>> good morning, this is bloomberg daybreak europe. these are the stories that set the agenda.

a u.s. small cap index soares the 12% in 12 sessions leave text dots in the dust as rumors that rate cuts are coming soon. an iranian plot to kill the former president unrelated to saturday's attack. mean while his rivals line up for the re-election bid. ♪ tom: it is earning season and we get the details coming through from europe's largest tech company in terms of the supply

of lithorgraphy machines. there's solid beat coming through for asml based and listed in the netherlands. $5.5 billion. so a solid beat on the sales number. the margin at 50 to 51%. a little softer than the estimates. asml's ute look remains unchanged. they have described this year as a transition year before seeing stronger growth in 2025. asml total net sales to be strong. they see it 6.7 billion to 7.3 billion you rose. we know as well that they're going to be looking at the sales and demand coming through from the likes of t.s.m. as well as

intel particularly for the extreme ultra violent machines of which asml makes those crucial for churning out those a.i. chips for the likes of apple and n vid yeah. we'll get more details around the asml story later this hour. and in terms of the geo politics and the demand for genre active a.i. chips. let's cross over to asia before we do that. we'll check in on the markets here because we have seen in the u.s. that significant rotation out some of the big tech names and into the russell 2000. a significant pickup. the russell 2,000 ending the day up 3.5%. rotation nation, that theme continues. will it be sustained? a lot of this on bets that the federal reserve is getting closer to the first cut with marks pricing in september and closing in on possibly three

cuts this year that's what's being priced in. close to three cuts by the end of 2024. we keep across the inflation data out of the uk as well, that drops 7:00 uk time as marks bet that the bank of oakland will be cutting rates pretty soon the pound at 129 on a big day in terms of the policy agenda for this new uk government as well as that inflation went. brent at $83 a barrel. and gold $2, 467 closing in on 2500 for the yellow metal linking not just to the inflation story and some of the political risks out there. current it had broken through the record levels for gold. let's cross over to asia. a check on that region's markets. able? >> yeah, tom, we're looking at some of the stocks in focus first as we see hsbc. we're hearing who is going to be

replacing knoll quinn and with that the current c.f.o. we'll hear who is going to be his successor but this is trader's first chance to streak the news that dropped during the lunch break. we're seeing the stock barely budging. it was .2% higher. but the second tar that we've been focusing on today amid this rotation out of tech is the chip stocks. that is one of the themes is -- i think hitting the chip names. but also trump's comment on taiwan dragging tsmc. you have to wonder will this feed into the bullish sentiment related to the stock especially given the optimism towards its earnings later in the week? and then, of course, that bloomberg scoop about how the biden administration is ramping up potentially the trade restrictions on the allies trying to cut china's access to chips and tokyo electron

extended gains after the story broke. 7% down now. flip the board. even as we see how these chip stocks are getting hit by these news lines already a day where they had a sector that was underperforming because of the rotation overnight in the u.s. you talked about how the russell 2,000 per formed but we are seeing the asia pacific is the cyclical seems to be taking the lead. the australian bench mark helped along by the banks. and on the nikkei helping to cap declines are those sectors, the stocks that are perhaps more sensitive to the economy. now as you see those declines on the csi300 very absolutely though. it perhaps worth pointing out how the gen seems to be holding up pretty well. maybe a bit of pesimism has priced in. but also worth noting that the dollar is sliding a little

today. maybe a bit of that fed rate cut optimism coming through along with a bit of a reversal of that so-called trump tree. tom? tom: thank you very much indeed on how the fed is factoring in. we appreciate with the detail of course on the asian markets broadly across the bench mark currently asia pacific flat. and let's take a closer look now at that eye-opening rotation into small caps what a story this is. mark ranford joins us from singapore. we've seen those gains then over five days of about 5% for the russell 2000. is this a bullish signal for this equity market? a bit of both and also trump trade as well just to throw that in. there are all kinds of factors involved in this. we are into the second half into the earning season, it's typical

that people will assess who are the big winners who are the big losers during the first half of the year and now it's a time for us to shift and get some of the catchup plays obviously small caps stand out very much in that field. during the fact that short-term interest rates are coming down you said earlier the bets on the fade starting to lower interest rates are getting pretty hot now. it's well known that smaller companies tend to favor the yield. as rate cuts come down it's favorable for them and throw in the trump factor as well. there's plenty of speculation that he's not keen on some of these tech companys in the united states. wouldn't mind breaking them up. it's a bit of a long shot but something that people considering. it makes sense for people to switch a little bit out of those to catchup some of these small company who is maben fit burglarly if they're in the

