♪ >> good morning.

this is "bloomberg daybreak: europe." these are the stories that set your agenda. nvidia becomes the world's most valuable company aztec drives a global rally in the stocks. fed officials again urge patients on rate cuts. north korea's kim jong-un rolls out the red carpet for russian president vladimir putin as the leaders begin talks in pyongyang. the u.k.'s second richest person, jim radcliffe, tells bloomberg great britain has had enough of rishi sunak and has rolling conservatives. more on this hour. let's get you caught up on how some of these key markets are faring. another very strong session for u.s. equities yesterday with the s&p 500 inching towards another record high, the 35th of the year. we are living sideways but still crucially futures are through 5500.

we had slightly weaker than expected retail sales numbers comes through. investors used that as an opportunity to price-in more rate cuts out of the fed this year. we are sitting at 46 basis points of cuts priced in. that's been positive for risk assets all around nasdaq. pointing towards another positive session led by nvidia. it has broken through microsoft to become the most valuable company in the world. your stocks towards the open pointing towards an unchanged open. ftse 100 leaning slightly more negative. in terms of some of the other assets we are watching out for this morning, the dollar is in focus so we are moving towards the highs of the year. the dollar continues to benefit from being a safe haven currency and the fact that the fed speak as of late has been slightly more hawkish, despite the fact that investors are pricing in two rate cuts for the rest of this year. that's giving the dollar a bit of a bed against other currencies.

the pound also in focus, trading sideways but a key cpi prints is coming up later today so that's at the top of the next hour and something to watch out for, especially services inflation as we go into the bank of england meeting thursday. will they sound more hawkish? will they have to acknowledge the fact that those numbers have been surprising to the upside? what does that mean for the path of monetary policy? a crucial day for the u.k. coming up. gold slipping somewhat but broadly speaking to, we have seen abe of a rally returned back into the bullying. it is up 13% this year as it's taking their cue from what risk assets are doing and interest rate markets pricing in those two interest-rate cuts. brent above $85 this morning so have completely shaken off that post opec disappointment selloff that we saw after the opec-plus announcements and now we have fully recuperated those losses

back to levels not seen since april. let's check in on how asian markets are faring with avril hong. would have you been watching this morning? avril: yeah, we've been watching those tech names in the asia-pacific after nvidia's record-setting performance and how it crossed the market cap of microsoft and apple overnight. that is really lifting the mood among the ai and ship related stocks this part of the world. it's helping the kospi and taiex outperform. even the hung thing getting some fuel from the -- the hang seng getting some fuel from the tech names. we are keeping a really close watch as well on the shanghai form amid some expectations of potentially announcements of policy support. the hang seng has been outperforming compared to what you see on the mainland, clearly. but let's flip the board because so far what we have gotten our comments from the pboc governor

and he says they are starting the implementation of government on trading. this would be buying and -- government bond trading. this would be buying and selling of government bonds. he has rejected the notion that this is quantitative easing. the likes of mizuho says the pboc is not considering qe. this is more about addressing, replenishing liquidity. we have seen yields in china fluctuating amid that comment from the governor. for context, we have been releasing a bond rally in china because of safe haven demand and expectations of rate cuts. let's put the board because the central bank that's already been really keen participant in bond markets is the boj. today, we got the meeting minutes from april. but investors seem to be shrugging that off a bit. the focus is really what we have gotten from the main meeting, june meeting, i should say, and what it's going to do in july. we are keeping a close watch on the cpi numbers due at the end

of the week. we have japan reportedly considering issuing a shorter-term maturities of bonds, something else to consider for bond market participants. we see the japanese yen against the greenback not moving very much today. it is still quite weak levels, although the equities worth noting has pared much of the gains from earlier in the session. nikkei actually negative now. >> thank you so much for that overview. that was avril hong in singapore. a boston fed president, susan collins, says she can see a scenario for two rate cuts before the end of the year if there is continued good news on inflation. >> we have to let the data tell us and it is not one or two indicators, it is looking more holistically at the information. >> are you looking at one or two rate cuts at this point, given where things are? >> i could imagine scenarios that would be consistent with both. >> and nvidia has become the

