♪ >> good morning, this is

bloomberg, i'm tom mackenzie. asia has struggles after the s&p hits another record. european futures are flat. in the u.k., crucial data is due , andrew bailey expects quite a drop as the central bank ways weather to cut rates. >> the next move will be a cut. the question is how long we have to maintain this level of restriction. tom: divergence grows and fed officials reaffirm the higher for longer approach. christine lagarde says there is a strong likelihood of a cut. let's check in on these markets.

the fed reiterating higher for longer. european futures are flat, s&p notching the 24th record high this year by the end of the close yesterday. and the volatility in focus ahead of an nvidia earnings with market suggesting 8% moves depending on what comes through from the maker of semi conductors. european futures with modest gains. ftse 100 adding 12 points. s&p unchanged, nasdaq pushed higher, 18,000, a modest gain. it will be sensitive to earnings. the pound is in focus. headline around 2.1%, core is moving to around 3.6%.

inflation data out of the u.k., or 41 on the 10 year and weighing out the commentary, a consensus it will be higher for longer, three or five months of data for they get confident. still they expected cut. brent at $82, down on a report of inventory buildup, second day of drops. copper is down 1.4%. china is the biggest buyer after it crossed through the record. a bit of wrist bite. let's cross over to asia. avril hong has a check of the markets.

avril: we are looking at nvidia in anticipation of the earnings event and the struggle for direction, markets moving sideways, we are seeing clear direction. equities are down as we see a selling of bonds and yields climb, the central bank will normalize policy further. japan, we saw a deeper deficit than expected. this is showing how the japanese currency is paying out, how it is affecting important value and could complicate things. as we talk about central banks,

we got interesting messaging today, pushing out a timeline for rate cuts third quarter of 25. even mild rate hikes, so more hawkish than anticipated. stocks are paring gains. we saw the kiwi dollar spiking against the aussie dollar. bonds are under pressure. there is a lot of optimism ahead of those earnings. taiwan semi conductor and tsmc rising to the highest on record. sk is a supplier for nvidia, highest since the year 2000. all eyes on nvidia. tom: avril with the check on

asian markets, thank you. wall street betting on a quarterly report from nvidia, a record yesterday with gains of 6/10 of 1%. evidence they can maintain explosive growth. let's bring in matt from bloomberg intelligence for the importance of nvidia. what are you focused on? >> another beat from nvidia. he numbers about revenue, so they got 24 billion in revenue and they will report 240% growth, huge expansion. market is between 24 and 25. all eyes will be on quarter to, the street is positioned close

to 27 billion in revenue, so that will be a key number this quarter. historically they have withheld because the business grew so quickly it's hard to estimate. the number if it is not the consensus number, the option spread could be skewed so people are expecting them to stay better. tom: ubs pointing out last year they need to consensus by 20%. matthew: gets tougher because people are understanding where the business is. tom: what is the threat? matt: it is growing so people like mehta, amason, they are huge customers and do not want

to spend with someone else. they are developing their equivalent ships and offering those to customers. everyone is facing because they don't want to nvidia and over time they -- choices will increase but investors are hoping the market will get bigger so if there is rivalry there is a huge opportunity. tom: hoping the market expands. $2000 for single sophisticated ship. matt with the deep dive from bloomberg intelligence indeed. traders are trimming bets on to u.s. rate cuts as chris wallace says he needs several months of

strong data. >> in the absence of weakening, i need to see several more months of data. before i would feel comfortable supporting easing. tom: ok. let's bring in bloomberg's jill. you can answer this question and then the markets can sit back. how likely are officials to see that trend that they need? jill: it will be difficult. i did think that out of the fed speak, those comments were telling in terms of throwing cold water on some rate cut that's. not difficult to see why the markets reacted. even more specific saying three or five months of data is what he needs to kind of gauge when

they can cut rates. end really, a market that last week saw inflation data for april, cooling and then the key gauge in six months, that is where we trend toward maybe two rate cuts, the idea of the fed needs to see consistency given how sticky inflation is. car insurance, sheltering continues to be a big piece of the puzzle. the idea of specifics, three or five more months of that trend will be a tough thing and it is leading to uncertainty. tom: jill with the context. indeed.

