>>ae the stories that set your agenda. manus: microsoft shares all in extended trade after forecasting slower growth in its cloud computing unit. pushing u.s. and european futures lower. sources the u.s. and germany will provide their battle tanks to ukraine. plus, a 32 year high, the rba will hike next month. in europe, wage pressure means the pace of increases should not slow. good morning, tom. it's all about tech, from hardware and software to chips. tom: good morning, it is a beat

when it comes to net sales for asml and the guidance is looking a little bit more positive. fourth quarter net sales coming in at 4.60 3 billion euros, central to the production of semiconductors. when it comes to first quarter net sales, they are looking at estimates of 6.1 billion euros. the estimates have been a little under that rate. they are seeing stronger sales than expected in the first quarter and fourth-quarter net sales just beating estimates as well. so it looks like a decent set of results for asml. we will be listening for any comments from these executives on the earnings call about the decision-making and aligning with the u.s. on further restrictions of sales of equipment to china.

gross margins coming in at 50%, the estimate had been for 50.6%. that is the lookahead for the first quarter from asml. manus: they are delaying revenue recognition of over $3 billion. as margins compress, costs rise. in december they cut their asml holding and this was in one of their funds that they have. the two fund managers there taking their positions ahead of those numbers. microsoft, this is the reality of forward guidance from microsoft has just taken a gouge out of the equity boom. tom: it was remarkable to see because they came through with a beat on the earnings, but is

that guidance around revenues going forward. after that initial earnings beat, it is the focus with demand going forward. that sentiment around microsoft rippling through these markets and ebbing on its sentiment. the msci asia pacific index with gains over 1%, largely as a result of the comeback of the kospi. modest gains over in japan as well but mainland china and hong kong remain closed. in australia, cpi coming in at the highest level in 32 years. it's a reminder that inflation can be more persistent than some expect. that led equities lower and a strengthening of the aussie dollar. this is the microsoft and

technology story. it's the concern about having demand. dipping demand for azure and the cloud for microsoft as we continue to see the debate unfold within the ecb among officials, saying we are data dependent, let's not get ahead of ourselves in terms of pledging 50 basis point hikes beyond february. manus: the undoing of the boom from microsoft has cut across all risk assets. let's look across the assets. the pmi in europe is above 50 for the first time since last year. let's look at the bond market in the united states as yields rolled down.

the fed will pause and declare victory on inflation. bitcoin in there, you're looking at a back-to-back drop of bitcoin. euro pmi data that we saw yesterday, we are not out of the woods yet. an upside surprise from germany and from vance -- from france. tom: let's crossover to reporters from around the world. we will talk about rba, and roslyn matheson will break down big developments when it comes to ukraine. >> microsoft said that growth in

its cloud computing would fall. alex webb is standing by for us. it's all about the software from asia, it's one of the biggest growth drivers for the company. >> the irony is expectations a very high for azure. it's the pace of growth for azure that is going to slow. they are expecting it to slow by four or five percentage points. the stock had gained about 9% from a january trough an expectation has been that a lot of the bad news was frontloaded. they had made comments about where the earnings from the previous quarter were going to go. market expectation was for 2%

growth. tom: alex webb on tech and the microsoft looked -- lookahead. austrians inflation accelerated to the fastest pace, exceeding forecasts and prompting money markets to price in an interest rate hike at the next meeting. the biggest contributors to inflation in australia last quarter, just how sticky is it? >> good morning to you. the biggest contributors are discretionary spending of people going out eating, travel expenses, airfares, accommodation, both international and domestic. electricity prices went up as well.

what we saw in the quarter was that discretionary spending, which includes things that we want, not necessarily need, outpaced nondiscretionary spending. we talked about the consumption demand that is there in the economy and that tends to be sticky. manus: where are we on price pressures? i think it's the gold standard, according to larry summers. what can you tell me about price pressures in the u.s. and the u.k.? why is australia breaking to the upside? >> australia lacks the world on trends. we usually tend to be behind the rest of the world. inflation is picking up everywhere else as well. price pressures are pretty

strong at the moment and there is a risk that even the first quarter is strong, especially if we exclude -- the underlying demand is going really strong. inflation is high, we are seeing signs of wages still picking up. so yes, that's the reason why we are seeing a bit of a slow pickup and fall off. manus: the u.s. and germany are poised to announce that they will provide battle tanks to ukraine. talking about supplying kyiv with a leopard tank. much has been talked about this, germany has been reluctant to deliver the leopard tanks.