world's most valuable company, over taking microsoft and apple with a market cap of $3.3 trillion. to talk about this and more, let's bring in bloomberg's mark cranfield. let's start with the market pricing for what the fed are going to do the rest of this year. we were just listening to susan collins saying she will not be averse to the idea two rate cuts. the median. that came out of the fed this week was one. interesting to see that there is conversations going on within the fed. but what would two rate cuts actually mean for risky assets if they go along with that? mark: traders are bound to extrapolate. if the fed is saying two, they will go for three at least. we saw it at the beginning of the year when the federal reserve are forecasting three interest-rate cuts this year. we saw the market pricing and way more than that. it was good for the equity

market, bond market at the start of the year. we saw a lot of diving back as people realized the numbers were not supportive of more rate cuts. now we are starting to go back the other way. the data that we have seen this week and recently is a bit softer. the inflation numbers are a little bit coming down again. so once again, the market has decided for itself that the fed dot plots really might be incorrect and that even though they are saying one, that may be there should be two or even three later in the year. that's where the market will continuously push ahead of whatever the fed is suggesting if the day-to-day see suggest that there can be more lowering of interest rates. that will continue to be good for equities. the bond market will like it. the inversion in the curve will probably stay for longer because the fed is not suggesting they are ready so that ms. people have to differ their purchases to the longest e of the curvend -- defer their purchases to the

longest end of the curve. you can see the dilemma. . at some point, it gets overdone but there's probably a way to go here. as we saw the beginning of the year, markets, to get ahead of themselves along way before the fed actually pushes back hard. >> yeah, well, speaking of markets getting ahead of themselves, let's talk about nvidia. what a run of late, the stock up more than 150% over the course of this year. will this rally have legs? it is now the biggest company in the world. can the rally continue? mark: what it is creating is a massive event risk for financial markets. no matter what asset classes are looking at, you have to look at nvidia as being another major event as if it was u.s. cpi, a fed meeting, or as if it was a jobs report. now everybody will need to know when nvidia have their quarterly

earnings. every time they have an earnings event, the whole world will need to watch it, because really that's what's happening. if you look at the speed with which the valuation of nvidia went from $1 trillion to $2 trillion in net from $2 trillion to $3 trillion, it's really quite remarkable. that means there's in norma's amount of investment capital tied up in just one company and loosing the consequences for the nasdaq and s&p. markets are very frothy on the back of that. it can go on for quite a while. what it does mean is that nvidia has to deliver. the expectations are extremely high. when it comes to their next earnings numbers, they have to either beat them or the outlook has to be very favorable, otherwise investors will say that's not good enough and you will see quite a significant reversal. if we do see a correction in that one stock, it is big enough to bring down the market across the equity market and probably a fallout in other markets as well. probably in the fx space and even in bonds to some extent as

well. so what we've done, we've introduced huge risk around a single name company, they won't go away for some time, and not everyone is shaking their -- to see when the next numbers will come up. >> that was mark cranfield. thank you. hugging on arrival. let rep. luna: has received a warm welcome from kim jong-un as he touched -- russian president vladimir putin has received a warm welcome from kim jong-un as he touched down in pyongyang. the u.s. warns the media could boost defense ties between the nations. let's get more from bloomberg's east asia government editor in tokyo. a pretty significant that putin is in north korea. what are the two leaders hoping to achieve at this point? john: i think that they both have their aims in this end, putin is looking to get more weapons on support from north korea.

north korea has a lot of ammunitions better interoperable with the systems russia has deployed. north korea is also suspected of supplying dozens, perhaps scores of ballistic missiles to russia. in return for this, kim jong-un is trying to get aid. and has economy is relatively small. it was estimated by south korea's central bank at about $24.5 billion a couple of years ago. one billion in aid is about 4% of gdp. north korea needs a lot. it needs food, it needs commodities, it needs technology. and the worry is any sort of military transfer, any sort of technology firms, that could increase his ability -- technology for arms, that could increase his ability to deliver a nuclear strike, make his arsenal stronger, which could be a threat to the u.s. and its asian allies, japan and south korea. >> given what you just said, you got to think the u.s. are watching what comes out of this trip very closely.

