tom: good morning. this is "bloomberg daybreak: europe." i am tom mackenzie in london and these are the stories that set your agenda. pricing in better odds of the fed will raise rates next week, with two year yields retracing over a third of monday's bunch. the fed is said to wait higher -- way tighter regulations following the collapse of three lenders in a week. plus, chancellor jeremy hunt will pledge to drive growth by unlocking business investment in his first u.k. budget. his speech will be set against the backdrop of mass worker strikes today. let's check in on these markets and yes, the dilemma for the federal reserve is ever more acute, particularly given the cpi print. that came out yesterday. core consumer prices accelerating faster than

expected. the fed will have to weigh that against the risks around financial stability for the banking system. there is relief for now across the asian space in terms of equity markets. across the benchmark, up 0.7%. particular upside for the banking stocks in tokyo and hong kong. some investors bet that the turbulence emanating from the financial world in the u.s. is starting to ebb. the futures in europe range bound after the rally we saw yesterday. futures in the u.s. also flat. a strong session yesterday, brushing off concerns about the cpi print. it was the regional lenders in the you -- in the u.s. pairing gains. the two year yield at 4.31. we saw that move higher of about 27 basis points yesterday in terms of the yield at the front end, and that move continues

today. six basis points moving at the front end of the u.s. yield curve as investors adjust to the probability of a rate hike again from the fed on march 22. we will check how markets are reacting to the latest cpi print with mark cranfield, sofia horta e costa will bring us up to speed with the latest data out of china. while we look ahead to jeremy hunt's u.k. budget, we will zoom in and get the details with lizzy burden. let's start with all things u.s. and the implications for the fed of this hot u.s. inflation tilting bets back toward a rate hike next week even the concerns lingering over financial fallout over the collapse of three banks in five days. our cranfield is here. good morning. how much more complicated does this make the fed's decision? mark: i do not think the cpi report in itself has done much

to change the fed's view. it is likely they will not go ahead with a 25 basis point move next week. the issue is the narrative from there. what guidance do they give to financial markets, investors, how they see the future? they will want to be as careful as possible in their wording in that respect. they might have real concerns about what is going on in the banking sector 13 banks go down in the space of a few days and colleagues have been looking through all the data carefully to see if they have missed anything else. there will not want to show their hands to the outside world for fear of causing panic in financial markets, but they will definitely be worried. where that makes them price their view is through the fed dot plots. there was a lot of hawkish talk with suggested it could be raised at the march meeting. given what has happened the last couple of weeks, they may prefer to keep the dot plots exactly where they were in december.

that means no description as to why they are keeping their view that way, but it would be a signal to people that they think they are getting closer to a pause than they were a few weeks ago. one way they may indicate to markets that there is a better reason for them to take a pause then there was recently is leaving the dot plots exactly where they are in december. tom: very interesting. the movements in the bond markets, is this now a more rational bond market? yields topping at 3.41 after a 27 basis point move higher in the yields yesterday. mark: unfortunately this month, not much chance of being rational because of the extreme moves in some cases like eight standard deviation moves. a lot of traders have been wiped out for this month and a lot of people are told you cannot trade anymore during march. that means liquidity will be patchy between now and the end of the quarter, which will add

to the confusion, and you got the ecb as well. there are a lot of events and we will have choppy trading simply because there have been a number of traders who will not be able to support the market. that will make each headline all the more erratic than it would have been other words. tom: bracing ourselves for choppy trading. thank you. mark cranfield out of singapore. now to china's economy strengthening in the first two months of the year with retail sales rising 3.5% from the same period last year. it was broadly a mixed picture. joining us for a breakdown of all the numbers as bloomberg's chief china correspondent, sofia horta e costa. how has the market reacted to this data? sofia: good morning. choppy trading in hong kong and mainland markets today. it starts with a risk on sentiment because before the data, the pboc, the chinese