how significant is this, and when and where would they be coming from? >> this is quite a breakthrough after weeks of pressure from countries like poland and months of calls from ukraine for these heavy weapons to come in, all because of the concern that russia may be gearing up for a fresh offensive as soon as next month, once the weather starts to turn. unless they get these heavy weapons, they are not going to struggle to push russia back, they will struggle to make ground themselves. now we are seeing the announcement perhaps today that germany and the u.s. will agree to send some of these heavy weapons from germany and the u.s.. that will open the door for other countries in europe who have leopard tanks to send them also, particularly from poland. they could make a real difference if they could get there quickly. the question is how long it will take for tanks to get there and

be deployed, and that could take many weeks. tom: in terms of on the ground practical implications of having thanks, what would it mean for the ukrainian military? >> that made a big push into the capital and were stopped pretty effectively. these heavy tanks will be much better in the terrain in the east of ukraine is the weather turns and it gets muddy and it enables him to push forward and allow them to make true ground. so it could be quite significant for ukraine if they get there in enough time. tom: the germans and u.s. aligning with the decision to send tanks to ukraine and what it means for that military. this chart highlights the glitches in some trades

yesterday. the new york stock exchange says some trades will be declared null and void. how they lament that will be interesting. this doesn't happen very often, we have some great reporting from our team on how they are glued to their screens when they saw the likes of wells fargo dropping down 20% in some cases. manus: it's a conjunction of two things. one is liquidity, you've got market on open, market on close, a whole series of orders placed in there. this is more than just technology and something to do with liquidity. they will also adjust the height and the low. that is huge ramifications in terms of technical trading. such events are extreme, we are

looking at the activity with the highest resilience in our systems. we had a normal market close, tom. tom: and again, they will declare some of these trades null and void on the back of that glitch. as central banks remain resolute in taming inflation, we will discuss. stay with us. this is bloomberg. ♪

>> this is very high inflation, by historical standards. there is no use pretending otherwise. at least it is likely the peak inflation, but we won't know that for sure until we get the numbers for this march quarter that we are in now. manus: following the inflation data, tenure euros for more than -- the head of fx research, a double punch for the aussie. china reopening and now you have one more pumping up from the

policies. how much more upside is there? >> the cpi really was a surprise and clearly the market is anticipating the dice were looking for further tightening by the rba. it's just too early, the cpi was just the proof that it's too early for central banks to rest easy because there are still some pressures. obviously we are nearing the end of the cycle. we are not at the beginning of that cycle where you see the real big polish moves. tom: is part of your message that we've seen volatility come off. does that drop in fx volatility concern you? >> i find it a bit surprising.

everyone seems very upbeat, it all seems almost like we've gone from inflation fear to, it's over in the space of no time. this is typical for financial markets. but i'm a bit concerned because i feel that it's too early to come to that conclusion. when we look at the u.s. and the fed, we will see it happening again and again, we will have to realize that things will not be as straightforward as some investors seem to be hoping these days. manus: let's continue with the volatility narrative, a discussion we had this morning. one could extrapolate that as the ball rose down, and realize volatility rolls down as well, is that one could add more risk as those models allow you to do as vol drops.

in the fx base, where would you take the highest risk to add to risk through fx? >> there certainly some upside here, some emerging markets offer some very attractive revenues and attractive yields. in the g10 space, there still some currencies that are looking attractive. norway and maybe the commodity space benefiting from the story in china. there's definitely currencies with -- that could benefit in the space. i have to emphasize that the current optimism might be overdone. you need to be able to sustain a few setbacks in the meantime, i think. tom: the prospects will be tied to the dollar.

you don't see cuts coming through, you don't think it comes through until late 2024 at the earliest. if markets start to align with that view, what does that do for the greenback? >> that should find the dollar with some uplift. markets are pricing in 50 basis points in rate cuts for the later part of this year and that continues to 2024. we have an expectation that inflation in the u.s. will still be 3% in 2024. to me, that does not call for rate cuts. we still have to see how the labor market develops, which is very, very tight. there speculation whether there will even be another two rate hikes before they end and cut again seems overdone. when happens we make it a strong message from the fed in february that that will support the

dollar, at least temporarily. manus: so you see a draw down in the euro. here is the one in the middle that i was chatting to my colleague about this morning, which is what do you need to see from data for the fed to pause? the goal standard is coming, according to larry summers. what do you need to see to motivate the fed to hit the pause button? not cut, but pause. >> it's the defense department that the labor market may be looking at. as far as the inflation front is concerned, we've already seen inflation come down quite a bit since the peak. we've seen plenty of evidence that inflation is easing, but that's not enough for that fed. they will need to see the labor market slow down.

