dani: this is bloomberg daybreak: europe. i'm dani burger in london alongside manus cranny in dubai. these are the stories that set your agenda. manus: elon musk does it again. the world's richest man unloads nearly $7 billion of tesla stock months after he said he was done selling. stocks slide before u.s. cpi a software number is expected with core inflation heating up. the u.k. plans possible blackouts in january in a worst-case scenario. industry and households face organized power outages. very good morning, we are talking about terror in tech and particularly of outages in the u.k. waiting for a bit of news flow but this is a moment of a mini

terror attack in tech. dani: tech is just such a huge proportion of the market. an analyst asked the question, what is the point of buying the stock market if tech isn't attractive? let me jump into stocks speaking of which because we are seeing other regions catch up with the negativity when it comes to yesterday's session because of micron issuing that morning. the msci asia pacific down by .8%, asian tech underperforming given that. you are also looking at european tech, or a futures i should say, down .2%. s&p not down as badly. the drama came from yesterday but still hanging tight. we get cpi out today, why would you take convictions when that report could change the

narrative. i know you are about your alliteration, we want to show the people be terror in tech. this is what the philadelphia semiconductor index data, tumbling by over 4%, over the past few days down 6%. manus: growth has been a challenge, we've had a bear market rally in tech. for me, the cross assets is driven by the proclivity to a deeper inversion. it is almost church-like. 2's and 10's, almost -50 on the inversion. when you see a volcker-style inversion, it is a pretty hard landing in my book. create is down a third of a percent. you are seeing the escalation of risk in energy flows from russia into the heart of europe to the czech republic, hungary, etc.

a weaponization of gas flows. bitcoin down by .8%, a pretty tough day on bitcoin and ethereum yesterday as we saw the nervousness ahead of this cpi. it is all about elon musk equating his tesla stock holdings, for me that is the ultimate story. dani: there is this question of what is driving it and what happens to twitter. i want to linger on the yield curve because our markets editor points out that the volcker era was down 200 basis points, so 85 basis points from bank of america is not that wild. let's get to our reporters around the world. one of the big ones is tesla, mi will have that one. manus: enda curran--elon musk

selling nearly $7 billion of tesla shares saying he may need the cash because he is possibly forced to buy twitter. he said he had no plans to sell additional stock. emme leads our business coverage in asia. he told the market he is done, he has just flogged $7 billion worth of stock, is he just taking advantage of a bounce? emma: it appears so. you have seen tesla stock come way up from lowe's we saw in may, around $600 now. trading around eight hundred $50 per share. it seems that is the reason he is giving. he is trying to cash in to avoid having to sell at a lower price if he is forced to complete that twitter deal. that is the reasoning he gave on

twitter late night on the west coast. he also did say that he won't be selling more shares. dani: thank you for the roundup there. traders are awaiting july's u.s. cpi print to do at 8:30 time. they are nervous that it will yet again surprise to the upside. enda, that's a totally fair assumption given that economists have struggled getting inflation right. they keep surprising to the upside. what is at stake with a cold or hot inflation print? enda: the expectation at least is headline inflation will slow to maybe 8.7% from 9.1%. that might be the narrative about a peak inflation, but the court number is expected to accelerate mostly due to higher wages and rents.

following gasoline prices brings down the headline number but right rents and wages pushes up the core. even at the numbers suggest the u.s. is turning a corner, i think there is still worried that it is very high inflation and the fed has a lot of work to do. some banks talking about very aggressive rate hikes again the next time they need. it might suggest peak inflation, if it is lower, perhaps the fed pivot will be sooner. but one way or another, the fed is not finished. manus: some strategy warnings coming from the likes of cathie wood in regards to the scale of the slowdown that could, in china relative to the rest of the world. we are banking on a quick turnaround in the housing market. let's see what the data is later in the day. and the in hong kong.

investors in asia appeared to be cautious ahead of the ridge on u.s. cpi. jules is putting together the risks for the market. yesterday was good news of quarantine, today it is inflation, mary the two -- marry the two, good morning. juliette: you don't want to take strong positions when you are awaiting key data points. the asian stock market holding at a two week low. it missed 3.7% in july driven by food and oil prices rising by more than 20% in the month. core inflation suggesting we won't see too much of a turnaround for policy makers in china as they try to stimulate the economy from the effective covered letdowns. let's have a look at cathay pacific, shares rising in hong kong after it trimmed its first-half loss.

