♪ >> gag mining cash good morning. -- good morning. 2020 five reinforcing bets on higher for longer rates.

>> recent rates have been more favorable. we need more good data that inflation is moving toward 2%. >> equity markets shrug off the outlook. s&p it's a new record high and g7 summit kicks off as leaders use russian assets to fund aid to ukraine. good morning, what's check on markets. lots of events. initially we got a cpi print to the downside, propelling a risk on move and snp futures and

nasdaq hang on to gains. another record high and opening up 2/10 of 1%. nasdaq is up and the fed turned more hawkish with their projections that did not stop a risk on rally. let's take a look at u.s. treasuries because after the print we saw a big rally in yields, 15 basis points. still ending around 10 points lower. 10.32 and the market is pricing in 1.6 rate cuts, more than projections, hawkishness is being priced into the interest rate curve. u.s. dollar is trading flat.

we lost a little ground leading toward the green. the euro is in focus. not just u.s. dollar, but political premium into the french parliamentary elections. a big focus. brent is down 3/10 of 1%. avril is in our singapore studio and just give us an overview of how the markets are faring? avril: as we have been discussing there is relief in this part of the world. we got u.s. inflation and markets shrugged the lonely fed

dot plot and asian equities are running higher. if you strip out the tech sector it does not look impressive and we are seeing declines in japan. caution is palpable and it is all about japanese currency weakness feeding into inflation and prompting russia to add to the japanese currency. it is about the japanese yen and that might explain why even though you are seeing recovery it is not by much. keeping our eyes on boj and yen. let's look at japan. bulletins those well because the relief rally overnight, a lot of green and yields are coming down

, prompting concerns for banks and stocks under brush up. as to how long this will last, that is the key question because we have the expectation that the boj will be more hawkish than the bond markets because it needs to support the japanese currency against the backdrop of resilience in the dollar and the fed. joumanna: hawkish fed and hawkish bank of japan. let's talk about the fed. officials dialed back expectations to only one rate cut in forecast more in 2025. they raised forecast after better-than-expected data. >> we see today's report as progress and building confidence, but we don't have

the confidence that would warrant beginning to loosen policy. we have to deal with that. policy is having effects we would hope for. we think we are getting the things we want. rate cuts that will take place this year or next year, we will have to see what the data brings and how it affects risks. the whole path matters and i continue to think that when we lose -- loosen policy, that will show up in market conditions. joumanna: let's get more from mark cranfield. i've been keeping my eyes on price action out of the fed. interesting reaction, a record

high. our equity investors placing more emphasis on cpi? mark: yes, to some extent. equity market would have been concerned with the fed wanting zero rate cuts but the basic story is we have been driven by the amazing story that companies can make money out of ai and the promise for the future. we've had bullish stories from oracle, apple. just feeling the idea that the stocks in the u.s. are driving the whole story. whether the fed cuts once, twice, not at all is immaterial to what is driving. they can deal with 5% interest

rates, that can be factored in. companies are making plenty of money so yesterday was good news on cpi, nothing damaging. equity markets can think about ai and company profits. joumanna: that is the story. what about rates? september is 56% priced in. very strong 10 year bond auction. will this rally continue? >> not too far. we get into the stage for the bond market, four and three quarters there. 75 points below the top and. pricing in a lot in the fed has

not done anything and they are not likely to do anything. there is a limit as to how far you can stretch treasuries and we are getting close. you can probably go further but not too much unless we get week data out of the u.s.. employment is strong, cpi is coming down and we need week numbers to get treasury yields lower than where they are. more data-dependent than we are in equities. u.s. dollar as a factor of other issues and there is a huge event in foreign exchange. if the boj disappoints, they could drive her emerging markets higher and we could have a whole lot of volatility.