the labor market is a lagging indicator, so it will take some time. i march they should be done hiking. the labor market should show some evidence of easing. tom: i want to get your views on the yen. saying it will scrap why cc probably within six months of taking over -- taking over. where does it top out, do you think? >> we have seen the yen benefit massively from speculation that this ultra easy policy will come to a long-awaited ins. but obviously if the boj does signal that it will continue along that path and we do have a rate hike in the forecast for later this year, which is 10 basis points, which seems

ridiculous compared to what other central banks have been doing. but it is a huge step for the boj. we may well see some overshooting as well, although i don't think the boj will be pleased if it starts to move to a very accelerated appreciation as well. so there is some caution there. i suspect the boj will move slower than the current market is anticipating. tom: great insight there. thank you very much indeed. coming up, chips, asml beats estimates. we dig into the semiconductor manufacturers earning an outlook later this hour. stay with us for the details. this is bloomberg. ♪

>> let's get a quick check of the first word news. the u.s. is poised to announce that will provide their main battle tank to ukraine. sources say germany, which had insisted it didn't want to be the only one to make the opera, will also send 14 of its leopard tanks to switzer -- switzerland took a crucial step toward allowing other companies to export swiss made weapons to ukraine after a committee voted on the move. just over three years after the ukraine government promised to level up britain, new analysis by bloomberg has found a gap between richer and poor nations has widened rather than narrowed. according to bloomberg u.k.'s latest leveling up scorecard, just 6% of local areas have made overall improvements since last may. some areas in the southwest and

northwest of england continue to fall further behind better off regions. former vice president mike pence is the latest politician to be found with classified documents in his private possession. according to his attorney, a small number of items were found in his home in indiana and turned over to the fbi after recent search. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. manus: simone, thank you very much. much. (annoenough with the calorie counting, carb cutting, diet fatigue, and stress. just taking one golo release capsule with three balanced meals a day has been clinically proven to repair metabolism, optimize insulin levels, and balance the hormones that make weight loss easy.

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manus: it's bloomberg "daybreak: europe." we have the stories that set your agenda. tom: microsoft shares fall in extended trading after forecasting slowing growth in its cloud computing unit. sources said the u.s. and germany will provide their main battle tanks to ukraine, overcoming discord that threatened allied unity. plus australian cpi at a 32 year hi, prompting bets the rba will hike next month. wage pressures mean the pace of increases should not slow. so the discord within the ranks of the ecb is becoming clearer as they square up around inflation. a reminder from the rba and australia that inflation can remain sticky.

manus: absolutely, and they don't want to be accused as the ones that got it wrong in europe. politically in america, maybe they can stall the hiking cycle because it's about political palatability. but it is microsoft that took a flesh wound overnight. tom: absolutely, with the forecast around waning demand, particularly for the cloud part of business. that has rippled on sentiment going forward. manus: across the assets we've got a reevaluation, will the fed be just 25 basis points and done? it seems we have started away from a recession in europe on

pmi, given that we're in a risk off narrative in the equity market. it may well mean the end of crypto which is rolling down for the second day. tom: in terms of what the asian markets -- there was a catch-up play with the kospi, gains of more than 1% on that index. modest optimism in japan, china and hong kong remained close. you look at the equity impact and australia on the stronger aussie dollar on bets the rba will have to act again. an impact on equities of .3% in

terms of aussie stocks. tied to the waning optimism within the tech space on back of the ebbing demand that microsoft foresees for its cloud business. manus: let's talk about strikes in the united kingdom. lizzie, a little bit more detail on the amazon dispute. >> it is chilly on the picket line but it's getting busier. you can see it behind me. there are expected to be about 300 workers striking today on the amazon fulfillment center. ever given raise from 10 pounds to 10.5 pounds an hour but they

want a 15% raise to 15 pounds an hour. amazon is not entertaining that. it is significant to see the strikes spreading from the public sector now to the private sector. to give us the union's perspective i'm joined by stuart richards, senior organizer at the gmb union. thanks for taking time for us. is the strike all about pay, or is it about conditions as well? >> there's a whole raft of things happening. it's like the glass slowly filling up with water. they have gone right through the pandemic, none of them took furlough, all of them increased their hours. they got to the end of that and they are expecting some big company that's made billions off the back of them to give a