a loss of about $5 billion is down from a deficit of almost 8 billion hong kong dollars this time last year thanks to a surge in revenue from its cargo department. and an easing of quarantine rules and caps on flight, ca thay only took around 2% in the beginning of this month. they are expected to get to 25% by the second half. that has analysts suggesting you can see positive eps. hsbc are expecting a return to profit in the second half and have a buy on cathay pacific, one of eight analysts with a by on the stock which is rising in today's session. dani: we saw optimism from europe, too. different earnings stories there. juliette saly in singapore. coming up, we will be speaking with ing bank senior rates strategist antoine bouvet on the

markets. ahead of that u.s. cpi printed a. how negative might that yield curve go? this is bloomberg. ♪

>> look at inflation expectations. >> consumer inflation expectations are dropping. >> inflation expectations and breakeven inflation rates coming down from their highs. >> hundred basis points is not necessary. >> we are at an inflection point in the inflation story. >> we are going to see inflation decline but to what level? >> is this really going to fall to the 2% target the fed is looking for? >> to say that they are at

neutral. >> the labor market right now is a very strong. >> it makes the notion of neutral, cold. >> i find that hard to achieve. >> we are still experiencing this inflation curve. manus: inflation commentary ahead of july's cpi. let's ram it home. this is 2's and 10's, a mild conversion of 50 basis points. nothing to the asphyxiation of the 1980's when the curve converted 200 basis points. it is cpi day. the future of inversion lands squarely on cpi. let's ask antoine bouvet what he makes of the current inversion. no pressure here now, and one. 50 basis points says to me a soft landing and nothing more to

worry about. do you agree or is there a risk of 200, good morning. antoine: 200 seems a little too much by way of inversion. i wouldn't go as far as a soft landing but clearly we are going to reach a peak in the fed funds rate that will not be sustained. this is what long-term interest rates are telling you and why we are struggling to rise above 3% and why rates are going to converge at 2% in the middle of next year. this is telling you that no matter how hard the fed hikes interest rates by the end of this year, we have to reverse most of it. dani: 2% in treasuries like water one, 2023. that is quite the call. what is happening in the greater economy that gets us down to 2%? is that a recession we are deeply in by the first quarter?

antoine: it is a mix of things. there is risk of recession and risk aversion throwing more funds towards u.s. treasuries. because of their ability to hedge against the recession. they are following the path for fed funds despite this spike. we think it will be cut in 2024 and temporarily, during the recession, treasuries will fall to the 2% level before rising back toward 2.5%. it will be slipping back in the course of 2023 and 2024. manus: you have got my attention. what does that do to the rest of the risk scenario? do equities implode?

do you get flattening in the european curves as well? antoine: yes, flattening on european curves is the way to go. to an extent, markets are extrapolating what this means for the fed in terms of very clear communication that they will hike until they have a much clearer picture of inflation coming down. to an extent, european rates are going to react the same way. i don't know to what extent the ecb can deliver more hikes than the fed because of the geopolitical and economic situation has cap more froth -- got more froth in europe. but the risks are the same. even though we are heading to recession and should not take that lightly, they have been helped by the fact that the fed pivot narrative, even though it has been debunked by a lot of speakers [indiscernible]

not excluding. dani: this idea that we are going to have inflation back to 2% and have a fed that pauses and perhaps reverses. let me play the other side of this, this is not my own thoughts here, this idea that when you look at the state of trade with commodities, it is a tight market that even if there is something like a recession, demand still will be far outstripped byte issues in supply. therefore inflation is still high, and policy needs to be extremely restrictive. what do you say to that? antoine: there is a short and medium-term aspect, i think. first off, i don't think inflation will be below 2% anywhere near the beginning of 2023.

that is more of a 2024 story in most countries. it is not excluded that we have ups and downs, and it doesn't have to sta welly about part of the whole time. you could imagine that inflation does not fall to 2%, for central banks to hike later in 2023 or 2024. and realize that inflation is going back up. i am open-minded to this scenario but it is going to come down before it goes back up and that will allow the fed to cut rates. that is why we have rates down in the first quarter, up 2023, and then rising back up because of that risk. manus: you are extrapolating a pretty bearish outlook in my mind.