what have we heard so far from the white house about putin's visit? john: well, we have seen some comments, concerns of what may come out of this, some talk this is a show desperation from putin f weaponsor. but the more the north korea supplies to russia, the more that ukraine is dependent on outside sources for weapons. for example, if russia fires off north korea ballistic missiles, whether they are good or not, it requires ukraine to deploy its air defense systems, missile interceptors, which come from the likes of the u.s.. the more that are fire to it, the more interceptors that are fired off, and the stocks become lower, which puts ukraine's at risk for more missile strikes. and also, ukraine has had trouble procuring artillery. north korea has been supplying quite a bit. we spoke to south korea's

defense minister last week, who said it could be up to 4.8 million artillery shells that have been supplied by north korea to russia. th eu, for comparison, is struggling to meet its pledge of one million shells within a year. there's quite a difference in what has been shipped between the two. >> appears to be the case. john, thank you so much for the overview. john herskovitz. as a get some of the main events going on today. we are going to be getting the u.k. cpi figure. that's going to be a key number as we go into the bank of england meeting on thursday. but of course, remember at the last cpi prints the numbers did surprise to the upside, namely led by services inflation so keep an eye on what comes out with that services inflation number. if it is very large or an upside surprise, then that will have a bearing on interest rate policy going forward. the market right now is leaning

toward 5050% chance of a cut in august, about 12 basis points preston. we are going to be getting some commentary from the ecb's mario santana. mario santana -- mario centeno. mario centeno will be speaking. just a quick reminder that the u.s. will be closed for juneteenth. many u.s. markets will be closed for trading, despite the fact that we have such a strong session yesterday. you can get a roundup of the stories you need to know to get your day going in today's edition of daybreak. terminal subscribers can go to do a wide be go -- d.a. why be go on your terminal. coming up, boeing's ceo is blasted by u.s. senators, who accuse the company of putting profit ahead of safety. we will bring you that story, next. this is bloomberg. ♪

♪ >> welcome back to "bloomberg daybreak: europe." south africa's stock benchmark, the rand and government bonds have routed following the reelection of cyril ramaphosa. he's do to be inaugurated in the anc agreed on a government alliance with other parties, including their biggest rival, the democratic alliance. let's get more in johannesburg. we are following the election very closely and what came out of the election, many discussions taking place. we now know what this government is going to look like. give us a little bit more details on what to expect. jennifer: right, as you mention, of course, we have the inauguration ticking off in just a few hours. there are a number of has of state from the south africa

region and the continent more broadly. the focus will be on what we hear from the president now that he will officially be inaugurated. but also, we are going to be paying close attention to what his cabinet looks like after he is officially inaugurated. the reason why we are focused on this is because, as you mentioned, course, the anc did lose their majority so now they are going to have to share some of these top positions with some former rivals, i guess current rivals, depending on how you look at it. the question will be, which cabinet positions, which ministerial positions are there likely to give up? and how will that then affect the trajectory of economic and fiscal policy? that's really what investors are paying close attention to. but largely what we are hearing from the investment community is that this outcome is broadly favorable. the question is, what will the government look like really moving forward? >> yeah, i mean, there were a

lot of questions into and out of the elections when it was not initially clear what the government would look like and whether anc what partner with market from the political parties. now that that has happened, what has been the reaction out of the investment community? jennifer: since friday, since the president was reelected on friday, we are largely sing investor sentiment really changing. heading into the election, we were sink foreign outflows really increasing for days on days on end, the rand weakening. right now, mentioned the johannesburg stock exchange was one of the best performers in terms of emerging-market benchmark indexes on tuesday among the 90 or so that are tracked bob bloomberg. we also see the rand strengthening more than 3% so far this month. as you mentioned, we see government bonds, local currency bonds doing quite well. but investors really are paying

close attention to what is going to happen with this new government that has formed, how they're going to be accelerating some of the reforms that have been hobbling the economy. namely, of course, there is the energy sector, the logistics sector. depending on what the president puts together, i think we are going to continue to see more reaction as far as south african assets. but yes, there doing quite -- they are doing quite well, especially when you compare to the past few months leading into the election. >> some of that election uncertainty now removed. well, also coming up, bloomberg has learned that france and italy will both face a reprimand from the eu over there excessive deficits. more details on that story ahead. this is bloomberg. ♪