decent payroll and they just haven't had it. >> you are asking for a 50% pay rise. the average increases 7.2%. why should the public have sympathy? >> amazon has always prided itself on advertising jobs that were paid on average $15 an hour. they are now saying $18 an hour in the u.s. very different economic circumstances, but that is a huge amount more than these workers are getting. it is only right that these workers get a wage that they can live on and support their families. >> you are asking for a 50% raise to cope with 10% inflation. amazon could in response raise its prices to deal with the higher wage bill. that would mean more inflation for the customers, some of your workers as well. that's not going to help them,

is it? >> i don't think amazon has a huge problem in generating profits. they had revenues of 96 million last year pretax operating. this rise is not going to impact how amazon does business. what it will do is start to bring some of that money that amazon generates back into the economy. these workers will spend all of those wages in the local area, actually bringing profits back into it. amazon doesn't do that. this is about sustainable jobs for these workers. >> you have asked for 15 pounds an hour because the u.s. minimum is currently $18 an hour. so 15 would be about $12 an hour. how have you arrived at this number? >> they are advertising that pay on average $18 an hour in the u.s., which is above the 15 we

are asking for. what we want amazon to do is start to talk to us, sit down with us, listen to the concerns of these workers. that will be the first step here. >> thanks so much for being here with us. tom: thank you very much indeed. let's get the rumor business lash with simone foxman in ohio. simone: the new york stock exchange said some trades will be declared null and void after glitch caused wild price swings and trading halts on hundreds of stocks. saying it started in yesterday's session. wells fargo and mcdonald's were affected. microsoft shares swung into the red in late trade after seeing revenue growth in its cloud

computing business slow in the current period. the azure unit has been the biggest growth driver in recent years with a 38% jump in sales last quarter. total revenue growth of 2% in the second quarter was the slowest in six years. bank of america is rewarding the majority of its staff with a pool of restricted stock. the incentive which comes on top of regular compensation would go to employees who earn up to a half million dollars a year. bloomberg understands at around 96% of the workforce are eligible for this game. that is your bloomberg business flash. manus: coming up, dani burger talks to david hirschman. he sits down live at the private equity conference. this is bloomberg. ♪

manus: it's a tumultuous ride for private equity in 2022. driven by geopolitics and economic uncertainty. so what is on the roadmap 2023? europe's largest private equity conference, dani burger is there. let's get straight to it. dani: is not just a who a private -- who's who of private equity, we have david hirschman, head of direct lending, thanks for joining us this morning. the conversation that manus and

tom have been having over the past few days is hoped that europe's economy is brightening. we've had upgrades, germany is no longer seeing a contraction. economists think the european economy can avoid a recession. is there any reason to be more optimistic this year? >> yes. clearly there is still a lot of uncertainty and questions about the economic outlook for 2023. but there are reasons to be optimistic in the sense that the fear of a europewide recession in 2023 is mitigated by some of the positive news and economic indicators. we've had three years of a lot of volatility. the last 10 or 15 years, there have been periods of volatility. we see stable performance through the portfolio and that is mainly driven by the fact that we invest in companies that

have a high level of recurring revenue, predictable revenue and high profit margins. that helps to maintain the stability and performance. dani: you have these black swan events and that stability gets thrown out the window. in terms of energy cost and inflation driven by that, in europe it has gotten easier, it has been a mild winter. how did things change of next winter is worse? >> obviously it's something we have to factor in in our analysis. even if there are positive signs that europe may not go into a continent wide recession, there are still uncertainties and still a challenging macroenvironment. we have to take that into account. there is a risk of further

inflation continuing to increase rates and that will be difficult for companies with low profit margins. it is important to make sure that we have companies with little exposure to energy costs or raw material cost inflation and high profit margins, so they are able to absorb these situations. dani: i know you are optimistic about your own portfolio, but industrywide if there is that threat of inflation and a lot of floating rate notes, do you think there is a reckoning to come of companies that are not able to handle those higher rates? david: that may be the case, and for highly levered companies that may become a problem, especially if they're margins are under pressure, if there are low profit margin businesses. it will be harder for them to continue to service their debt.