to the u.k. now where aprils inflation print is out. andrew bailey said he is expecting quote quite a drop to levels close to a 2% target. andrew: inflation tomorrow, i don't know what it is. i expect a drop in the number as we've said. i think that the next will be a cut in the question is how long we maintain this restriction level. tom: i'm joined by our u.k. correspondent with clear commentary from andrew bailey out of the u.k.. will it align with what we have heard? what are we expecting, what could it mean for the boe? >> inflation could get back to target. a drop from 3.2% in april is

what economists expect and it would be significant as the first major economy to do that in the cycle so you can imagine the pressure on bailey in officials if inflation gets back to target to cut rates in june or this summer when you have a laggard in transmission, 18 months for rates to hit the economy and an election and a chancellor who is saying rate cuts would be a feel-good factor. i would say he was not clear. we heard from then in his final speech the governors saying a cut is expected this summer, not june or august. you've got maurice -- worries from some analyst that we will get upside surprise which would dismantle bets for a june cut.

it is a coin toss, less likelihood if we get upside surprise, but real focus on that. tom: if we get to the 2.1% level you've talked about politics. do they do a victory lap? >> they will if it wins the election. they have not managed to translate economic success into a lead in the polls. even though it was their top priority last year, the lead of the labour party has only widened. so it is going to be important to capitalize and difficult when it is more the bank of england job and if you look at it real wages are better than before the financial crisis and the

chancellor admitted that living standards have fallen. tom: lizzie, thank you very much indeed with a preview indeed. what it could mean for the politics of the u.k. as well. we will speak with the u.k. shadow secretary after the data drops. that conversation after 7:00 a.m. u.k. time. here is what else we have today, 5:00 p.m. u.k. time, the deadline hits. bhp, anglo, that offer, revised offer, going through a significant plan, deadline set by regulators happens when it comes to mergers and the deadline is 5 p.m. u.k. time. will they come through with another offer? we watch the story. 7:00 p.m., we get the fed minutes. consensus is higher for longer but minutes will add color to

the picture. then on the earnings front it is gravitational pull of nvidia and also covering that story in all of its depth. you can get a roundup to get your day going in daybreak. subscribers can go to d.a. why bigo on the terminal. coming up, the u.s. softened its earlier resistance to a broad israeli military operation. we discuss what that means for the ongoing conflict. more on that next, this bloomberg. ♪

tom: welcome back to bloomberg daybreak: europe. the u.s. softened resistance to a broad military operation by israel. the u.s. official said israel incorporated humanitarian concerns into their plans. joining me is bloomberg horizons anchor. tell us the latest in terms of the softening from the u.s., early vocal resistance to a broad military operation by

israel in the city? anchor: the national security advisor has been doing a tour, he met with leaders over the weekend. he met with israeli officials and it appears the u.s. stance has softened with the assault of israel. in the past we spoke about joe biden's resistance to a full-blown invasion due to concerns about the humanitarian situation. the backdrop is 900,000 people have left in the last couple of weeks and there are 400,000 people still living on the ground there. so far israel have kept attacks limited to the periphery and border, have not gone fully into the city but after this conversation it seems as though

it is changed. tom: what is our understanding of the situation and whether aid is getting in? joumanna: the u.n. paused or suspended operations due to concerns over security. also very really shocking images of very desperate palestinians storming a peer set up to distribute aid. people stormed and got access to aid but ultimately it blocked distribution to the rest of gaza. a spokesperson told us humanitarian operations are near collapse. 1.1 million face catastrophic hunger and this is important

because let's tie it to the decision and the fact that the prosecutor sought an arrest warrant for the is really prime minister under allegations they had used starvation to engage in warfare. that is a war crime and we know officials said the restriction is with distribution internally out of their control. u.s. had strong words with respect to the prosecution yesterday with antony blinken saying it was wrongheaded for them to come out with an allegation and that there is no equivalence between what israel is doing and what a loss did. it's tom: an important update, thank in dade. we will check in right now in