>> welcome back to "bloomberg

daybreak: europe." boeing's ceo, dave calhoun, has faced searing criticism in a senate hearing that zeroed in on the companies's manufacturing shortcomings and accused its leader of putting profits ahead of safety. >> you and your board of directors have a duty to shareholders. but they will be deeply ill-served if you fail to correct course to confront the root cause of this broken safety culture. >> strong words. let's speak to benedikt kammel, who lose our global aviation coverage. good to have you with us. very interesting to see what went down in that hearing. and of course, dave calhoun was very much criticized over the company's safety policies. but is there anything new we learn from it? were there any new revelations

that came out from the hearing? >> there were not any real new revelations and it was not really the kind of forum where you would expect this. this was a lot about the performance, one-sided kind of trading off against the other. obviously, calhoun was very much at the receiving end of the criticism. he got some real roasters. we heard from sandra blumenthal -- senator blumenthal, who led the session. he started by saying you have not done shareholders any service, you have not done your employees any service. a lot of it was sort of really getting the last couple of years -- re-litigating the last couple of years, what went down. calhoun at one point got up and faced to the two crashes that involved boeing aircraft. that was a moment he tried to set the tone that way by showing contrition, showing he is remorseful. but it was a very difficult session for him. he stumbled here and there, he did not fall.

but overall, you know, he really was at the receiving end of some very strong words. >> i mean, we know that dave calhoun is actually looking to step down by the end of this year. but with that in mind, how did he do? were there any knockout blows from senators? benedikt: probably the harshest point came when one senator started questioning him about pay. calhoun is obviously very well-paid. he made $33 million in 2023. and that was a section of the hearing where it really went back-and-forth. would have you done to deserve this kind of money? how does that compare to the humble worker on the shop floor? at one point, the senator said it is a travesty you are still in the job, so really sort of pulled no punches on that front. calhoun sort of let it, i wouldn't say wash over but he sort of endured it. he sort of fired back here and there but overall remained fairly retained, measured tone.

we did not learn anything dramatically new but it gave us sort of a sense of where the company stands and where it needs to go next. and that was a big point in the whole conversation, sort of, what does the company need to do next? where did it come from? who is going to be that person that takes the company into the next stage? nothing new on that front. he did say i'm leaving but that's really for all of us, sort of the next big marker. who will take over the company, who will take over for calhoun, and who will stabilize boeing? >> that's the big question in aviation. benedikt kammel, thank you so much for the overview. now to some other stories making news. swiss banks, including ubs, are pressing the government to postpone global capital rules for trading businesses to avoid being disadvantage after the eu decided on a delight. switzerland is set to roll by the end of july on whether to also push back on its implementation date. bloomberg understands ubs

believes that without a pause, it would be one of the few major global banks forced to adopt the trading rules in 2025. coming up as well, the u.k.'s second richest person says britain has "had enough" of the ruling conservatives. we will bring you our interview with jim ratcliffe. that is coming up next. this is bloomberg. ♪ her uncle's unhappy. i'm sensing an underlying issue. it's t-mobile. it started when we tried to get him under a new plan. but they they unexpectedly unraveled their “price lock” guarantee. which has made him, a bit... unruly. you called yourself the “un-carrier”. you sing about “price lock” on those commercials. “the price lock, the price lock...” so, if you could change the price, change the name!

it's not a lock, i know a lock. so how can we undo the damage? we could all unsubscribe and switch to xfinity. their connection is unreal. and we could all un-experience this whole session. okay, that's uncalled for.

>> good morning, this is bloomberg daybreak europe, these other stories that set your agenda. nvidia becomes the world's most valuable company is tech drives a global rally in stocks. fed officials again urge patients on rate cuts. the u.k. turns to cpi data due out in an hour's time with the bank of england's 2% target in sight. plus, the uk's second richest person tells bloomberg britain has had enough of prime minister rishi sunak in his ruling conservatives. more from our exclusive interview this hour. welcome back to the show, everybody. a quick market check because the s&p reached a record high yesterday session getting very close to 5500, the very first record high for the year, the nasdaq also another positive close. nvidia focus as a continues to climb up and has technically become the most valuable company

in the world, largest market cap. that is the view of the u.s. equities. over in europe you could see european futures are not doing a lot. ftse 100 and the u.k. tilting towards the down side, but of course to major events this week, we have the u.k. cpi numbers coming out shortly, that we have that bank of england meeting to watch out for on thursday. a couple of drivers, this is we talk about broader european asset stabilization after the volatility of last week. also turning to some of the other assets we are watching out for the have been on our radar, the dollar in focus, as you can see, today, inching towards the highs of 2024 so we continue to see dollar benefiting from being the safe haven currency. the pound trading sideways. it has been in a tight reach for the most of the year. 127, 128. does the cpi print move the needle, we will find out shortly. go chase today. but again, seeing some come back