central bank injected more liquidity than economists were expecting, so the read was that china's financial system needs more liquidity because it is lending more. this is a positive signal for the economy, suggests the reopening trade is working because there is more credit, but less than an hour later, we got the mixed data. 3.5% in retail sales is ok, but not blowout figures from china. the key highlight was the property sector. property sales rose for the first time since mid-2021, which was largely unexpected. you see a big rally in property shares in hong kong, but the key thing to watch out for is the chinese consumer. this is what everyone is waiting for. are consumers going to spend? is there going to be an inflation hit for the rest of the world? and there is still weakness here, so that rally we saw at the open, that fizzled out

throughout the asia session. let's see if we can close higher because people are reading it that china's economy will need more support, more stimulus. we are not seeing that strength into consumer spending yet. tom: a less confident consumer than many had hoped for for these retail sales. thank you very much for the context. sofia horta e costa also pointing out the liquidity injections and the jump in housing sales for us out of china. now two things u.k. ahead of an important day for u.k. chancellor jeremy hunt, set to deliver his spring budget later today after the collapse of silicon valley bank continues to be felt in global markets. let's bring in lizzy burden. what are we expecting to hear from the u.k. chancellor today? lizzy: if you think back to rishi sunak's five priorities, two of them are about the economy, halving inflation and

growing the economy, also keeping on top of debt, but this is what the budget will be framed around. he wants to shield ordinary britons from the cost of living crisis, and we are expecting chancellor jeremy hunt to extend support for energy bills on households and get to the heart of the labor market activity problem, which is pushing up inflation. an extension of childcare provision is likely to be the rabbit tail for this budget as well as increasing how people can save tax-free for their retirement and extending the amount of time people can hold onto their benefits if they are long-term sick but going back to work. then to grow the economy, we are expecting sweetness for business to compensate for the rising corporation tax expected to set in for april. that could be something along the lines of expensing on capital expenditure. this will be a budget presented as a budget for growth, but the

question is how ambitious will it be? the office for budget responsibility is likely to see there is not much room for giveaways. we know what happened when liz truss announced unfunded tax cuts what happened in markets. tom: all of this against the backdrop of mass industrial action again in the u.k. more than 100,000 public-sector workers striking today. can we expect any assistance for those workers given the fiscal constraints? lizzy: it is not a high priority for the chancellor when he has got taxes and a postwar high, creeping infrastructure. it would be have to be a priority if he were to raise taxes or cut spending debate. it does not look likely. the other thing we are not expecting in the budget is mention of making britain a silicon valley. that was the sort of plan the chancellor and prime minister liked to use until the collapse of silicon valley bank over the weekend that threatened to

overshadow the budget, but as you know, the government helped to facilitate the sale of svb u.k. to hsbc. i was speaking to the foreign secretary yesterday and i asked him whether the government is underestimating the risk of hsbc's exposure to china. take a listen. >> we want to make sure we protect the u.k. tech sector and make sure those incredibly innovative individuals and companies are still able to prosper. that is what has underpinned the decision, but we take all of these decisions very carefully and we look thoughtfully at the risks and benefits of course correction. lizzy: hsbc bought svb u.k. and you have got to wonder the benefits they were balancing when they picked it as the highest bidder. tom: thank you very much for that conversation with the u.k. foreign secretary, the preview of the chancellor's budget later today. we will have extended coverage

of the u.k. budget announcement. that special is live for u.k. viewers from 12:15 p.m. sam -- 12:15 p.m. on bloomberg tv. at 9:00 a.m. u.k. time, the iea leases its oil market report for march. that as we see oil prices bounce back from the pressure they have been under. then we will get british chancellor jeremy hunt's first budget, setting out the government's plans for tax and spending. at the same time, the office of budget responsibility will publish an updated fiscal forecast for the next five years. also at 12:30, we will get u.s. ppi. the question on everyone's mind is what will the figures mean for the fed's rate hike dilemma. and at the same time, we will get u.s. retail sales numbers as well, an indication of the strength of the u.s. consumer. coming up, we will talk

investment plays in this environment with fisch asset management. that stickier inflation adding to the fed's headaches. he will ask where the opportunities are amongst and amidst this volatility. this is bloomberg. ♪