a way to mitigate that risk is to invest in companies with conservative levered structures such that the ratio is in excess of two or three times, to make sure that even with the impact of inflation and increased rates, these companies continue to generate enough cash to comfortably service their debt. dani: even if the ecb hikes 50 basis points, still those companies would be ok? david: as you say, the pace of inflation is slowing down. the central bank's monetary policies are working. however, the we do expect a continuing increase of rates, may be up to 1% higher than they are now. even in that scenario, we for comfortable that our portfolio companies continue to service their debts without issue. dani: you want to make sure

those debt ratios are low. it does seem that for private equity there is a change and there is -- it's harder to get leverage. what is your appetite to land right now? david: we are very selective and we are very cautious in our investment strategy over the last year since the invasion of ukraine by russia, but even before that. there is certainly a sense that we have to be very selective because we are in an uncertain environment and it is a challenging macroenvironment. we do have appetite to invest in high-quality credit, businesses which are market leaders which approved to be resilient, and businesses in very defensive sectors. typically that will be in business services, health care, software or insurance services.

we find that those companies through covid and even before that, through the brexit challenges and even in 20 since invasion of ukraine, these companies have continued to grow and generate decent profit levels. dani: i've heard other folks talk about becoming more conservative. do you think this is a shift in the industry, and if so, is it a permanent shift? david: if it is a shift in the industry, it has happened over a number of years. the large players in the private debt market have proved to raise and deploy the number of fines, and overall, the asset class has a favorable performance. dry powder and private credit remains very strong, and many investors continue to see private debt as a safe asset

class to invest in, especially in a challenging time. dani: do you think that, again, private credit has grown so massively in part in response to banks pulling back. do you think this will accelerate that even more if banks are pulling back so much? david: it has already, and private debt fines have gained market shares even at the upper end of the midmarket and into some large cap transactions. some private debt is now a substitute for banks, even for larger transactions. we've seen a couple of multibillion euro or pound transactions in 2021 and 2022, which is clearly a nutrient. it has happened in the u.s. before, but that is a developing trend in europe. there is maybe less liquidity

from the bank financing market, and that is where private debt funds fill the void. dani: that's all we have time for. enjoy the rest of the conference. tom: dani burger, thank you very much. that was the sound of the deck hands prepping dani burger's yacht for later. more interviews from the conference with dani burger. stick around for those interviews. plenty more coming up. this is bloomberg. ♪

tom: welcome back. shares in adani group companies are following after was said they were shorting the empire stocks. accusing brazen market manipulation and accounting fraud. manus: that report was released on the same day as a key share sale. representatives for the group did not immediately respond to calls and email seeking a comment, saying the company would issue a statement in response to the accusations later today. it's number four on the bloomberg list.

i want you to focus in on today's wealth change, his well today has fallen by $900 million alone. tom: in a single day. this is a significant business empire. we will bring you more details when they come. the response we are waiting for as well. back to the earnings picture, asml generally met earnings estimates, beating on net sales for the year, as global chip demand remained strong. let's bring in april from amsterdam for the details. what is the demand outlook for chipmaking in the quarters ahead? april: good morning. asml sales forecast for the first quarter beat analyst expectations and also provided a new outlook for 2023. analyses sales growth of more

than 25% compared to 2022. regarding demand for its advanced machinery, the ceo said in a bitter -- video interview transcript that despite the company facing challenges such as inflation and geopolitical tensions, demand is still much higher than what they can make. manus: what do we know so far about chip export controls and the effect that might have on asml? april: japan and the netherlands are said to be poised on you controls on chipmaking equipment to china after the u.s. announced its own set of restrictions. whatever impact it will have on the asml business is probably too early to say. the chief executive said that while there's been much speculation in the media about what might happen, not much has changed since the october regulations from washington, and

the company is waiting to see what decisions politicians and governments come to an hope they're able to come to a reasonable solution. tom: we also have st micro -- reporting later this week. what will they be focused on? april: investors will be keen to see whether they are able to meet net revenue guidance of $4.4 billion for the first three months through december. it will also be interesting to see whether the company is seeing any pressure from interest rates on a higher duration sectors and whether exposure to a weakened consumer environment could impact the company's results. however, it does have a strong backlog so it could still report moderate growth on thursday. manus: april, thank you very much, from amsterdam.

we've seen the currency ratcheting higher and the bond market with the aussie dollar up by .10%. aussie inflation running at a 32 year high. anyone who thought it was one breath away from death was sadly mistaken. tom: i'm so glad you got that in at the end. the australian treasurer saying he thinks inflation has been targeting up. stay with us, this is bloomberg. ♪

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