a very big driver for globally. joumanna: it really feels like ai is emerging as a secular story driving the market. thank you for the analysis. that was mark cranfield. bloomberg understands g7 leaders in italy will provide ukraine with $50 billion using profits of frozen russian assets. technical details will be hashed out. let's bring in all of her crook. there are loads of items on the agenda but let's start with this reporting about what they decided to do and what it would unlock for ukraine. oliver: this has been the debate, how to tap the value

without seizing the underlying assets. while frontloading the cash to ukraine. we been talking about $50 billion and the agreement will be done in the form of a loan, mostly by the u.s. and others. that gets pushed to ukraine and repaid with profits from frozen assets that are in europe. the devil is in the details. they are according to sources not intending to have a full sort of mechanics worked out at this meeting, but they are hoping to disperse it. it is desperately needed by ukraine. another topic is how do you cinch the money in the russian war machine and as we think

about the bipolar world with china, russia and g7, they've brought leaders from turkey, uae, brazil, argentina, india on this side. and the pope. he said part of his session tomorrow the first-ever pope hope to have joined a g7 meeting. joumanna: i did know the argentinian president was giving a speech on ai, did not realize the pope was getting involved but many leaders are european and we know we had elections, a surge from the far right. chancellor schulz diminished over president macron and we been watching over politically on the ground. a lot of turmoil. to what extent are domestic

issues going to supersede or take precedent over g7 priorities? >> domestic issues and political situations undermine not only the attention, but also legitimacy, their mandate. we've had the british prime minister facing an election. very low approval ratings, it is crystallized when it comes to schulz and macron just yesterday. he shows up today to deal with global issues with marine le pen at his heels and then schulz we had zelenskyy in parliament, lawmakers who didn't well, boycotting the speech and sending scathing messages about

german support. what we bring is the host of g7, the only leader reinforced by elections was giorgia meloni. joumanna: that's a good place to leave it. a reminder that salon made a surprise trip overnight, worth bearing in mind. that was all of her crook in italy. coming up, how a fitness app plans to harness ai. speaking with ceo michael merton up next. ♪ >> and we will also speak with alpha founder jonas. you do not want to miss that. this is bloomberg. ♪

joumanna: the forum is underway in oxford shire. let's get to daybreak european anchor tom mackenzie who is out there with a special guest. tom: thank you very much indeed, happy to join you indeed. we have a grouping in a gathering of big hitters in the tech space. right now i'm pleased to say i'm joined by ceo michael martin. this is a fitness app used by many people in london and globally. thank you for joining us. talk us through what strava does

and how is the business doing? michael: the goal is to help everyone live there active lives. as you said 190 countries. it has been growing strongly and benefited from the pandemic and growth continued and accelerated in the last several months. we are seeing two times what we saw in countries like the u.k.. tom: you took over five months ago. what is your ambition in the next 12 months? michael: growth rates are quite good. i want to see balanced growth. historically we found our original fit with men frankly.

this is common across the sector. participation rates with women lag men. we have an opportunity to change that and we have been focused on making sure women have a platform that allowed them to live the best active life. the growth rate of gen z women is two times the growth rate previously. tom: there is a big focus on generative ai. how are you embedding ai? michael: as someone who came from google, ai is embedded in how i do everything. there is incredible opportunity and i think of that for two reasons. one, there is a lot of buzz around ai and in my several

years of using it i have never been interested in the novelty of it. i do not believe every product needs a chat interface, but ai can solve human problems. you need the right data and that is where we are well suited because the active community of 125 million members have uploaded more than 10 billion activities. combine that unique set of human bodies in motion with ai. tom: any pushback? michael: we see the data as owned by users and we are entrusted with the data so we take it seriously. trust, privacy, safety they are paramount. the data is data that users

shared publicly. they cannot opt out from having it used and they are contributing not only to products that help them become a better version of themselves, but they are contributing to our efforts to improve transport infrastructure for humans. tom: elle magazine did a feature. do you welcome dating? michael: our goal is to help people live their best active life and our vision is the world is connected by movement. we are adding social features. i do not see it as a social media network. i consider social media networks apps where you prioritize engagement, scrolling, things like that. our mission is to get you to be

active. >> are you benefiting from the challenges faced by x? michael: i do see signs that people have become tired of those networks and they are looking for real connections. i think we help with that. tom: ipo? michael: my priorities were to prioritize growth and fill gaps that we have had. opportunities within the product. tom: you want to take this public? michael: we want to maximize the opportunity. >> michael martin kicking things off. joumanna: always worth getting in an ipo question. that was tom mackenzie. plenty more coming up the rest of this hour.