>> the u.s. banking system remains resilient and on solid foundation with strong capital and liquidity throughout the system. the board continues to carefully monitor developments of financial markets and across the financial system. tom: that was fed governor michelle bowman on the american banking system.

joining us now is maria staheli, the senior portfolio manager at fisch asset management. thank you and good morning. let's start with a question around the risks emanating from the u.s. banking system. do you breathe a sigh of relief? are the risks now in the rearview mirror? maria: good morning. in our view, we have seen a couple of days where a few banks have failed because of idiosyncratic factors. it was a confluence of idiosyncratic factors, like having alm mismatches, ultimately leading to this confidence crisis, and that is something i do not believe the whole banking system in the u.s. is looking at, but we are seeing weaknesses in regulation. regulation needs to be strengthened especially for smaller institutions. we definitely are happy to see

that there is this call for a strengthening in the regulation. the u.s. authorities are looking at this in detail. overall, we are not concerned this is a systemic crisis at the moment. tom: we know the federal reserve is doing its own review of how this played out. meanwhile, they have their meeting coming up next week, the next decision from the fed, and they have to weigh out financial stability with still tight labor markets and high inflation. we saw that with the cpi print yesterday, particularly around the core consumer prices. where do you think they land on this? does the federal reserve have the space to pause next week and ensure that financial stability is addressed? maria: at the moment, the fed does not have the freedom to pause hiking just yet. you still have too hot and too sticky inflation, as you saw yesterday in the latest figures.

you also have seen still elevated wages in the last payrolls report. what this event in the banking system shows you is that things start breaking and this may not be the last thing that breaks in this hiking cycle. what this does to the overall cycle, it makes the transmission mechanism a little more direct, which ultimately helps the fed because they may have to do less hikes overall. and the market got it quite right that there was a pricing out of hikes, but what i think is wrong is i do not think we will see the fed cut rates at the end of this year just yet. if it does anything, the fed will probably go a little slower to give more time to assess how the transmission mechanism has changed and how these lags have changed.

these lags are long and variable, and the variable is the important thing here. tom: talk to us about the fed balance sheet. they have this new loan program to backstop the banking system, any bank can access this, and there is no stigma attached because it has only been named for two years. is this supportive of equities in the medium-term? maria: it is important there is differentiation between what the fed can do to support the well-functioning of the market and the financial system. there is another side, and this is taking priority of fighting inflation, bringing price stability back, and that is taking priority at the moment. i think the fed will have to stick to that as well in order to show their measures to support market functioning are working. it would not be a good signal if the fed would pause right now

because it would show that the fed does not have confidence in its own measures. tom: meanwhile, you have a preference for european banks. the ecb will have their decision tomorrow. what is the rationale for positioning and leaning into european banks in this environment? maria: we have been having overweight financials for the past couple of months and we have started to moderate that because our rates view has changed with recent events. however, we still see more offset in european rates and we see a different profile in european banks compared to u.s. banks. european banks, they have a bit of different funding structure, a bit of a different composition of the assets side, and we believe the are still better positioned for the type of environment we are in right now. overall, financials, we are comfortable in the u.s. they are still fundamentally sound.

the big banks are strong in terms of liquidity and funding and also in terms of asset quality, but we believe the earnings tailwind we have seen for the past couple of months has moderated a bit. tom: the earnings tailwind has moderated but still worth having a bit of exposure to financial sectors with a preference for european banks. maria staheli, senior portfolio manager at fisch asset management. thank you for joining us this morning. coming up, moody's cuts its outlook on the u.s. banking sector to negative after the collapse of three lenders. we will have the details next. this is bloomberg. ♪

>> so far it is pretty calm.