can you translate that level of sobriety one might say to the high-yield space where everybody one after the other, oh, high yields is at its peak and will not blowout any further. you are gra. nd. -- grand. talk me through sovereign and the nightmare that may come. antoine: i'm not expecting a nightmare but there is a few reasons to be careful. in a tightening cycle, there are first and second order effects of not only increasing rates, each 25 450 basis point increment -- or 50 basis point increment in the cycle is different. on top of that, we see an

acceleration of quantitative tightening in september by the fed. and the effect on that on a number of financial conditions outside of the u.s. even within the u.s. is very hard to contemplate. we will reach that point in the cycle where everything will slow and we start having that scare affect. -- effect. dani: in terms of looking outside the u.s., on of the more radio syncretic issues -,- one of the more radio syncretic issues is you can get italian yields going higher bedspreads not blowing out, have we avoided the worst of a debt crisis for the region? antoine: it is too early to say. the ecb deserves credit with the tool using it to the fullest.

i hope they will keep doing this. if we have anything that resembles a debt crisis, the danger zone is between now and the september 25 election. if markets lose confidence in italy's leadership to deliver reforms and abiding by the eu fiscal rules, this is the real danger for sovereign debts. barring that, the spread level is it for a while and will not be as severe as previously. manus: and one, let's see how this plays out for us all. antoine, not expecting any nightmares, my words not yours. juliette saly has the first word headlines. juliette: europe's energy security has taken a hit after

russian crude flowing to hungary, slovakia and the czech republic was halted. according to the russian pipeline operator, payments prevented the transit fee. president biden has signed legislation that will give the semiconductor industry $52 billion in subsidies. the legislation will spar u.s. chipmakers to construct more production in the u.s. and provides billions of dollars to support research and development. it will reduce reliance on other countries for advanced chips and restricted u.s. companies from expanding in china. serena williams plans to retire from the sport after playing in this month's u.s. open. she has 123 grand slam titles and almost $100 million in prize money. she told about the magazine she wants to focus on her venture

capital firm. three professional golfers who joined the saudi liv golf series will have to set up the fedex cup playoffs. they qualified for the playoffs and its $18 million top prize but were banned because they also joined the rival league circuit. the golfers essay the band is anti-competitive. -- say the ban is anti-competitive. global news, 24 hours a day, on air, and on bloomberg quicktake. powered by more than 2700 journalists and analysts in more than 120 countries. dani: coming up, blacked out. the u.k. could face several days without power this winter under the governments worst-case scenario. that story next. this is bloomberg. ♪

manus: its daybreak to europe with me, manus cranny in dubai and dani burger in london. the u.k. is planning several days over this winter when events could lead to organized blackouts for industry and households. bloomberg has learned the reasonable worst-case scenario could be an electricity shortfall. this could be a pretty tough spot in the wintertime at home in the u.k. dani: brings back memories of perhaps decades past when this was an occurrence in the u.k. let's take into whittemore with lizzy burden. this scenario where we get thi?, >lizzy: this is the worst-case

scenario, not what the government is expecting. at the fact that they are planning for this to happen has led the pound to slide yesterday. the reason is because if we have a cold winter, and then the u.k. is at the mercy of european gas imports. let's remember, everyone will be competing for them so the prices will be higher. then we would have to import and we don't have enough storage in the u.k. there would be a shortfall of a sixth of peak demand. in that case, the government would switch to emergency coal supply, override commercial c ontracts and induce blackouts for some industry and homes. manus: liz truss is talking about tax maneuvers, etc. if this comes the past, it will challenge the incoming prime minister, isn't it? full stop.

lizzy: boris johnson has said he will not do any more fiscally to help until we know we the next prime minister is. we had more hostings yesterday with a liz truss and rishi sunak laying out their stalls. households have an extra 1.3 billion dollars of debt, because we had the energy price cut hikes, they are already in a difficult situation. manus: lizzy burden in london. coming up, elon musk is at it ag this is xfinity rewards. our way of showing our appreciation. with rewards of all shapes and sizes. [ cheers ] are we actually going? yes!! and once in a lifetime moments.