into the bullion up 13% over the course of this year. brent is also one to watch. you can see the oil complex also rebounding away from the lows we got just from that opec-plus meeting. $85 is where we are at for brent. let's turn to that inflation print coming off in about half an hour's time in in the u.k., it is coming out soon, the cpi reading will be coming a day before the bank of england decides whether to hold rates steady ahead of next month's general election. so, let's speak to bloomberg's economics in on jade. big surprise for anyone who has been watching u.k. data has seen the services inflation number. surprise to the upside. to what extent are investors watching out for that service is inflation figure at the upcoming print? >> you are right, that the most important part of today's data. it's going to be really

interesting data point because since the beginning of the year we had inflation behaving in services being on a downward trend. and then april was a bit of a shocker. we did get headline inflation to 2% after 2.3, but services inflation came 14% above with the bank of england was forecasting. april is a particular month because there is a lot of banking in prices. we also have the increase in the national minimum wage. they did suggest was that firms feel comfortable in passing along higher costs. in a way, that sort of what we are looking at. one inflation we expected to make for the frog -- for the progress, 2% actually reached the 2% in may. we expect a climb from 5.5 to 5.9. i think we see that, things will move and we will be happy.

>> many people who aren't as into the weeds as we are will jump on the fact of the headline print is close to 2%, but the bank of england, and this is what really matters for the future path of military policy, will be looking at that services inflation number. there is a meeting coming up tomorrow, two basis points of cuts are priced in. no one is expecting them to move tomorrow, but how well this number affects what they do later on in the year? >> it comes broadly in line, even if it comes a little bit above, the summer rate cuts that we now see in august, because jun was sort of a no go. and it doesn't want to be perceived as meddling inflation in the middle of an election campaign. but they have signaled they are ready to cut. they have signaled that a summer rate cut is likely. we think that's probably still going to go ahead even with the marginal upside surprise in august because the bank of

england has seen enough evidence of things going in the right direction, headline inflation, as you said, the economy has weakened. there is to justify a rate cut and i think any big surprise in today's data would be on the scale of easing. it was 75 basis points of easing. if it becomes above, it's thinking into less cuts than that. >> they are certainly running out of time on the calendar. thank you for the overview. staying in the u.k., the opposition labor party plans to charge private school fees for the first time ever if elected next month. labor says it will raise 1.5 billion pounds a year, which will be spent in state schools, but some private schools are warning low income pupils could be put at risk. joining us now with more is

bloomberg's -- what has the reaction been to these portfolios? >> it's definitely one of the labors more polarizing policies. it's been quite in a mode here in the u.k. i think part of the reason for that is there is a historic significance associated with the schools, and historically they have been left alone by the government, i think the last legislation, with regard to the management of the independent school was in the 1800s, so this is been well over 100 years that the schools have been independent in both name and nature. speaking to some of the head teachers at the schools, there is a lot of anxiety in this sector. they are worried they won't be able to sustain the cost. i spoke to the ceo of the independent schools council, which is a group that represents 1400 and 50 schools. she said to me that some schools may have to close and they are not sure whether they can absorb

the southern -- the sudden shock and its cost. there's a lot of anxiety in the sector and schools are very worried at the moment. >> you have to wonder politically why they are introducing this. you know from a funding standpoint, but it seems like these programs are going to be at risk, but why are they at risk? >> i have spoken to a number of head teachers and they are, at the moment, looking into ways to absorb that concept that they don't have to pass on the full 20% increase to parents. they have been looking at a number of different strategies, but something that kept coming up in these conversations are these programs. in the u.k., according to the independent schools council, about one third of all students at private schools are on some sort of fee assistance. that's 500 60,000 students. and they are receiving, on average, 13,000 pounds a year. that three quarters of the cost of an average private school

education. it's not a small amount of money they are receiving. and the fear is that schools will have no choice but to cut these programs. which, at the moment, are funded by the school zone revenue alongside donations from alumni. the feeling is that that might have to be cut or drastically reduced, and that will result potentially in some students not being able to afford to stay on in the schools and to continue their education. that's the feeling among the independent sector at the moment and they are quite worried that that might be the case. >> definitely would be a very negative, unintended consequence. thank you very much. the uk's second richest person says britain has had enough with the governing conservatives after 14 years in office. tim ratcliffe spoke exclusively with bloomberg's francine lacqua ahead of next month's general election. >> i was in a fan of the change, i thought it was very foolish.