terms of the commodity complex. there is oil, down three straight sessions and it is less about geopolitics and more about the old up of storm -- stockpiles. wti is down in the session. read straits sessions where the pricing of oil is lower. opec-plus is meeting in june so the decision will be consequential. year to date oil is up, softness on the buildup in the u.s.. coming up, the central bank of nigeria raises rates. will it be enough to curb inflation? more next, this is bloomberg. ♪

it's an amazing thing when you show generosity of spirit to someone. and you want people to be saved and to have a better life, then you don't stop. the idea that we have saved five million people's lives, it's overwhelming. it's everything. ♪ tom: welcome back to bloomberg

daybreak: europe. what is happening in the japanese bond market with yields up to levels we have not seen in a long time. close to 1% level so yields are up, pricing is down. we will keep across this as speculation continues around where the boj goes. 0%, not positive. we will keep across the story. close to 1% level. on the continent of africa, nigerian central bank raises its rate to a record high. to boost the nations bruised currency. i'm joined for more. what pushed the central bank to hike rates again? ondiru: inflation.

in april 30 three .7, upward trajectory and factors have led to this including removal of subsidies and volatility. another stubborn issue is inflation and this is because of insecurity and infrastructure challenges. plus volatility. another factor since the president came into power the currency lost 70% of its value, first liberalization of the fx market and then the official and parallel market. even though the currency gained momentum, 28% of value has been wiped out. central bank is raising its rates from 400 basis points, 200 and now 150 to ensure interest rates are hard.

tom: what is the market reaction? guest: tighter for a longer policy is hard. manufacturers are saying the cost of borrowing is high for them and that affects production and the prices of goods. nigeria is an economy where minimum wage is already thousand and there is a cash crunch. the prices astronomical and there is little to spare. investors are happy. imf is satisfied because their position is backed by data and investors are ok with a tighter for longer policy. they would like to see more transparency from the central bank because the central bank has said little or nothing about it. tom: if the imf is happy, we are

clear. thank you indeed, joining us on the rate coming through. plenty more, stay with us. this is bloomberg. ♪

tom: this is bloomberg daybreak: europe, i'm tom mackenzie in london, these other stories. asia struggles to keep the rally going up until the s&p 500 hits another record. european futures flat as traders brace from results from nvidia. crucial inflation data do in the next hour, boe governor andrew bailey expects quite a drop as the central bank weighs whether to cut rates. >> i think the next move will be a cut, as we said. the question for us is how long we have to maintain this level of restriction. tom: plus, that divergence grows, fed officials reaffirmed the higher for longer approach on rates. ecb president christine lagarde says there's a strong likelihood of a gut -- of a cut next month. let's check in on these markets,

central-bank filtering through these markets, but bracing for nvidia, a police waiting for that catalyst and whether or not nvidia can answer that question. can it repeat the successes in terms of the earning story of last year into 2024. those numbers crossing after the market in the u.s. later today. european stocks pointing modestly higher up a 10th of a percent, just shy a 10th of a percent. ftse 100 pointing gains of 12 points. commodity structure has started to soften in the recent days. s&p futures pointing flat after that fresh record. the 24th record high for the s&p just this year alone. gnostic futures also breaking through a fresh record pointing higher by a 10th of a percent. 18,800 40. let's flip the board and lacrosse asset. so far in the session, treasury is not on the move on the back of what we've heard from fed speakers. he wants to see three to five months more certainty. 441 on the benchmark 10 year,

pound and focus. 127 will it be whipsawed along the cpi print. 2.1 percent is the expectation on the headline number. core is expected at three point 6%. $82 a barrel on brent. the build is part of the situation for brent, pressure down. three straight sessions of weakness for oil. copper taking a breather, down 1.5 percent. that's a buildup of stockpiles and that key chinese market. copper at 10,701, talking of china, a story breaking. chinese megabanks are pressuring managers across their branches to extend loans to as so owned enterprises. so in order to fund that purchase of unsold properties it speaks to the urgency again of officials in beijing and wanting to address the downward pressure that continues across the chinese real estate market. that detail crossing in that story we keep across for you. of course, the details around