this is bloomberg. ♪

joumanna: beijing blasted the move raising levees as high as 48%. asia transport reporter danny joins us. run us through who are the winners and losers? danny: a view winners. byd got the lowest amount of tariffs slapped on them, so stock has reacted much better than rivals. it was up 8.8% in hong kong on thursday and we have seen others reacting badly. sco c motors had the biggest

tariffs and they were down so there is a divergence of winners and losers, but is not a surprise. we are expecting a bigger number of tariffs on some rands. clearly the fallout is not so great for the others. it is fascinating to see what is playing out. joumanna: it is interesting but the next question is how will china retaliate? tariffs of their own on european carmakers? danny: this is sensitive for foreign automakers, particularly out of germany, they rely on china for profitability so we

will watch for china's retaliation. right now china has been criticizing protectionism that brussels put on with tariffs. china has warned they may put on tariffs or start investigating the dairy industry and aviation sector. these are things it is unhappy about. it is lobbying and did not succeed so therefore, wondering what it does next in terms of whether we see trade tensions between the world's largest economies. joumanna: and a discussion featuring at the summit. asia transport reporter danny, thank you for joining us. coming up, we will speak to founder and ceo jonas on the state of ai. you do not want to miss the

conversation. this is bloomberg. ♪

joumanna: good morning, this is "bloomberg daybreak europe." i'm joumanna bercetche. fed officials signal one interest rate cut but keep the door open for two, reinforcing

higher for longer rates. >> the more recent are more favorable earlier in the year only to see more good data to bolster our confidence inflation is moving sustainably toward 2%. joumanna: equity markets shrug off the outlook, u.s. stocks surged with the s&p 500 hitting a new record high. she seven leaders are set to agree on freezing russian assets to fund a to ukraine. we will go live to the g7 summit in italy later this hour. we sell the s&p once more reach record highs, breaking through 5400 and yesterday session after a weaker than expected cpi print that came through, putting a massive rally in bonds. bonds about 15 basis lower -- 15 basis points lower at one point. s&p futures up 0.2%. not the case for european

markets which are opening in the red after a better session yesterday. u.s. treasuries and 10-year yield's sitting above 0.3% on the heels of the cpi print which catalyzed the rally. broadly speaking over the course of the week, we are down 20 basis points for 10 year yields. the market is pricing in a 50% chance of a september rate cut, about 1.6 cuts for the year as a whole. the euro is trading around 1.80, a lot of political premium price. brent is lower 0.3%. a week dominated i artificial intelligence has seen tech giants apple into the race with its own ai vision. they announced a partnership with openai and new features earlier this week. paris-based startup has raised 600 million euros at that takes

on bigger global players. let's go back to tom mackenzie, who continues our ai conversations. the topic du jour. tom: it is indeed and it seems to be continuing. we can bring you now from germany, jonas andrulis, ceo / founder, aleph alpha. thank you for joining us, talk to us about the enterprise demand for your models and how you see that evolving in the quarters ahead? jonas: that is a great question. we have been focusing on enterprises and government from the beginning, and although we see some of our customers adopt some general chatbot offers, for most of the problems where a lot of value can be captured, you need something more than a

general chatbot, even a fine-tuned model. we have been integrating into these critical business applications, and that is where a lot of value is. tom: how do you extract that value? who are your main enterprise customers? which part of the spaces tapping you on the shoulder saying we need your solutions? jonas: we are seeing a lot of traction in complex regulated industries, financial services is where we launched the combined solution. also things like manufacturing or security, government, logistics. the answer really is, these models are in some way possible to mirror human reasoning, and if we can do that, we can automate and transform certain

value chains, but this requires technology beyond chatbots. this is why it takes so long and why some leading players have low revenue numbers, because the value capture for a general-purpose trained lm is difficult to do. tom: is that what separates aleph alpha from the pack? you can build out value more quickly than your competitors? we know the spend coming through from openai, they have the support from microsoft. is that what sets aleph alpha apart, you are close to getting profitable and driving revenues? jonas: openai has tons of revenue but there is no profit at that price. it is not clear what a functioning business model is. you can argue that these team that are training have not found

a business model yet that works. that is something that separates us in the sense we are not just doing that but we are a very open technology that includes other models. you can use open source models with our technology. our proprietary research is on top of that transforming businesses. that is why we are parting with pwc, because an attack team alone, even well-funded is not positioned to transform these massive industries in these massive use cases. tom: this ties into some concern amongst some, sequoia put out data in terms of the amount spent on capex, talent, the hardware and infrastructure, and end-use, the monetization, and that gap remains very wide.