even so, material good inflows yesterday. i had a client meeting which was positive, so it is calm, but it is early days to look at it. tom: that was credit suisse's ceo, ulrich koerner, speaking to bloomberg exclusively after the release of the lender's annual report yesterday. bank of america has marked up more than $15 billion in new deposits in a matter of days, emerging as one of the big winners after the collapse of three smaller banks in the u.s. for more, let's bring in valerie tytel. 15 billion is a huge amount. valerie: this deposit shift is underway, a big number that bank of america is citing. the extent to which this deposit flight continues from smaller regional banks to the big four systemically important, two -- too big to fail, it is an unknown for the markets. we do get this data from the

fed, and the total deposits in the u.s. banking system, commercial deposits, is 18 trillion. at saw a huge bounce with the balance sheet expanded due to the qe operations over covid. this blue line is the small institutions, competing for those deposits with the large institutions. the question next friday is how large will this shift show. tom: meanwhile, the commercial deposit flight already underway because of the higher money market rates that you can get. is that an added complication? valerie: the regional banks' business model is coming under pressure because money market funds are yielding over 4%. the money being pulled from deposits being invested in securities is also another big question. how can regional banks survive if they have to pay a premium to hold onto those deposits? tom: what does it mean in terms of the regional banks accessing the fed's lending facility?

how much uptake are we seeing and what does that mean broadly for markets? valerie: that is a question how much these regional banks lent on the new lending facility. the reason why equities traded strongly yesterday as people are trading this as a qe trade. we get the details tomorrow evening, just how much the take up was of the fed's new lending facility. the question is, is it almost going to surprise us with how much is added to the fed balance sheet? that is a positive detail for positive boosts for risk assets. that is probably why equities traded strongly yesterday. tom: the liquidity imposes one to watch in terms of the new lending facility from the fed. valerie tytel, thank you for breaking that down. let's get to the first word news with madison mills. >> in the u.k., chancellor jeremy hunt will pledge to drive economic growth by unblocking

business investment in his first budget later today. most pressing issues for him, high inflation, cost-of-living crisis, and labor shortages. with the u.k. tax burden at a postwar high, struggle to raise taxes or find savings. bloomberg understands a billion-dollar expansion of free childcare is also under consideration today. and the pentagon says a russian fighter jet collided with a u.s. surveillance drone in international airspace, causing the craft to crash over the black sea. russia's defense ministry denied the claim, they it's gets it did not come into contact with the drone. the state department says the collision was, quote, a brazen violation of international law. meanwhile, the russian ambassador to the u.s. soccer to defuse the tension. >> we do not want any confrontation between the united states and russia.

we are in favor of diplomatic relations for the sake and the interest of the people of the united states and the russian federation. madison: global news powered by more than 2700 journalists and analysts in more than 120 countries. i am madison mills and this is bloomberg. tom: thank you very much. coming up, we will speak to prudential's cfo after they reported a drop in new business profit, missing estimates. that interview is next. this is bloomberg. ♪

tom: good morning.

this is "bloomberg daybreak: europe." i am tom mackenzie and these are the stories that set your agenda. traders resume pricing in better than even odds that the fed will raise rates next week with two year yields retreating over a third of monday's plunge. the fed is set to way tighter regulations for midsized banks following the collapse of three lenders in a week. moody's cuts its outlook for the u.s. banking system. plus, chancellor jeremy hunt will pledge to drive growth by unlocking business investment in the u.k. in his first budget. his speech will be set against the backdrop of mass workers strikes. let's check in on the earnings, and we start with bmw because it is a beat in terms of the margin estimates for the year 2023 coming through from bmw. margins now seen between 8% to

10%. the estimates had been for 8.67 percent, so they have raised their forecast for the margins. there will be scrutiny about the outlook for this business in terms of a softer consumer. just running through the top lines, revenue for the fourth quarter came in at 34.6 billion euros. full-year dividend per share, 8.5 euros, coming above estimates. inditex another headline posting earnings today as well. it will boost dividends by 29% to 1.20 euros per share. full-year ebitda coming in at 5.5 euros, so slightly below the estimates. we get a boost to the dividend that will be a focus for many investors out there, the