this are that icbc is amongst other lenders. icbc is one of the biggest banks in the world. again, leaning on their managers at the branch level to extend these loans and they are getting loans at a rate of around 1.75%. the people's bank of china, last week saying it will establish a nationwide program and will unleash $41 billion in funding to help fund that state owned pushed in terms of buying up that excess inventory. we've seen property prices falling the most in about a decade in the most recent data out of china, in terms of sales, they are expected to follow about 40% just in the most recent 12 months. that pressure is acute and chinese officials are trying to step up and put in place something of a flaw around that situation. real estate sector makes up 20% of china's gdp on some measurements. one of wall street's most prominent bears is turning

positive. morgan stanley's michael wilson now sees the s&p 500 touching a record high by next june. will a breakthrough fresh record again, the 24th time this year, that's it about turn from wilson that the benchmark would tumble 15% by the end of this year. >> i wouldn't be surprised if we have both sides. that's a world we are in. we talked about this at the beginning of the year. we had three equally similar outcomes. one is the soft landing, the goldilocks is the consensus, that's our house view. you have the no landing which is the sticky inflation, even may be stagflation outcome, which is what the market was thinking about in april. but you still can't rule out a recession either. all of these are very possible and they could all happen with a higher than normal degree of certainty.

that's really the headline that should've been out. particularly at a point in time where maybe our mistake is we don't know maybe is much as everybody else claims to, that's called humility, something that we've learned the hard way. the meat of our report in this update was more about how do you make money in an environment where you have 0% upside on the base case and you could have 20% upside or 20% downside. it's a process, it's understanding what kind of environment and how are we going to manage that. we spent a large part of the report talking about trade ideas, specific sector ideas, that's not the headline people wanted to write about, that's your prerogative, but that's what we want to talk about. >> let's talk about the headline just briefly. you deemphasize in the 5400 are few saying it's a price target is not that important for you, what is that?

>> institutional clients don't care about the target on the s&p 500, they are trying to pick stocks. alpha generation this year has been spectacular. the way we measure it with our client bases this is the best alpha generation, alpha capture we have seen since we started recording in 2010. that's what people care about. what kind of starts work in this environment. when we skew from these different outcomes you need to be ready to pivot towards different types of securities. right now our house call is a soft landing goldilocks outcome. we are not that confident that we want to make that bet fully. staples over discretionary. utilities and staples because that protects against slowing growth risk. the main factor that has been working as quality. quality is the most consistent

factor and we don't see that changing. >> are those specific factors that win regardless of the overall index? do you see areas independent of this overall shift of whether there is this momentum and international money that ports and and keeps valuation side? >> its large-cap quality. it still up the quality curb and we show it very clearly. it is a classic late cycle winner, which is where we are. tom: morgan stanley chief u.s. equity strategist mike wilson on his change of heart around the forecast for the s&p and the broader view across equity markets. u.k. inflation could explode to 2.1% in the year to april. thanks to a foreign household energy bill, bank of england governor andrew bailey says he predicts quite a drop in the upcoming inflation print in less

then 30 minutes. for a preview, let's bring in our cross asset strategist with our markets live team who has views on the pound, and everything else around the boe and central banks. how should investors read the cpi data, given that we are expecting a soft print that has been flagged by the boe governor. he doesn't have insight right now but he has his team forecasting 2.1% on the headline number. what are you looking at? >> good morning, it is a question of who has the last hurrah. core inflation was supposed to find a 3% tangoe services inflation risk up 5%. that is going to limit what the boe can be able to do in terms of policy later this year. it is possible if inflation comes below 2%.

that would give them the ability to rally from here. what would be interesting is if the reading is higher than forecasting 2.3 or 2.4%, then that is the lenient disinflationary additive that will cause it to sell off from here. this not only a question of the print we get today but the print of the months ahead were bank of england expects it to re-accelerate be on the second half. tom: really interesting in terms of projecting forward on the inflation story for the u.k. the divergence -- i will get there, it is quite pronounced in terms of the ecb and boe in the fed on the other. we heard from christine lagarde towards the end of the day yesterday reiterating that june is likely from the ecb in terms

of the cut. i guess what the question is going forward is, how do they sequence that? do they come through the months after that decision in june? are you hearing from the hawkish members from ecb saying hang on, let's hold back on this? what is your take on how it folds and how it plays out? >> i don't think they will get a rate cut in july. i think that if the ecb were to cut, it looks like the foregone conclusion. one in september and one of december to alternate meetings. a lot of that will depend on what the fed does with its policy and i think of the fed is going to hold rates this year, then i would see to rate cuts possible from the ecb. if the fed were able to cut rates at least once, then i

think it's possible that we get three rate cuts from the ecb. tom: cross asset strategist with our markets live team. some of the caveats around the inflation story of the u.k., you could get to two, possibly three cuts coming from the ecb. we are going to be speaking with a u.k. chatter's jazz shadow chief secretary -- u.k.'s shadow chief secretary. that's just after 7:00 a.m. london time. to dealmaking or a lack of dealmaking. redhead crossing the terminal, snyder electric saying talks with bentley systems have ended. snyder electric is a maker of electric components, things like chargers for cars, and they were in talks with bentley systems in the u.s., which is a software integration company, but those talks have now ended according to this line. it dropped just in the last few minutes. that potential deal has been

sidelined according to this statement, both sides have been holding discussions and they have come to this agreement not to pursue that. so we continue to watch that story for you, snyder electric, we will continue to monitor that when it starts trading 8:00 a.m. u.k. time period official said to italy for the g7 finance ministers meeting. we will discuss the agenda next. oliver crook will be on the ground in that meeting. we will be in the studio to break down what to expect from this meeting with the geopolitics and focus. this is bloomberg. ♪

tom: welcome back to bloomberg daybreak: europe, happy wednesday. officials are headed to italy for the g7 finance ministers

meeting that kicks off tomorrow. the u.s. is hoping to convince allies to use the $280 billion in frozen russian assets to back new loans to ukraine. i'm joined by bloomberg's oliver crook, normally based in berlin, he has been covering the g7. tell us where the debate stands. beginning of the year was touted there was resistance and pushback from the europeans, how has that debate evolved? >> there still is pushback depending on what we talk about, there's the seas versus freeze. united states wants to seize those $280 billion worth of underlying assets, distribute those to ukraine which will go a huge difference in terms of getting the financing for this war on sound footing going forward. europeans are resistant. they want to bring the profits off of those assets held by central banks that are 3 billion a year. but that doesn't take you that far. but they are hoping to get at this meeting is the architecture to somehow frontload that to say future profits will be turned

into a bomb that is then dispersed to ukraine to the tune of about $50 billion. if you think about the scale of the package passed by congress it was really a lifeline to ukraine, that would be doubling that some and if that's what they want to work out at the meeting and then maybe to get that before the leaders in about three weeks and get it approved. tom: russia invaded ukraine, why not just use a whole lot. was the argument? >> the question is does this in peril this liberal democratic order one of the key tenets is the right to private property on the rules around that. if you are starting to violate that where there is no legal sound footing upon which to do that, then really you start to have questions about is the euro a safe reserve currency. this is what we have heard from the european central bank and from the europeans were american say, it's cut and dry. tom: what's the latest on the trade friend? what is top of mind for g7 ministers, is a china when it comes to trade and how much

alignment is there across this grouping? >> there is rhyming in terms of the u.s. and europe. europe takes in a cautious approach in terms of its approach to china. you have these tariffs from the biden administration coming in, china hitting back. this will be a major question for the finance minister, a question of industrial policy. the unresolved question around the inflation reduction act, but central bankers will be there. if you get a full on trade war, tariff war, that will have a huge inflationary pressure, so that will be front and center for central bankers. although, jerome powell has apparently came down with covid last week, so i'm not sure he's going to make it appear we will keep an eye on that. tom: oliver crook will be on the ground at that g7 ministers meeting setting us up nicely for the key topics that will be addressed. again, oliver will be reporting for us throughout the g7 and italy. other stories making venues today. a lobby group says on the question of trade china could on these tariffs as i is 25% on

imported cars with large engines. the china chamber of commerce to the eu posted on exit was informed about the potential move by insiders. such levies would affect european carmakers and have a significant impact on beijing's relationship with brussels. china is ramping up threats of retaliation is the first deadline looms for the european commission's probe into beijing subsidies of its booming electric vehicle markets. argentina's president says he has no plans to break relations with spain after a diplomatic crisis between the historic allies expanded yesterday after the libertarian leaders, at a far right rally in madrid led the european country to recall its ambassador from buenos aires. the argentine president bum fasted the move as nonsense, typical arrogant socialist. bloomberg learned bbva has hired a public relations firm to help

it overcome the spanish government opposition to its hostile bid. the bank has tasked the company with swaying public opinion in favor of the takeover. staying in the banking space, barclays is set to be weighing whether some workers attend company offices five days a week. this as u.s. brokerage regulators adapt new rules for supervising work at home. discussions have advanced enough that some managers of started warning employees to prepare to commute daily. there is plenty more coming up. i will do a preview and a deep dive on the nvidia story. stay with us. this is bloomberg. ♪

>> everybody complains about meetings but what one should complain about is not being prepared for meetings, not paying attention and meetings

and not knowing what happened in meetings. it meetings copilot helps keep it front and center for an organization. all of the future we are launching is really a thing called team copilot. it will be in the meeting and everywhere your team is working on. this team copilot will help you in all your teammates. it's like having an ai teammate that helps you. emily: for all of this to really work you have to trust your pc with everything about you, will it know you better than a real assistant, a friend or a collie again are we in relationship territory? >> to mean, there are two things, how should one think about privacy, how should one think about safety and how should we relate to ai? let's unpack them. on the privacy side, i think there are going to be needs for

real private information. whether it's in the enterprise side were people say don't trade on my data, that's the assurance we have for the cloud. i want the new pcs we launched yesterday which are all about keeping everything you are doing on the pc local. that's on the privacy side. safety is another one. how do i make sure that whatever i am doing is safe. i am safe from serial attacks. and then the third is, the relationship side is i don't like anthropomorphizing ai. i believe it's a tool, it has got intelligence, if you want to give it that moniker, but it's not the same intelligence i have. one of the most unfortunate names is artificial intelligence. i wish we would've called the different intelligence because i have my intelligence, i don't need artificial intelligence, i just want my intelligence to

compose with this different intelligence so that i have more agency. tom: that was microsoft chairman and ceo speaking to bloomberg's emily chang on the question of ai. put a pin in it because we will come back to the ai story. that switch focus to what we've heard from fed officials signaling, reiterating rates will stay higher for longer. take a listen. >> this economy has been incredibly resilient, stronger than i expected and i have been really pleased by how fast inflation has come down in spite of that. >> i think it's a little too soon to determine where inflation is going. base case, i think we will have inflation come down but i think it will take longer. >> i think this is a moment where patients really matters. it's going to take longer for us to see the extent of progress where i think it will be necessary for us to change our policy stance. >> we are taking a big risk by

doing that because so far the labor market remains very healthy. tom: some of the latest commentary from fed officials. we go from the macro to the micro and the story around nvidia. end of the question of the volatility that this earning story could produce for these markets, with options markets pricing in a move of around 8%, either side up or down. that could translate to gains or losses of around 180 8 billion u.s. dollars. for context, ubs pointing out that in the four quarters of last year, they beat, on average, the consensus estimates. they beat nvidia by 20% on average. this is the potential market cap move on the back of this earning story. the expectation is they will come through revenues up 243% on the year before. the stock is up 90% year to date. a tripled last year. that story so consequential for the broader markets.

it makes up about 5.3% in terms of waiting for the s&p. we are counting down back to the macro to the inflation story of the u.k.. are we going to get her to handle on the headline number. 2.1% is the estimate. 3.1%'s on-call. we get the forehand along call, that could be consequential. the markets are split 50-50 to whether the boe goes into. we will break that story down for you on the markets today show. we speak with the team with the u.k. at shadow chief secretary after that inflation drops. do not miss that conversation starting just after 7:00 a.m. u.k. time. markets today is next. this is bloomberg. ♪

it's an amazing thing when you show generosity of spirit to someone. and you want people to be saved and to have a better life, then you don't stop. the idea that we have saved five million people's lives, it's overwhelming. it's everything.

>> this is bloomberg markets today. i'm anna edwards alongside guy johnson. here's what you need to know. asia strugglo