that wasn't global, that was conservatives that came up with that smart idea. when he have 60,000 people in london, why do you want to encourage them to leave, it doesn't make any sense to me. because they all bring an enormous to the economy. i think the generation of manchester would attract an investment. francine: what's your take on the u.k. right now, the elections on the u.k.? is it good for business? >> i think that the conservatives now have had a fairly long stint in they have put forward a whole series of prime ministers that haven't been terribly successful, to be honest. so, i think everybody in the

u.k., you can see everybody is ready for a change. they've had enough. so, i've met keir starmer couple times, i think he will do a very sensible job. francine: you have been disappointed with the way brexit has been run? >> yes. francine: how would you do it differently and how do you think labor will deal with it? would you be, would you ever go into politics? >> i don't think they would have me, i'm probably not pc enough, i think, for politics. and i'm certainly not very woke. francine: how would you run the country? >> i think, for me, when you have immigration, which is one issue, and the other issue, which is the economic issue, if

you just look at the economic issue for the u.k., in my view it's quite simple, the u.k. economy is 2 trillion pounds, the gdp is 2 trillion pounds, and the government takes half of it, at least half of it, so the government spends one trillion pounds. so, in my view -- if you look at us, we spent 60 or 70 billion. the government spends trillion, an awful lot more than us. you need to spend money well because you are not spending your own money, you're spending the population of the uk's money. and there are good reasons why people pay taxes, you've got health care, police, roads, all those types of things, and i don't think the government manages those things very well and i don't think it focuses on a very well. i don't to get has the right quality people running it, they are spending a trillion pounds to help -- health services ms,

we don't have security anymore, education is a bit of a mess, we cannot run sewage systems in the u.k. we have systems in the victorian area -- era. just take that, it's a simple example, we allow utilities to be sold off and bought by french companies in the french companies pay 50 billion pounds in dividend, but they reinvest in the equipment and they've got top class equipment for drinking water facilities, and then all of a sudden it's a crisis. these are the minimum requirements. and if people don't behave and do what they do in america, there are consequences. >> that was the founder and chairman jim speaking exclusively with bloomberg's francine lacqua for leaders with

laqua. bloomberg has learned that france and italy will be amongst the seven countries facing an eu infringement procedure for their excessive deficits last year. so, let's speak to eleanor from bloomberg economics in paris. good to have you with us. there's a lot going on in paris and in french assets over the last week with monitoring the price action very closely. it's interesting to see simultaneously was going to happen is the european commission are shedding light on the fact that france deficit has been wide and will continue to overshoot that 3% line that the european commissioner are watching out for. to what extent is the market right to be worried about the state of france's public finances to be had? quex freak -- clearly the market has reasons to worry. even before the announcements of the elections, it has been strained now the elections are

in two days. we think that whoever wins will likely lead to fiscal slippage and that's why markets are worried. on the question now is by how much. in order to answer this question, we look at the problems of the main opposition parties in here's what we find. for the case of the right wing, we see that the cost of the program can be as low as 8 billion, which means that the impact of debt will be manageable and moderate. but what markets are mostly worried about is the case that they would stick to policies that are more ambitious. in the case of the left-wing alliance, the new popular front, their preliminary estimates suggest a could go up to 60

billion to the deficit. in that case it would be more substantial and could rise to 121% of gdp in 2027 above 113% in this scenario, and the deficit widened. in both cases we see that it will not be met in making the conversations with france is more difficult. even in the case with micron who manages to stay in power, we see that will also decrease the opposition of the fiscal policy. >> it will make the path of adjustments even more challenging for france, whatever the future government looks like after the elections. we have also been keeping a close eye on the spread, that's also where 10 year bonds are treating first their german equivalents. we saw massive upticks in spreads over the course of last week at 80 basis points. is that going to have broader ramifications looking ahead on

debt servicing more on other parts of the economy as well? >> yes, clearly. since the announcement of the election they reached levels in 2017. the first time when micron and le pen were competing for power. higher borrowing costs could be strained on the fiscal outlook and also on economic growth. so on the fiscal outlook spreads were remain at the common level, then the impacts would be modest. but more material impacts good kicking in and if markets react to the case of the list trust budget, which it's 100 basis points compared to what markets are having and plugging into the model, we see the dead of increase to reach almost 147 percent in 2040, way up from our baseline projection.

so it's a story that takes time because it takes time to kick in. but in the same scenario, it can have the same material impact on growth, which we seek can flatten 2025. >> thank you so much for joining us and giving us the overview of what to expect for french finances. eleanor mcgrady from bloomberg economics. plenty more coming up. we will be back in a moment. this is bloomberg.

>> the white house has reportedly canceled a high-level meeting with israel in response to prime minister benjamin netanyahu's claims that the u.s. is withholding weapons. >> i said that it's inconceivable that in the past few months the administration

has been withholding weapons and ammunition state israel. during world war ii churchill said, give us the tools, will do the job. i said, give us the tools and we will finish the job a lot faster. >> axios reports the biden team is angry and shocked by netanyahu statement. for more, let's bring in our dubai bureau chief, interesting to see that the u.s. are now saying they don't really know where these allegations from israel are coming from, what is going on? >> we saw prime minister netanyahu in the video saying it was inconceivable the u.s. was withholding and munitions in arms at a time when israel was fighting for its life. we didn't know that and apparently the u.s. today either and said they later denied the claim saying we don't know what the prime minister is talking about and the only weapon shipment under review was the one that includes the 2000 palm -- 2000 pound bombs and it would be used on rafah and cause

massive casualties. there is criticism here between the u.s. and israel and that has been going on since the war. it's in its eighth month, the u.s. has repeatedly criticized israel asking for more restrained, more aid and taken into its hands anything that could include building that period. >> i want to talk about lebanon, how closely should we be watching what's happening on the border? >> the u.s. envoy meant there is significant concern about an all-out war. now the diplomatic effort may have failed to come to a diplomatic solution in this, but they have so far been successful in keeping the status quo, meaning rules of engagement between the two. >> that is our dubai bureau chief. thank you for joining me around the set. plenty more coming up on daybreak europe. this is bloomberg. ♪

>> we have to let the data tell us, and it's not one or two indicators, it's looking more holistically at the information. >> are you looking out one or two rate cuts at this point given where things are? >> i can imagine scenarios that would be consistent with both. >> i would need to observe a time of inflation moderating demand and expanding supply before becoming confident that a reduction in the federal funds rate is appropriate. this condition could take months and more likely to play out. >> it was an excellent inflation number after a few months of less excellent numbers. so hopefully we will see more like that. i think there is still a little bit of the juice left that is working its way through. >> i believe it is going in the

right direction. the economy evolves. >> fed officials speaking about the path of rates ahead and worth remembering that they are now about 46 basis points priced in by the end of this year. i also want to draw your attention to some numbers we head out of the u.s. yesterday, retail sales surprising to the downside coming in at 0.1% versus zero point 3% expectations. also control group number that is the core group of sales with total retail and food stores with certain sectors. that also has been lagging. but then the data was supposed to revise lower. does that tell you there are signs that consumer spending has started to slow down, the health of the u.s. consumer will be slower in the latter half of this year. coming up in just a couple minutes time, we have a big number in the u.k. anyone who has been watching with the bank of england will do tomorrow, we will be following for this u.k. cpi printer. we spoke about this early on the

show that u.k. services cpi has been surprising to the upside. that's one of the reasons why investors have been paring back their expectations for what the bank of england will do. only two basis points worth of cuts priced in. about 16 basis points priced in at the next meeting. big one coming up. we are going to continue talking to entrepreneurs and businesses in our coverage of the u.k. in our next hour we are joined by bruce chambers of commerce president martha lane fox. in interview with u.k. work and pensions secretary at 8:40 5 a.m. london time. plus, cole ryan, the former u.s. house speaker joins francine lacqua on the pulse. that exclusive interview at nine: -- at 9:48 a.m. london time. this is bloomberg. ♪

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♪ anna: good morning from london. this is "bloomberg markets: today." i am anna edwards alongside kriti gupta. nvidia becomes the world's most valuable company as tech drives