dividend being raised by 29%. we will be hearing from bmw's ceo later this morning, so stay tuned for that. let's get to another earnings story and cross over to hong kong because prudential's new business profit fell short of analyst estimates in a year that the u.k. based insurer dividend to focus on asian and african markets. the reporting period coincided with hong kong and mainland china, two of prudential's biggest markets, exiting three years of covid zero restrictions. joining us now is james turner, the cfo of prudential. thank you for joining us. let's start with the top line on your results, your key takeaways and how you think your position is for the business in the year ahead. james: thank you for having me today. we are representing a solid set of results. rip is up 9% on the continent

exchange rate. we have delivered significant growth in operating profit, strong balance sheet, high capital ratio, strong liquidity. we are poised for growth. tom: talk to us about the new business profit come of the drop of 14%, missing estimates for the full year. does a turnaround see likely -- seem likely? james: on the constant exchange rate basis, our mbp dropped 11. that three is because of exchange rates, and this is all driven by economics. if you strip out economics, mbp was down four, which were compared favorably against the challenging time in 2022 for the industry. economics was also driven by hong kong. if you strip out hong kong, our mbp was down -- up 5%.

the reason hong kong was so impacted his we saw largely u.s. dollar business, and as you know, the u.s. dollar went up 240%. we market the mbp based on the year end interest rate. tom: interest rates clearly a factor and we will unpack that story a bit more. the life insurance business really important as a driver for the business on the reopening of the borders between hong kong and china, presumably a catalyst for prudential going forward. how much demand do you expect to see for the life insurance market business? james: in terms of operating profit, we are just reporting 8% growth. that was driven by 15% uplift in our insurance and income, so health and protection, regular premium, key business. in terms of the hong kong-china mainland border opening, we are

seeing strong momentum in the first two months. we have given the overall impact on our sales for january and february of it being plus 15%. what we are seeing is visitor numbers increasing every month. tom: you continue to see that demand from those visitors coming over from china. you are now able to -- at least mainland investors -- are now able to buy the stocks, the shanghai hong kong stock connect. how much do you expect to see that come through? james: last year -- 2021, we did just over 2 billion of share issuance on the hong kong line, and we were delighted in mid-2020 two to get inclusion in the hang seng composite insect -- index. this gives us access to the shanghai connect and now the shenzhen connect. we are seeing an absolute doubling of volumes on the hong kong line. we see this as incredibly positive. we still see that southbound

flow. tom: what is the balance sheet exposure? how much exposure do you have to silicon valley bank and the commercial lenders in the u.s.? james: we are always positioned -- i used to be the chief risk officer -- we always positioned our balance sheet conservatively, so our exposure to svb, to the whole of that small tear u.s. banking, is relatively limited. tom: can you give us more clarity on what that means in terms of exposure? james: absolutely. for svb, it was $1 million out of a debt portfolio of 23 billion. tom: changes at the top recently at prudential, a new ceo taking the helm. what is the strategy going forward for you and the team? james: i am delighted to have

him on board and he has hit the ground running. you will get a chance to see him at the investor roadshows for all of our investors, but we are not announcing major shift in strategy at this point. he has been in the office for just about three weeks, i think. tom: we will give him a bit more time. major changes meanwhile in the mainland's around the regulatory bodies overseeing insurance and inking. -- banking. what will be the impacts and changes coming down the pipe from regulators in beijing? james: again, it is early days, but for the nfra, we see this as a positive. if i look back, two things they have done recently. first, they say they want to increase insurance penetration to 5% in the mainland. it is currently at 3%, so it is driving the health and protection, which is the heart blood of what we are selling. the second is that they are

opening up the pensions market, and therefore for foreign insurers with strong capital, with strong experience of being able to sell retirement and manufacturer products, these are really great signs for the growth, the structural growth of the chinese market. tom: before we let you go, i want to circle back to the rates environment. we are looking ahead to the federal reserve decision next week. investors now expecting a hike from the fed. the hong kong unit of the business impacted in terms of your business, i believe dropping around 47% in terms of new business profit as a result of the higher rates. is that a theme, and evolution you expect to continue in the quarters ahead and how? you are adjusting to that? ? james: we take a long-term view. what is happening is we are discounting all of those future cash flows. it is not that it is having a