is that a legitimate concern or do you see that closing? jonas: from my perspective, a lot of the equity stories do not make a lot of sense. one of the major differences looking at llm's and training in llm's, a lot of that money has a short shelf life, so you spend hundreds of millions to train an llm, you're building a brand and getting some knowledge, you are learning something from that, but you know all that money and that model by itself in a few months will be practically worthless when the next generation hits. think about this from an investment perspective, and from

a founders perspective that mean you have to raise all that money, it will be your liquidation preference, and you are raising at a valuation that you have to live up to. sooner or later you have to show how that investment makes sense, that is not an easy show. if you are not also at the same time or in combination to that solving valuable business problem. tom: what did you make of the tie up between openai and apple? jonas: i think apple has always played their card pretty well. i would have loved to see a strong apple offer, as i have been working with them a few years back. i think apple knows they own the customer, and similar to what they have done with maps, they can adopt certain technologies and switch things around. as long as apple remains the customer, they are fine. tom: we talked about fundraising, you have raised hundreds of guns of euros, are

you looking to raise again this year? much runway do you have? jonas: we have decent runway and revenues are coming in strong, we increased our guidance. we are not basically with our backs against the wall, we do not have to raise but we see tons of opportunity currently. we might raise in the somewhat future but not this year. tom: you flagged concerns and risks about u.s. mega cap tech companies, and we think of microsoft, nvidia, and their investments in the ai space. we think of microsoft absorbing inflection. is that concern, more of a concern or have you been able to assuage those risks? our governments and regulators taking this seriously?

how are you thinking about that as a potential concern for you? jonas: a lot of the deals we have seen in the gen ai space, whole acquisitions but investments, they are coming with strategic influence. we have seen a lot of deals in kind against computer credits locking in a company to a cloud or on a certain accelerator or limiting the strategic options. these are strategic moves for dominance in the market. this goes to our earlier point, it is not quite clear what the business model is if you are a team training an llm, but it is clear with the business model is if you are running a cloud or if you're producing accelerators or a semiconductor business, they are fueled by the ai hype, so these companies have strong

strategic interest for dominance and control in that space. tom: before we let you go, you seem to suggest there is a hype cycle around ai, is that how you would interpret it? jonas: absolutely, and we do not have to be cautious, working as intended, free markets working as intended, this technology will revolutionize everything we are doing, and now we are figuring out who is to win and lose and where business models are. the way we are figuring that out is getting hyped up about it, doing wrong investments, and there will be winners and -- when you mom or the internet, there will be the pets.com and the googles and amazons, and everybody is trying to figure out who is who. tom: jonas andrulis, really

fascinating, thank you for your time, ceo of aleph alpha based here in germany. tom: such a good interview -- joumanna: such a good interview, thank you, tom mackenzie. we will be talking more about tech and ai focused conversations that will come up this morning. now to some of the other stories making news this morning, openai ceo, sam altman, has told staff the company is on pace for $3.4 billion of annual revenue. he held an all hands meeting and said the vast majority of the revenue is coming directly from products and services. he is also understood to have said openai is on track to generate $200 million by offering its ai models through microsoft.

samsung has unveiled advancements to his technology luring makers of ai chips to its manufacturing business. though it is the number one chipmaker, it has been trying to catch up with tsmc were companies manufacture customer design chips. samsung expresses ai related list expand fivefold by 2028 with revenue increasing nine times over current levels. broadcom shares jumped after the annual forecast topped estimates on the back of robust ai demand. the company which is a chip supplier to apple sees full-year sales that $51 billion, marginally higher than the average analyst estimates. they expect total sales to come in at more than $11 billion. coming up, a conversation about the how the tech industry is changing the world of money laundering and organize crime.

we will hear from investigative journalists, geoff white, next. this is bloomberg. ♪

joumanna: welcome back to "bloomberg daybreak europe." for as long as there have been money, there have been people eager to steal and launder it. authorities are plan catch up with sophisticated criminals online. let's go back to tom mackenzie. tom: thank you. we are pleased to be joined by geoff white, the author of "the lazarus heist." now the story in the details around how criminals are using technology to launder money. thank you for joining us, it is a great read. you outlined traditional money