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>> this is "bloomberg daybreak:

europe." we have the stories this at your agenda. dani: elon musk does it again. $7 billion of tesla.. box plot before u.s. guy. -- stocks why u.s. epi. industry and households could face organized power. good morning. a lot going on. waiting for the yield curve. manus: absolutely. it is the bond market we want to worry about. what will that do to the bond market?

bank of america, ing. it is likely -- i tried to get -- to be dramatic with me. refused. in the first quarter, but will have to do all of its bidding. dani: not only do yields go down. it might be at the end as well. when it comes to equity market, they are being dragged down. issuing a warning that comes after mr. earnings. all about and demand -- and demand.

europeans selling off amid all of that. those hanging tight ahead of cpi. soft index once again. this is a selloff of nearly 5%. a decline of more than 6%. manus: the world richest man has sold off tesla stock. musk, biggest on record. he just said he had no plans to sell. whether he has trying to get out of buying twitter or he is a great punter. stocks are up. >> it is interesting.

definitely a lot of speculation. many things it could be about. things are thought to have clarified. a little bit of a contingency. forced to complete the twitter deal. tesla stock has been on a good run. they were worried when it was a. we are seeing an opportunity here. this is the weight markets are looking. dani: when it comes to tesla, we

have seen issues with twitter. talk about the long-term impact on tesla, depending on how the twitter deal shakes out. >> the twitter deal has been an overhang on tesla stock. it will continue to be, something that weighs on the stocks. even though we have seen a bullish run. earnings, getting through that. also, president biden's climate bill. who will hang over tesla shares until this is resolved. we have a case ahead of us. thank you very much.

let's get the first word news. >> u.s. house speaker says the chinese president is acting like a scared bully over her visit to taiwan. she told nbc they wanted to refocus on the region although the white house is trying to distance themselves. close he told nbc that congress would not face the intimidation. >> he is acting like a scared bully. this was before the meeting where he would want to be reelected. >> 2.7% in july. it amounted to the fastest inflation rate in two years.

the rise in prices has slowed from six point 1% in june. u.s. justice department is preparing to sue google soon as next month for illegally dominating the ad market. be their second case against google. in a statement, technology helps small businesses around the world. they have expanded options. a popular diabetes drug has a property in it found in some samples. they will allow it to the continued to sail. -- continue to sail -- to sell.

global news, 24 hours a day, on-air and at bloomberg quicktake, powered by more than 2,700 journalists and analysts in more than 120 countries. dani: thank you. i have been talking about the chip sector. the image yesterday really accelerated semi conductors. the latest to say they are falling off rapidly. the company warned investors that revenue will not be projections sending chip stocks stumbling. >> it will enable us to meet the growing demand. memory is expected to go faster. we will need more capacity in order to supply that demand.

long-term technology and manufacturing, leadership. microsoft needs to play an important role. they should bring 40,000 jobs and another 35,000 jobs in construction and in the community this is the largest investment here in the u.s.. this will remain over the course of a decade. it will bring office supplies in line. today, less than one in 50 chips

are produced in the u.s.. it will enable us to produce one in 10 tips here in the u.s. this is a major moving of the needle in terms of domestic supply chains and enabling national and economic security as well. we are pleased to be part of it. dani: how much of that was in the works before they were signed into law? >> 2% of global production taking place would have gone way down. we have to level the playing field. that is why so much production has moved. it is intended to deliver and

become even smaller, taking it to 10%. our investment would have been far less. we would have produced more overseas. we are able to be part of the domestic supply chain. dani: this comes at a tenuous time, hard to gauge where things are going. earlier this morning macron put out a statement, downgrading the forecast for the rest of the year's revenue. what went wrong in terms of areas that there have been less demand for than expected? >> we have to manage for the near-term as well as long-term. some are looking at long-term. everything is about data and the efficiency of data we have to be able to supply that over time to

the investment that we just discussed. manus: micron technology president speaking to us. 9% over three days. that plays to this terror intact. that is war at the moment. what would that mean for global supply chains? those are the risks the market needs to assess. i will leave it there. dani: plenty of those supply chain issues come head to head with the micron warning that has to do with demand. it is such a consumer reliant company. all of those issues, not just

demand, consumer issues are starting to rear their head. manus: this goes back to the heart of what we talked about about the type of recession. there was a euphoria in housing. everybody has to be in it. that was what they warned with china. dani: certainly. this leads to inflation. coming up, we will take into the politics story, specifically in kenya. this is bloomberg. ♪

dani: welcome back to "bloomberg daybreak: europe." numbers coming in from ahold delhaize, looking at margins that beat estimates. operating markets coming in at 4.1%.