direct impact. we are predominantly health and protection business. that is not sensitive to interest rates, but because it is long-term, what we are doing is discounting those future cash flows at a higher interest rate. our mbp with analogy has this market to market force. so we are marking to the market what the interest rate is at a given point in time and discounting during the higher interest rates. tom: james turner, cfo of prudential. thank you for your time on the back of these earnings and looking to the quarters ahead for the insurance assets manager based out of hong kong. that's get the bloomberg business flash with madison mills in dubai. madison: meta is planning to cut 10,000 jobs and close 5000 open rolls. this is its second major round of layoffs. the facebook parent already laid

off 11,000 workers in november, around 13% of its staff. this comes as the company bids to become more efficient and improve its financial performance. meanwhile, sources tell bloomberg's that apple will make bonus payouts less frequent for some of its employees. they are also limiting hiring for jobs and closely watching travel spending. bloomberg has also been told that hsbc is cutting the base pay at offers a newly promoted senior investment bankers by a quarter. sources say some new managing directors are now offered a salary of about 225, that compares with 300 thousand for those already in the same position. this comes ahead of a u.k. proposal to lift caps on bigger bonuses, a policy imposed when it was part of the eu. and bloomberg has learned that tiktok is pulling a split from chinese parent company bytedance. that move would be to address

concerns about u.s. national security risks. this move could also result in a sale or ipo and is considered a last resort. it would also need approval from beijing. this as bytedance achieved a valuation of $220 billion in an investment by abu dhabi firm d 42. that is much less than the 300 billion set from a share buyback program last year. that is your bloomberg business flash. tom: madison mills in dubai, thank you. coming up, it is budget day in the u.k. we will take a look at what to expect from chancellor jeremy hunt's announcements later today. it is his first budget. that is next. this is bloomberg. ♪

>> like every year, this budget they will begin with jeremy hunt holding up the iconic red box, carrying his debut budget speech as he leaves downing street for parliament. it is a moment shared with previous chancellors from gordon brown to nigel lawson and john major, and image guaranteed to play out in news ports around the world. liam gladstone holds the record for longest continuous speech, more than four hours and 45 minutes. the shortest, benjamin disraeli, barely breaking a sweat than his 45 minute address. should hunt come out swinging with higher taxes, he will not have to wait long for the money to start rolling in. any changes could come into effect as early as 6:00 p.m. that very day. happily for him, he can soften the blow with a drink.

chancellor is allowed a tumble when giving the speech, the only time an official can booze up a bit when before the house of commons. can clark was partial to a whiskey. jeffrey howland enjoyed hardee's, while john major enjoyed gin. tom: a preview of what to expect from today's budget day. you cannot blame the chancellor for reaching for a stiff drink given the economics he is facing. it is budget day, chancellor jeremy hunt under pressure to boost growth showing that britain is on the teetering edge of recession. joining us now is tineke frikkee , the head of u.k. research at waiver 10 asset management. thank you for joining us this morning. let's get a sense as to what you think corporate's in the u.k. and executives will be looking

for from this budget, where they will be zeroed in terms of their focus. tineke: thank you for having me. the main thing everyone is looking for is for this budget to be less disruptive than the last one, so we want stability and continuity because any company needs that in order to decide their investment plans for the u.k. that is one thing and clearly we have seen a lot in the press already of whether the rumors happen, so most people expect that there will be an announcement on defense, for example. there will be an announcement on the leveling up, less extreme to what it was previously for the post, but perhaps some low-tech -- to encourage investment. and i am hoping there are a few

cuts left for business. clearly at the moment, we have not heard, but we think corporation tax will go from 19% to 25%. that might be delayed a bit and that will be a positive, but we will see. we expect a bit of clean energy, may be bit of health to the cards, but it is continuity and stability. tom: you touched on the 19 percent, to 5% corporation tax. -- 19% to 25% corporation tax. what is that doing for your holdings? tineke: for our holdings, it is not as important because we are a global investment house and even within the u.k., what i look at the equities, we tend to be biased to companies that make their sales outside the u.k.