laundering in the process, then say technology has come along around crypto and given this a rocket booster for criminal gangs in terms of their ability to launder money. how has the evolution of technology changed money laundering? geoff: as your viewers know, technology is across the financial industry. first, the traditional finance, things like online account creation, faster payments and tech innovations that speed up finance, but you also have the creation of a new edifice of new finance, cryptocurrencies, and videogame marketplaces. those are controlling huge amounts of money largely unregulated. they are off the radar and the money is sloshing around internationally. for money laundry's, both of

those are useful, they can use the speed of traditional finance tech innovation and can push criminal money into new areas of new finance, cryptocurrencies, videogame marketplaces. they are of huge interest to money launderers. without, a lot of organized crime cannot function. tom: the amount of money is extraordinary, you detailed 600 when he five dollars million from one gaming company, these are not -- $ -- $625 million from one gaming company. geoff: this company that makes -- it was valued at $1.2 billion, huge amount of money, millions were going into this videogame from players. hackers set out in 2022 to steal

it and got away with $625 million. it is one of the biggest thefts ever stolen from one victim in one go but what is amazing is because it was stolen in the form of cryptocurrency because the game worked on cryptocurrency, it was stolen in one minute 55 seconds which makes it the fastest theft of all time. that money is suspected to go back to north korea. tom: you have real knowledge and expertise around north korea and the role in this but russia as well, how difficult doesn't make it for law enforcement to clamp down on this given the international nature and that regimes of russia and north korea? geoff: relations have never been rosie but there has been

collaboration in the past, authorities have arrested some cyber criminals. since the re-invasion of ukraine, that has taken a huge slide. the governments are taking action against the financial underpinnings of this organized crime and cybercrime. viewers are familiar with ransomware, large amounts, most of the money from ransomware is going to the russian federation. the u.s. government has sanctioned multiple cryptocurrency exchanges in the russian federation. they are still running as it stands but it freezes them out from the u.s. financial system. in terms of the russian federation and north korea, north korea has been under sanctions for years and yet has managed to survive allegedly by

hacking into companies, stealing money and laundering it. russia is under international sanctions. i cannot imagine for a second there is not a conversation between the russian federation and the north korean counterparts with whom they have a long association about how to survive under those sanctions. russia is trying to learn those lessons from north korea. tom: before we let you go, how are you thinking about how generative ai could fold into this? geoff: my view is at the moment the momentum with ai in general is with the defenders. crime prevention organizations have been using machine learning to spot suspicious transactions and so on, they are doubling down on that and using all the innovations you were talking about with your previous guest to do that. there were signs financial criminals are using ai to craft

better phishing emails and deepfakes to con people out of money but they are not at the at scale use for cybercrime and organize crime. at the moment i feel we can be positive the momentum seems to be with the defenders rather than the hackers. tom: really fascinating, geoff white, investigative journalist, author. joumanna: a very busy morning for you, that was tom mackenzie joining us. there is plenty more coming up. tom will bring you more interviews. "bloomberg daybreak europe." this is bloomberg. ♪

>> what is clear here is that

having been a little burned by the enthusiasm at the end of last year, and the reversal on inflation, they are not going to want a reversal quickly with one good print. he stated again and again they will need more than just one, and that is why you had the hesitancy. >> there is not any contraction or recession or any indication of that, it is a strong labor market. there is no reason for the fed to cut rates. >> from our perspective, the fomc meeting gives us more conviction there will be more cuts by the federal reserve at some point in the second half of the year. >> i do not think they can accurately plan around what fiscal policy might be because you do not know the makeup of congress. it is impossible to predict that. joumanna: different opinions coming through on their reaction to the cpi print and the fed announcement yesterday.

it is worth mentioning on the cpi, the core number was at its lowest level in the last three years. super court adjusts for food, energy and housing, and you can see the month on month number is sitting in negative territory, falling for the first time in three years, a big signal for anyone watching the inflationary prints. and we had the fed meeting yesterday and a lot of people are jumping on the fact that the projections for interest-rate cuts have been revised upwards. the fed is anticipating one rate cut this year, that is the median projection but the market is pricing 1.6 cuts priced in, september at a 56% probability, and another one over the course of q4. markets are a bit more dovish than the projections. a lot more coming up, some of

the brightest names in tech are gathering. we will be speaking to ceos in ai. up next, "markets today." this is bloomberg. ♪

anna: good morning, this is bloomberg "markets today." i'm anna edwards alongside guy johnson and critical. -- kriti gupta. does jerome powell leave the door open for one more rate cut? >> the most recent inflation