defense sector. you've got all those things being thrown up in the air as the same time it's no wonder that there is room for people to run this trade. and it could run for a while particularly if donald trump stays as the frontrunner going into these elections. this will probably have links. >> linkage to the small cap rally has furtherer to run. what's happening in terms of the fx space? you an eagle eye there's a little bit of strengths for the ye, n. is there reprieve for the japanese currency pa they can get free cuts from the fed this year? >> yeah, and it's not just interest rates. there's a number of fact force here. it's a very big -- factors here. it's a very big week if we could close below 160. 158, it says on it. but we've been there for the whole week around there.

positioning is very skewed towards yen shorts. very, very big positions and they're hardly budged in the past couple of weeks even though short-term is incoming. the spot rate is starring to get lower. we had some data suggesting the bank of japan or the japanese authorities with the mound of intervention that's two shots of intervention in the past week. it is all beginning to weigh on dollar yen. if we don't get a strong close people are coming this week, they'll be looking towards -- they've got the japanese c.p.i. data if that is first explanation for the bank of japan for a bit more tightening, pull all those things together. some of those yen shorts are beginning to give up. it could be quite a being week next week where people are speck laying on the fed. dollar yen starting to get some traction. we could be going toward the 150

area. that certainly could be the case. >> 150 for japanese yen. we'll see if they're unwound at the beginning of next week. thank you very much indeed in terms of the take coming through for the currency. the japanese yen. the u.s. dollar, j.p.y. cross and the rotation that we see into small naps the u.n. the u.s. secret service boosted donald trump's security after inteintelligence revealed an iranian not kill him. what do we know about this alleged plot that stage? >> the extent of what you just said to be completely honest. this is crucial because it's not related to the assassination attempt over the weekend which has been classified as a domestic terrorism by a 20 year-old assailant. the contest is important because one of his key things that he's

talked to in terms of successes has been the assassination of the iranian general sully mainy. there has been during his own administration questions around increasing security not just for him but for some of his deputies. john bolton is one example of some of the people that still have that boost of security because of the overhang of that assassination from the united states to general sole mainy i should mention that iran has been very vocal. said this is indeed not true. there never was a plot but this was something that showed up in the last couple of weeks that created that boost on security for president trump. >> that's on the security concerns and the linkages that it may be toward iran we'll continue to keep in that story in terms of the detail. there's also the focus now. we had the v.p. pick and that underscored for a lot of people that this is a u.s. that's moving towards a protectionist isolationist kind of move with

j.d. vance as the number two. but does the focus on the economics well beyond the protectionism. what detail do we know about the incoming trump administration? >> when it comes to financial markets are wondering whether that 50% tariff comment that he made on fox news is something that will show up. there are other components to this as well his economic agenda isn't clear. let me shed some light on where that could land because he put it in the context of j.d. vance. he's appealing to more of the maga crowd, even more right wing crowd of the -- of the republican base as well. and in that comes a lot of pressure to take on project 2025. in this region this hasn't been covered. this is a policy proposal coming out from the heritage foundation. it's important to remember the heritage foundation is a conservative think tank. it's responsible for a lot of the policies that ronald reagan

put forward. the republican party likes to put reagan on a pedestal. some of these proposals are backed by the republicans but not by president trump as well. removing food stamps, removing medicaid. these are some of the policies that president trump has not necessarily supported but talked about addressing like deficits. we had a great interview talking about how that tariff proposal would work. he cried going all the way back to 19206789 i'm not going to give you a history lesson. but what you need to know is that his kind offend -- the definition of trump-onoics is prepping low interest rates, cutting taxes and bringing a lot of that money back via the road map that was shown almost two centuries ago. >> this is a case for some within the republican party with a good bit of recent history in

terms of vice president and president who said they would not have accepted the election results as well. and that will be a concern for some. many people are looking past that for now. with the economic platform, thank you very much indeed. here's what we're thinking about today. 10:00 a.m. uk time. in terms of the inflation story, we're going to get more details the data dropping 10:00 a.m. time. that will be tomorrow. lizy burden will be on the ground covering all of that. but the inflation story will be consequential in terms of giving us more clarity and why the e.c.b. goes next after moving with its first cut this year. 11:00 a.m. uk time. the king's pitch speech -- he will be doing the talking. but it's the speech crafted by this new labour party. the policy priorities of this new british government will be outlined in that speech. we'll be across that for you

with the detail. at 7:00 p.m. uktime, the page and how the different components seeing the evolution of this economy. yesterday, it came in stronger than expected reinforcing bets for some that a soft landing is still on the cards for the reserve. coming up -- blocking china's access to advanced computer chips. we'll have the details next. this is bloomberg.

♪ tom: welcome back to bloomberg daybreak europe. shares of equipment makers in japan are beginning to fall. the biden administration is weighing even tougher rules for overcease firms seen as enabling china's semiconductor industry. drew joins with us the details. anabel, there have been a flurry of measures from the biden administration in terms of restricting access of chinese firms to key equipment, key tech from the u.s. and its allies. this is another measure being considered now by washington, by the team, of course, led by joe

biden what do we know about these additional restrictions? >> well, what we're hearing tom, is that it basically means that any and all equipment could be targeted from these major companies. we have seen aat of restrictions since we saw asml in the netherlands. they're restricted from selling their equipment technology to china. but what's important to understand is that even with those restrictions in place, it hasn't stopped them from servicing the economy that chinese companies already own. that's credit cool to understand because if you don't maintain or service your equipment, definitely within a year, they can stop working that's the issue for the u.s. because we've got companies like tokyo electron like asml that are sticking with the servicing schedules and you're continuing to enable coin the chip-making ambitions. >> what is the mechanic there

is, anabel for the u.s. going about -- about this in terms of these additional restrictions? anabel: so what they're looking at doing here is invoking this so-called foreign direct product rule, the fdpr what it boils down is that you can put controls on foreign-made products that can use the tiniest amount of american technology which is why i say that any and all of asml products could be targeted in this. what we're hearing is this sort of idea or plan is being touted and discussed with toke you and the hague if japan and the netherlands don't tougher or tying their own china measures. the timing is quite difficult because the election is just a few months ago action few months away, rather. there's that question for allies do they really see much of a reason to change? >> yeah, it's really interesting the services part of this story i was speaking to huawei. they were telling me about those

engineers and experts from foreign companies that had to leave their campus after restrictions were put in place. talk to us about response from companies. how much of this is leverage from the hague and japan to get tough? versus the biden administration under pressure for its own u.s. companies that are being frozen out in this large part of the markets? >> there are two sides of the coin here. thinking about the large marks in the u.s., these are all major chip equipment providers, they're saying that this perhaps isn't the best way to go about it, the fdpr. their concern is that if you push japan and the netherlands so much they could be quite defiant and not corporation with the restrictions that are already in place. from the sign of the companies we didn't get anything from the likes of tokyo electron. it is a company that gets 20% of its sales from china. we did have the asml earn this

is morning. we're getting those comments coming through. it is interesting that asml for instance, they're april predicting the same amount of steals year as opposed to last year. have they considered the restriction? they wouldn't go ahead with these measures if they were indeed enacted. but tokyo electron, they could see the sales hit by this. bloomberg intelligence is saying by 10% to 15% which is why you're seeing that reaction so far. >> yeah, really important question mark as they look to a stronger year in 2025. we'll see if that can actually come through given that expectation. and bloomberg's annabelle with the details. coming up, brian moynahan tells us the organization is putting more money and resources blind its trading business. more from that interview next. this is bloomberg.

>> we continue along three dimensions, technology. jim has done a great job. five, seven years ago we made the decision to give him more capabilities. technology, the balance sheet they've taken help customers achieve their goals and talent. jimmy continues to increase. he made $1 billion which is a strong earnings quarter but what's happening you're seeing back dow jones industrials back billions quarter. they used to drop 500. you're seeing much more stability to break it on a relative by a says. the best second quarter they've had since 2012. a lot of that is when they got the profit. tom started this. jimmy took it over and done a

spectacular job. we'll keep giving them more rwa, capital and investment and technology because that's oar expensive business to -- to run from a day-to-day basis. >> i know you watt to grow all the business but do you have a strategy about the balance which is a traditional bank lending as opposed to the fee side are you reba lansing the bank? >> this quarter happened to be half the earnings from people and from institutions. out of the 25 billion, 14 was spread revenue and 11 was feed revenue. because the market dictate as lot of fee revenues. but in a consumer business we made the decision to lower fee burdens. and the trade off was long-term favoritebility running 88% across all the platform engagement places and bringing favoritebility. 20 points in the last 20 years.