for those companies that make nearly all of their profits in the u.k., it is in the numbers. ultimately share prices move from positive to negative expectations relative to what is in the numbers. for the moment, 25% is penciled in, and that means many u.k. companies are not going away because going from 19% to 25% has a big hit on earnings. and we have interest rates going up, so every company has guided their interest costs going up, costs of labor going up, so we are not going to make a lot of progress. tom: i want to get back to the banking crisis in the u.s. we have debated this is in the last 24 hours. to what extent were you pouring through your portfolio and addressing potential exposure? where you making adjustments? where you making any changes to the portfolio in light of what is happening in the u.s.?

tineke: no, is the short answer, because we are focused on profitable cash flow growers and banks tend to not fall in that camp. we underweight bank, but we need to think about it. is this idiosyncratic to svb? is it limited to the u.s.? or is it a wider issue? and we had ad hoc meetings as you would expect, and there is a large amount of svb mismanaging their position. there is also a strange change in the u.s. since 2018, certain banks could function without less regulatory positioning, and it is very different in the u.k. and europe. we do not have a way for smaller banks to fall under the radar, but the main message we have been focusing on, when rates go up a lot like we heard from

prudential earlier on, things change and certain business models do not work. that is what we carefully look at. all of the business models we look and invest in, do they still work? and yes. rates have been increasing for a while now. tom: the sensitivity to. this higher rate environment. . the ftse 100 and outperformer last year. does the value bias within the ftse 100 at the index level continue to be a tailwind for this index or does it start to fade? tineke: that is an interesting point to think about because a big part of the u.k. value camp our financials and banks are a big one. if anything, what svb has made people think about is maybe interest rates will not go as high as we thought and

therefore, maybe the peak will be earlier and lower. what's that meeks -- and what that means for banks because they make more money when you have a lower loan, so the bank bid will be tough for them, particularly if there is a heightened uncertainty about balance sheets. and oil is the next one, and i think demand is increasing nicely. it is all about inflation now, so typically if inflation stays high, we will be ok. tom: we are running short of time, but great analysis and the call on profits for the banking sector. tineke frikkee, head of u.k. research at waverton investment management. coming up, apple delays some bonuses and freezes hiring while meta cuts some 10,000 jobs. that is next. this is bloomberg. ♪

tom: welcome back. apple is stepping up its belt-tightening efforts amid uncertain times. sources telling bloomberg the world's most valuable company will make payouts less frequent for some of its employees and freeze hiring for several roles. let's bring in bloomberg's asia tech lead. last year was all about inflation fears and now it is about belt-tightening that apple. >> apple has always been a frugal company. able do not realize that because it is a huge company with lots of revenue, but they have been careful about their expenditure. some of that we talk about in this once a year payout is in line with parts of the company. the belt-tightening and no new hiring is in line with what we see at apple being careful with

their money, no large-scale layoffs so far compared to everybody else, so this is more of an incremental thing we see at apple and we tend to expect this from apple. they are not as big in terms of spending and cutting. tom: that is an interesting perspective. what about meta? it seems they are taking the knife out for this firm. tim: meta is the absolute opposite company in silicon valley to apple. they changed their name and it is going nowhere. not many people are in the metaverse, not many people have the glasses that you where, but mark zuckerberg is spending billions of dollars to try and make that happen. it is not happening and he has to cut costs, get rid of staff to rein in those costs and hopefully have a longer projection along the timeline for this company to stay profitable for this big metaverse bet if it goes nowhere. tom: really appreciate it. bloomberg's tim culpan on the

difference around apple and meta as they both rest -- both wrestle with rising costs and look to address the questions around costs and staffing. let's check on the markets. futures in europe pointing to gains of 0.2% after the rally of yesterday. regional banks picking up steam in the stateside yesterday. the s&p also pointing higher by 0.2%. cpi still pretty high, and that will have to be addressed by the fed at their meeting next week. at the front end, two year yields at 4.20 eight, revised by four basis points after yields jumped by 27 basis points yesterday. this is bloomberg. ♪

anna: