialist party won the elections. it's a good result, they got 42 seats, but they fell short of the 68 majority needed to form government. of course, there is an uncertainty in the region that may also bring instability at the national level, were the socialists need the support of parties to pass legislation, and where they need still to pass big legislation, including the national budget that has been delayed so far. that's, as i said, a big if on whether they would be able to form government in catalonia.

because both parties are seeking a new referendum in the region. this is a redline for the socialists, so we're probably leading toward a deadlock in the region. tom: if you get that, then you get renewed elections, of course. talk to us about the economics, catalonia, famously an industrial hub for spain. the implications to the politics to the broader national economy. >> catalonia is the second largest region of spain. and it accounts for 19% of the gdp, so course, there is an increasing component in this region. broadly speaking, it is true that so far the markets haven't been reacting significantly to what's going on in catalonia. more broadly, the spanish

economy grew 0.7% in the first quarter, and is expected to expand this year and in 2025. for the time being, it looks like the economy has not been impacted by the situation. tom: thomas gualtieri on the applications of effort in catalonia and what he could mean for been the future of the spanish economy. we will take a look at earnings duty this week. including major european telecoms and luxury shares. our preview of the earnings story. goldman sachs' ceo david solomon joining for an exclusive interview, as he takes part in the choose france summit. that conversation 3:30 p.m. u.k. time. this is bloomberg. ♪

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tom: welcome back to "bloomberg daybreak europe." costs and capital spending cuts will be in focus when major european telecoms report this week. analyst will watch let's results after burberry's profit warning in january. look at more around the earnings story and bring in chloe. what will investors be scrutinizing when it comes to the telecom earnings? >> the guiding metric is cash. most of europe's telecom companies have got it for a fairly optimistic baseline growth for cash flow this year. we will see how that compares with reality in earnings reports this week. especially because they have been dealing with quite high input costs and wage pressures. if we look at individual companies, budget telecom is said to have particularly strong cash flow growth, which might boost shareholder returns. it is a similar story for

vodafone, it has about 4 billion euros set aside for buybacks. bt is still in the middle of a turnaround but could report a return to annual growth for the first time. overall positive for the sector this week. tom: cash flows will be scrutinized by analyst when it comes to telecoms. when it comes to luxury space, reach montana burberry, how divergent are these stories, burberry has its own challenges, what is the set up for the earnings stories for those luxury groups? >> as was the case with the fourth quarter reports, we have got winners and losers in luxury. still the same thing really. that depends on branding and target audience. we've got quite a good resilience in high-end luxury, but burberry is kind of the middle-of-the-road more so, compared to cartier which richemont owns. that will be illustrated once again this week with richemont

and burberry. burberry is still in the middle of a brand revival initiative coinciding with slowing demand in luxury, so it doesn't bode particularly well for it, there is also self demand in china, so that puts it in a tough spot. richemont shares have been one of the biggest sector gain ers this year and they are effecting strong growth in the jewelry segment with cartier, with softer performance in the other segments because it is a tough year. that's the kind of divergence we're keeping in mind this week. tom: chloe with a nice set up in terms of the telecom earnings and the luxury front with richemont and burberry and focus later this week. a reminded the french president emmanuel macron himself will be speaking exclusively to bloomberg from the trees france summit. watch that interview with john micklethwait, bluebirds editor in chief, that's at 6:00 p.m. u.k. time. before that, don't miss out on

our exclusive interview with the u.s. treasury secretary janet yellen, that conversation checking out at 30 5 p.m. u.k. time. and here's what else to look out for this week. euro area finance ministers meeting in brussels. so those conversations will be scrutinized. and you have that choose france summit that kicks off on tuesday. a big day in terms of the announcements. we just had a microsoft detailing some of its investment plans in france, around 4 billion euros from mai and cloud. on the data front, we get the final german cpi out as well. then you have the qatari economic forum starting in doha. bloomberg is on the ground and we will bring you exclusive interviews throughout that event. on the earnings front out of china, tencent and alibaba both report on wednesday. we will alert you if there's any sense that the consumer in china is starting to turn around. then you get euro area first quarter dup, a pitch on the

health of the eurozone economy, as expectations remain that the ecb could cut in june. and russia's president vladimir putin beginning a two-day visit to china, interesting given that xi jinping was recently in france, and hungary and serbia. u.s. cpi data crossing, in fact, on wednesday, the inflation print out of the u.s. earnings, you will get walmart and siemens, and nato military chiefs will meet in brussels on friday after a weekend of activity in ukraine, with some gains for the russian military. china data, a data dump on friday, proxy prices, retail sales and industrial project released friday after that aggregate financing out of china contracted for the first time on record since 2005. the inflation data was also concerning out of the weekend. the data picture being rounded out of china on friday. stay with us. this is bloomberg. ♪

>> there isn't, at this time, much evidence in my view that inflation is stalling out at 3%. if you take a step back, what's happened is inflation went way up in the united states, and everywhere else in the world. tom: federal reserve bank of chicago president austan goolsbee speaking. we will hear from jay powell on tuesday. the chorus of voices from the fomc suggesting they are comfortable sitting higher for longer on rates out of the u.s., given what's been happening with inflation. does that change that narrative on the back of the inflation data that we expected? cpi this wednesday, did it just

that narrative? here is what transpired the last three months when it comes to u.s. super court inflation, and beans acceleration, the white line is cpi's looting and energy, and u.s. cpi and services excluding energy and housing. as you can see from the start of this year, those lines have started to take up, on an aggregated basis in the first three months of the year, you have seen core inflation coming in at around 4.5% from 3.3% in q4, so that move up is what has led to the concerns. are we going to get a restart of the disinflation narrative with that inflation data out of the u.s. this week? let's have a look at what's been happening in china because the credit impulse fell off a cliff for the most recent data for april. aggregate financing out of china contracted for the first time in almost 20 years, and in terms of money supply, the broader money supply component reduced to its lowest level in two years as well.

mortgages, house loans, all contracting, that will concern chinese officials pray they launched ultra long bonds, so maybe a bit of fiscal support in the months ahead. plenty coming up, including exclusive conversation with the french president about trade and geopolitics and international investment, hear that interview with bluebirds editor in chief at 6:00 p.m. u.k. time. we will hear more about the state of u.s.-china relations and china's overcapacity issues from treasury secretary janet yellen. that conversation starting at 3:00 p.m. u.k. time. the goldman sachs ceo also sitting down with us at 3:30 p.m. u.k. time. don't go away yet. "markets today" is next. this is bloomberg. ♪

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>> good morning from london, this is bloomberg markets. less than a half an hour away -- less than one ho