lower the fee burden. but get a payback in transaction because those are zero interest deposits some of we grow a million counts a year. they started 2,000, 3,000. it's all zero interest rate money. it's very strong. if it's a young kid it's a customer of the future. that's what we're doing. that balance and fee is there it's all going to be about fee. but the incremental growth 7% in increase fees a year that's our drive there. jimmy has a mix in the trade and business. and in the commercial business is actually balanced. investment banking fee, a billion six. but it's dominated by lending and deposits for corporate customers. the moment i met him i knew he was my soulmate. "soulmates." soulmate! [giggles] why do you need me? [laughs sarcastically] but then we switched to t-mobile 5g home internet. and now his attention is spent elsewhere. but i'm thinking of her the whole time. that's so much worse. why is that thing in bed with you?

this is where it gets the best signal from the cell tower! i've tried everywhere else in the house! there's always a new excuse. well if we got xfinity you wouldn't have to mess around with the connection. therapy's tough, huh? -mmm. it's like a lot about me. [laughs] a home router should never be a home wrecker. oo this is a good book title.

♪

>> good morning, i am tom mackenzie. the rotation of the small-cap index leaving text stocks in the dust. secret service boosts security around donald trump after hearing of irani and plot to kill the president unrelated to last weekends attempts. imf lifts the growth outlook laying out its agenda. inflation data out of the u.k. is important.

inflation expected to increase, but we'll wait policy data later today. significant move yesterday, will that continue? s&p futures point 24 points up. the u.k. looking at gains of 3/10 of 1%. the s&p looking to a bit of a loss. nasdaq futures are lower and we've seen that divergence

between mega caps and small caps if that comes to bear. let's look cross asset. yields are down, treasuries are up. most reactive to expectations, the lead up to inflation data brent crude $83 a barrel and 2468 for gold. a 2% gain yesterday. double digits but flat for the yellow metal. bloomberg spoke with republican candidates focusing on business and the economy including

trump's plans and the future of jay powell. let's bring in kriti gupta for more. we've been hearing about trump, what stood out to you? kriti: is covered -- it covered everything including his policy. what comes to mind is tariffs and 60% cherubs -- tariffs which would cut china's growth rate in half. it applies to europe. the former president this goes back to centuries like the

mckinley tariff. back then they were talking about reducing tariffs on american exports after american independence. he is applying that now to have an equal playing guild between the u.s. and rest of the world, making sure america is competitive and money fuel things like the deficit. there are more pressures from the heritage foundation, pushing for eliminating medicaid or food stamps. these are things the gop is including to save finances. tom: eliminating food stamps but

pushing ahead tax cuts for the wealthiest. kriti: trump does not endorse project 2025 but he talked about an extension during his first term. that was a direct thing, it would cover corporate taxation like apple from his first term, repatriating money.

he says jay powell is safe which is important because he has talked about replacing jay powell. he is now saying he would let him finish his term, talking about interest rate policy. he is saying they should not cut rates before the election. there may be a political readthrough but he is saying jay powell should finish the term. jay powell cut interest rates off the back of the introduction of tariff policy from the trump administration. tom: he is comfortable keeping him if jay powell does a good job. kriti gupta with the break down if he wins in november. thank you.

elon musk will relocate headquarters for x and spacex. he said the announcement is frustration with a long related to transgendered children. elon musk endorsed donald trump and pledged tens of millions of dollars to his campaign every month. russia and ukraine are swapping prisoners in a deal facilitated by the uae, the sixth managed by the goal state. if it goes ahead as planned. they have swapped almost 1400 prisoners so far this year. hsbc appointed giorgio henry as the new chief executive, picking insiders for the top job in september. noel quinn announced his retirement after five years of

ceo. less than two years after his promotion to chief financial officer. lizzy burden joins us. let's get to the kings speech and views on inflation. what are you focused on? it's the new labour government, what will be outlined? lizzie: it is the kings speech because these bills set the tone for the new government in the house of lords. there is a focus on policy and