the estimate has been around 4%. looking at net sales as well. 21.5. 20 point 76 have been the estimate. we will be speaking to the cfo, natalie knight about those earnings. manus: the kenyan authorities have begun counting ballots. our bloomberg correspondent is on the ground. any early numbers? what can you tell us this morning? >> good day. it is early on. that is safe to say. we are waiting to see what the results are. about a million votes have been counted.

we are waiting for about 9 million. it is early on. it has been fascinating to look at some of the news that has come out from the electoral commission here in kenya. voter turnout is down this year. 80% last year, 60% this year. we are seeing the president taken early lead. as you mentioned, it is still very early on. it has been fascinating to see just how the reaction has been this early on. dani: thank you very much. jennifer there, tracking the election for us all week. what do we have coming up on the program? manus: we have revenues from

ahold delhaize. who walked oil? -- who walked away? the cfo eight will join us. -- the cfo will join us. this is bloomberg. ♪

>> the real driver for recovery today has been leisure travel. that continues to be strong. we are seeing that persistent demand through july and even through august. the pace of leisure travel continues to be very strong. manus: aco talking about travel

revenge. they are sticking with underlying energy. margins will still be 4%. they are pulling their ipo off a website. dani: a lot to go through. let's do that now with natalie knight, the cfo of ahold delhaize. top line numbers, you are increasing your outlook when it comes to your and cash flow. given your upgraded view, where do you see the strength coming? is it pricing is the driver of sales growth or is it the expectation of increased volume? natalie: we have driven this with our business.

we stop and shop the brand we have been working on a lot. there is increased momentum in the quarter and subsequently. that will be what drives it. we have introduced a new savings program will we will get a lot of savings for prices with customers. manus: good morning. that takes me to the question about margins. he said he will stick with a 4% operating margin. are you observing some of the cost increases, rather than passing those on to the customer? is that a risk to the 4% margin? natalie: it is not. we included that in our guided. we are including 850 million

euros this year. we want to shield our customers from higher price increases. that is something we are expecting. dani: what about the impact of rising energy costs, wage costs? natalie: all of those costs are real. piercing those as being the most difficult ones. when it comes to everything on the product side, we are negotiating very hard with our suppliers make sure we get the best prices. when it comes to other costs, you all right. those are higher. we are looking at sourcing, how we bring our legacy systems into place so we can use those. those things together will help us offset some of those higher costs. manus: you are delaying or

suspending your plans for the ipo. is that indefinitely, is that until markets get stronger or better, what is the guidance on the.com? natalie: we are spending, not stopping. we believe in how much we are able to crystallize the value. the markets are not playing into our hands right now. we are focusing on what we can control, how we can gain shares in the marketplace. holy drive double-digit growth. dani: in these earnings, there is a lot of optimism there.

for the entire business to really move forward and push beyond some of these macro headwinds, a lot of competitors and other folks in the space have not been able to get those under control, are you looking at more consolidation, potential m&a? natalie: tough times show who has their ducks in a line. this is a place were we really strong about our business model and the approach we are taking. when you look at what does that mean in the market, i think we will see in the future we are going to see more consolidation in the marketplace happening. as a group, that is something that we have had a good track record with. in small areas close to our business, we are looking to find opportunities there that allow

us to benefit and drive better savings for customers going forward. manus: we wish you well. keep those margins up and running. natalie knight, cfo of ahold delhaize. there you go. markets are just not playing ball with us at the moment. dani: i think we are all looking forward to a day when markets are a little less volatile. more volatility comes as cpi numbers are out. up next is "bloomberg markets: europe." ♪

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>> good morning and welcome