the framing will be renewal with focus on economic growth. we expect a bill to strengthen the fiscal watchdog, which was sidelined by liz truss and this is designed to make sure that can never happen again. we're expecting a bill to launch the national wealth fund, rachel reeve plans to drive inbound investment and then great british energy being launched as well. there will be a copy and paste job from the previous government. a smoking ban, renters reform bill and we expected a little bit of rebellion, about the cap on benefits to families with more than two children. something gordon brown talked

about a lot and some mp's argue it fuels child poverty. the government has been protecting fiscal rules and saying they will commit to unfunded spending is the argument. they are saying it's not rebellion when you have a strong majority. tom: gordon ramm has been vocal on that. does this lock in an interest rate cut? >> it would look that way. inflation will jot from 2% to 1.9%. you've got traitorous on august rate cut but we heard from the

chief economist saying he will be looking through the data points at the long-term trend so it suggests august cut is not a done deal. tom: indeed. with a preview of the kings speech. coming up we will speak to the ceo of the power space software startup. they've raised a lot of cash from significant backers so stay tuned. this is bloomberg. ♪

tom: welcome back. europe's most valuable tech company asml smashed estimates and i'm joined by david watkins. we saw the results flagging that 2025 is a big year so talk us through these numbers.

david: a big beat in the second quarter strength of demand from customers needs asml machines. goes to show how they find themselves in the middle of the boom. very encouraging as the previous quarter we saw a mess, which speaks to uneven demand like you say. demand timing issue of guidance was lower,

it depends which way investors look this morning. tom: that was pronounced's with significant demand from china, calibrated in recent quarters. talk about restrictions and how asml could be caught in the crosshairs? david: it is facing restrictions , tightened again this year. china sales were up which shows demand is strong.

we saw shares fall in tokyo. increased restrictions involve servicing of machines so this will prevent asml from offering support and they would fall out of function. we've seen evidence of companies coming to grips with supply chains and questions about which way restrictions might go. tom: indeed. the impact of potential

restrictions. moving to tech startups, this next interview -- it's been a good quarter for startups, raising close to $16 billion. more than asia. one company benefiting is pigment, who reached unicorn status and i'm joined by the companies co-founder eleanor. this is a company that offers planning software including unilever raising funding.

outline what pigment does. eleanor: we live in one of the most destructive times so the pace of change is overwhelming. we try to help avoid surprises. pigment helps large companies evolve so you mentioned unit lever, when they launch a new ice cream a tiktok or picks up on the ice cream and it becomes a new success. they have three weeks to adapt,

we are here to help them quickly. tom: how do you compete with legacy providers? what do you have that they do not? >> we really compete in the business planning ecosystem so this is where we come in. when you think about this, they are living in a world where we have to face unprecedented changes, it's very hard to adapt. most companies need to be highly

collaborative. that is where we are upcoming so pigment is agile and nubile. >> given the economic picture are you seeing a slowdown? >> we do not see a slowdown but people look to add that faster. we can adapt ai and if they put ai they will be faster so need

faster rate helping them move faster. tom: ok. eleanor, we are out of time but really fascinating as you raised that. i demand and we appreciate time. we will keep across this. we will give you detail on the rotation hitting small caps. stay with us, this is bloomberg. ♪

tom: welcome back

this is bloomberg. ♪

(aidyl) hi, i'm aidyl, and i lost 90 pounds on golo. i struggled with weight loss and weight gain my entire life. with all the yo-yo dieting i did in the past, i would lose 20, 30, 50 pounds just to gain them over and over again. in one year, i've lost five sizes, and i'm on my way to lose another three. with golo, i can do it. (announcer) change your life at golo.com. that's golo.com. the moment i met him i knew he was my soulmate. "soulmates." soulmate! [giggles] why do you need me? [laughs sarcastically] but then we switched to t-mobile 5g home internet. and now his attention is spent elsewhere. but i'm thinking of her the whole time. that's so much worse. why is that thing in bed with you? this is where it gets the best signal from the cell tower! i've tried everywhere else in the house! there's always a new excuse. well if we got xfinity you wouldn't have to mess around with the connection. therapy's tough, huh? -mmm. it's like a lot about me. [laughs] a home router should never be a home wrecker. oo this is a good book title.

anna: good morning, i'm anna edwards. we